Professional Documents
Culture Documents
MIDTERMS Coverage: 1. 2. 3. Omnibus Investments Code Foreign Investments Act Cases i. ii. I. Garcia cases (due process requirements) Appealing decisions of the BOI 3. an expanding productivity as the key to raising the quality of life for all, especially the underprivileged.
The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices. In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. Private enterprises, including corporations, cooperatives, and similar collective organizations, shall be encouraged to broaden the base of their ownership. Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. All natural resourced EXCEPT AGRICULTURAL LAND cannot be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into coproduction, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Period <= 25 yrs + 25 yrs extension The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens. The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish- workers in rivers, lakes, bays, and lagoons. The President may enter into agreements with foreign-owned corporations involving either 1. 2. technical or financial assistance
Section 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all. Section 10. The State shall promote social justice in all phases of national development. Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. Section 19. The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos. Section 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments. Section 21. The State shall promote comprehensive rural development and agrarian reform. ARTICLE VI The Legislative Department Section 28. (1) The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation. (4) No law granting any tax exemption shall be passed without the concurrence of a majority of all the Members of the Congress. ARTICLE VII Executive Department Section 20. The President may contract or guarantee foreign loans on behalf of the Republic of the Philippines with the prior concurrence of the Monetary Board, and subject to such limitations as may be provided by law. The Monetary Board shall, within thirty days from the end of every quarter of the calendar year, submit to the Congress a complete report of its decision on applications for loans to be contracted or guaranteed by the Government or government-owned and controlled corporations which would have the effect of increasing the foreign debt, and containing other matters as may be provided by law. ARTICLE XII National Economy and Patrimony Section 1. The goals of the national economy are: 1. 2. a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people
for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources. The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution. Section 3. Lands of the public domain: 1. 2. 3. 4. agricultural (may be further classified, may be alienated) forest or timber mineral lands and national parks. Period <= 25 yrs + 25 yrs extension Limit: <= 1000 ha
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Section 5. The State, subject to the provisions of this Constitution and national development policies and programs, shall protect the rights of indigenous cultural communities to their ancestral lands to ensure their economic, social, and cultural well-being. Section 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands. Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain. - Aliens cannot own land but can own condominiums through a condominium corporation (only up to 40% of such corp.). Section 9. The Congress may establish an independent economic and planning agency headed by the President, which shall, after consultations with the appropriate public agencies, various private sectors, and local government units, recommend to Congress, and implement continuing integrated and coordinated programs and policies for national development. Until the Congress provides otherwise, the National Economic and Development Authority shall function as the independent planning agency of the government. Section 10. The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos. In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos. The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities. Section 11. Public Utility = Citizens or Corporations established under Philippine Law. Period= <= 50 years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines. Section 12. The State shall promote the preferential use of Filipino labor,
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Omnibus Investments Code Economic Nationalism Planned Economy Disperse Industries Promote small and medium scale industries Encourage competition/ discourage monopoly
Policies:
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3.
No vacancy shall be filled except for the unexpired portion of any term, and that no one may be designated to be a governor of the Board in an acting capacity but all appointments shall be ad interim or permanent. ART 5. Qualifications of Governors of the Board. 1. 2. 3. at least thirty (30) years old of good moral character and of recognized competence in the fields of economics, finance, banking, commerce, industry, agriculture, engineering, law, management or labor.
