Monday, March 4, 2019

Draft Bill to Revise the Local Government Code

Republic of the Philippines
SENATE OF THE PHILIPPINES
Pasay City


EIGHTEENTH CONGRESS
First Regular Session


SENATE BILL No. ____



Introduced by HON. JUAN MAKABAYAN
_______________________________________________________________________


AN ACT TO RATIONALIZE LOCAL GOVERNANCE, STRENGTHEN LOCAL GOVERNMENT UNITS, PROVIDE FOR JOINT RESPONSIBILITY AND IMMEDIATE ACCOUNTABILITY, AND REVISE THE LOCAL GOVERNMENT CODE


EXPLANATORY NOTE


This bill seeks to rationalize local governance, strengthen local government units, provide for joint responsibility and immediate accountability, and revise the Local Government Code. To this end, the bill provides for the delineation of functions, consolidation of powers, removal through a no-confidence vote, and extension of term of office.   

The comprehensive delineation of functions of the national and local governments promotes consistency in the enforcement of government policy, by avoiding the overlap of jurisdiction by separate government bodies over the same subject matter. Furthermore, it promotes the efficient use of government resources, by avoiding the duplication of functions. Finally, it promotes the speedy implementation of government programs and projects, by avoiding delays caused by conflicts of jurisdiction. 

The consolidation of local government powers in cities and municipalities promotes the efficient use of government resources, by avoiding the overlap of jurisdiction by separate government subdivisions over the same local territory. Notably, the cities and municipalities collectively, cover the entire national territory without any overlap of territorial jurisdiction. Furthermore, the municipal and city governments constitute the basic government structure in present day human settlements. While barangays were the dominant human settlements throughout the archipelago up to the 15th century, these smaller size settlements have since given way to larger development in the mold of municipalities and cities. Compared to the provincial governments, the municipal and city governments are closer to the people in present day municipalities and cities. Compared to the barangay governments, the municipal and city governments are more capable and better equipped to promote the general welfare, deliver basic services, and enforce peace and order throughout the entire municipality of city. 

The consolidation of legislative and executive powers in the local sanggunian strengthens the local government units, by merging all political powers in one political body, and by avoiding institutional deadlocks between the local legislature and the local chief executive. 

The vesting in a collegial body, of the power to “hire-and-fire” the local chief executive, promotes good governance, by providing for joint responsibility, and immediate accountability through the no-confidence vote.

The extension of terms from three (3) to five (5 years of local legislators and executives strengthens the local government units, by promoting stability through long tenure in office, subject however to periodic validation of the voters' mandate. Nonetheless, the maximum of three (3) consecutive terms is retained to avoid permanent tenure.

In view of the foregoing, the immediate approval of this measure is earnestly requested.






Republic of the Philippines
SENATE OF THE PHILIPPINES
Pasay City


EIGHTEENTH CONGRESS
First Regular Session


SENATE BILL No. ____



Introduced by HON. JUAN MAKABAYAN
_______________________________________________________________________


AN ACT TO RATIONALIZE LOCAL GOVERNANCE, STRENGTHEN LOCAL GOVERNMENT UNITS, PROVIDE FOR JOINT RESPONSIBILITY AND IMMEDIATE ACCOUNTABILITY, AND REVISE THE LOCAL GOVERNMENT CODE


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


PART I. Delineation of national and local government functions


SECTION 1. A new Subsection 2(d) of Republic Act No. 7160 is hereby provided to read as follows: 

“SECTION 2. Declaration of Policy.- … (D) DEVOLVED LOCAL AUTONOMY SHALL IN ALL CASES BE SUBJECT TO THE PRINCIPLE OF SUPREMACY OF THE NATIONAL GOVERNMENT OVER THE LOCAL GOVERNMENT, CONSISTENT WITH THE UNITARY SYSTEM OF GOVERNMENT OF THE STATE. LOCAL AUTONOMY SHALL NOT BE CONSTRUED TO EMPOWER LOCAL GOVERNMENT UNITS TO OBSTRUCT OR DISRUPT THE FORMULATION OR IMPLEMENTATION OF NATIONAL GOVERNMENT POLICIES, PROGRAMS OR PROJECTS.” 

SECTION 2. New Subsections 3(n), 3(o) and 3(p) of Republic Act No. 7160 are hereby provided to read as follows: 

“SECTION 3. Operative Principles of Decentralization.- … (N) DEVOLVED LOCAL AUTONOMY SHALL NOT BE CONSTRUED TO EMPOWER LOCAL GOVERNMENT UNITS TO AUTHORIZE ACTS OR OMISSIONS EXPRESSLY PROHIBITED BY THE NATIONAL GOVERNMENT, NOR TO PROHIBIT ACTS OR OMISSIONS EXPRESSLY AUTHORIZED BY THE NATIONAL GOVERNMENT. 

“(O) DEVOLVED LOCAL AUTONOMY SHALL NOT BE CONSTRUED TO EMPOWER LOCAL GOVERNMENT UNITS TO OBSTRUCT OR DISRUPT, OR CAUSE THE OBSTRUCTION OR DISRUPTION, OF THE FORMULATION OR IMPLEMENTATION OF NATIONAL GOVERNMENT POLICIES, PROGRAMS OR PROJECTS, BY DIRECT OR INDIRECT MEASURES, SUCH AS THE ENACTMENT OF ORDINANCES, ISSUANCE OF EXECUTIVE ORDERS, OR WITHHOLDING OF PERMITS, LICENSES OR CLEARANCES NOTWITHSTANDING COMPLIANCE WITH THE APPLICABLE REQUIREMENTS. 

“(P) IN CASE OF CONFLICT BETWEEN NATIONAL GOVERNMENT STANDARDS AND LOCAL GOVERNMENT STANDARDS, THE FORMER SHALL PREVAIL OVER THE LATTER, FOR PURPOSES OF THE ISSUANCE OF PERMITS, LICENSES OR CLEARANCES BY LOCAL GOVERNMENT UNITS, IN CONNECTION WITH THE IMPLEMENTATION OF PROGRAMS OR PROJECTS ADOPTED, CONDUCTED OR AUTHORIZED BY THE NATIONAL GOVERNMENT.”

SECTION 3. A new Section 17A of Republic Act No. 7160 is hereby provided to read as follows:

“SECTION 17A. Basic Services and Facilities; Public Roads.- THE MASTER PLAN, DESIGN, CONSTRUCTION AND MAINTENANCE OF NATIONAL ROADS AND BRIDGES SHALL BE THE RESPONSIBILITY OF THE NATIONAL GOVERNMENT ACTING THROUGH ITS IMPLEMENTING AGENCY. THE MASTER PLAN, DESIGN, CONSTRUCTION AND MAINTENANCE OF CITY, MUNICIPAL, PROVINCIAL AND BARANGAY ROADS AND BRIDGES, SHALL BE THE RESPONSIBILITY OF THE CITY, MUNICIPAL, PROVINCIAL AND BARANGAY GOVERNMENTS RESPECTIVELY, PROVIDED THAT THE MASTER PLAN AND DESIGN OF LOCAL ROADS AND BRIDGES SHALL IN ALL CASES BE CONSISTENT WITH THE MASTER PLAN AND DESIGN OF NATIONAL ROADS AND BRIDGES. IN CASE OF IRRECONCILABLE INCONSISTENCY, THE NATIONAL GOVERNMENT THROUGH ITS IMPLEMENTING AGENCY SHALL BE EMPOWERED TO SUSPEND OR ENJOIN ON TEMPORARY OR PERMANENT BASIS THE IMPLEMENTATION BY THE LOCAL GOVERNMENT CONCERNED OF THE LOCAL MASTER PLAN AND DESIGN.

“THE MANAGEMENT OF TRAFFIC IN NATIONAL ROADS AND BRIDGES SHALL BE THE RESPONSIBILITY OF THE NATIONAL GOVERNMENT ACTING THROUGH ITS IMPLEMENTING AGENCY, WHILE THE MANAGEMENT OF TRAFFIC IN CITY, MUNICIPAL, PROVINCIAL AND BARANGAY ROADS AND BRIDGES, SHALL BE THE RESPONSIBILITY OF THE CITY, MUNICIPAL, PROVINCIAL AND BARANGAY GOVERNMENTS RESPECTIVELY. IF IN ANY CASE THE TRAFFIC IN LOCAL ROADS AND BRIDGES AFFECT THE TRAFFIC IN NATIONAL ROADS AND BRIDGES, THE NATIONAL GOVERNMENT THROUGH ITS IMPLEMENTING AGENCY SHALL BE EMPOWERED TO ASSUME ON TEMPORARY OR PERMANENT BASIS, THE MANAGEMENT OF TRAFFIC IN THE LOCAL ROADS AND BRIDGES CONCERNED UPON WRITTEN NOTICE TO THE LOCAL CHIEF EXECUTIVE.

“THE NATIONAL GOVERNMENT THROUGH ITS IMPLEMENTING AGENCY MAY IN THE NATIONAL INTEREST DEVOLVE TO THE LOCAL GOVERNMENT, SUBJECT TO ACCEPTANCE BY THE LOCAL GOVERNMENT SANGGUNIAN CONCERNED, THE RESPONSIBILITY TO CONSTRUCT AND MAINTAIN NATIONAL ROADS AND BRIDGES. NO DEVOLUTION MADE AND ACCEPTED SHALL BE IRREVOCABLE. THE DEVOLUTION OF THE RESPONSIBILITY TO CONSTRUCT AND MAINTAIN NATIONAL ROADS AND BRIDGES MAY IN THE NATIONAL INTEREST BE SUSPENDED OR REVOKED AT ANY TIME BY THE NATIONAL GOVERNMENT THROUGH ITS IMPLEMENTING AGENCY.

“THE NATIONAL GOVERNMENT THROUGH ITS IMPLEMENTING AGENCY MAY IN THE NATIONAL INTEREST DEVOLVE TO THE LOCAL GOVERNMENT, SUBJECT TO ACCEPTANCE BY THE LOCAL GOVERNMENT SANGGUNIAN CONCERNED, THE RESPONSIBILITY TO MANAGE TRAFFIC IN NATIONAL ROADS AND BRIDGES. NO DEVOLUTION MADE AND ACCEPTED SHALL BE IRREVOCABLE. THE DEVOLUTION OF THE RESPONSIBILITY TO MANAGE TRAFFIC IN NATIONAL ROADS AND BRIDGES MAY IN THE NATIONAL INTEREST BE SUSPENDED OR REVOKED AT ANY TIME BY THE NATIONAL GOVERNMENT THROUGH ITS IMPLEMENTING AGENCY. 

“THE NATIONAL GOVERNMENT THROUGH THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS SHALL IN ACCORDANCE WITH THE ADMINISTRATIVE CODE, BE EMPOWERED TO CLASSIFY ROADS AND HIGHWAYS INTO NATIONAL, CITY, MUNICIPAL, PROVINCIAL AND BARANGAY ROADS AND HIGHWAYS, BASED ON OBJECTIVE CRITERIA, AND PROVIDE OR AUTHORIZE THE CONVERSION OF ROADS AND HIGHWAYS FROM ONE CATEGORY TO ANOTHER.”


PART II. Consolidation of local government powers in cities and municipalities


SECTION 4. Subsection 17(b) of Republic Act No. 7160 is hereby amended to read as follows:

[CLAUSE OPTION 1: SUBSECTION 17(B)] 

“SECTION 17. Basic Services and Facilities.- ... (B) SUCH BASIC SERVICES AND FACILITIES FOR THE PROVINCES, CITIES, MUNICIPALITIES AND BARANGAYS, SHALL TO THE EXTENT APPLICABLE, INCLUDE BUT NOT BE LIMITED TO THOSE UNDER (1)(i)-(1)(viii), (2)(i)-(2)(xii), (3)(i)-(3)(xii), AND (4)(i)-(4)(j). SPECIFIC REFERENCES TO THE BARANGAY, MUNICIPALITY, PROVINCE AND CITY UNDER 17(B)(1), 17(B)(2), 17(B)(3), AND 17(B)(4) RESPECTIVELY ARE DELETED.

“EACH CITY AND MUNICIPALITY MAY BY ORDINANCE APPROVED BY A MAJORITY OF ALL THE MEMBERS OF ITS SANGGUNIAN, LIMIT THE POWER OF ITS COMPONENT BARANGAYS TO PROVIDE BASIC SERVICES AND FACILITIES, TO PROMOTE LOCAL INTEREST, OR TO AVOID THE DUPLICATION OF FUNCTIONS OR CONFLICT OF JURISDICTION.

“EACH CITY AND MUNICIPALITY MAY BY ORDINANCE APPROVED  BY A MAJORITY OF ALL THE MEMBERS OF ITS SANGGUNIAN, LIMIT THE POWER OF ITS MOTHER PROVINCE, TO PROVIDE BASIC SERVICES AND FACILITIES IN THE CITY OR MUNICIPALITY, TO PROMOTE LOCAL INTEREST, OR TO AVOID THE DUPLICATION OF FUNCTIONS OR CONFLICT OF JURISDICTION. 

“ANY LIMITATION OF THE POWER OF THE COMPONENT BARANGAYS OR MOTHER PROVINCE, TO PROVIDE BASIC SERVICES AND FACILITIES, MAY IN THE LOCAL INTEREST BE WITHDRAWN BY THE CITY OR MUNICIPALITY BY MAJORITY VOTE OF ALL THE MEMBERS OF THE CITY OR MUNICIPAL SANGGUNIAN CONCERNED.”

[CLAUSE OPTION 2: SUBSECTION 17(B)] 

“SECTION 17. Basic Services and Facilities.- ... (B) SUCH BASIC SERVICES AND FACILITIES FOR THE CITIES AND MUNICIPALITIES, SHALL TO THE EXTENT APPLICABLE, INCLUDE BUT NOT BE LIMITED TO THOSE UNDER (1)(i)-(1)(viii), (2)(i)-(2)(xii), (3)(i)-(3)(xii), AND (4)(i)-(4)(j). SPECIFIC REFERENCES TO THE BARANGAY, MUNICIPALITY, PROVINCE AND CITY UNDER 17(B)(1), 17(B)(2), 17(B)(3), AND 17(B)(4) RESPECTIVELY ARE DELETED.

“EACH CITY AND MUNICIPALITY MAY BY ORDINANCE APPROVED BY A MAJORITY OF ALL THE MEMBERS OF ITS SANGGUNIAN, DEVOLVE TO ITS COMPONENT BARANGAYS THE POWER TO PROVIDE BASIC SERVICES AND FACILITIES WITHIN THE RESPECTIVE BARANGAYS, TO PROMOTE LOCAL INTEREST.

“EACH CITY AND MUNICIPALITY MAY BY ORDINANCE APPROVED  BY A MAJORITY OF ALL THE MEMBERS OF ITS SANGGUNIAN, DEVOLVE TO ITS MOTHER PROVINCE, THE POWER TO PROVIDE BASIC SERVICES  WITHIN THE CITY OR MUNICIPALITY, TO PROMOTE LOCAL INTEREST.

“THE POWER TO PROVIDE BASIC SERVICES AND FACILITIES DEVOLVED TO COMPONENT BARANGAYS OR MOTHER PROVINCE, MAY BE WITHDRAWN BY THE CITY OR MUNICIPALITY BY MAJORITY VOTE OF ALL THE MEMBERS OF THE CITY OR MUNICIPAL SANGGUNIAN CONCERNED, TO PROMOTE LOCAL INTEREST, OR TO AVOID THE DUPLICATION OF FUNCTIONS OR CONFLICT OF JURISDICTION.”

