R.A. 3079

REPUBLIC ACT No. 3079

AN ACT AMENDING CERTAIN SECTIONS OF REPUBLIC ACT NUMBERED ONE THOUSAND SEVEN HUNDRED EIGHTY-NINE, ENTITLED "AN ACT PRESCRIBING THE NATIONAL POLICY IN THE PROCUREMENT AND UTILIZATION OF REPARATIONS AND DEVELOPMENT LOANS FROM JAPAN, CREATING A REPARATIONS COMMISSION TO IMPLEMENT THE POLICY, PROVIDING FUNDS THEREFOR, AND FOR OTHER PURPOSES."

Section 1. Paragraph (a) of Section two of Republic Act Numbered One thousand seven hundred eighty-nine, as amended, is further amended to read as follows:

Section 2. Between paragraphs (a) and (b), between paragraphs (b) and (c), and after paragraph (f) of Section two of the same Act, there are hereby inserted paragraphs (a-1), (b-1), and (g) and (h), respectively, to read as follows:

Section 3. Paragraphs (d) and (e) of Section two of the same Act, as amended, are further amended to read as follows:

Section 4. Section three of the same Act is amended to read as follows:

"Sec. 3. Special Economic Development Fund. The proceeds from the sale of reparations goods and utilization of services (excluding the sum referred to in Section two, paragraph (d) hereof), together with interests earned, shall be constituted into a Special Economic Development Fund, out of which Congress may appropriate by special laws, from time to time, such amounts as may be necessary to constitute a Special Trust Fund which shall be available to the Development Bank of the Philippines and the Philippine National Bank for loans for economic and industrial development projects as well as for construction, reconstruction, repair and/or improvement of public school buildings in amounts not exceeding eighty per cent of the value of the securities and payable within a period not exceeding twenty years depending upon the kind of the loan and with interest at a rate not exceeding four per cent per annum: Provided, That the Development Bank of the Philippines and the Philippine National Bank shall charge for their services only the actual cost thereof and shall not make any profit therefrom: Provided, further, That fifty per cent of such Special Trust Fund shall be available for industrial loans, thirty per cent for agricultural loans (but not more than twenty per cent of such agricultural loans may be granted on any single agricultural crop), and the remaining twenty per cent, which shall be given top priority, for public school building construction, reconstruction, repair and/or improvement, as Congress may provide from time to time. The sum of twenty million pesos shall likewise be set aside from the said Special Economic Development Fund to constitute a revolving fund which shall be used exclusively to aid in the establishment of rural banks, subject to the provisions of Republic Act Numbered Seven hundred twenty, otherwise known as the `Rural Banks Act,' as amended, and the further sum of fifty million pesos for the purchase of landed estates as provided for in the Land Tenure Act and such other landed estates as provided for by other special Acts."

Section 5. Paragraphs (a), (b), (c), and (e) of Section five of the same Act, as amended, are hereby further amended to read as follows:

"Sec. 5. The implementing machinery. (a) For the purpose of implementing the provisions of this Act, the Reparations Agreement, and the exchange of notes on reparations loans, there is hereby created the Reparations Commission, hereinafter referred to as the Commission, which shall be composed of a Chairman and four other members, at least one of whom shall belong to the minority party whose presidential candidate obtained the second largest number of votes in the presidential election immediately preceding his appointment, to be appointed by the President of the Philippines, with the consent of the Commission on Appointments, who shall serve until removed for cause or by reason of death or disability. The Chairman shall receive a salary of eighteen thousand pesos per annum and the other members, fifteen thousand pesos per annum each. All decisions of the Commission shall be by majority vote.

Section 6. Paragraph (e-1), Section five of the same Act is repealed.