ART. 6. Appointment of Board Personnel. - The Board shall appoint its technical staff and other personnel subject to Civil Service Law, rules and regulations. ART 7. Powers and Duties of the Board. - The Board shall be responsible for the regulation and promotion of investments in the Philippines. It shall meet as often as may be necessary generally once a week on such day as it may fix. Notice of regular and special meetings shall be given all members of the Board. Four (4) governors = QUORUM Four (4) governors = MAJORITY VOTE (1) Prepare annually the Investment Priorities Plan (2) Promulgate such rules and regulations as may be necessary to implement the intent and provisions of this Code relevant to the Board; (3) Process and approve applications for registration with the Board, imposing such terms and conditions as it may deem necessary to promote the objectives of this Code (4) After due hearing, decide controversies concerning the implementation of the Code that may arise between registered enterprises or investors therein and government agencies, within thirty (30) days after the controversy has been submitted for decision: Decision = 30 days from submission of controversy Appeal to the President = 30 days from receipt of adverse decision (5) Recommend the entry of foreign nationals into the Philippines for employment to the CID (6) Check by inspection or reports the participation of foreign nationals in registered enterprises (7) Periodically check and verify the compliance by registered enterprises with the relevant provisions of this Code, with the rules and regulations
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(4) Recommend to the Board such policies and measures he may deem necessary to carry out the objectives of this Code; and (5) Generally, to exercise such other powers and perform such other duties as may be directed by the Board of Governors from time to time. ART. 9. Powers and Duties of the Vice-Chairman. - The VICE-CHAIRMAN shall have the following powers and duties: (1) To act as Managing Head of the Board; (2) To preside over the meetings of the Board in the absence of the Chairman; (3) Prepare the Agenda for the meetings of the Board and submit for its consideration and approval the policies and measures which the Chairman deems necessary and proper to carry out the provisions of this Code; (4) Assist registered enterprises and prospective investors to have their papers processed with dispatch by all government offices, agencies, instrumentalities and financial institutions; and
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(2) sales to export processing zones; (3) sales to registered export traders operating bonded trading warehouses supplying raw materials used in the manufacture of export products under guidelines to be set by the Board in consultation with the Bureau of Internal Revenue and the Bureau of Customs; (4) sales to foreign military bases, diplomatic missions and other agencies and/or instrumentalities granted tax immunities, of locally manufactured, assembled or repacked products whether paid for in foreign currency or not: Provided, further, That export sales of registered export traders may include commission income: and Provided, finally, That exportation of goods on consignment shall not be deemed export sales until the export products consigned are in fact sold by the consignee. Sales of locally manufactured or assembled goods for household and personal use to Filipinos abroad and other non-residents of the Philippines as well as returning Overseas Filipinos under the Internal Export Program of the government and paid for in convertible foreign currency inwardly remitted through the Philippine banking systems shall also be considered export sales. ART. 24. Production cost shall mean the total of the cost of direct labor, raw materials, and manufacturing overhead, determined in accordance with
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ART. 28. Criteria in Investment Priority Determination. - No economic activity shall be included in the Investment Priorities Plan unless it is shown to be ECONOMICALLY, TECHNICALLY AND FINANCIALLY SOUND after thorough investigation and analysis by the Board. The determination of PREFERRED AREAS OF INVESTMENT to be listed in the Investment Priorities Plan shall be based on long-run comparative advantage, taking into account the value of social objectives and employing economic criteria along with market, technical; and financial analyses. The Board shall take into account the following: (a) Primarily, the economic soundness of the specific activity as shown by its economic internal rate of return; (b) The extent of contribution of an activity to a specific development goal; (c) Other indicators of comparative advantage; (d) Measured capacity as defined in Article 20; and
Foreign corporation
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e. f.
The extent to which labor, materials and other resources obtained from indigenous sources are utilized; The extent to which technological advances are applied and adopted to local conditions;
ii. iii.
OR exports 70% of its total production Obligates to attain PHILIPPINE NATIONAL STATUS within 30 years from registration EXCEPTION: 100% EXPORT -
g.
The amount of equity and degree to which the ownership of such equity is spread out and diversified; and
B.
Type of Business a. 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 at least fifty percent (50%) of its total production is for export it is an existing producer which will export part of production under such conditions and/or limited incentives as the Board may determine; enterprise is engaged or proposing to engage in the sale abroad of export products bought by it from one or more export producers 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.
h.
applications NOT ACTED UPON within 20 WORKING DAYS shall be deemed approved decision can be appealed to the OFFICE OF THE PRESIDENT within 30 DAYS from its promulgation if appealed, decision of the board shall be FINAL and executory after 90 DAYS after perfection of appeal unless the OP reverses it issued a certificate of registration o o under the seal of the Board of Investments with the signature of its Chairman and/or such other officer or employee of the Board as it may empower and designate for the purpose. CONTENTS The name of the registered enterprise; The preferred area of investment in which the registered enterprise is proposing to engage; The nature of the activity it is undertaking or proposing to undertake, whether pioneer or nonpioneer, and the registered capacity of the enterprise; and The other terms and conditions to be observed by the registered enterprise by virtue of the registration. TITLE II BASIC RIGHTS AND GUARANTEES
b. c.
Certificate of Registration. -
d.
e.
C. D.
Has the capacity to CONTRIBUTE to the development of the preferred are and of the national economy in general Proposing to engage in NOT PREFERRED projects - it must have 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.
a.
b. c.
ART. 38. Protection of Investment. - All investors and registered enterprises are entitled to the basic rights and guarantees provided in the Constitution. Among other rights recognized by the Government of the Philippines are the following: (a) REPARTRIATION OF INVESTMENTS. - right to repatriate the entire proceeds of the liquidation of the investment in the currency in which the investment was originally made and at the exchange rate prevailing at the time of repatriation (b) REMITTANCE OF EARNINGS. right to remit earnings from the investment in the currency in which the investment was originally made and at the exchange rate prevailing at the time of remittance, (c) FREEDOM FROM EXPROPRIATION. - There shall be no expropriation by the government of the property represented by
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.
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Board may require INTERNATIONAL CANVASSING but if value exceed $5 Million, the provisions of PD 1764 on INTERNATIONAL COMPETITIVE BIDDING shall apply. Should the enterprise sell the machinery within 5 YEARS from importation, both the vendor and the vendee shall be liable to pay TWICE the tax exemption granted to it. EXCEPT if sale within 5 years is made to: to another registered enterprise or registered domestic producer enjoying similar incentives; for reasons of proven technical obsolescence; or for purposes of replacement to improve and/or expand the operations of the registered enterprise.
4. Exemption From Wharfage Dues And Export Tax, Duty, Impost And Fees 5. Tax Exemption On Breeding Stocks And Genetic Materials Importation of BREEDING STOCKS and GENETIC MATERIALS a. b. c. not locally available or not available in a comparative price reasonably needed by the enterprise prior approval by Board secured 6. Tax Credits on domestic equipment reasonable needed and exclusively used for registered business would have been tax-exempt had they been imported
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exempt from CONTRACTORS TAX on RAW MATERIALS equivalent to tax due on such Board may set a fixed percentage of export sales as tax
on purchase of genetic material and breeding stocks reasonable needed and exclusively used for registered business would have been tax-exempt had they been imported prior approval of Board secured made within 10 years from registration
Incentves:
1.
and
Major
7.
Income Tax deduction equal to 100% of costs for necessary and major infrastructure works prior approval of the Board in consultation with other government agencies concerned; all such infrastructure works shall upon completion, be transferred to the Philippine Government
B. Non-Fiscal Incentives 1. Employment Of Foreign Nationals Registered enterprise may employ foreign nationals in supervisory, technical or advisory positions for a period not exceeding five (5) years from its registration, extendible for limited periods at the discretion of the Board o if majority of shares owned by foreign nationals, the positions of PRESIDENT, TREASURER and GENERAL MANAGER maybe retained by foreign nationals.
any amount not deducted for a particular year may be carried over for deduction for subsequent years not exceeding ten (10) years from commercial operation. 2. Nationality requirements not as strict in less developed areas Types of Investment a. Pioneer Areas of Investments (Initially owned by foreigners) Investments that are required to attain Filipino status (60% Filipino) within thirty (30) years or such longer period as the BOI may determine except enterprises whose production is 100% geared for exports. Foreign investments are allowed up to forty percent (40%) of the outstanding voting capital stock; may be higher if it exports at least 70% of its total production.
Spouse and children below 21 shall be allowed entry to the Philippines A registered enterprise shall train Filipinos as understudies of foreign nationals in administrative, supervisory and technical skills. 2. 3. Simplification of customs procedures Importation of consigned equipment No restriction as to use of equipment consigned to the registered enterprise o o o 4. upon payment of re-importation bond for the exclusive use of the registered enterprise if sold or transferred, rule on imported machinery shall apply
III. Foreign Investments Act Philippine National 1. citizen of the Philippines; of a domestic partnership or association wholly owned by citizens of the Philippines; 2. a corporation organized under the laws of the Philippines of which at least sixty percent (60%) of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines
The privilege to operate a bonded manufacturing/trading warehouse Access to the utilization of the bonded warehousing system in all areas required by the project subject to such guidelines as may be issued by the Board upon prior consultation with the Bureau of Customs. TITLE IV INCENTIVES TO LESS-DEVELOPED-AREA REGISTERED ENTERPRISE
3.
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Is a foreign corporation required to register with the SEC if it wants to do business in the Philippines? NO What are the consequences of not registering with the SEC? Foreign corporation not registered CANNOT SUE but can counter-sue should the Domestic Corporation file a case against it first Summary of Doing Business: The principles regarding the right of a foreign corporation to bring suit in Philippine courts may thus be condensed in four statements: (1) if a foreign corporation does business in the Philippines without a license, it cannot sue before the Philippine courts; (2) if a foreign corporation is not doing business in the Philippines, it needs no license to sue before Philippine courts on an isolated transaction or on a cause of action entirely independent of any business transaction; (3) if a foreign corporation does business in the Philippines without a license, a Philippine citizen or entity which has contracted with said corporation may be estopped from challenging the foreign corporations corporate personality in a suit brought before the Philippine courts; and (4) if a foreign corporation does business in the Philippines with the required license, it can sue before Philippine courts on any transaction. MR. Holdings, Ltd. V. Bajar, 380 SCRA 617 (2002); Agilent Technolgies Singapore (PTE) Ltd. v. Integrated Silicon Technology Phil. Corp., G.R No. 154618, 14 April (2004). Taxes Expenses Liabilitie s Limited to assets of subsidiary Deposit of Securities NONE required Establishment and Registration Costs: Filing fee: .2% of authorized capital stock but not less than P1,000 Legal Research fee: 1% of fling fee but not less than P10.00 By-laws fee: P500 DST: P1 for each P200 par value of shares Additional Fees: a. P2,000 if
1.
soliciting orders, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totaling one hundred eighty [180] days or more participating in the management, supervision or control of any domestic business, firm, entity or corporation in the Philippines; and any other act or acts that imply a continuity of commercial dealings or arrangements and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of commercial gain or of the Capital Requirement Minimum capital requirement = $200K EXCEPT: 1. advanced technolog y approved by DOST ($100K) 2. direct employme nt of at least 50 persons ($100K)
2.
3.
Definition/ Description
incorporated and existing under the laws of the Philippines wholly owned or at least majority owned by a foreign parent company separate juridical entity from parent company
Corporate Income Tax = 30% of NET income or MCIT (2% of GROSS income) Remittance of Dividends = 30% EXCEPT: 15% if country of parent company 1. grants 15% tax sparing 2. does not impose tax on dividends
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Branch
Minimum capital requirement = $200K EXCEPT: 1. advanced technolog y approved by DOST ($100K) 2. direct employme nt of at least 50 persons ($100K)
Corporate Income Tax = 30% of NET income or MCIT (2% of GROSS income) Branch Profit Remittance Tax = 15% of total profits applied or earmarked for remittance without deduction of tax component (shall not include income derived from activity not related to business)
Parent company can allocate to its branch a proportional part of branchs expenses
Deposit Government Securities = at least P100K with SEC within 60 days from issuance of license Additional securities= 2% of the gross income in excess of P5M within 6 months after each fiscal year NONE required
promotes products of parent company but cannot enter into contracts with local entities on behalf of parent company does not derive income from the Philippines contracts must be entered into by the HEAD OFFICE and the local entity
NO TAX LIABILITY
Acceptable activities of a representative office: a. dissemination of foreign market information; b. promotion for export of Philippine products c. acting as a message centre or a communication centre between interested
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e.
f.
g.
h.
i.
NO income tax if it does not derive income from the Philippines Employees of RAH = 15% of gross income or NIRC rates
NONE required
Filing fee: P5,000 Legal Research fee: 1% of fling fee but not less than P10.00 BOI requirement of annual inward remittance = Not less than $50,000 for expenses
Regional Branch
Not
less
than
Expenses
Liabilities
NONE
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Joint Venture
It refers to a foreign business entity which is allowed to derive income in the Philippines by performing qualifying services to its affiliates, subsidiaries or branches in the Philippines, in the Asia-Pacific Region and in other foreign markets. Regional operating headquarters are prohibited from offering qualifying services to entities other than their affiliates, branches or subsidiaries a cooperative arrangement of
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the foreign corporation may take advantage of the goodwill already generated by the domestic corporation, as an ongoing concern subject to NATIONALITY requirements
Corporate Income Tax = 30% of NET income or MCIT (2% of GROSS income) Tax on the Sale of Shares of Stock: Unlisted corporation, Capital Gains Tax = 5% of the first P 100,000.00 and 10% for the excess above P 100,000.00 of net gain. traded and listed in the Philippine Stock Exchange, = 1/2 of 1% of the value of the stock sold Exchange of property for stock where party gains control of stock TAX FREE Dividends = 30% EXCEPT: 15% if country of parent company 1. grants 15% tax sparing 2. does not impose tax on dividends
NONE Required
DST: P1 for each P200 par value of shares Subsequent sale: DST = .75 centavos for each or fractional part of par value
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contracts entered
or into
b.
transfer of systematic knowledge for the manufacture of a product or the application of a process; rendering of a service, including management
Income Tax = 30% can be reduced to at most 10% by treaty Royalty subject to 12% VAT
No allocation
NONE required
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Manageme nt Contract
NONE required
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