[(b) Such basic services and facilities include, but are not limited to, the following:
(1) For Barangay:
(i) Agricultural support services which include planting materials distribution system and operation of farm produce collection and buying stations;
(ii) Health and social welfare services which include maintenance of barangay health center and day-care center;
(iii) Services and facilities related to general hygiene and sanitation, beautification, and solid waste collection;
(iv) Maintenance of katarungang pambarangay;
(v) Maintenance of barangay roads and bridges and water supply systems;
(vi) Infrastructure facilities such as multi-purpose hall, multipurpose pavement, plaza, sports center, and other similar facilities;
(vii) Information and reading center; and
(viii) Satellite or public market, where viable;
(2) For a Municipality:
(i) Extension and on-site research services and facilities related to agriculture and fishery activities which include dispersal of livestock and poultry, fingerlings, and other seedling materials for aquaculture; palay, corn, and vegetable seed farms; medicinal plant gardens; fruit tree, coconut, and other kinds of seedling nurseries; demonstration farms; quality control of copra and improvement and development of local distribution channels, preferably through cooperatives; interbarangay irrigation system; water and soil resource utilization and conservation projects; and enforcement of fishery laws in municipal waters including the conservation of mangroves;
(ii) Pursuant to national policies and subject to supervision, control and review of the DENR, implementation of community-based forestry projects which include integrated social forestry programs and similar projects; management and control of communal forests with an area not exceeding fifty (50) square kilometers; establishment of tree parks, greenbelts, and similar forest development projects;
(iii) Subject to the provisions of Title Five, Book I of this Code, health services which include the implementation of programs and projects on primary health care, maternal and child care, and communicable and non-communicable disease control services, access to secondary and tertiary health services; purchase of medicines, medical supplies, and equipment needed to carry out the services herein enumerated;
(iv) Social welfare services which include programs and projects on child and youth welfare, family and community welfare, women's welfare, welfare of the elderly and disabled persons; community-based rehabilitation programs for vagrants, beggars, street children, scavengers, juvenile delinquents, and victims of drug abuse; livelihood and other pro-poor projects; nutrition services; and family planning services;
(v) Information services which include investments and job placement information systems, tax and marketing information systems, and maintenance of a public library;
(vi) Solid waste disposal system or environmental management system and services or facilities related to general hygiene and sanitation;
(vii) Municipal buildings, cultural centers, public parks including freedom parks, playgrounds, and other sports facilities and equipment, and other similar facilities;
(viii) Infrastructure facilities intended primarily to service the needs of the residents of the municipality and which are funded out of municipal funds including but not limited to, municipal roads and bridges; school buildings and other facilities for public elementary and secondary schools; clinics, health centers and other health facilities necessary to carry out health services; communal irrigation, small water impounding projects and other similar projects; fish ports; artesian wells, spring development, rainwater collectors and water supply systems; seawalls, dikes, drainage and sewerage, and flood control; traffic signals and road signs; and similar facilities;
(ix) Public markets, slaughterhouses and other municipal enterprises;
(x) Public cemetery;
(xi) Tourism facilities and other tourist attractions, including the acquisition of equipment, regulation and supervision of business concessions, and security services for such facilities; and
(xii) Sites for police and fire stations and substations and municipal jail;
(3) For a Province:
(i) Agricultural extension and on-site research services and facilities which include the prevention and control of plant and animal pests and diseases; dairy farms, livestock markets, animal breeding stations, and artificial insemination centers; and assistance in the organization of farmers and fishermen's cooperatives, and other collective organizations, as well as the transfer of appropriate technology;
(ii) Industrial research and development services, as well as the transfer of appropriate technology;
(iii) Pursuant to national policies and subject to supervision, control and review of the DENR, enforcement of forestry laws limited to community-based forestry projects, pollution control law, small-scale mining law, and other laws on the protection of the environment; and mini-hydroelectric projects for local purposes;
(iv) Subject to the provisions of Title Five, Book I of this Code, health services which include hospitals and other tertiary health services;
(v) Social welfare services which include programs and projects on rebel returnees and evacuees; relief operations; and population development services;
(vi) Provincial buildings, provincial jails, freedom parks and other public assembly areas and similar facilities;
(vii) Infrastructure facilities intended to service the needs of the residence of the province and which are funded out of provincial funds including, but not limited to, provincial roads and bridges; inter-municipal waterworks, drainage and sewerage, flood control, and irrigation systems; reclamation projects; and similar facilities;
(viii) Programs and projects for low-cost housing and other mass dwellings, except those funded by the Social Security System (SSS), Government Service Insurance System p. 172 (GSIS), and the Home Development Mutual Fund (HDMF): Provided, That national funds for these programs and projects shall be equitably allocated among the regions in proportion to the ratio of the homeless to the population;
(ix) Investment support services, including access to credit financing;
(x) Upgrading and modernization of tax information and collection services through the use of computer hardware and software and other means;
(xi) Inter-municipal telecommunications services, subject to national policy guidelines; and
(xii) Tourism development and promotion programs;
(4) For a City:
All the services and facilities of the municipality and province, and in addition thereto, the following:
(1) Adequate communication and transportation facilities;]

SECTION 5. Section 48 of Republic Act No. 7160 is hereby amended to read as follows:

“SECTION 48. Local Legislative Power.- LOCAL LEGISLATIVE POWER SHALL BE EXERCISED BY THE SANGGUNIANG PANGLUNGSOD FOR THE CITY, AND THE SANGGUNIANG BAYAN FOR THE MUNICIPALITY. 

“LOCAL LEGISLATIVE POWER SHALL ALSO BE EXERCISED BY THE SANGGUNIANG PANLALAWIGAN FOR THE PROVINCE, AND SANGGUNIANG BARANGAY FOR THE BARANGAY, SUBJECT TO THE LIMITATIONS ON THE LEGISLATIVE POWER OF THE SAID POLITICAL SUBDIVISIONS UNDER THIS CODE, INCLUDING BUT NOT LIMITED TO THE LIMITATIONS THAT MAY BE IMPOSED BY THE CITY OR MUNICIPALITY CONCERNED.”

[Local Legislative Power. - Local legislative power shall be exercised by the sangguniang panlalawigan for the province; the sangguniang panlungsod for the city; the sangguniang bayan for the municipality; and the sangguniang barangay for the barangay.]

SECTION 6. A new Section 48A of Republic Act No. 7160 is hereby provided to read as follows:

“SECTION 48A. Local Legislative Power; Franchises; Land Transportation.- SUBJECT TO THE GUIDELINES AND IMPLEMENTING RULES AND REGULATIONS ISSUED IN THE NATIONAL INTEREST BY THE IMPLEMENTING AGENCY OF THE NATIONAL GOVERNMENT, THE CITY SANGGUNIAN AND MUNICIPAL SANGGUNIAN RESPECTIVELY SHALL IN THE LOCAL INTEREST BE EMPOWERED TO REGULATE OR RESTRICT, AUTHORIZE, LIMIT, PROHIBIT ON TEMPORARY OR PERMANENT BASIS,THE OPERATION OF PUBLIC UTILITY MOTORCYCLES, SCOOTERS AND MINI-VANS OR MINI-TRUCKS, AND GRANT FRANCHISES FOR THE OPERATION THEREOF WITHIN THE TERRITORIAL JURISDICTION OF THE CITY AND MUNICIPALITY CONCERNED. UNLESS OTHERWISE PROVIDED BY GOVERNMENT REGULATIONS, MOTORCYCLES AND SCOOTERS SHALL BE OF TWO, THREE OR FOUR WHEELS, AND MINI-VANS OR MINI-TRUCKS SHALL BE PASSENGER VEHICLES WITH CARRYING CAPACITY OF NOT MORE THAN SEVEN (7) PASSENGERS EXCLUDING THE OPERATOR.

“ANY FRANCHISE APPROVED BY THE CITY SANGGUNIAN OR MUNICIPAL SANGGUNIAN SHALL INCLUDE WITHIN ITS COVERAGE ONLY LOCAL GOVERNMENT ROADS, AND SHALL EXCLUDE NATIONAL GOVERNMENT ROADS EXCEPT TO CROSS SUCH ROADS AT INTERSECTIONS. NO LOCAL FRANCHISE SHALL BE ISSUED ALLOWING THE FRANCHISED VEHICLE TO TRAVERSE NATIONAL ROADS, EXCEPT TO CROSS SUCH ROADS AT INTERSECTIONS.

“REGULATIONS ISSUED BY THE NATIONAL GOVERNMENT OR THE CITY GOVERNMENT OR MUNICIPAL GOVERNMENT CONCERNED MAY PRESCRIBE COMPLIANCE WITH MANUFACTURER'S SPECIFICATIONS ON BODY SIZE AND MAXIMUM LOAD, AS WELL AS CAPACITY TO COMPLY WITH MINIMUM AND MAXIMUM SPEEDS AS MAY BE APPLICABLE, AMONG OTHER ASPECTS OF VEHICLE OPERATION TO PROMOTE SPEEDY BUT SAFE TRANSPORTATION. NO REGULATION SHALL BE ISSUED ALLOWING MORE PASSENGERS OR MORE FREIGHT OR CARGO IN THE VEHICLE THAN ITS REGISTERED CARRYING CAPACITY.” 

SECTION 7. A new Section 48B of Republic Act No. 7160 is hereby amended to read as follows:

“SECTION 48B. Local Legislative Power; Franchises; Water Transportation.- SUBJECT TO THE GUIDELINES AND IMPLEMENTING RULES AND REGULATIONS ISSUED IN THE NATIONAL INTEREST BY THE IMPLEMENTING AGENCY OF THE NATIONAL GOVERNMENT, THE CITY SANGGUNIAN AND MUNICIPAL SANGGUNIAN RESPECTIVELY SHALL IN THE LOCAL INTEREST BE EMPOWERED TO REGULATE OR RESTRICT, AUTHORIZE, LIMIT, PROHIBIT ON TEMPORARY OR PERMANENT BASIS,THE OPERATION OF PUBLIC UTILITY BOATS, OUTRIGGER BOATS, CATAMARANS, AND TRIMARANS, AND GRANT FRANCHISES FOR THE OPERATION THEREOF WITHIN THE MUNICIPAL WATERS OF THE CITY AND MUNICIPALITY CONCERNED. UNLESS OTHERWISE PROVIDED BY GOVERNMENT REGULATIONS, BOATS SHALL REFER TO WATER VESSELS WITH CARRYING CAPACITY OF NOT MORE THAN SEVEN (7) PASSENGERS EXCLUDING THE OPERATOR.

“REGULATIONS ISSUED BY THE NATIONAL GOVERNMENT OR THE CITY GOVERNMENT OR MUNICIPAL GOVERNMENT CONCERNED MAY PRESCRIBE COMPLIANCE WITH MANUFACTURER'S SPECIFICATIONS ON BODY SIZE AND MAXIMUM LOAD, AS WELL AS CAPACITY TO COMPLY WITH MINIMUM AND MAXIMUM SPEEDS AS MAY BE APPLICABLE, AMONG OTHER ASPECTS OF VEHICLE OPERATION TO PROMOTE SPEEDY BUT SAFE TRANSPORTATION. NO REGULATION SHALL BE ISSUED ALLOWING MORE PASSENGERS OR MORE FREIGHT OR CARGO IN THE VEHICLE THAN ITS REGISTERED CARRYING CAPACITY.” 

SECTION 8. A new Section 48C of Republic Act No. 7160 is hereby amended to read as follows:

“SECTION 48C. Local Legislative Power; Franchises; Community Radio.- SUBJECT TO THE GUIDELINES AND IMPLEMENTING RULES AND REGULATIONS ISSUED IN THE NATIONAL INTEREST BY THE IMPLEMENTING AGENCY OF THE NATIONAL GOVERNMENT, THE CITY SANGGUNIAN AND MUNICIPAL SANGGUNIAN RESPECTIVELY SHALL IN THE LOCAL INTEREST BE EMPOWERED TO REGULATE OR RESTRICT, AUTHORIZE, LIMIT, PROHIBIT ON TEMPORARY OR PERMANENT BASIS,THE OPERATION OF PUBLIC UTILITY COMMUNITY RADIOS, AND GRANT FRANCHISES FOR THE OPERATION THEREOF WITHIN THE TERRITORIAL JURISDICTION OF THE CITY AND MUNICIPALITY CONCERNED. UNLESS OTHERWISE PROVIDED BY NATIONAL GOVERNMENT REGULATIONS, MUNICIPAL RADIO STATIONS SHALL HAVE A MAXIMUM RANGE OF TEN (10) KILOMETERS, WITH TRANSMITTERS HAVING A MAXIMUM EFFECTIVE RADIATED POWER (ERP) OF 100 WATTS UNLESS THE TERRAIN WARRANTS A HIGHER ERP TO COVER THE MAXIMUM RANGE, AND ANTENNA WITH MAXIMUM HEIGHT OF THIRTY (30) METERS AND MINIMUM HEIGHT OF FIFTEEN (15) METERS.”

[NOTE: See Community Radio Stations in India. http://edaa.in/Transmission_%20Power.php.]

SECTION 9. Section 129 of Republic Act No. 7160 is hereby amended to read as follows:

“SECTION 129. Power to Create Sources of Revenue.- EACH CITY AND MUNICIPALITY SHALL EXERCISE ITS POWER TO CREATE ITS OWN SOURCES OF REVENUE AND TO LEVY TAXES, FEES, AND CHARGES SUBJECT TO THE PROVISIONS HEREIN, CONSISTENT WITH THE BASIC POLICY OF LOCAL AUTONOMY. 

“EACH CITY AND MUNICIPALITY MAY BY ORDINANCE APPROVED BY A MAJORITY OF ALL THE MEMBERS OF ITS SANGGUNIAN, DEVOLVE TO ITS COMPONENT BARANGAYS THE POWER TO LEVY TAXES, FEES AND CHARGES OVER ACTIVITIES CONDUCTED AND/OR PROPERTIES LOCATED WITHIN THE RESPECTIVE BARANGAYS, TO PROMOTE LOCAL INTEREST.

“EACH CITY AND MUNICIPALITY MAY BY ORDINANCE APPROVED  BY A MAJORITY OF ALL THE MEMBERS OF ITS SANGGUNIAN, DEVOLVE TO ITS MOTHER PROVINCE, THE POWER TO LEVY TAXES, FEES AND CHARGES OVER ACTIVITIES CONDUCTED AND/OR PROPERTIES LOCATED WITHIN THE CITY OR MUNICIPALITY, TO PROMOTE LOCAL INTEREST. 

“UPON DEVOLUTION OF THE POWER TO LEVY TAXES, FEES AND CHARGES, THE CITY OR MUNICIPALITY SHALL IPSO FACTO LOSE THE POWER TO LEVY SUCH TAXES, FEES AND CHARGES SIMILAR TO THOSE DEVOLVED, IN ORDER TO AVOID DOUBLE TAXATION OR REGULATION.

“THE POWER TO LEVY TAXES DEVOLVED TO BARANGAYS OR PROVINCES MAY IN THE LOCAL INTEREST BE REVERTED BACK TO THE CITY OR MUNICIPALITY BY MAJORITY VOTE OF ALL THE MEMBERS OF THE CITY OR MUNICIPAL SANGGUNIAN CONCERNED.”

[Power to Create Sources of Revenue. - Each local government unit shall exercise its power to create its own sources of revenue and to levy taxes, fees, and charges subject to the provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local government units.]

SECTION 10. A new Section 129A of Republic Act No. 7160 is hereby provided to read as follows:

“SECTION 129A. Distribution of Proceeds.- THE PROCEEDS OF TAXES, FEES AND CHARGED LEVIED BY THE CITY OR MUNICIPALITY SHALL BE DISTRIBUTED AS FOLLOWS:

“(A) TWENTY FIVE PERCENT (25%) SHALL ACCRUE TO THE GENERAL FUND OF THE MOTHER PROVINCE;

“(B) FIFTY PERCENT (50%) SHALL ACCRUE TO THE GENERAL FUND OF THE CITY OR MUNICIPALITY; IF A CITY OR MUNICIPALITY IS NOT UNDER ANY MOTHER PROVINCE, THE ALLOTMENT FOR THE LATTER SHALL ALSO ACCRUE TO THE CITY OR MUNICIPALITY CONCERNED;

“(C) TWENTY FIVE PERCENT (25%) SHALL ACCRUE TO THE GENERAL FUND OF THE COMPONENT BARANGAYS.

“THE SHARE OF EACH COMPONENT BARANGAY SHALL BE DETERMINED ON THE BASIS OF THE FOLLOWING FORMULA:

(i) FIFTY PERCENT (50%) BASED ON POPULATION;

(ii) TWENTY-FIVE PERCENT (25%) BASED ON LAND AREA;

(iii) TWENTY-FIVE PERCENT (25%) BASED ON EQUAL SHARING.
      
“(D) THE SHARE OF THE PROVINCE AND OF EACH BARANGAY SHALL BE RELEASED, WITHOUT NEED OF ANY FURTHER ACTION, DIRECTLY TO THE PROVINCIAL AND BARANGAY TREASURER, ON A QUARTERLY BASIS WITHIN FIVE (5) DAYS AFTER THE END OF EACH QUARTER, AND SHALL NOT BE SUBJECT TO ANY LIEN OR HOLDBACK FOR WHATEVER PURPOSE.”

SECTION 11. A new Section 130A of Republic Act No. 7160 is hereby provided to read as follows:

“SECTION 130A. Fundamental Principles; Natural Resources.- ... THE EXPLOITATION OR DEVELOPMENT OF NATURAL RESOURCES, INCLUDING BUT NOT LIMITED TO THE EXTRACTION OF ORDINARY STONES, SAND, GRAVEL, EARTH AND OTHER QUARRY RESOURCES UNDER SECTION 138, AND TO FISHING AND OTHER FISHERY ACTIVITIES IN MUNICIPAL WATERS AND OPERATION OF FISHING VESSELS UNDER SECTION 149, SHALL BE SUBJECT TO THE GUIDELINES AND IMPLEMENTING RULES AND REGULATIONS ISSUED IN THE NATIONAL INTEREST BY THE IMPLEMENTING AGENCY OF THE NATIONAL GOVERNMENT. THE IMPLEMENTING AGENCY OF THE NATIONAL GOVERNMENT SHALL IN THE NATIONAL INTEREST BE EMPOWERED TO REGULATE OR RESTRICT, AUTHORIZE, LIMIT, PROHIBIT ON TEMPORARY OR PERMANENT BASIS, THE EXPLOITATION OR DEVELOPMENT OF NATURAL RESOURCES, IN AREAS UNDER THE TERRITORIAL JURISDICTION OF THE LOCAL GOVERNMENT UNITS.” 

SECTION 12. Section 134 of Republic Act No. 7160 is hereby amended to read as follows:

“SECTION 134. Scope of Taxing Powers.- EACH CITY AND MUNICIPALITY SHALL BE EMPOWERED TO LEVY TAXES, FEES AND CHARGES UNDER SECS. 135 (TAX ON TRANSFER OF REAL PROPERTY), 136 (TAX ON PRINTING AND PUBLICATION BUSINESS), 137 (FRANCHISE TAX), 138 (TAX ON SAND AND GRAVEL), 139 (PROFESSIONAL TAX), 140 (AMUSEMENT TAX), 141 (TAX ON TRUCKS), 143 (TAX ON BUSINESS), 147 (FEES AND CHARGES), 148 (FEES FOR WEIGHTS AND MEASURES), 149 (FISHERY RENTALS), 152 (TAX ON STORES OR RETAILERS), AND 156 (COMMUNITY TAX). A CITY OR MUNICIPALITY SHALL NOT IMPOSE TAXES, FEES AND CHARGES IN EXCESS OF THE MAXIMUM RATES FIXED UNDER THE CITED SECTIONS.

“PROVINCES AND BARANGAYS SHALL NOT BE EMPOWERED TO LEVY TAXES, FEES AND CHARGES, EXCEPT THOSE DEVOLVED TO THE SAID LOCAL GOVERNMENT UNITS BY THE CITIES OR MUNICIPALITIES CONCERNED UNDER THIS CODE, IN ORDER TO AVOID DOUBLE TAXATION OR REGULATION. SECTIONS 135, 142, 151 AND 152 SHALL BE AMENDED ACCORDINGLY.”

[Scope of Taxing Powers. - Except as otherwise provided in this Code, the province may levy only the taxes, fees, and charges as provided in this Article.]
SECTION 13. Section 232 of Republic Act No. 7160 is hereby amended to read as follows:

“SECTION 232. Power to Levy Real Property Tax.- A CITY OR MUNICIPALITY MAY LEVY AN ANNUAL AD VALOREM TAX ON REAL PROPERTY SUCH AS LAND, BUILDING, MACHINERY, AND OTHER IMPROVEMENT NOT HEREINAFTER SPECIFICALLY EXEMPTED. 

“THE MOTHER PROVINCE AND THE COMPONENT BARANGAYS, SHALL NOT BE EMPOWERED TO LEVY A SIMILAR TAX, IN ORDER TO AVOID DOUBLE TAXATION.”

[Power to Levy Real Property Tax. - A province or city or a municipality within the Metropolitan Manila Area my levy an annual ad valorem tax on real property such as land, building, machinery, and other improvement not hereinafter specifically exempted.]
SECTION 14. Section 233 of Republic Act No. 7160 is hereby amended to read as follows:
[CLAUSE OPTION 1: SECTION 233]

“SECTION 233. Rates of Levy.- A CITY OR MUNICIPALITY SHALL FIX A UNIFORM RATE OF BASIC REAL PROPERTY TAX APPLICABLE TO THEIR RESPECTIVE LOCALITIES AT THE RATE NOT EXCEEDING ONE PERCENT (1%) OF THE ASSESSED VALUE REAL PROPERTY.”

[CLAUSE OPTION 2: SECTION 233]

“SECTION 233. Rates of Levy.- A CITY OR MUNICIPALITY SHALL FIX A UNIFORM RATE OF BASIC REAL PROPERTY TAX APPLICABLE TO THEIR RESPECTIVE LOCALITIES AT THE RATE NOT EXCEEDING TWO PERCENT (2%) OF THE ASSESSED VALUE REAL PROPERTY.”

[Rates of Levy. - A province or city or a municipality within the Metropolitan Manila Area shall fix a uniform rate of basic real property tax applicable to their respective localities as follows:
(a) In the case of a province, at the rate not exceeding one percent (1%) of the assessed value of real property; and
(b) In the case of a city or a municipality within the Metropolitan Manila Area, at the rate not exceeding two percent (2%) of the assessed value of real property.]

SECTION 15. Sections 235, 236, 238 and 239 of Republic Act No. 7160 are hereby amended by retaining references to the city or municipality and deleting references to the province.

SECTION 16. Section 271 of Republic Act No. 7160 is hereby amended to read as follows:

“SECTION 271. Distribution of Proceeds.- THE PROCEEDS OF THE BASIC REAL PROPERTY TAX, INCLUDING INTEREST THEREON, AND THE PROCEEDS FROM THE USE, LEASE OR DISPOSITION, SALE OR REDEMPTION OF PROPERTY ACQUIRED AT A PUBLIC AUCTION, IN ACCORDANCE WITH THE PROVISIONS OF THIS TITLE, BY THE CITY OR MUNICIPALITY SHALL BE DISTRIBUTED AS FOLLOWS:

“(A) TWENTY FIVE PERCENT (25%) SHALL ACCRUE TO THE GENERAL FUND OF THE MOTHER PROVINCE;

“(B) FIFTY PERCENT (50%) SHALL ACCRUE TO THE GENERAL FUND OF THE CITY OR MUNICIPALITY; IF A CITY OR MUNICIPALITY IS NOT UNDER ANY PROVINCE, THE ALLOTMENT FOR THE LATTER SHALL ALSO ACCRUE TO THE CITY OR MUNICIPALITY CONCERNED;

“(C) TWENTY FIVE PERCENT (25%) SHALL ACCRUE TO THE GENERAL FUND OF THE BARANGAYS; FIFTY PERCENT (50%) OF THE BARANGAY PROCEEDS SHALL ACCRUE TO THE BARANGAY WHERE THE PROPERTY IS LOCATED; THE OTHER FIFTY PERCENT (50%) OF THE BARANGAY PROCEEDS SHALL BE ACCRUE EQUALLY TO ALL OTHER COMPONENT BARANGAYS OF THE CITY OR MUNICIPALITY.
      
“(D) THE SHARE OF THE PROVINCE AND OF EACH BARANGAY SHALL BE RELEASED, WITHOUT NEED OF ANY FURTHER ACTION, DIRECTLY TO THE PROVINCIAL AND BARANGAY TREASURER, ON A QUARTERLY BASIS WITHIN FIVE (5) DAYS AFTER THE END OF EACH QUARTER, AND SHALL NOT BE SUBJECT TO ANY LIEN OR HOLDBACK FOR WHATEVER PURPOSE.”

[Distribution of Proceeds. - The proceeds of the basic real property tax, including interest thereon, and proceeds from the use, lease or disposition, sale or redemption of property acquired at a public auction in accordance with the provisions of this Title by the province or city or a municipality within the Metropolitan Manila Area shall be distributed as follows:
(a) In the case of provinces:
(1) Province - Thirty-five percent (35%) shall accrue to the general fund;
(2) Municipality - Forty percent (40%) to the general fund of the municipality where the property is located; and
(3) Barangay - Twenty-five percent (25%) shall accrue to the barangay where the property is located.
(b) In the case of cities:
(1) City - Seventy percent (70%) shall accrue to the general fund of the city; and
(2) Thirty percent (30%) shall be distributed among the component barangays of the cities where the property is located in the following manner:
(i) Fifty percent (50%) shall accrue to the barangay where the property is located;
(ii) Fifty percent (50%) shall accrue equally to all component barangays of the city; and
(c) In the case of a municipality within the Metropolitan Manila Area:
(1) Metropolitan Manila Authority - Thirty-five percent (35%) shall accrue to the general fund of the authority;
(2) Municipality - Thirty-five percent (35% shall accrue to the general fund of the municipality where the property is located;
(3) Barangays - Thirty percent (30%) shall be distributed among the component barangays of the municipality where the property is located in the following manner:
(i) Fifty percent (50%) shall accrue to the barangay where the property is located;
(ii) Fifty percent (50%) shall accrue equally to all component barangays of the municipality.
(d) The share of each barangay shall be released, without need of any further action, directly to the barangay treasurer on a quarterly basis within five (5) days after the end of each quarter and shall not be subject to any lien or holdback for whatever purpose.]

SECTION 17. Section 285 of Republic Act No. 7160 is hereby amended to read as follows:

“SECTION 285. Allocation to Local Government Units.- THE SHARE OF LOCAL GOVERNMENT UNITS IN THE INTERNAL REVENUE ALLOTMENTS SHALL BE ALLOCATED IN THE FOLLOWING MANNER:

“(A) TWENTY FIVE PERCENT (25%) SHALL ACCRUE TO THE PROVINCES;

“(B) FIFTY PERCENT (50%) SHALL ACCRUE TO THE CITIES AND MUNICIPALITIES; IF A CITY OR MUNICIPALITY IS NOT UNDER ANY PROVINCE, THE ALLOTMENT FOR THE LATTER SHALL ALSO ACCRUE TO THE CITY OR MUNICIPALITY CONCERNED; AND

“(C) TWENTY FIVE PERCENT (25%) SHALL ACCRUE TO THE BARANGAYS.

“THE SHARE OF EACH PROVINCE, CITY, MUNICIPALITY AND BARANGAY SHALL BE DETERMINED ON THE BASIS OF THE FOLLOWING FORMULA:

“(A) FIFTY PERCENT (50%) BASED ON POPULATION;

“(B) TWENTY-FIVE PERCENT (25%) BASED ON LAND AREA;

“(C) TWENTY-FIVE PERCENT (25%) BASED ON EQUAL SHARING.”

[Allocation to Local Government Units. - The share of local government units in the internal revenue allotment shall be collected in the following manner:
(a) Provinces - Twenty-three percent (23%);
(b) Cities - Twenty-three percent (23%);
(c) Municipalities - Thirty-four percent (34%); and
(d) Barangays - Twenty percent (20%)
Provided, however, That the share of each province, city, and municipality shall be determined on the basis of the following formula:
(a) Population - Fifty percent (50%);
(b) Land Area - Twenty-five percent (25%); and
(c) Equal sharing - Twenty-five percent (25%)
Provided, further, That the share of each barangay with a population of not less than one hundred (100) inhabitants shall not be less than Eighty thousand (P80,000.00) per annum chargeable against the twenty percent (20%) share of the barangay from the internal revenue allotment, and the balance to be allocated on the basis of the following formula:
(a) On the first year of the effectivity of this Code:
(1) Population - Forty percent (40%); and
(2) Equal sharing - Sixty percent (60%)
(b) On the second year:
(1) Population - Fifty percent (50%); and
(2) Equal sharing - Fifty percent (50%)
(c) On the third year and thereafter:
(1) Population - Sixty percent (60%); and
(2) Equal sharing - Forty percent (40%).
Provided, finally, That the financial requirements of barangays created by local government units after the effectivity of this Code shall be the responsibility of the local government unit concerned.]

SECTION 18. Sections 289, 290, 291 and 292 of Republic Act No. 7160 are hereby amended by applying the percentage allocation of shares in the internal revenue allotment under Section 285, to the allocation of shares of the local government units to the national wealth.


PART III. Consolidation of legislative and executive powers in local SANGGUNIAN


SECTION 19. Section 41 of Republic Act No. 7160 is hereby amended to read as follows:

“SECTION 41. Manner of Election AND APPOINTMENT. - (A) THE PROVINCIAL GOVERNOR, CITY MAYOR, MUNICIPAL MAYOR AND PUNONG BARANGAY SHALL BE ELECTED BY MAJORITY VOTE OF ALL THE MEMBERS OF THE LOCAL SANGGUNIAN CONCERNED FROM AMONG THEMSELVES. THEY SHALL SERVE BASED ON THE TRUST AND CONFIDENCE OF THE LOCAL SANGGUNIAN. THEY MAY BE REMOVED AT ANY TIME FOR LOSS OF CONFIDENCE UPON THE VOTE OF AT LEAST TWO-THIRDS OF ALL THE MEMBERS OF THE LOCAL SANGGUNIAN.

“(B) THE REGULAR MEMBERS OF THE CITY AND MUNICIPAL SANGGUNIAN SHALL BE ELECTED BY DISTRICT, AS MAY BE PROVIDED FOR BY IMPLEMENTING RULES AND REGULATIONS ISSUED BY THE SECRETARY OF INTERIOR AND LOCAL GOVERNMENT TO PROMOTE FAIR AND EQUITABLE REPRESENTATION. THE CITY OR MUNICIPAL SANGGUNIAN MAY ALSO HAVE ELECTIVE SECTORAL MEMBERS, AS MAY BE PROVIDED FOR BY IMPLEMENTING RULES AND REGLATIONS ISSUED BY THE SECRETARY OF INTERIOR LOCAL GOVERNMENT TO PROMOTE SECTORAL INTEREST.

“THE CITY MAYORS AND MUNICIPAL MAYORS WITHIN THE TERRITORIAL JURISDICTION OF A PROVINCE SHALL BE THE REGULAR EX OFFICIO MEMBERS OF THE PROVINCIAL SANGGUNIAN CONCERNED. THE PROVINCIAL SANGGUNIAN MAY ALSO HAVE ELECTIVE SECTORAL MEMBERS, AS MAY BE PROVIDED FOR BY IMPLEMENTING RULES AND REGULATIONS ISSUED BY THE SECRETARY OF INTERIOR AND LOCAL GOVERNMENT TO PROMOTE SECTORAL INTEREST.

“THE REGULAR MEMBERS OF THE BARANGAY SANGGUNIAN SHALL BE APPOINTED BY THE MAYOR OF THE MOTHER CITY OR MUNICIPALITY. THE MAYOR MAY ALSO APPOINT SECTORAL MEMBERS OF THE BARANGAY SANGGUNIAN, AS MAY BE PROVIDED FOR BY IMPLEMENTING RULES AND REGULATIONS ISSUED BY THE SECRETARY OF INTERIOR AND LOCAL GOVERNMENT TO PROMOTE SECTORAL INTEREST.

“THE REGULAR MEMBERS OF THE BARANGAY SANGGUNIAN SHALL BE APPOINTED BY THE MAYOR OF THE MOTHER CITY OR MUNICIPALITY FROM A LIST OF AT LEAST THREE NOMINEES FOR EVERY VACANCY , PREPARED BY THE BARANGAY BASED HOMEOWNERS’ ASSOCIATION/S REGISTERED AND IN GOOD STANDING UNDER REPUBLIC ACT NO. 9904 KNOWN AS THE “MAGNA CARTA FOR HOMEOWNERS AND HOMEOWNERS’ ASSOCIATIONS”, THE BARANGAY BASED CONDOMINIUM CORPORATION/S REGISTERED AND IN GOOD STANDING UNDER REPUBLIC ACT NO. 4726 KNOWN AS “THE CONDOMINIUM ACT”, AS AMENDED, AND/OR THE BARANGAY BASED COMMUNITY ASSOCIATION/S REGISTERED AND IN GOOD STANDING WITH THE SECURITIES AND EXCHANGE COMMISSION OR  THE DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT. THE DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT MAY IN THE LOCAL INTEREST ISSUE IMPLEMENTING RULES AND REGULATIONS TO PROVIDE FOR THE REGISTRATION AND GRANT OF LEGAL PERSONALITY TO COMMUNITY ASSOCIATIONS OF BARANGAY RESIDENTS. THE SECRETARY OF INTERIOR AND LOCAL GOVERNMENT SHALL ISSUE IMPLEMENTING RULES AND REGULATIONS GOVERNING THE PREPARATION OF LISTS OF NOMINEES TO PROMOTE THE INTERESTS OF THE COMMUNITY.

“(C) IF THE CITY OR MUNICIPAL MAYOR IS ELECTED GOVERNOR BY THE PROVINCIAL SANGGUNIAN, THE CITY OR MUNICIPAL SANGGUNIAN CONCERNED SHALL ELECT A DEPUTY MAYOR FROM AMONG ITS MEMBERS BY MAJORITY VOTE OF ALL THE SANGGUNIAN MEMBERS. THE DEPUTY MAYOR SHALL DISCHARGE THE FUNCTIONS OF THE CITY OR MUNICIPAL MAYOR WHO HAS BEEN ELECTED PROVINCIAL GOVERNOR. 

“(D) THE PROVINCIAL, CITY, MUNICIPAL AND BARANGAY SANGGUNIAN MAY BY MAJORITY VOTE OF ALL ITS RESPECTIVE MEMBERS CREATE, RESTRUCTURE OR ABOLISH SUCH OFFICES IT MAY DEEM NECESSARY OR BENEFICIAL FOR THE DISCHARGE OF LOCAL FUNCTIONS. THE SANGGUNIAN CONCERNED MAY PRESCRIBE THE POWERS, FUNCTIONS, QUALIFICATIONS, MANNER OF ELECTION OR APPPOINTMENT, TERM, COMPENSATION AND OTHER RELATED MATTERS, OF SUCH LOCAL OFFICES.” 

[Manner of Election. - (a) The governor, vice-governor, city mayor, city vice-mayor, municipal mayor, municipal vice-mayor, and punong barangay shall be elected at large in their respective units by the qualified voters therein. However, the sangguniang kabataan chairman for each barangay shall be elected by the registered voters of the katipunan ng kabataan, as provided in this Code.
(b) The regular members of the sangguniang panlalawigan, sangguniang panlungsod, and sangguniang bayan shall be elected by district, as may be provided for by law. Sangguniang barangay members shall be elected at large. The presidents of the leagues of sanggunian members of component cities and municipalities shall serve as ex officio members of the sangguniang panlalawigan concerned. The presidents of the "liga ng mga barangay and the pederasyon ng mga sangguniang kabataan" elected by their respective chapters, as provided in this Code, shall serve as ex officio members of the sangguniang panlalawigan, sangguniang panlungsod, and sangguniang bayan.
(c) In addition thereto, there shall be one (1) sectoral representative from the women, one (1) from the workers, and one (1) from any of the following sectors: the urban poor, indigenous cultural communities, disabled persons, or any other sector as may be determined by the sanggunian concerned within ninety (90) days prior to the holding of the next local elections as may be provided for by law. The COMELEC shall promulgate the rules and regulations to effectively provide for the election of such sectoral representatives.]

SECTION 20. Section 44 regarding vacancies and succession is deleted.

SECTION 21. Section 46 regarding vacancies and succession is deleted.

SECTION 22. Sections 423-439 regarding the sangguniang kabataan is deleted.

SECTION 23. Section 445 regarding the municipal vice-mayor is deleted. 

SECTION 24. Section 456 regarding the city vice-mayor is deleted.

SECTION 25. Section 466 regarding the provincial vice-governor is deleted.


PART IV. Extension of terms of local legislators and executives


SECTION 26. Section 43 of Republic Act No. 7160 is hereby amended to read as follows:

SECTION 43. Term of Office.- (A) THE TERM OF OFFICE OF ALL MEMBERS OF THE LOCAL SANGGUNIAN SHALL BE FIVE (5) YEARS. [The term of office of all local elective officials elected after the effectivity of this Code shall be three (3) years, starting from noon of June 30, 1992 or such date as may be provided for by law, except that of elective barangay officials: Provided, That all local officials first elected during the local elections immediately following the ratification of the 1987 Constitution shall serve until noon of June 30, 1992.] 

(B) NO MEMBER OF ANY LOCAL SANGGUNIAN SHALL SERVE FOR MORE THAN THREE (3) CONSECUTIVE TERMS IN THE SAME POSITION. VOLUNTARY RENUNCIATION OF THE OFFICE FOR ANY LENGTH OF TIME SHALL NOT BE CONSIDERED AS AN INTERRUPTION IN THE TERM OF SERVICE OF THE SANGGUNIAN MEMBER. [No local elective official shall serve for more than three (3) consecutive terms in the same position. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of service for the full term for which the elective official concerned was elected.]
[(c) The term of office of barangay officials and members of the sangguniang kabataan shall be for three (3) years, which shall begin after the regular election of barangay officials on the second Monday of May 1994.]

SECTION 27. Rules and Regulations. -  The Secretary of Interior and Local Government shall issue the rules and regulations to implement the provisions of this Act.

SECTION 28. Repeal. - All laws, presidential decrees, executive orders, letters of instruction, proclamations, rules and regulations, and other issuances, or any part thereof, including the provisions of Republic Act No. 7160 also known as the “Local Government Code of 1991”, as amended, which are inconsistent with or contrary to the provisions of this Act, are hereby repealed, amended or modified accordingly.

SECTION 29. Effectivity. - This Act shall take effect fifteen (15) days after its complete publication in the Official Gazette, or in at least two (2) national newspapers of general circulation, except as otherwise provided herein. 

The amendments provided under Parts III and IV hereof shall apply prospectively to local government officials elected after this Act takes effect.


Approved: 


HON. JUAN MAKABAYAN
Senator

Draft Bill to Modernize Inland Transportation

Republic of the Philippines
SENATE OF THE PHILIPPINES
Pasay City


EIGHTEENTH CONGRESS
First Regular Session


SENATE BILL No. ____



Introduced by HON. JUAN MAKABAYAN
_______________________________________________________________________


AN ACT TO RATIONALIZE AND MODERNIZE INLAND TRANSPORTATION


EXPLANATORY NOTE


This bill seeks to rationalize and modernize inland transportation.

Notably, the number of motor vehicles and commuters continuously rise every year, even as there remains a huge backlog in transportation infrastructure. 

While piecemeal solutions, like the number coding and truck ban, provide some short term relief, these measures by themselves can never solve the traffic problem that continues to grow and worsen through the years.

To effectively address the problem of motor vehicle traffic congestion, a comprehensive traffic management plan is necessary. The plan will need to cover all the industries and government agencies that are directly and indirectly related to land transportation. It will need to provide an integrated solution over the short term, the medium term and the long term. 

In this regard, the bill seeks to maximize the use of the public road network, re-fleet public transportation with modern utility vehicles, promote mass transportation, develop inland water and air transportation, and integrate related government functions.

In view of the foregoing, the immediate approval of this measure is earnestly requested.






Republic of the Philippines
SENATE OF THE PHILIPPINES
Pasay City


EIGHTEENTH CONGRESS
First Regular Session


SENATE BILL No. ____



Introduced by HON. JUAN MAKABAYAN
_______________________________________________________________________


AN ACT TO RATIONALIZE AND MODERNIZE INLAND TRANSPORTATION


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

SECTION 1. No Parking on National Roads.- All types of vehicles shall be banned from parking along all national public roads at all times or for 24 hours a day and 7 days a week, except in cases of emergency and government sponsored or recognized social events, to maximize the use of the existing national road network for land transportation. The public road network is designed and intended for moving motor vehicles and not for vehicle parking. The Department of Transportation shall be responsible for implementing the ban along national public roads.

SECTION 2. No Parking on Local Roads.- All types of vehicles shall be banned from parking along all local public roads for 16 hours a day and 7 days a week, except during non-working legal holidays, or in cases of emergency and government sponsored or recognized social events, to maximize the use of the existing local road network for land transportation. Unless the City or Municipal council provides a different daily schedule in consideration of local conditions, the 16 hour ban on parking along local public roads shall be from 6 a.m. to 10 p.m. daily. The public road network is designed and intended for moving motor vehicles and not for vehicle parking. The City and Municipality shall be responsible for implementing the ban along local public roads.

SECTION 3. Motorcycles on Outer Lanes.- All motorcycles and similar type of vehicles shall be allowed to traverse only the outermost lane of multiple lanes, or of the outer half of a singular lane, along all national and local public roads for 24 hours a day and 7 days a week, subject to reasonable exceptions depending on traffic conditions. Motorcycles that swerve through road lanes, while other motor vehicles move straight forward, endanger public safety. The Department of Transportation shall be responsible for implementing the outer lane rule along national public roads. The City and Municipality shall be responsible for implementing the outer lane rule along local public roads.

SECTION 4. No Tricycles on National Roads.- Pending the gradual phase-out and refleeting of all public utility tricycles as provided herein, all public utility tricycles shall be banned along all national public roads for 24 hours a day and 7 days a week, except to cross said national roads at intersections with local public roads. Slow moving tricycles that traverse public roads slow down the entire traffic flow. The Department of Transportation shall be responsible for implementing the ban along national public roads.
SECTION 5. Tricycles on Outer Lanes.- Pending the gradual phase-out and refleeting of all public utility tricycles as provided herein, all public utility tricycles shall be allowed to traverse only the outermost lane of multiple lanes, or of the outer half of a singular lane, along all local public roads for 24 hours a day and 7 days a week. Slow moving tricycles that traverse public roads, occupying the center of the lane and preventing vehicles in the rear from overtaking, slow down the entire traffic flow. The City and Municipality shall be responsible for implementing the outer lane rule along local public roads.

SECTION 6. Loading and Unloading Areas.- All public utility buses, minibuses, vans, Asian utility vehicles (AUVs), jeepneys, multicabs and other public utility vehicles, shall be allowed to stop, load and unload passengers and cargo, only at designated loading and unloading areas along all national and local public roads for 24 hours a day and 7 days a week. Unlimited multiple stops by public utility vehicles along the public road network impede traffic flow. The Department of Transportation shall be responsible for the designation of loading and unloading areas along national roads. The City and Municipality shall be responsible for the designation of loading and unloading areas along local public roads.

SECTION 7. Road Obstructions.- All unauthorized structures, constructions and obstructions along all national and local public roads, and along all inland public waterways, shall be deemed a public nuisance and removed accordingly. The Department of Public Works and Highways shall be responsible for the removal of all obstructions along national public roads and inland public waterways. The City and Municipality shall be responsible for the removal of all obstructions along local public roads. The Department of Public Works and Highways may in consideration of local interest, consistent with the national interest, provide for the devolution to the City and Municipality, of the responsibility to remove obstructions along inland public waterways. Obstructions along the public road network impede traffic flow.

SECTION 8. Public Road Network.- Unless the President in the national interest determines otherwise, the development and operation of the public road network shall adopt the following order of priorities: 

8.1. First priority shall be given to the repair and maintenance of the existing public road networks, the restoration and rebuilding of the dilapidated public roadworks (such as shoulders, sidewalks, culverts and aqueducts), the widening of intersections of the existing public road networks, and the acquisition of or easement over existing private subdivision roads (that provide critical relief for traffic congestion), to maximize the use of limited public funds allocated for infrastructure by maximizing the use of the existing national, local, public and private road networks;

[NOTE: See Administrative Code of 1987, Exec. Order No. 292, Book III, Section 12. Local Government Code of 1991, Rep. Act No. 7160, as amended, Section 19. Subdivision and Condominium Buyer’s Protective Decree, Pres. Dec. No. 957, as amended by Pres. Dec. No. 1216, Section 31.]

8.2. Second priority shall be given to the construction of new national and local road networks in conflict areas where armed rebels are known to operate, to the full extent practicable, taking into consideration the safety and security of the construction personnel and equipment; and 

8.3. Third priority shall be given to the widening of the existing road networks apart from the intersections, including the construction of flyovers, skyways or tunnels, unless the project is financed by the private sector under a public-private partnership which may proceed immediately without regard to this priority scheme.

The Department of Transportation and the Department of Public Works and Highways shall in the national interest and in accordance with their respective mandates, implement the development and operation of the public road network. 

SECTION 9. Public Railway System.- Unless the President in the national interest determines otherwise, the development and operation of the public railway system shall adopt the following order of priorities: 

9.1. First priority shall be given to the repair and maintenance of tracks and carriages of the existing railway system;

9.2. Second priority shall be given to the acquisition of additional carriages for the existing railway system; and 

9.3. Third priority shall be given to new rail and carriage systems, to maximize the use of limited public funds for infrastructure, by maximizing the use of the existing rail and carriage systems.

The Department of Transportation and the Department of Public Works and Highways shall in the national interest and in accordance with their respective mandates, implement the development and operation of the public railway system.

SECTION 10. Bus Rapid Transit.- Unless the President in the national interest determines otherwise, a bus rapid transit (BRT) system shall be developed and operated to replace the existing bus system in urban areas, to maximize the use of the existing national public road network. The development shall include Epifanio delos Santos Avenue (EDSA) and other bus routes in Metro Manila, as well as the national roads used as bus routes in urban areas of other regions. Along EDSA, the BRT shall use the innermost lane adjoining the Metropolitan Rail Transit (MRT), and use the same stations of the MRT for loading and unloading passengers, after the stations are expanded to accommodate the additional flow of passengers from the BRT. The BRT system may be pursued under the public-private-partnership concept (PPP). The existing bus operators may be granted reasonable opportunity to merge or consolidate under a single entity and bid for the BRT system. The Department of Transportation shall in the national interest implement the adoption of the BRT system.

SECTION 11. Refleeting Tricycles.- All public utility tricycles shall be phased-out and refleeted with multicabs and other similar or smaller public utility vehicles, for faster transportation and more efficient use of road space. The phase-out shall not exceed three (3) years which is the minimum period to fully depreciate a new tricycle unit or to earn a reasonable return of investments in such unit. The refleeting may be pursued under the PPP, where the private proponent will buy the public utility tricycles, and sell to or exchange with the tricycle operators the replacement multicabs or other vehicles. The Department of Interior and Local Government shall in the national interest implement the phase out and refleeting. The Department of Interior and Local Government may in consideration of local interest, consistent with the national interest, devolve to the City and Municipality the implementation of the phase out and refleeting. 

SECTION 12. Refleeting Jeepneys.- All public utility jeepneys shall be phased-out and refleeted with minibuses, vans, AUVs, multicabs and other similar or smaller public utility vehicles, for faster transportation and more efficient use of road space. The phase-out shall not exceed three (3) years which is the minimum period to fully depreciate a new jeepney or to earn a reasonable return of investments in such unit. The refleeting may be pursued under the PPP, where the private proponent will buy the public utility jeepneys, and sell to or exchange with the jeepney operators replacement minibuses, vans, AUVs, multicabs or other vehicles. The Department of Transportation shall in the national interest implement the phase out and refleeting. The Department of Transportation may in consideration of local interest, consistent with the national interest, devolve to the City and Municipality the implementation of the phase out and refleeting with multicabs and other similar or smaller public utility vehicles.

SECTION 13. Slow Moving Vehicles.- All private and public motor vehicles, except heavy equipment, military and police vehicles, that are incapable of a cruising speed of at least 60 kilometers per hour at full load, shall be banned along all national and local public roads for 24 hours a day and 7 days a week. Such motor vehicles shall be granted a grace period to continue the use of the public road network, provided that the grace period shall not exceed three (3) years, which is the minimum period to fully depreciate a new motor vehicle or to earn a reasonable return of investments in such unit. Slow moving vehicles impede traffic flow. The Department of Transportation shall be responsible for implementing the ban along national public roads. The City and Municipality shall be responsible for implementing the ban along local public roads.

SECTION 14. Build of Jeepneys.- The design and build of new cabs and jeepneys by local motor shops, fabricators and manufacturers, shall comply with the standard specifications of the multicab, AUV, van and minibus, as provided by the Department of Transportation, unless specific authority for deviation based on justifiable purposes is secured from the said Department. A justifiable purpose may include the design and build of limited units for culture tourism, or for experiments in science and technology.

The Department of Trade and Industry shall regulate the operation of motor shops, fabricators and manufacturers to ensure compliance with the standard specifications. Underpowered, oversized, and slow-moving vehicles with large turning circles impede traffic flow.

SECTION 15. Rebuild of Jeepneys.- The redesign, rebuild and remanufacture of old cabs and jeepneys by local motor shops, fabricators and manufacturers, shall comply with the standard specifications of the multicab, AUV, van and minibus, as provided by the Department of Transportation, unless specific authority for deviation based on justifiable purposes is secured from the said Department. A justifiable purpose may include the design and build of limited units for culture tourism, or for experiments in science and technology.

The Department of Trade and Industry shall regulate the operation of motor shops, fabricators and manufacturers to ensure compliance with the standard specifications. Underpowered, oversized, and slow-moving vehicles with large turning circles impede traffic flow.

SECTION 16. Prototype Vehicles.- Department of Transportation and the Department of Science and Technology shall design and build prototypes of motor vehicles (i.e. 2-man quadcycles, 4-man mini-cars, 6-man mini-jeeps, 8-man mini-vans, 12-man vans, 16-man vans, etc.), inland or coastal water craft, unmanned aerial vehicles (drones) and other transport vehicles, that are aerodynamic and/or hydrodynamic in design, simple to construct, easy to maintain, cheap to build and make efficient use of limited road space, waterways and air corridors. For this purpose, the Department of Science and Technology may engage the services of government and private universities, to augment its organic resources. The technical plans and detailed design of the prototypes shall be made available to the public at reasonable cost to facilitate mass production of the vehicles by local shops, fabricators and manufacturers.

SECTION 17. Land Terminals.- The Department of Transportation shall consolidate multiple private terminals for buses, minibuses, vans, AUVs, jeepneys and multicabs under a single land transportation terminal at a designated entry and exit point for a specific area, with smaller satellite terminals for short routes within the metropolis, city or municipality. The operation by each public utility bus operator of its own permanent terminal located within highly populated areas, and the operation by groups of public utility jeepneys of unauthorized temporary terminals usually at or near intersection areas, aggravate traffic congestion. The land transportation terminal may be pursued under the PPP. The existing public utility operators may be granted reasonable opportunity to merge or consolidate under a single entity and bid for the land transportation terminals.

SECTION 18. Ports and Terminals.- The Department of Transportation shall integrate or link by convenient access the land transportation terminals with the existing seaports and airports, to maximize the use of all public ports by facilitating the transfer of passengers or cargo from one port to another.

SECTION 19. Traffic Management Council.- The Department of Transportation shall establish a traffic management council at the national and regional level. The Department of Interior and Local Government shall establish a traffic management council at the city and municipality levels. 

The traffic management council at the national and regional levels shall be comprised of representatives from the Department of Transportation (DOTr), Department of Public Works and Highways (DPWH), Department of Trade and Industry (DTI), Department of Interior and Local Government (DILG), Land Transportation Office (LTO), Land Transportation and Franchising Regulatory Board (LTFRB), Toll Regulatory Board (TRB), Maritime Industry Authority (MARINA), Civil Aviation Authority of the Philippines (CAAP), Civil Aeronautics Board (CAB), Philippine National Police (PNP), and other agencies with land transportation traffic related functions, including the Metropolitan Manila Development Authority (MMDA) for the Metro Manila area. At the City and Municipal levels, the council shall be comprised of all the foregoing, and the Mayor concerned.

The representative of the Department of Transportation shall be the ex-officio chair of the council at the national and regional levels, except for the Metro Manila area where the head of the MMDA shall be the ex-officio chair. The mayor shall be the ex-officio chair of the council at the city or municipal level.

SECTION 20. Management of National Roads.- The Department of Transportation shall centralize in the national government through the national and regional traffic management councils, the traffic management over all national public roads. The use of national roads is recognized as one of national interest that overrides local interest. Traffic management shall include but not be limited to the number coding scheme (that bans travel by motor vehicles according to its plate number) and the truck ban scheme (that bans travel by trucks during specified hours of the day and during specified days of the week). Local government units shall be prohibited from imposing its own traffic management schemes, such as number coding and truck ban, along national roads that traverse through the territories of the local units. 

SECTION 21. Inland Water Transportation.- The Department of Transportation shall promote and regulate the use of public utility watercraft within inland public waterways, to complement the public utility vehicles that ply the public road network, and provide faster but safer public transportation. The MARINA shall franchise the deployment and use of public utility watercraft within inland public waterways. The Department of Transportation may in consideration of local interest, consistent with the national interest, provide for the devolution from MARINA to the City and Municipality, of the authority to franchise the deployment and use of public utility watercraft within inland public waterways. The operation of public utility watercraft shall in all cases be subject to the implementing rules and regulations of the MARINA.

SECTION 22. Inland Air Transportation.- The Department of Transportation shall promote and regulate the use of the unmanned aerial vehicle (UAV) as public utility aircraft within inland low level air corridors, to complement the public utility vehicles that ply the public road network, and provide faster but safer public transportation. The Civil Aeronautics Board shall franchise the deployment and use of the UAV as public utility aircraft within inland low level air corridors. The Department of Transportation may in consideration of local interest, consistent with the national interest, provide for the devolution from the CAB to the City and Municipality, of the authority to franchise the deployment and use of the UAV as public utility aircraft within inland low level air corridors. The operation of the UAV as public utility aircraft shall in all cases be subject to the implementing rules and regulations of the Civil Aviation Authority of the Philippines.