Section 7. Section six, except paragraphs (b), (c), (e), (f), (g), (h) and (i), of the same Act is hereby amended to read as follows:

"Sec. 6. Powers, functions and duties of the Commission. The Commission shall administer the acquisition, utilization and distribution of the reparations goods and/or services subject to the provisions of the Reparations Agreement and this Act. In line with the overall economic program and the policy set in this Act, the Commission shall prepare and submit for the approval of the President of the Philippines, upon recommendation of the National Economic Council, (a) a five-year reparations program to be revised yearly as conditions warrant, consisting of a bread list of eligible projects, which shall be strictly priority-rated from the first to the last item in accordance with the system of priorities established by the National Economic Council, of which the first year shall be made as firm as possible and in sufficient detail to form the preliminary basis for the schedule of goods and services called for in Article four of the Reparations Agreement: Provided, That in the reparations program to be adopted priority shall be given to projects already approved by the Commission and already included in the schedule agreed upon between the Philippine and the Japanese Governments and for which procurement orders have already been issued to the end that complete and full payments shall be affected on such projects which have been given priority by the National Economic Council before procurement orders for new projects shall have been issued by the Commission: Provided, further, That no project shall be included in the tentative schedule unless it has previously been priority-rated as part of the five-year reparations program: Provided, further, That the priority rating of the projects in such a program shall determine and control the order or priority of each project in the tentative and agreed schedule which order may not be altered without prior notice to and approval of the corresponding change or amendment by the National Economic Council and the President, and it shall be mandatory on the Reparations Commission to furnish the National Economic Council such information as will enable the National Economic Council to implement this proviso; (b) the amount, extent, and conditions including the terms of payment under which reparations shall be procured, distributed and utilized; (c) the rules and regulations to be followed in administering the procurement, distribution, and utilization of reparations, including the procedure and forms of application thereof. Such reparations program, conditions of procurement, distribution and utilization, and rules and regulations governing the administration, distribution and utilization of reparations shall be duly published once a week for three consecutive weeks, in two newspapers, one in Tagalog and another in English, of general circulation in the Philippines: Provided, however, That the Commission may submit proposed amendments to the rules and regulations, the reparations program and the yearly schedule, as circumstances in the future may require, for approval of the President of the Philippines, upon recommendation by the National Economic Council.

Section 8. Paragraphs (a), (b) and (d) of Section seven of the same Act are hereby amended to read as follows:

Section 9. Section ten of the same Act, as amended, is hereby further amended to read as follows:

"Sec. 10. Operating Funds. The funds for the approved budget of the Commission shall be provided for in the annual General Appropriation Acts. The Commission is empowered to impose a service fee not greater than two per cent on all transactions except those where the reparations goods and/or services are used for the government non-revenue producing projects. For its initial operating fund, the Commission is hereby authorized to obtain from the Central Bank temporary advances not exceeding a total sum of one million pesos, which shall be reimbursed out of the proceeds from reparations."

Section 10. Section eleven of the same Act is amended to read as follows:

"Sec. 11. Terms of procurement. As a general rule, reparations goods shall be procured on an f.o.b. (free-on-board) Japanese port basis: Provided, That the Mission may, if circumstances so warrant, procure such goods on c. and f. (cost and freight) Philippine port, ex-factory or c.i.f. (cost, insurance and freight) Philippine port basis, in which case the suppliers shall be required to quote separately expenses for freight. When reparations goods shall be paid on installments, only the f.o.b. cost thereof, exclusive of the insurance, ocean freight and other expenses incident to importation shall be considered in computing the amount of the installments. The insurance shall be obtained from domestic insurance companies wholly owned by Filipino citizens: Provided, That upon delivery of reparations goods, whether partial or complete, pursuant to contract, to the end-user, whether a government agency or a private person or entity, the end-user shall insure at his expense said goods or parts thereof or attachment thereto, against loss or damage due to any and/or all causes, including but not limited to war, theft, robbery, unauthorized dismantling, with the Government Service Insurance System pursuant to the provisions of Republic Act Numbered Six hundred fifty-six, or with any private domestic insurance company, eighty per cent of the capital of which is owned by Filipino citizens and the management of which is vested in such citizens, the policy to be endorsed in favor of the Commission to the extent of its insurable interest, for as long as the government has any insurable interest on such goods. The insurance, ocean freight and other expenses incident to importation shall be paid by the end-user in accordance with usual business practices. As much as possible, in the transportation of reparations goods from Japan to the Philippines, carriers of the Philippine registry shall be preferred. The inspection and testing of reparations goods, whether intended for the government for the private sector, shall be undertaken only by agencies specifically designated by the Philippine Government through the Mission: Provided, That preference shall be given to Philippine registered and internationally recognized inspection and testing firms. Nothing herein shall be construed as exempting the end-user from paying in full all the necessary costs, charges and expenses incident to the application for the procurement, production, delivery and acquisition of, the goods concerned."

Section 11. The first paragraph of Section twelve of the same Act is amended as follows:

"Sec. 12. Terms of Sale. Capital goods and complimentary services intended for non-revenue producing government projects or for projects intended for public benefit and welfare shall be transferred to the agencies concerned without cost, and those intended for revenue producing government projects at procurement cost, the incidental expenses being payable in cash by the end-user before delivery. Capital goods and complementary services disposed of to private parties as provided for in subsection (a) of Section two hereof shall be sold on cash or credit basis under rules and regulations as may be determined by the Commission. Sales on credit basis shall be payable on installments: Provided, That, in case of capital goods for the utilization of which an initial investment before operation of not more than twenty per cent of the cost of such goods is required, the first installment shall be paid on the third month after complete delivery of the goods, and in the case of capital goods for the utilization of which an initial investment before operation of more than twenty per cent of the cost of such goods is required, and also in the case of ocean-going vessels, the first installment shall be paid on the twelfth month after complete delivery of the goods, extendible when deemed to be justified by the Commission not exceeding one year. The balance, in both cases, shall be paid in equal annual installments with interest at three per cent per annum within a period to be fixed by the Commission after considering the economic life expectancy of the goods but in no case exceeding ten years from the date the first installment falls due: Provided, That in the case of vessels, the procurement cost thereof shall be paid within the period provided for in Republic Act Numbered Fourteen hundred and seven. The Commission may provide for the payment of additional interests at the rate not exceeding three per cent per annum for delinquency in the payment of installments. Goods other than capital goods procured as reparations shall be sold for cash only at prevailing prices for similar goods.

"In all transactions involving the transfer of capital goods and/or services from reparations to authorized private parties specified in this Act, the sale shall be directly to end-users and not through middlemen. The contract of the sale shall bear the conditions that no capital goods of the sale shall bear the conditions that no capital goods thus acquired shall be resold, leased or in any other manner disposed of except to Filipino citizens or to entities wholly owned by Filipino citizens who shall continue the utilization thereof in the projects for which the goods were originally intended or in similar projects included in the economic development program of a similar priority, subject, however, to the further condition that groups, associations and corporations which are recipient such goods shall not permit any subsequent change in ownership or control as shall at any time thereafter change the control or ownership wholly held therein by Filipino citizens. It shall further contain a provision that any transfer of ownership, whether by virtue of a private contract or through court proceedings, shall be to Filipino citizens or entities wholly owned by Filipino citizens who shall begin utilizing them in such projects as the National Economic Council shall determine within one year from notice of the Council's decision."

Section 12. The same Act is amended by inserting between Sections twelve and thirteen a new section to be known as Section 12-A, to read as follows:

"Sec. 12-A. Performance Bond. Before delivery of the reparations goods, the private end-user shall file a performance bond in favor of the Commission in an amount equivalent to ten per cent of the f.o.b. cost, or in lieu thereof, it shall be sufficient if the private end-user shall execute in favor of the Commission a guaranty secured by real estate or any other property accepted to the Commission in an amount equivalent to ten per cent of the total f.o.b. cost, Japanese port, of the capital goods to be delivered to end-user. The conditions of said bond shall be as prescribed by the rules and regulations of the Commission."

Section 13. Section thirteen of the same Act is hereby amended by adding a new paragraph to read as follows:

"The Commission shall include in the contract between the Mission and the Japanese supplier the following provision: that the supplier agrees to allow the Auditor General or his duly authorized representative to have access to and examine any directly pertinent books, documents, papers and records of the supplier involving transactions related to this contract within three years from the time of final payment."

Section 14. