An Act to Require that the Making of Investments and the Doing of Business Within the Philippines by Foreigners or Business Organizations Owned in Whole or in Part by Foreigners Should Contribute to the Sound and Balanced Development of the National Economy on a Self-Sustaining Basis, and for Other Purposes

REPUBLIC ACT No. 5455

An Act to Require that the Making of Investments and the Doing of Business Within the Philippines by Foreigners or Business Organizations Owned in Whole or in Part by Foreigners Should Contribute to the Sound and Balanced Development of the National Economy on a Self-Sustaining Basis, and for Other Purposes

Be it enacted by the Senate and House of Representatives of the Philippine Congress Assembled:

Section 1. Definitions and scope of this Act.— (1) As used in this Act, the term "investment" shall mean equity participation in any enterprise formed, organized or existing under the laws of the Philippines; and the phrase "doing business" shall include soliciting orders, purchases, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors who are domiciled in the Philippines or who in any calendar year stay in the Philippines for a period or periods totaling one hundred eighty days or more; participating in the management, supervision or control of any domestic business firm, entity or corporation in the Philippines; and any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization.

Section 2. Permitted Investments.— (1) Without need of prior authority anyone not a Philippine national as that term is defined in Section three of the Investment Incentives Act, and not otherwise disqualified by law, may invest:

Section 3. Permissible Investments.— If an investment by a non-Philippine national in an enterprise not registered under the Investment Incentives Act is such that the total participation by non-Philippine nationals in the outstanding capital thereof shall exceed thirty per cent, the enterprise must obtain prior authority from the Board of Investments, which authority shall be granted unless the proposed investment

Investments made in the form of foreign exchange or other assets actually transferred to the Philippines shall also be registered with the Central Bank. The Board shall assess and appraise the value of such assets other than foreign exchange.

Section 4. Licenses to do business.— No alien, and no firm, association, partnership, corporation or any other form of business organization formed, organized, chartered or existing under any laws other than those of the Philippines, or which is not a Philippine national, or more than thirty per cent of the outstanding capital of which is owned or controlled by aliens shall do business or engage in any economic activity in the Philippines, or be registered, licensed, or permitted by the Securities and Exchange Commission or by any other bureaus, office, agency, political subdivision or instrumentality of the government, to do business, or engage in any economic activity in the Philippines, without first securing a written certificate from the Board of Investments to the effect;

Upon granting said certificate, the Board shall impose the following requirements on the alien or the firm, association, partnership, corporation or other form of business organization that is not organized or existing under the laws of the Philippines

The above requirement shall be in addition to those set forth in the Corporation Law, as amended, for licensing foreign corporations and a violation of any of these requirements shall be sufficient cause to cancel a license or permit issued pursuant to this Act: Provided, However, That this section shall not apply to aliens or foreign firms, associations partnerships, corporations or other forms of business organization not organized or existing under the laws of the Philippines who may lawfully have been licensed to do business in the Philippines prior to the effectivity of this Act; Provided, further, That where the issuance of said license has been irregular or contrary to law, any person adversely affected thereby may file an action with the Court of First Instance where said alien or foreign business organizations resides or has its principal office to cancel the said license. In such cases, no injunction shall issue without notice and hearing; and appeals and other proceedings for review shall be filed directly with the Supreme Court.

Section 5. Mergers and Consolidations.— The provisions of this Act shall apply to any merger, consolidation, syndicate or any other combination of firms, associations, partnerships or other forms of business organization that will result in ownership or control by persons or entities that are not Philippine nationals of more than thirty per cent of the capital of whatever organization results from the merger, consolidation, syndicate or other combination.

Section 6. Local Government Action.— No agency, instrumentality or political subdivision of the Government shall take any action in conflict with or which will nullify the provisions of this Act, or any certificate or authority granted thereunder.

Section 7. Publication and Posting of Notices.— Immediately after the filing of any application under this Act, the Secretary of the Board of Investments shall publish the same at the expense of the applicant once a week for three consecutive weeks in the Official Gazette and in one of the newspapers of general circulation in the province or city where the applicant has its principal office and post copies of said application in conspicuous places, in the office of the Board of Investments or in the building where said office is located, setting forth in such copies the name of the applicant, the business in which it is engaged or proposes to engage or invest, and such other data and information as may be required by the Board of Investments. No approval or certificate shall be valid without the publication and posting of notices as herein provided.

Section 8. Judicial Relief.— From any decision of the Board of Investments under this Act, or from the failure of the Board of Investments to act on any application within sixty days from the date of final publication of the application, the applicant or any person adversely affected thereby may seek judicial relief in the Court of First Instance of Manila.

Section 9. Rules and Regulations.— The Board of Investments shall promulgate such rules and regulations as may be necessary to enforce the intent and provisions of this Act. The rules and regulations shall take effect thirty days after their publication in the Official Gazette and in two (2) newspapers of general circulation in the Philippines.

Section 10. Penal Clause.— Any violation of this Act or of the requirements for a license to do business within the Philippines shall be punished with a fine of not less than ten thousand pesos and not more than twenty-five thousand pesos and imprisonment of not less than five years and not more than ten years. If the violation is committed by a corporation or association, the penalty shall be imposed upon the president, director or directors, manager, managing partner, or other official thereof responsible for such violation. Any alien violating or responsible for the violation of this Act shall, upon completion of the service of sentence, be deported without any further proceedings on the part of the Deportation Board. Any government official or employee who aids, abets or connives with any person in violating this Act shall, in addition to the penalty which may be imposed upon him as a principal, be perpetually disqualified from holding any public office.

Section 11. Separability Clause.— If any part or section of this Act is declared unconstitutional for any reason, whatsoever, such declaration shall not in any way affect the other parts or sections of this Act.

Section 12. Repealing Clause.— All laws or parts of laws inconsistent herewith are hereby repealed or modified accordingly.

Section 13. Appropriation.— The sum of one million pesos or so much thereof as may be necessary, out of any funds in the National Treasury not otherwise appropriated, is hereby authorized to be appropriated to carry out the provisions of this Act.

Section 14. Effectivity.— This Act shall take effect upon approval.

Approved: September 30, 1968.