SECTION 23. Rules and Regulations.- The heads of the cited departments, agencies and local government units shall issue the rules and regulations to implement the provisions of this Act.

SECTION 24. Repeal.- All laws, presidential decrees, executive orders, letters of instruction, proclamations, rules and regulations, and other issuances, or any part thereof, which are inconsistent with or contrary to the provisions of this Act, are hereby repealed, amended or modified accordingly.

SECTION 25. Effectivity.- This Act shall take effect fifteen (15) days after its complete publication in the Official Gazette, or in at least two (2) national newspapers of general circulation.


Approved: 


HON. JUAN MAKABAYAN
Senator

Draft Bill to Liberalize Foreign Investments

Republic of the Philippines
SENATE OF THE PHILIPPINES
Pasay City


EIGHTEENTH CONGRESS
First Regular Session


SENATE BILL No. ____



Introduced by HON. JUAN MAKABAYAN
_______________________________________________________________________


AN ACT TO LIBERALIZE FOREIGN INVESTMENTS, 
REQUIRE RECIPROCITY IN  FOREIGN PROFESSIONAL PRACTICE, 
AND ESTABLISH A FOREIGN INVESTMENT COUNCIL


EXPLANATORY NOTE


This bill seeks to provide for the omnibus liberalization of foreign investments, require reciprocity in professional practice, and establish a foreign investment council, to promote job creation and consumer price reduction, while protecting the basic securities of the State.

The omnibus lifting of statutory limitations on foreign investments aims to benefit of the middle class and the masa class, by promoting the entry and expansion of foreign owned or affiliated enterprises, that increase the demand for local jobs, as well as the supply of local goods and services.

Notably, the artificial legal barriers benefit only the monopolists and oligopolists of the mayaman class, at the expense of the majority of the workers and consumers, who are consequently deprived of in-country job opportunities and cheaper goods and services.

The bill also promotes the transfer technologies, access to foreign markets and economic growth, by lifting limitations on joint ventures or other commercial arrangements, between Filipino companies and foreign owned or affiliated enterprises.

Finally, the bill seeks to loosen the stranglehold of entrenched cartels over government procurement, by enabling the entry of independent foreign players that may then disrupt rigged biddings and other corrupt practices.

The unfounded fear of foreign domination is raised ironically by both the local elitist  capitalists and their arch-enemy the local communists. This obsolete mindset properly belongs to the colonial times decades and centuries years ago, when foreign investors were protected by a foreign army operating under a foreign government established here in the Philippines. The foreign army and foreign government have long gone. What remains today is the Philippine government and its armed forces to protect the national interests of the Filipino people.

The millions of Overseas Filipino Workers (OFWs) who work for foreign employers in a foreign land under a foreign government, is testament that foreign sources of income benefit the Philippine economy. For the protection and security of the Filipino workers, it is certainly preferred that these foreign employers come instead to the Philippines as foreign investors and employers.

The opening of professional practice, subject to reciprocity, seeks to augment the liberalization of foreign investments, because by experience foreign investors ordinarily come with their own foreign consultants. Nonetheless, since the opening is subject to reciprocity, the measure also opens wider fields of practice for Filipino professionals who time and again have proven to be competent, reliable and innovative by global standards.

Nonetheless, the promotion of foreign investments must be balanced with the protection of the basic securities of the State, including external security, internal security, food security, water security, energy security, environment security, resource security (natural, human, industrial) and cyber security. The balance may be accomplished by establishing a Foreign Investment Council. The blanket limitations on foreign investments are then replaced with sparing government intervention in limited cases where the foreign transaction actually threatens the basic securities of the State.

In view of the foregoing, the immediate approval of this measure is earnestly requested.








Republic of the Philippines
SENATE OF THE PHILIPPINES
Pasay City


EIGHTEENTH CONGRESS
First Regular Session


SENATE BILL No. ____



Introduced by HON. JUAN MAKABAYAN
_______________________________________________________________________


AN ACT TO LIBERALIZE FOREIGN INVESTMENTS, 
REQUIRE RECIPROCITY IN  FOREIGN PROFESSIONAL PRACTICE, AND ESTABLISH A FOREIGN INVESTMENT COUNCIL 


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

Section 1. Title.- This Act shall be known as the “Foreign Investments Liberalization Act of __________”.

Section 2.  Declaration of Policy.- It is the policy of the State to attract, promote and welcome productive investments from foreign individuals, partnerships, corporations, and governments, including their political subdivisions, in activities which significantly contribute to national industrialization and socio-economic development to the extent that foreign investment is allowed in such activity by the Constitution. Foreign investments shall be encouraged to create jobs (through the establishment of new business enterprises or expansion of existing business enterprises), reduce consumer prices (through the increase in supply of goods and services), transfer technologies, expand access to foreign markets, promote economic growth, strengthen free competition and enhance efficiency. Foreign investments shall also be employed to pursue anti-corruption through systemic change (by facilitating the entry of independent competitors vis-a-vis the existing cartels of government suppliers).

The artificial legal barriers to foreign investments benefit only the few elite monopolists and oligopolists, at the expense of the majority of the workers and consumers, who are unfairly deprived of job opportunities and cheaper goods and services, as a natural consequence of the investment limitations. Pursuant to the Constitutional principle of social justice, the matter of foreign investment policy must hereby be resolved in favor Filipino workers and consumers and their basic needs for jobs and cheaper consumer goods and services, as against the proprietary interests of the Filipino capitalists who have the adequate resources to protect themselves.

Section 3. Omnibus Lifting of Nationality Requirements.- Except as otherwise provided in this Act, and subject to the provisions of the Constitution, all local and foreign investors shall be subject to the equal protection of the laws.

All statutory laws and implementing rules and regulations that impose nationality requirements or foreign investment limitations on various activities and enterprises are hereby repealed, except as otherwise provided in this Act, and subject to the provisions of the Constitution.

Section 4. Limitation of Scope.- Except as otherwise provided in this Act, the omnibus lifting of nationality requirements or foreign investment limitations shall not apply to Micro Enterprises under Republic Act No. 9501, Small-Scale Mining under Republic Act No. 7076, and Public Lands under Commonwealth Act No. 141.


PROFESSIONAL PRACTICE


Section 5. Board Examinations.- Board examinations in the Philippines for all professions regulated by the Professional Regulation Commission shall be open to citizens of the Philippines, and to citizens, subjects or nationals of a foreign state with diplomatic relations with the Philippines, provided that such foreign state grants citizens of the Philippines substantially similar privileges.

Apart from the mandatory requirement of reciprocity, all foreign applicants for board examinations shall comply with the applicable requirements of the Professional Regulation Commission.

Section 6. Professional Practice.- Professional practice in the Philippines for all professions regulated by the Professional Regulation Commission shall be open to citizens of the Philippines, and to citizens, subjects or nationals of a foreign state with diplomatic relations with the Philippines, provided that such foreign state grants citizens of the Philippines substantially similar privileges.

Apart from the mandatory requirement of reciprocity, all foreign applicants for professional license to practice shall comply with the applicable requirements of the Professional Regulation Commission.

Section 7. Criminology.- Section 12 of Republic Act No. 6506 is hereby amended to read as follows:

“Sec. 12. Qualifications for Examination. — Any person applying for examination and for a certificate, shall, prior to admission to examination, establish to the satisfaction of the Board that:
  (a) He is at least eighteen years of age and a citizen of the Philippines, OR A CITIZEN OR SUBJECT OF A FOREIGN STATE THAT PERMITS FILIPINOS TO TAKE BOARD EXAMINATIONS AND PRACTICE CRIMINOLOGY WITHIN ITS TERRITORIES;
  (b) He must be a person of good moral character, as certified to by at least three persons of good standing in the community wherein he resides;
(c) He must not have been convicted of a crime involving moral turpitude; and
  (d) He has graduated in Criminology from a school, college or institute recognized by the Government after completing a four-year resident collegiate course leading to the degree of Bachelor of Science in Criminology (B.S. Crim.): provided, that holders of Bachelor of Laws degree may, within five years after the approval of this Act, take this examination after completing at least ninety-four (94) units Criminology, Law Enforcement, Police Science and Penology subjects.”

Section 8. Merchant Marine.- Section 14 of Republic Act No. 8544 is hereby amended to read as follows:

“Sec. 14. Qualifications of Applicant for Examination. – Every applicant for examination shall establish the following requisites:
[a] He is a citizen of the Philippines, OR A CITIZEN OR SUBJECT OF A FOREIGN STATE THAT PERMITS FILIPINOS TO TAKE BOARD EXAMINATIONS AND PRACTICE MERCHANT MARINE PROFESSION WITHIN ITS TERRITORIES OR WITH ITS REGISTERED MERCHANT MARINE VESSELS;
[b] He is of good moral character;
[c] He has met standards of medical fitness, particularly with good eyesight and hearing as certified by a Department of Health [DOH] accredited medical institution conducting physical and medical examinations for seafarers
[d] In the case of Marine Deck/Engineer Officer, he must be a graduate of Bachelor of Science in Maritime Transportation or Bachelor of Science in Marine Engineering in a school, academy, institute, college or university duly recognized by the Commission on Higher Education [CHED];
[e] For an applicant taking the examination other than that for the Marine Deck/Engineer Officer, he must have completed a course approved by the appropriate government agency, as defined in the rules and regulations implementing this Act.”
Section 9. Pharmacy.- Section 38 of Republic Act No. 10918 is hereby amended to read as follows:

“Sec. 38. Requirements for the Opening and Operation of Retail Pharmaceutical Outlet or Establishment. – The opening of a retail pharmaceutical outlet or establishment shall be subject to requirements provided for in this Act and the rules and regulations prescribed by the FDA.

  The application for the opening and operation of a retail drug outlet or other similar business establishments shall not be approved, unless applied for by a [Filipino] registered and licensed pharmacist, either as owner or as pharmacist-in-charge, pursuant to the provisions of this Act.

Section 10. Radiologic and X-Ray Technology.- Section 19 of Republic Act No. 7431 is hereby amended to read as follows:

“Sec. 19. Qualifications for Examination. — Every applicant for examination under this Act shall, prior to admission for examination establish to the satisfaction of the Board that he:
(a) Is a Filipino citizen, OR A CITIZEN OR SUBJECT OF A FOREIGN STATE THAT PERMITS FILIPINOS TO TAKE BOARD EXAMINATIONS AND PRACTICE RADIOLOGIC AND X-RAY TECHNOLOGY WITHIN ITS TERRITORIES;
(b) Is of good moral character and has not been convicted of a crime involving moral turpitude; and
(c) Is a holder of a baccalaureate degree in radiologic technology from a school, college or university recognized by the Government if he applies for the radiologic technology examination or is a holder of an associate in radiologic technology diploma from a school, college or university recognized by the Government if he applies for the x-ray technology examination.”


BUSINESS ENTERPRISES


Section 11. Fisheries.- Section 5 of Republic Act No. 8550 is hereby amended to read as follows:

“Sec. 5. Use of Philippine Waters. - The use and exploitation of the fishery and aquatic resources in Philippine waters shall be IN ACCORDANCE WITH THE CONSTITUTION. [reserved exclusively to Filipinos: Provided, however, That] Research and survey activities may be allowed [under strict regulations,] for [purely] research, scientific, technological and educational purposes [that would also benefit Filipino citizens].”

Section 12. Retail Trade.- Section 5 of Republic Act No. 8762 is hereby amended to read as follows:

“Sec. 5. Foreign Equity Participation. - Foreign-owned partnerships, associations and corporation formed and organized under the laws of the Philippines may, upon registration with the Securities and Exchange Commission (SEC) and the Department of Trade and Industry (DTI), or in case of foreign owned single proprietorships, with the DTI, engage or invest in the retail trade business, [subject to the following categories.]
[Category A – Enterprises with paid-up capital of the equivalent in Philippine Pesos of less than Two million five hundred thousand US dollars (US$2,500,000.00) [shall be reserved exclusively for Filipino citizens and corporations wholly owned by Filipino citizens].
[Category B – Enterprises with a minimum paid-up capital of the equivalent in Philippine Pesos of two million five hundred thousand US dollar (US$2,500,000.00) but less than Seven million five hundred thousand US dollars (US$7,500,000.00) [may be wholly owned by foreigners except for the first two (2) years after the effectivity of this Act wherein foreign participation shall be limited to not more than sixty percent (60%) of total equity].
[Category C – Enterprises with a paid-up capital of the equivalent in Philippine Pesos of Seven million five hundred thousand US dollars (US$7,500,000.00), or more [may be wholly owned by foreigners: Provided, however, That in no case shall the investments for establishing a store in vestments for establishing a store in Categories B and C be less than the equivalent in Philippine pesos of Eight hundred thirty thousand US dollars (US$830,000.00)].
[Category D – Enterprises specializing in high-end or luxury products [with a paid-up capital of the equivalent in Philippine Pesos of Two hundred fifty thousand US dollars (US$250,000.00) per store may be wholly owned by foreigners].
“EXCEPT IN MICRO-SIZED DOMESTIC MARKET ENTERPRISES, AS DEFINED UNDER REPUBLIC ACT NO. 9178 AND OTHER LAWS, WHICH SHALL BE RESERVED TO FILIPINO CITIZENS, OR TO CORPORATIONS, PARTNERSHIPS, ASSOCIATIONS OR COOPERATIVES WHOLLY OWNED BY THEM, AND UNLESS OTHERWISE PROVIDED BY REPUBLIC ACT NO. 7042, AS AMENDED, KNOWN AS THE FOREIGN INVESTMENTS ACT.
“The foreign investor shall [be required to] maintain in the Philippines the full amount of the prescribed minimum capital unless the foreign investor has notified the SEC and the DTI of its intention to repatriate its capital and cease operations in the Philippines. [The actual use in Philippine operations of the inwardly remitted minimum capital requirement shall be monitored by the SEC.]
“Failure to maintain the full amount of the prescribed minimum capital prior to notification of the SEC and the DTI, shall subject the foreign investor to penalties or restrictions on any future trading activities/business in the Philippines.”
[“Foreign retail stores shall secure a certification from the Bangko Sentral ng Pilipinas (BSP) and the DTI, which will verify or confirm inward remittance of the minimum required capital investments.”]

Section 13. Retail Trade.- Section 8 of Republic Act No. 8762 is hereby amended to read as follows:

“Sec. 8. Qualification of Foreign Retailers. - No ALIEN OR FOREIGN ENTITY [foreign retailer] shall be allowed to engage OR INVEST in retail trade in the Philippines unless [all the following qualifications are met:]
[(a) A minimum of Two hundred million US dollar (US$200,000,000.00) net worth in its parent corporation for Categories B and C, and Fifty million US dollar (US$50,000,000.00) net worth in its parent corporation for category D;]
[(b) (5) retailing branches or franchises in operation anywhere around the word unless such retailer has at least one (1) store capitalized at a minimum of Twenty-five million US dollars (US$25,000,000.00);]
[(c) Five (5)-year track record in retailing; and]
[d] HE OR SHE IS A [Only] national[s] from, or A juridical ENTITY [entities] formed or incorporated in Countries which allow the entry of Filipino retailers [shall be allowed to engage in retail trade in the Philippines].
“The DTI is hereby authorized to pre-qualify all foreign retailers WHO ARE NATIONALS FROM, OR A JURIDICAL ENTITY FORMED OR INCORPORATED IN COUNTRIES WHICH ALLOW THE ENTRY OF FILIPINO RETAILERS, subject to the provisions of this Act, before they are allowed to conduct business in the Philippine.
[“The DTI shall keep a record of Qualified foreign retailers who may, upon compliance with law, establish retail stores in the Philippines. It shall ensure that parent retail trading company of the foreign investor complies with the qualifications on capitalization and track record prescribed in this section.]
[“The Inter- Agency Committee on Tariff and Related Matters Authority (NEDA) Board shall formulate and regularly update a list of foreign retailers of high-end or luxury goods and render an annual report on the same to Congress.”]

Section 14. Private Securities Agencies.- Section 4 of Republic Act No. 5487 is hereby amended to read as follows:

“Sec. 4. Who May Organize a Security or Watchman Agency. Any Filipino citizen, OR A CITIZEN OR SUBJECT OF A FOREIGN COUNTRY THAT PERMITS FILIPINOS TO ORGANIZE A SECURITY OR WATCHMAN AGENCY WITHIN ITS TERRITORIES, or a corporation, partnership, or association, with a minimum capital of five thousand pesos, one hundred per cent of which is owned and controlled by THE FOREGOING [Filipino citizens], may organize a security or watchman agency: Provided, That no person shall organize or have an interest in, more than one such agency except those which are already existing at the promulgation of this Decree: Provided, further, That the operator or manager of said agency must be at least 25 years of age, a college graduate and/or a commissioned officer in the inactive service of the Armed Forces of the Philippines; of good moral character; having no previous record of any conviction of any crime or offense involving moral turpitude and not suffering from any of the following disqualifications:
(1) Having been dishonorably discharged or separated from the Armed Forces of the Philippines;
(2) Being a mental incompetent;
(3) Being addicted to the use of narcotic drug or drugs; and
(4) Being a habitual drunkard.
For purposes of this Act, elective or appointive government employees who may be called upon on account of the functions of their respective offices in the implementation and enforcement of the provisions of this Act and any person related to such government employees by affinity or consanguinity in the third civil degree shall not hold any interest, directly or indirectly in any security guard or watchman agency. (As amended by Pres. Decree No. 11.)”

Section 15. Cockpits.- Section 5(a) of Presidential Decree No. 449 is hereby amended to read as follows:

Section 5. Cockpits and Cockfighting: In General:
“(a) Ownership, Operation and Management of Cockpits. Only Filipino citizens, OR CITIZENS OR SUBJECTS OF A FOREIGN COUNTRY THAT PERMITS FILIPINOS TO OWN, MANAGE AND OPERATE COCKPITS WITHIN ITS TERRITORIES, AND not otherwise inhibited by existing laws, shall be allowed to own, manage and operate cockpits. [Cooperative capitalization is encouraged.]”

Section 16. Firecrackers and other Pyrotechnic Devices.- Section 5 of Republic Act No. 7183 is hereby amended to read as follows:

“Sec.  5. Qualifications of Manufacturers or Dealers. — A license or permit to manufacture or to deal in wholesale or retail of firecrackers and pyrotechnic devices shall be issued only to: (a) Filipino citizens, OR CITIZENS OR SUBJECTS OF A FOREIGN COUNTRY THAT PERMITS FILIPINOS TO MANUFACTURE OR DEAL IN FIRECRACKERS AND PYROTECHNIC DEVICES WITHIN ITS TERRITORY, WHO ARE of good moral character; or (b) entities duly registered with the Bureau of Commerce of the Department of Trade and Industry (DTI) or the Securities and Exchange Commission (SEC), one hundred per centum (100%) of the capitalization of which is owned by [Filipino citizens] THE FOREGOING.”

Section 17. Private Radio Communications Network.- Section 4 of Republic Act No. 3846 is hereby amended to read as follows:

“Section 4. No radio station license shall be GRANTED OR transferred to any person, firm, company, association or corporation without express authority of the NATIONAL TELECOMMUNICATIONS COMMISSION. [Secretary of Commerce and Communications, and no license shall be granted or transferred to any person who is not a citizen of the United States of America or of the Philippine Islands; or to any firm or company which is not incorporated under the laws of the Philippine Islands or any state or territory of the United States of America; or to any company or corporation twenty percent (20%) of whose capital stock may be voted by aliens or their representatives, or by a foreign government or its representatives, or by any company, corporation, or association organized under the laws of a foreign country.]”

Section 18. Recruitment and Placement.- Article 27 of Presidential Decree No. 442, as amended, known as the “Labor Code of the Philippines”, is hereby repealed.

[Article 27. Citizenship requirement. Only Filipino citizens or corporations, partnerships or entities at least 75 percent of the authorized and voting capital stock of which is owned and controlled by Filipino citizens shall be permitted to participate in the recruitment and placement of workers, locally or overseas.]

Section 19. Government Contracts for Public Works.- Commonwealth Act No. 541 is hereby repealed.

[COMMONHEALTH ACT NO. 541, AN ACT TO REGULATE THE AWARDING OF CONTRACTS FOR THE CONSTRUCTION OR REPAIR OF PUBLIC WORKS

[SECTION 1. All branches, offices, and subdivisions of the Government and all government-owned or controlled companies, authorized to contract and make disbursements for the construction or repair of public works, shall give preference in awarding contracts for such works to Filipino or American contractors and domestic entities when the lowest bid of a domestic bidder is not more than fifteen per centum in excess of the lowest foreign bid: Provided, however, That for the construction of land, air, and seacoast defenses, arsenals, barracks, depots, hangars, landing fields, quarters, hospitals, and all other buildings and structures required for the national defense of the Philippines, no foreign bids shall be allowed.

[SECTION 2. For the purposes of this Act, the following terms shall be taken in the sense herein-below indicated:
(a) The term "Filipino or American contractor" means any citizen of the Philippines or of the United States habitually established in business and engaged in general construction work.
(b) The term "domestic entity" means any corporate body or commercial company duly organized and registered under the laws of the Philippines seventy-five per centum of the capital of which is owned by citizens of the Philippines or of the United States, or by citizens of both countries.
(c) The term "domestic bidder" means any Filipino or American contractor or domestic entity which bids for any public work or work of construction or repair for the Government of the Philippines and/or any of its instrumentalities as enumerated in section one of this Act.
(d) The term "foreign bid" means the bid of any other contractor or entity, not included in Section (a) of this section.

[SECTION 3. This Act shall take effect upon its approval.
Approved: May 26, 1940]

Section 20. Government Infrastructure Contracts.- Section 3(d) of Presidential Decree No. 1594 is hereby repealed.

“Section 3. Prequalification of Prospective Contractors. A prospective contractor may be prequalified to offer his bid or tender for a construction project only if he meets the following requirements.
“(a) Legal Requirements. The prospective contractor must have been licensed as a contractor for the current year pursuant to Republic Act No. 4566, must have paid his privilege tax to practice or engage in the contracting business for the current year, must comply with the Administrative Order No. 66 of the Office of the President of the Philippines, and must comply with other existing pertinent laws, rules and regulations.
“(b) Technical Requirements. The prospective contractor must meet the following technical requirements to be established in accordance with the rules and regulations to be promulgated pursuant to Section 12 of this Decree, to enable him to satisfactorily prosecute the subject project:
1) Competence and experience of the contractor in managing projects similar to the subject project.
2) Competence and experience of the contractor's key personnel to be assigned to the subject project.
3) Availability and commitment of the contractor's equipment to be used for the subject project.
“(c) Financial Requirements. The net worth and liquid assets of the prospective contractor must meet the requirements, to be established in accordance with the rules and regulations to be promulgated pursuant to Section 12 of this Decree, to enable him to satisfactorily execute the subject project. The prospective contractor may be allowed to cover the deficiency in the required net worth through a line of credit fully committed to the subject project by a bank or financial institution acceptable to the Ministry concerned.
[(d) Filipino participation. The Government shall promote maximum participation of eligible Filipino contractors in all construction projects.]”

Section 21.  Government Contracts for Civil Works.- Letter of Instructions No. 630 is hereby amended to read as follows:

“[In order to encourage and promote the development of the domestic construction industry, the] THE following instructions shall be [strictly] observed:
“1.    [Unless specifically authorized by the President of the Philippines in exceptional cases,] Bidding award or negotiations of primarily civil works contracts shall be limited to Filipino individuals, OR TO CITIZENS OR SUBJECTS OF A FOREIGN COUNTRY THAT PERMITS FILIPINOS TO ENTER INTO GOVERNMENT CIVIL WORKS CONTRACTS WITHIN ITS TERRITORIES, and to corporations, partnership, or associations ONE HUNDRED PERCENT (100%) [seventy-five per sent (75%)] of the capital of which is owned by THE FOREGOING. [citizens of the Philippines; and]
[2.    The contracting government entity shall at all times ensure that no individual, corporation, partnership or association shall enter into any contract, agreement, tie-up, or joint venture arrangement with any non-Filipino entity that would circumvent the provisions of the Anti-Dummy laws.]”

Section 22. Special Purpose Vehicle.- Section 4 of Republic Act No. 9182 is hereby amended to read as follows:

“Sec. 4. Special Purpose Vehicle. An SPV shall be organized as stock corporation in accordance with Batas Pambansa Blg. 68, otherwise known as "The Corporation Code of the Philippines" and the rules promulgated by the Commission for purposes of registering the SPV [: Provided, That if the SPV will acquire land, at least sixty percent (60%) of its outstanding capital stock shall be owned by Philippine nationals pursuant to Republic Act No. 7042, as amended, otherwise known as "The Foreign Investment Act"].”

Section 23. Public Utilities.- Section 16(a) of Commonwealth Act No. 146 is hereby amended to read as follows:

“Section 16. Proceedings of the Commission, upon notice and hearing.- The Commission shall have power, upon proper notice and hearing in accordance with the rules and provisions of this Act, subject to the limitations and exceptions mentioned and saving provisions to the contrary:
“(a) To issue certificates which shall be known as certificates of public convenience, authorizing the operation of public service within the Philippines whenever the Commission finds that the operation of the public service proposed and the authorization to do business will promote the public interest in a proper and suitable manner. [Provided, That thereafter, certificates of public convenience and certificates of public convenience and necessity will be granted only to citizens of the Philippines or of the United States or to corporations, co-partnerships, associations or joint-stock companies constituted and organized under the laws of the Philippines; Provided, That sixty per centum of the stock or paid-up capital of any such corporations, co-partnership, association or joint-stock company must belong entirely to citizens of the Philippines or of the United States: Provided, further, That no such certificates shall be issued for a period of more than fifty years.]”

Section 24.  Rice and Corn.- Section 3 of Presidential Decree No. 194 is hereby amended to read as follows:

“Section 3. The National Grains Authority may authorize the alien or business organization mentioned in Section 1 hereof to engage in the rice and/or corn industry, subject to the following conditions:
[a. The National Grains Authority shall certify that there is an urgent need for foreign investment in the undertaking and that the same will not pose a clear and present danger of promoting monopolies or combination in restraint of trade.]
A[b]. The alien, association, corporation or partnership shall have the necessary financial capability and technical competence.
B[c]. The alien, association, corporation or partnership shall submit a development plan acceptable to the National Grains Authority.”

Section 25.  Rice and Corn.- Section 5 of Presidential Decree No. 194 is hereby repealed.

[Section 5. In connection with the foreign equity participation, at least 60% thereof shall be transferred to Filipino citizens over a period to be established by the National Grains Authority at the time of approval of its authority to engage in the industry, or phase out its operation within the same period.]

Section 26. Government Contracts for the Supply of Goods.- Section 1 of Republic Act No. 5183 is hereby amended to read as follows:

“Section 1. No contract either through a public bidding or negotiated contract for the supply to, or procurement by, any government-owned or controlled corporation, company, agency or municipal corporation of materials, equipment, goods and commodities shall be awarded to any contractor or bidder who is not a citizen of the Philippines, OR IS NOT A CITIZEN OR SUBJECT OF A FOREIGN COUNTRY THAT PERMITS FILIPINOS TO SUPPLY GOODS TO ITS GOVERNMENT, or which is not a corporation or association [at least sixty percent] ONE HUNDRED PERCENT (100%) of the capital of which is owned by THE FOREGOING [Filipino citizens, except, as to a citizen, corporation or association of a country the laws or regulations of which grant similar rights or privileges to citizens of the Philippines. In the latter case the Flag Law shall continue to be applicable].”

Section 27.  Deep Sea Commercial Fishing.- Section 27 of Republic Act No. 8550 is hereby amended to read as follows:

“Section 27. Persons Eligible for Commercial Fishing Vessel License. - No commercial fishing vessel license shall be issued UNLESS THE APPLICANT COMPLIES WITH THE PROVISIONS OF THIS ACT [except to citizens of the Philippines, partnerships or to associations, cooperatives or corporations duly registered in the Philippines at least sixty percent (60%) of the capital stock of which is owned by Filipino citizens]. No person to whom a license has been issued shall sell, transfer or assign, directly or indirectly, his stock or interest therein to any person not qualified to hold a license. Any such transfer, sale or assignment shall be null and void and shall not be registered in the books of the association, cooperative or corporation.

“For purposes of commercial fishing, fishing vessels owned by [citizens of the Philippines] INDIVIDUALS, partnerships, corporations, cooperatives or associations qualified under this section shall secure Certificates of Philippine Registry and such other documents as are necessary for fishing operations from the concerned agencies: Provided, That the commercial fishing vessel license shall be valid for a period to be determined by the Department.”

Section 28.  Condominium Units.- Section 5 of Republic Act No. 4726 is hereby amended to read as follows:

“Sec. 5. Any transfer or conveyance of a unit or an apartment, office or store or other space therein, shall include the transfer or conveyance of the undivided interests in the common areas or, in a proper case, the membership or shareholdings in the condominium corporation: Provided, however, That where the common areas in the condominium project are owned by the owners of separate units as co-owners thereof, no condominium unit therein shall be conveyed or transferred to persons other than INDIVIDUALS OR JURIDICAL ENTITIES THAT MAY BE QUALIFIED UNDER THE APPLICABLE PROVISIONS OF THE CONSTITUTION [Filipino citizens, or corporations at least sixty percent of the capital stock of which belong to Filipino citizens, except in cases of hereditary succession]. Where the common areas in a condominium project are held by a corporation, no transfer or conveyance of a unit shall be valid if the concomitant transfer of the appurtenant membership or stockholding in the corporation will cause the alien interest in such corporation to exceed [the limits imposed by existing laws] ANY LIMITATION THAT MAY BE IMPOSED BY THE CONSTITUTION.”


OMNIBUS INVESTMENTS CODE


Section 29. Omnibus Investments Code.- Article 11 of Executive Order No. 226 is hereby amended to read as follows:

“ARTICLE 11. "Registered Enterprise" shall mean any individual, partnership, cooperative, corporation or other entity incorporated and/or organized and existing under Philippine laws; OR ANY CITIZEN OR SUBJECT OF A FOREIGN COUNTRY, OR ANY CORPORATION OR OTHER ENTITY FORMED, ORGANIZED AND EXISTING UNDER ANY LAWS OTHER THAN THOSE OF THE PHILIPPINES, WHOSE LAWS ALLOW FILIPINO CITIZENS AND CORPORATIONS TO DO BUSINESS IN ITS OWN COUNTRY OR STATE, AND LICENSED TO TRANSACT BUSINESS IN THE PHILIPPINES UNDER PHILIPPINE LAWS; and registered with the Board in accordance with this Book: Provided, however, That the term "registered enterprise" shall not include commercial banks, savings and mortgage banks, rural banks, savings and loan associations, building and loan associations, developmental banks, trust companies, investment banks, finance companies, brokers and dealers in securities, consumers cooperatives and credit unions, and other business organizations whose principal purpose or principal source of income is to receive deposits, lend or borrow money, buy and sell or otherwise deal, trade or invest in common or preferred stocks, debentures, bonds or other marketable instruments generally recognized as securities, or discharge other similar intermediary, trust of fiduciary functions.”

Section 30. Omnibus Investments Code.- Article 32 of Executive Order No. 226 is hereby amended to read as follows:

“ARTICLE 32. Qualifications of a Registered Enterprises. — To be entitled to registration under the Investment Priorities Plan, an applicant must satisfy the Board that:
(1) He is a citizen of the Philippines, OR A CITIZEN OR SUBJECT OF A FOREIGN COUNTRY THAT PERMITS FILIPINOS TO OWN, MANAGE AND OPERATE ENTERPRISES WITH INCENTIVES WITHIN ITS TERRITORIES, in case the applicant is a natural person[,]; or in case of a partnership or any other association, it is organized under Philippine laws, OR UNDER THE LAWS OF A COUNTRY THAT PERMITS SIMILAR PHILIPPINE ENTITIES TO  OWN, MANAGE AND OPERATE ENTERPRISES WITH INCENTIVES WITHIN ITS TERRITORIES, [and that] at least sixty percent (60%) of its capital is owned and controlled by [citizens of the Philippines] THE FOREGOING, AND AT LEAST SIXTY PER CENT (60%) OF THE MEMBERS OF ITS GOVERNING BODY ARE CITIZENS OF THE PHILIPPINES, OR CITIZENS OR SUBJECTS OF A FOREIGN COUNTRY AS AFORESAID; or in case of a corporation or a cooperative, it is organized under Philippine laws, OR UNDER THE LAWS OF A COUNTRY THAT PERMITS SIMILAR PHILIPPINE ENTITIES TO OWN, MANAGE AND OPERATE ENTERPRISES WITH INCENTIVES WITHIN ITS TERRITORIES, [and that] at least sixty per cent (60%) of the capital stock outstanding and entitled to vote is owned and held by [Philippine nationals as defined under Article 15 of this Code] THE FOREGOING, and at least sixty per cent (60%) of the members of the Board of Directors are citizens of the Philippines, OR CITIZENS OR SUBJECTS OF A FOREIGN COUNTRY AS AFORESAID. [If it does not possess the required degree of ownership as mentioned above by Philippine nationals, the following circumstances must be satisfactorily established:]
[(a) That it proposes to engage in a pioneer projects as defined in Article 17 of this Code, which, considering the nature and extent of capital requirements, processes, technical skills and relative business risks involved, is in the opinion of the Board of such a nature that the available measured capacity thereof cannot be readily and adequately filled by Philippine nationals; or, if the applicant is exporting at least seventy per cent (70%) of is total production, the export requirement herein provided may be reduced in meritorious cases under such conditions and/or limited incentives as the Board may determine;]
[(b) That it obligates itself to attain the status of a Philippine national, as defined in Article 15, within thirty (30) years from the date of registration or with such longer period as the Board may require taking into account the export potential of the project: Provided, That a registered enterprise which exports one hundred percent (100%) of its total production need not comply with this requirement;]
[(c) That the pioneer area it will engage in is one that is not within the activities reserved by the Constitution or other laws of the Philippines to the Philippine citizens or corporations owned and controlled by Philippine citizens;]

THE BOARD MAY IN THE NATIONAL INTEREST RESERVE TO PHILIPPINE CITIZENS OR TO CORPORATIONS OWNED AND CONTROLLED BY PHILIPPINE CITIZENS, THE GRANT OF INCENTIVES UNDER THIS BOOK, WITH RESPECT TO CERTAIN PREFERRED AREAS OF INVESTMENT, AT THE REASONABLE DISCRETION OF THE BOARD.

NOTWITHSTANDING THE FOREGOING, THE BOARD MAY IN THE REASONABLE EXERCISE OF ITS DISCRETION, PROVIDE EXCEPTIONS TO THE GENERAL RESERVATION, AND GRANT INCENTIVES TO APPLICANTS WHO ARE CITIZENS, SUBJECTS OR CORPORATIONS OF A FOREIGN COUNTRY, IF THE ACTIVITY IS A PIONEER ACTIVITY AS DEFINED IN ARTICLE 17, OR THE ACTIVITY INVOLVES THE EXPORT AS DEFINED IN ARTICLE 23 OF AT LEAST SIXTY PERCENT (60%) OF THE TOTAL PRODUCTION OR SUCH OTHER PERCENTAGE DETERMINED BY THE BOARD, OR THE ACTIVITY IS LOCATED IN A LESS-DEVELOPED-AREA AS DEFINED IN ARTICLE 40.

THE BOARD MAY AT ITS REASONABLE DISCRETION REQUIRE APPLICANT WHO IS A CITIZEN, SUBJECT OR CORPORATION OF A FOREIGN COUNTRY, TO ATTAIN THE STATUS OF A PHILIPPINE NATIONAL AS DEFINED IN ARTICLE 15, WITHIN THIRTY (30) YEARS OR SUCH OTHER PERIOD DETERMINED BY THE BOARD.

IF THE APPLICANT IS NOT A CITIZEN OF THE PHILIPPINES, NOR A CORPORATION OR OTHER ENTITY FORMED, ORGANIZED AND EXISTING UNDER PHILIPPINE LAWS WITH AT LEAST SIXTY PERCENT (60%) OF ITS CAPITAL OWNED AND CONTROLLED BY CITIZENS OF THE PHILIPPINES, THE ACTIVITY OR ACTIVITIES IT WILL ENGAGE IN MUST NOT BE WITHIN THE ACTIVITIES RESERVED TO PHILIPPINE CITIZENS OR TO CORPORATIONS OWNED AND CONTROLLED BY PHILIPPINE CITIZENS.

(2) The applicant is proposing to engage in a preferred project listed or authorized in the current Investment Priorities Plan within a reasonable time to be fixed by the Board [or, if not so listed, at least fifty percent (50%) of its total production is for export or it is an existing producer which will export part of production under such conditions and/or limited incentives as the Board may determine; or that the enterprise is engaged or proposing to engage in the sale abroad of export products bought by it from one or more export producers; or the enterprise is engaged or proposing to engage in rendering technical, professional or other services or in exporting television and motion pictures and musical recordings made or produced in the Philippines, either directly or through a registered trader].

(3) The applicant is capable of operating on a sound and efficient basis of contributing to the national development of the preferred area in particular and of the national economy in general; and

(4) If the applicant is engaged or proposes to engage in undertakings or activities other than preferred projects, it has installed or undertakes to install an accounting system adequate to identify the investments, revenues, costs, and profits or losses of each preferred project undertaken by the enterprise separately from the aggregate investment, revenues, costs and profits or losses of the whole enterprise or to establish a separate corporation for each preferred project if the Board should so require to facilitate proper implementation of this Code.”

Section 31. Omnibus Investments Code.- Article 35 of Executive Order No. 226 is hereby amended to read as follows:

“ARTICLE 35. Criteria for Evaluation of Applications. — The following criteria will be considered in the evaluation of applications for registration under a preferred area:
[(a) The extent of ownership and control by Philippine citizens of the enterprises;]
[(b)] (A) The economic rates of return;
[(c)] (B) The measured capacity Provided, That estimates of measured capacities shall be regularly reviewed and updated to reflect changes in market supply and demand conditions; Provided, Further, That measured capacity shall not result in a monopoly in any preferred area of investment which would unduly restrict trade and fair competition nor shall it be used to deny the entry of any enterprise in any field of endeavor or activity;
[(d)] (C) The amount of foreign exchange earned, used or saved in their operations;
[(e)] (D) The extent to which labor, materials and other resources obtained from indigenous sources are utilized;
[(f)] (E) The extent to which technological advances are applied and adopted to local condition;
[(g)] (F) The amount of equity and degree to which the ownership of such equity is spread out and diversified; and
[(h)] (G) Such other criteria as the Board may determine.”


FOREIGN INVESTMENTS ACT


Section 32. Foreign Investments Act.- Section 6 of Republic Act No. 7042, as amended by Republic Act No. 8179, is hereby amended to read as follows:

“Section 6. Foreign Investments in Export Enterprises.- Foreign investment in export enterprises whose products and services do not fall within [Lists A and B of] the Foreign Investment Negative List provided under Section 8 hereof is allowed up to one hundred percent (100%) ownership.

“Export enterprises which are non-Philippine nationals shall register with BOI and submit the reports that may be required to ensure continuing compliance of the export enterprise with its export requirement. BOI shall advise SEC or BTRCP, as the case may be, of any export enterprise that fails to meet the export ratio requirement. The SEC or BTRCP shall thereupon order the non-complying export enterprise to reduce its sales to the domestic market to not more than forty percent [40%] of its total production; failure to comply with such SEC or BTRCP order, without justifiable reason, shall subject the enterprise to cancellation of SEC or BTRCP registration, and/or the penalties provided in Section 14 hereof.”

Section 33. Foreign Investments Act.- Section 8 of Republic Act No. 7042, as amended by Republic Act No. 8179, is hereby amended to read as follows:

“Section 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 the Department of National Defense [DND] to engage in such activity, such as the manufacture, repair, storage and/or distribution of firearms, ammunition, lethal weapons, military ordnance, explosives, pyrotechnics and similar materials; unless such manufacturing or repair activity is specifically authorized, with a substantial export component, to a non-Philippine national by the Secretary of National Defense; or]

[2)  which have implications on public health and morals, such as the manufacture and distribution of dangerous drugs; all forms of gambling; nightclubs, bars, 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 as determined by the Department of Science and 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.]

“SECURITY-RELATED ACTIVITIES, REQUIRING PRIOR CLEARANCE AND AUTHORIZATION FROM THE PHILIPPINE NATIONAL POLICE TO ENGAGE IN SUCH ACTIVITY, SHALL BE RESERVED TO PHILIPPINE NATIONALS, AND TO CITIZENS, SUBJECTS OR NATIONALS OF FOREIGN COUNTRIES THAT PERMIT FILIPINOS TO ENGAGE IN SECURITY RELATED ACTIVITIES WITHIN ITS TERRITORIES. SECURITY -RELATED ACTIVITIES INCLUDE BUT ARE NOT LIMITED TO THE MANUFACTURE, REPAIR, STORAGE AND/OR DISTRIBUTION OF FIREARMS, GUNPOWDER, DYNAMITE, BLASTING SUPPLIES, INGREDIENTS USED IN MAKING EXPLOSIVES, TELESCOPIC SITES, AND SIMILAR MATERIALS.

“DEFENSE-RELATED ACTIVITIES, REQUIRING PRIOR CLEARANCE AND AUTHORIZATION FROM THE DEPARTMENT OF NATIONAL DEFENSE TO ENGAGE IN SUCH ACTIVITY, SHALL BE RESERVED TO PHILIPPINE NATIONALS, AND TO CITIZENS, SUBJECTS OR NATIONALS OF FOREIGN COUNTRIES THAT PERMIT FILIPINOS TO ENGAGE IN DEFENSE RELATED ACTIVITIES WITHIN ITS TERRITORIES. DEFENSE-RELATED ACTIVITIES INCLUDE BUT ARE NOT LIMITED TO THE MANUFACTURE, REPAIR, STORAGE AND/OR DISTRIBUTION OF GUNS AND AMMUNICATION, MILITARY ORDNANCE, GUNNERY, GUIDED MISSILES, TACTICAL AIRCRAFT, SPACE VEHICLES, COMBAT VESSELS, WEAPONS EQUIPMENT, MILITARY COMMUNICATIONS EQUIPMENT, NIGHT VISION EQUIPMENT, RADIATION DEVICES, ARMAMENT TRAINING DEVICES, AND SIMILAR MATERIALS.

“ACTIVITIES WITH IMPLICATIONS ON PUBLIC HEALTH AND MORALS, SHALL BE RESERVED TO PHILIPPINE NATIONALS, AND TO CITIZENS, SUBJECTS OR NATIONALS OF FOREIGN COUNTRIES THAT PERMIT FILIPINOS TO ENGAGE IN SUCH  ACTIVITIES WITHIN ITS TERRITORIES. ACTIVITIES WITH IMPLICATIONS ON PUBLIC HEALTH AND MORALS INCLUDE BUT ARE NOT LIMITED TO THE MANUFACTURE AND DISTRIBUTION OF DANGEROUS DRUGS; ALL FORMS OF GAMBLING, NIGHTCLUBS, BARS, BEER HOUSES, DANCE HALLS, SAUNA AND STEAM BATHHOUSES AND MASSAGE CLINICS.

“MICRO-SIZED DOMESTIC MARKET ENTERPRISES, AS DEFINED UNDER REPUBLIC ACT NO. 9178 AND OTHER LAWS, SHALL BE RESERVED TO FILIPINO CITIZENS, OR TO CORPORATIONS, PARTNERSHIPS, ASSOCIATIONS OR COOPERATIVES WHOLLY OWNED BY THEM, EXCEPT AS OTHERWISE PROVIDED IN SECTION 9 OF THIS ACT.

[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, endorsed by 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. (as amended by Republic Act No. 8179)]

Section 34. Foreign Investments Act.- Section 9 of Republic Act No. 7042, as amended by Republic Act No. 8179, is hereby amended to read as follows:

“Section 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 MICRO ENTERPRISES UNDER REPUBLIC ACT NO. 9178 AND OTHER LAWS, Cooperatives under Republic Act No. 9520 [6938], Rural Banks under Republic Act. No. 7353, AND Thrift Banks [AND PRIVATE DEVELOPMENT BANKS] under Republic Act No. 7906.” [and Financing Companies under Republic Act No. 5980 as amended. These rights shall not extend to activities reserved by the Constitution, including (1) the exercise of profession: (2) in defense-related activities under Section 8 (b) hereof, unless specifically authorized by the Secretary of National Defense: and, (3) activities covered by Republic Act No. 1180 (Retail Trade Act) [superseded by Republic Act No. 8762 (Retail Trade Liberalization Act of 2000)].  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. No. 449 (Cockpits Operation and Management). (as amended by Republic Act No. 8179)]


BANKING INSTITUTIONS


Section 35.  Foreign Banks.- Section 3 of Republic Act No. 7721, as amended by Republic Act No. 10641, is hereby further amended to read as follows:

“SEC. 3. Guidelines for Approval. – In approving entry applications of foreign banks, the Monetary Board shall: (i) ensure geographic representation and complementation; (ii) consider strategic trade and investment relationships between the Philippines and the country of incorporation of the foreign bank; (iii) study the demonstrated capacity, global reputation for financial innovations and stability in a competitive environment of the applicant; (iv) see to it that reciprocity rights are enjoyed by Philippine banks in the applicant’s country; and (v) consider willingness to fully share their technology.

“Only established, reputable and financially sound foreign banks shall be allowed entry in accordance with Section 2 of this Act. The foreign bank applicant must be widely-owned and publicly-listed in its country of origin, unless the foreign bank applicant is owned and controlled by the government of its country of origin.

“In the REASONABLE exercise of this authority, the Monetary Board MAY [shall] IN THE NATIONAL INTEREST adopt such measures as may be necessary to ensure that the control of at least [sixty percent (60%)] A MAJORITY of the resources or assets of the entire banking system is held by domestic banks which are majority-owned AND CONTROLLED by Filipinos.”

Section 36.  Domestic Banks.- Section 73 of Republic Act No. 8791, is hereby amended to read as follows:

“SECTION 73. Acquisition of Voting Stock in a Domestic Bank. — [Within seven (7) years from the effectivity of this Act and] Subject to guidelines issued pursuant to the Foreign Banks Liberalization Act, the Monetary Board may authorize a foreign bank to acquire up to one hundred percent (100%) of the voting stock of only one (1) bank organized under the laws of the Republic of the Philippines.

“[Within the same period,] The Monetary Board may authorize any foreign bank, which prior to the effectivity of this Act availed itself of the privilege to acquire up to sixty percent (60%) of the voting stock of a bank under the Foreign Banks Liberalization Act and the Thrift Banks Act, to further acquire voting shares of such bank to the extent necessary for it to own one hundred percent (100%) of the voting stock thereof.

“In the REASONABLE exercise of this authority, the Monetary Board MAY [shall] IN THE NATIONAL INTEREST adopt measures as may be necessary to ensure that [at all times the] MAJORITY control of [seventy percent (70%) of] the resources or assets of the entire banking system is held by banks which are at least majority-owned AND CONTROLLED by Filipinos.

“Any right, privilege or incentive granted to a foreign bank under this Section shall be equally enjoyed by and extended under the same conditions to banks organized under the laws of the Republic of the Philippines.[(Secs. 2 and 3, RA 7721)]”

Section 37.  Thrift Banks.- Section 7 of Republic Act No. 7906, is hereby amended to read as follows:

“SECTION 7.    Directors and Officers. — NON-FILIPINO CITIZENS MAY BECOME MEMBERS OF THE BOARD OF DIRECTORS OF A THRIFT BANK TO THE EXTENT OF THE FOREIGN PARTICIPATION IN THE EQUITY OF SAID BANK [At least a majority of the members of the board of directors of any thrift bank which may be established after the effectivity of this Act shall be citizens of the Philippines]: provided, however, that no appointive or elective official, whether full-time or part-time, shall at the same time serve as officer of any thrift bank, except in cases where such service is incident to financial assistance provided by the government or a government-owned or -controlled corporation to the bank: provided, further, that in the case of merger or consolidation duly approved by the Monetary Board, the limitation on the number of directors in a corporation, as provided in Section 14 of the Corporation Code of the Philippines, shall not be applied so that membership in the new board may include up to the total number of directors provided for in the respective articles of incorporation of the merging or consolidating banks.”

Section 38.  Thrift Banks.- Section 8 of Republic Act No. 7906, is hereby amended to read as follows:

  “SECTION 8.    Ownership. — UNLESS OTHERWISE PROVIDED BY THE MONETARY BOARD, AT least forty percent (40%) of the voting stock of a thrift bank [which may be established after the approval of this Act] shall be owned by citizens OR NATIONALS of the Philippines, except where a new bank may be established as a result of a merger or consolidation of existing thrift banks with foreign holdings in which case, the resulting foreign holdings shall not be increased but may be reduced and, once reduced, shall not be increased thereafter beyond sixty percent (60%) of the voting stock of thrift banks.  The percentage of the foreign-owned voting stocks shall be determined by the citizenship of individual stockholders and in case of corporations owning shares, by the citizenship of each stockholder in the said corporations.”[Any provision of existing laws to the contrary notwithstanding, stockholders in a thrift bank shall be exempt from any ownership ceiling for a period of ten (10) years from the effectivity of this Act.]

“EXCEPT AS OTHERWISE PROVIDED BY REPUBLIC ACT NO. 8791, REPUBLIC ACT NO. 7721 AND OTHER LAWS, THE MONETARY BOARD MAY IN THE NATIONAL INTEREST, AND UPON THE REASONABLE EXERCISE OF ITS DISCRETION, RESTRICT, REGULATE OR LIBERALIZE FOREIGN INVESTMENTS IN THE VOTING STOCK OF A THRIFT BANK.”

Section 39.  Private Development Banks.- Section 4 of Republic Act No. 4093, as amended, is hereby further amended to read as follows:

“Sec. 4.  A private development bank shall be organized in the form of a stock corporation and its paid-up capital shall not be less than four million pesos for Class A, two million pesos for Class B, and one million pesos for Class C: Provided, That UNLESS OTHERWISE PROVIDED BY THE MONETARY BOARD, at least FORTY [seventy] percent (40%) of the voting stock OF A PRIVATE DEVELOPMENT BANK [subscribed by the private sector] shall be owned [and held] by [the] citizens OR NATIONALS of the Philippines, except where a new bank is established as a result of the consolidation of existing private development banks in any of which there are foreign-owned voting stocks at the time of consolidation: [Provided, however, That the Monetary Board may, with the approval of the President of the Philippines, reduce the required minimum percentage of Philippine ownership prescribed herein from seventy percent (70%) to sixty percent (60%)]: Provided, further, That if said subscription of private shareholders to the initial capitalization of a private development bank cannot be secured or is not available, the Development Bank of the Philippines on representation of the said private shareholders and with the approval of its Board of Governors shall, within thirty days from date of approval by the Board of Governors, and after compliance by the private stockholders with the conditions of said approval, subscribe to the capital stock of such development bank, which shall be paid in full at the time of subscription out of the trust fund provided in Section three, Paragraph three, of Republic Act Numbered Twenty hundred and eighty-one, in an amount equal to the difference between the required paid-up capital and the fully paid subscribed capital of the private stockholders but not exceeding the latter: Provided, furthermore, That the Board of Governors shall act on the representation made by the private shareholders within thirty days from the date it is filed: Provided, still further, That such shares of stock subscribed by the bank shall be preferred shares entitled to cumulative dividends at the yearly rate of one percent during the first five years, two percent during the following five years, and three percent thereafter shall be preferred as against common and other preferred stockholders in the distribution of assets in the event of liquidation, and shall be entitled to voting privileges: Provided, still further, That such preferred shares of the bank may at any time he paid off at not less than par and retired in whole or in part if, in the opinion of the Monetary Board, the bank has accumulated enough capital strength to permit retirement of such shares, or sold at not less than par [to private individuals who are citizens of the Philippines], and in the sale thereof, the qualified registered stockholders shall have the right of pre-emption within one year from the date of offer in proportion to their respective holdings, but in the absence of such buyers, preference shall be given to residents of the province or city where the development bank is located: Provided, finally, That such preferred shares may be converted to common shares when sold [to private individuals]. NON-FILIPINO CITIZENS MAY BECOME MEMBERS OF THE BOARD OF DIRECTORS OF A THRIFT BANK TO THE EXTENT OF THE FOREIGN PARTICIPATION IN THE EQUITY OF SAID BANK [All members of the board of directors of the private development bank shall be citizens of the Philippines]: Provided, however, That no appointive or elective public official, whether full-time or part-time, shall at the same time serve as officer of any private development bank, except in cases where such service is incident to financial assistance provided by the government or a government-owned or controlled corporation to the bank: Provided, further, That in the case of merger or consolidation of private development banks duly approved by the Monetary Board, the limitation on the maximum number of corporate directors in a corporation, as provided for in Section 12 of the Corporation Code of the Philippines, shall not be applied so that membership in the new board may include up to the total number of directors provided for in the respective articles of incorporation of the merging or consolidating private development banks.

“EXCEPT AS OTHERWISE PROVIDED BY REPUBLIC ACT NO. 8791, REPUBLIC ACT NO. 7721 AND OTHER LAWS, THE MONETARY BOARD MAY IN THE NATIONAL INTEREST, AND UPON THE REASONABLE EXERCISE OF ITS DISCRETION, RESTRICT, REGULATE OR LIBERALIZE FOREIGN INVESTMENTS IN THE VOTING STOCK OF A PRIVATE DEVELOPMENT BANK.”

Section 40. Rural Banks.- Section 4 of Republic Act No. 7353, is hereby further amended to read as follows:

“SECTION 4.    No rural bank shall be operated without a Certificate of Authority from the Monetary Board of the Central Bank. Rural banks shall be organized in the form of stock corporations. Upon consultation with the rural banks in the area, duly established cooperatives and corporations primarily organized to hold equities in rural banks may organize a rural bank and/or subscribe to the shares of stock of any rural bank: provided, that a cooperative or corporation owning or controlling the whole or majority of the voting stock of the rural bank shall be subject to special examination and to such rules and regulations as the Monetary Board may prescribe. UNLESS OTHERWISE PROVIDED BY THE MONETARY BOARD [With the exception of shareholdings of corporations organized primarily to hold equities in rural banks as provided for under Section 12-C of Republic Act No. 337, as amended, and of Filipino-controlled domestic banks], AT LEAST SIXTY PERCENT (60%) OF the VOTING [capital] stock of any rural bank shall be [fully] owned [and held directly or indirectly] by citizens OR NATIONALS of the Philippines [or corporations, associations or cooperatives qualified under Philippine laws to own and hold such capital stock: provided, that any provisions of existing laws to the contrary notwithstanding, stockholdings in a rural bank shall be exempt from any ownership ceiling for a period of ten (10) years from the approval of this Act: provided, further, that any such exemption shall required the approval of the Monetary Board]. If subscription of private shareholders to the capital stock of a rural bank cannot be secured or is not available, or insufficient to meet the normal credit needs of the locality, the Land Bank of the Philippines, the Development Bank of the Philippines, or any government-owned or controlled bank or financial institution, on representation of the said private shareholders but subject to the investment guidelines, policies and procedures of the bank of financial institution and upon approval of the Monetary Board of the Central Bank, shall subscribe to the capital stock of such rural bank, which shall be paid in full at the time of subscription, in an amount equal to the fully paid subscribed and unimpaired, capital of the private stockholders or such amount as the Monetary Board may prescribe as may be necessary to promote and expand rural economic development: provided, however, that such shares of stock subscribed by the Land Bank of the Philippines, the Development Bank of the Philippines or any government-owned or controlled bank or financial institution may be sold at any time at market value [to private individuals who are citizens of the Philippines]: provided, finally, that in the sale of shares of stock subscribed by the Land Bank of the Philippines, the Development Bank of the Philippines or any government-owned or controlled bank or financial institution, the registered stockholders shall have the right of preemption within one (1) year from the date of offer in proportion to their respective holdings, but in the absence of such buyer, preference, however, shall be given to residents of the locality or province where the rural bank is located.

“EXCEPT AS OTHERWISE PROVIDED BY REPUBLIC ACT NO. 8791, REPUBLIC ACT NO. 7721 AND OTHER LAWS, THE MONETARY BOARD MAY IN THE NATIONAL INTEREST, AND UPON THE REASONABLE EXERCISE OF ITS DISCRETION, RESTRICT, REGULATE OR LIBERALIZE FOREIGN INVESTMENTS IN THE VOTING STOCK OF A RURAL BANK.”

Section 41.  Rural Banks.- Section 5 of Republic Act No. 7353, is hereby further amended to read as follows:

“SECTION 5.    NON-FILIPINO CITIZENS MAY BECOME MEMBERS OF THE BOARD OF DIRECTORS OF A RURAL BANK TO THE EXTENT OF THE FOREIGN PARTICIPATION IN THE EQUITY OF SAID BANK [All members of the Board of Directors of the rural bank shall be citizens of the Philippines at the time of their assumption to office]: provided, however, that nothing in this Act shall be construed as prohibiting any appointive or in any capacity in the bank.

“No director or officer of any rural bank shall, either directly or indirectly, for himself or as the representative or agent of another, borrow any of the deposits or funds of such banks, nor shall he become a guarantor, indorser, or surety for loans from such bank to others, or in any manner be an obligor for money borrowed from the bank or loaned by it except with the written approval of the majority of the directors of the bank, excluding the director concerned. Any such approval shall be entered upon the records of the corporation and a copy of such entry shall be transmitted forthwith to the appropriate supervising department. The director/officer of the bank who violates the provisions of this section shall be immediately dismissed from his office and shall be penalized in accordance with Section 26 of this Act.

“The Monetary Board may regulate the amount of credit accommodations that may be extended directly to the directors, officers or stockholders of rural banks of banking institutions. However, the outstanding credit accommodations which a rural bank may extend to each of its stockholders owning two percent (2%) or more of the subscribed capital stock, its directors, or officers shall be limited to an amount equivalent to the respective outstanding deposits and book value of the paid-in capital contributions in the bank.”


FOREIGN INVESTMENT COUNCIL


[NOTE: See US Defense Production Act of 1950, as amended by FINSA, Section 721 (50 U.S.C. App. 2170). Executive Order No. 11858 (as amended by Executive Order No. 13456), re Foreign Investment in the United States.]

Section 42. Policy.- Foreign investment in the Philippines promotes job creation, productivity, competitiveness and economic growth. It shall be the policy of the Philippines to support unequivocally such investment, consistent with the protection of the basic securities of the country, being defense or external security, internal security, food security, water security, energy security, environment security, resource security (human, natural, industrial) and cyber security.

Section 43. Definitions.-

(a) “Control” means the ability to exercise certain powers over important matters affecting an entity; the power, direct or indirect, whether or not exercised, through the ownership of a majority or a dominant minority of the total outstanding voting interest in an entity, board representation, proxy voting, a special share, contractual arrangements, formal or informal arrangements to act in concert, or other means, to determine, direct, or decide important matters affecting an entity; the power to determine, direct, take, reach, or cause decisions regarding important matters affecting an entity, including but not limited to the following:
(1) The sale, lease, mortgage, pledge, or other transfer of any of the tangible or intangible principal assets of the entity, whether or not in the ordinary course of business;
(2) The reorganization, merger, or dissolution of the entity;
(3) The closing, relocation, or substantial alteration of the production, operational, or research and development facilities of the entity;
(4) Major expenditures or investments, issues of equity or debt securities, or dividend payments by the entity, or approval of the operating budget of the entity;
(5) The selection of new business lines or ventures that the entity will pursue;
(6) The entry into, termination, or non-fulfillment by the entity of significant contracts;
(7) The policies or procedures of the entity governing the treatment of non- public technical, financial, or other proprietary information of the entity;
(8) The appointment or dismissal of officers or senior managers;
(9) The appointment or dismissal of employees with access to sensitive technology or classified government information; or
(10) The amendment of the Articles of Incorporation, constituent agreement, or other organizational documents of the entity with respect to the matters described in Paragraphs (a)(1) through (9) of this Section.

(b) “Covered transaction” means any merger, acquisition, or takeover that is proposed or pending as of the date this Act takes effect, by or with any foreign person which could result in foreign control of any person engaged in commerce in the Philippines.

(c) “Critical Infrastructure” means systems and assets, whether physical or virtual, so vital to the Philippines that the incapacity or destruction of such systems or assets would have a debilitating impact on any of the basic securities.

(d) “Critical technologies” mean critical technology, critical components, or critical technology items essential to any of the basic securities.

(e) “Foreign government-controlled transaction” means any covered transaction that could result in the control of any person engaged in commerce in the Philippines by a foreign government or an entity controlled by or acting on behalf of a foreign government.

Section 44. Council.- There is hereby established the Foreign Investment Council (Council) which shall be composed of the following members or the designee of any such member:
(a) The Secretary of the Department of Justice;
(b) The Secretary of the Department of National Defense;
(c) The Secretary of the Department of Interior and Local Government;
(d) The Secretary of the Department of Agriculture;
(e) The Secretary of the Department of Environment and Natural Resources;
(f) The Secretary of the Department of Energy;
(g) The Secretary of the Department of Labor and Employment;
(h) The Secretary of the Department of Trade and Industry;
(i) The Secretary of the Department of Information and Communications Technology;
(j) The Director-General of the National Economic Development Authority;
(k) The Governor of the Bangko Sentral ng Pilipinas;
(l) The Chairman of the Securities and Exchange Commission;
(m) The Solicitor-General;
(n) The heads of any other executive department, agency, or office, as the President determines appropriate, generally or on a case-by-case basis.

The Secretary of the Department of Justice shall be the Chairman of the Council. The Chairman of the Council shall have the authority, exclusive of the heads of departments or agencies, to act, or authorize others to act, on behalf of the Council, and to communicate on behalf of the Council with the legislative branch of government and the public.

The resolutions of the Council shall be approved by a majority vote of all its members.

Section 45. Secretariat.- The Council is hereby authorized to establish a secretariat. The Council shall determine the composition, prescribe the qualifications and fix the compensation of the members of the secretariat.

Section 46. Lead Agency.- The lead agency or agencies (lead agency) shall have primary responsibility, on behalf of the Council, for the review and investigation of a specific covered transaction.

The following shall be the lead agency for the review and investigation of the particular transaction indicated:

(a) The Department of National Defense for any covered transaction that poses a risk to defense or external security;

(b) The Department of National Defense for any covered transaction that poses a risk to internal security; the Department of Interior and Local Government as co-lead agency for any covered transaction that poses a risk to internal security;

(c) The Department of Agriculture for any covered transaction that poses a risk to food security;

(d) The Department of Environment and Natural Resources for any covered transaction that poses a risk to water security;

(e) The Department of Environment and Natural Resources for any covered transaction that poses a risk to natural resource security;

(f) The Department of Environment and Natural Resources for any covered transaction that poses a risk to environment security;

(g) The Department of Energy for any covered transaction that poses a risk to energy security;

(h) The Department of Labor and Employment for any covered transaction that poses a risk to human resource security;

(i) The Department of Trade and Industry for any covered transaction that poses a risk to industrial resource security;

(j) The Department of Information and Communications Technology for any covered transaction that poses a risk to cyber security.

The Chairman of the Council shall designate the lead agency or agencies whenever a covered transaction poses a risk to two or more basic securities.

Section 47. Review.- Upon notice by any party to any covered transaction, or upon its unilateral initiative without such notice, the Council shall review the covered transaction to determine the effects of the transaction on any basic security of the Philippines, and shall consider the relevant factors for such purpose as appropriate.

If the Council determines that the covered transaction is a foreign government-controlled transaction, the Council shall conduct an investigation of the transaction.

Any review under this section shall be completed within thirty (30) calendar days beginning on the date of notice or initiation of review.

Section 48. Investigation.- The Council shall immediately conduct an investigation of the effects of a covered transaction on any basic security of the Philippines, and take any necessary action in connection with the transaction to protect the affected basic security of the Philippines, in each case in which a review of the covered transaction results in a determination that:
(a) the transaction threatens to impair any basic security of the Philippines and that threat has not been mitigated during or prior to the review of a covered transaction;
(b) the transaction is a foreign government-controlled transaction;
(c) the transaction would result in control of any critical infrastructure of or within the Philippines by or on behalf of any foreign person, if the Council determines that the transaction could impair any basic security, and that such impairment to a basic security has not been mitigated by assurances provided or renewed with the approval of the Council during the review period; or
(d) the lead agency recommends that an investigation be undertaken.

Any investigation under this section shall be completed within forty-five (45) calendar days beginning on the date on which the investigation commenced.

Section 49. Relevant Factors.- The Council, or any lead agency acting on behalf of the Council, taking into account the requirements of the basic securities, shall consider:
(a) domestic production needed for the projected requirements of the basic securities,
(b) the capability and capacity of domestic industries to meet the requirements of the basic securities, including the availability of human resources, products, technology, materials, and other supplies and services,
(c) the control of domestic industries and commercial activity by foreign citizens as it affects the capability and capacity of the Philippines to meet the requirements of the basic securities,
(d) the potential effects of the proposed or pending transaction on sales of military goods, equipment, or technology to any country identified by the Secretary of National Defense as a country that supports terrorism, or to any country identified by the Secretary of Defense as posing a potential military threat to the interests of the Philippines;
(5) the potential effects of the proposed or pending transaction on Philippine international technological leadership in areas affecting the basic securities of the Philippines;
(6) the potential basic security-related effects on Philippine critical infrastructure, including major energy assets;
(7) the potential basic security-related effects on Philippine critical technologies;
(8) whether the covered transaction is a foreign government-controlled transaction;
(9) as appropriate, and particularly with respect to a foreign government-controlled transaction, a review of the current assessment of the relationship of such country with the Philippines, specifically on its record on cooperating in counter-terrorism efforts, and the potential for transshipment or diversion of technologies with military applications;
(10) the long-term projection of Philippine requirements for sources of energy and other critical resources and material; and
(11) such other factors as the Council, or any lead agency acting on behalf of the Council, may determine to be appropriate, generally or in connection with a specific review or investigation.

Section 50. Risk Mitigation.- The Council, or any lead agency acting on behalf of the Council, may seek to mitigate any basic security risk posed by a transaction that is not adequately addressed by other provisions of laws, by entering into a mitigation agreement with the parties to a transaction or by imposing conditions on such parties.

The Council, or any lead agency acting on behalf of the Council, may negotiate, enter into or impose, and enforce any agreement or condition with any party to the covered transaction in order to mitigate any threat to any basic security of the Philippines that arises as a result of the covered transaction.

Prior to taking risk mitigation measures, the Council shall identify the basic security risk posed by the transaction based on factors including the threat, vulnerabilities, and potential consequences. The Council shall also set forth the risk mitigation measures that it believes are reasonably necessary to address the risk.

Any agreement entered into or condition imposed under this section shall be based on a risk-based analysis, conducted by the Council, or any lead agency acting on behalf of the Council, of the threat to a basic security of the Philippines of the covered transaction.

The Council shall ensure that adequate resources are available for the purpose of monitoring a risk mitigation measure.

Section 51. Suspension or Prohibition.- The Council, by a majority vote of all its members, may suspend or prohibit a covered transaction if in the reasonable exercise of its discretion it determines that such action is necessary to address risk.

Section 52. Confidentiality of Information.- Any covered transaction report, relevant documentary material or information, shall be confidential and exempt from disclosure. No such report, material or information may be made public, except as may be relevant to any administrative or judicial action or proceeding. Nothing in this section shall be construed to prevent disclosure to the legislative branch of government.

Section 53. Control and Supervision.- The Council shall be under the control and supervision of the President.

Section 54. Rules and Regulations.- The Council, by a majority vote of all its members, shall issue the rules and regulations to implement the applicable provisions of this Act.

Section 55. Appropriation.- The Council shall be provided with an initial appropriation of ______________ Philippine Currency (Php__________) drawn from the national government. Appropriations for the succeeding years shall be included in the General Appropriations Act.


MISCELLANEOUS PROVISIONS


Section 56. Interpretation.- Nothing herein shall be construed to modify the requirements or otherwise liberalize the issuance of working visas or investor's visas under the immigration and investment laws, or of alien employment permits under the labor laws.

Section 57. Rules and Regulations.- The National Economic Development Authority (NEDA), in consultation with the Securities and Exchange Commission (SEC), the Board of Investments (BOI), the Philippine Economic Zone Authority (PEZA) and other government agencies concerned, shall prepare and promulgate the rules and regulations to implement the provisions related to foreign investments, within ninety (90) days after the approval of this Act.

The Professional Regulation Commission, together with representatives of the various Professional Regulatory Boards and accredited professional organizations, shall prepare and promulgate the rules and regulations to implement the provisions related to foreign professional practice, within ninety (90) days after the approval of this Act.

The respective government agencies vested with authority to issue the implementing rules and regulations of the various statutory laws cited in this Act, shall within ninety (90) days after the approval of this Act, prepare and promulgate the appropriate implementing rules and regulations.

Section 58. Repeal.- All laws, presidential decrees, executive orders, letters of instruction, proclamations, rules and regulations, and other issuances, or any part thereof, which are inconsistent with or contrary to the provisions of this Act, are hereby repealed, amended or modified accordingly.

Section 59. Separability.- If, for any reason or reasons, any part or parts of this Act shall be declared unconstitutional or invalid by any competent court, other parts of this Act shall be thereby shall continue to be in full force and effect.

Section 60. Effectivity.- This Act shall take effect fifteen (15) days after its complete publication in the Official Gazette, or in at least two (2) national newspapers of general circulation.


Approved: 


HON. JUAN MAKABAYAN
Senator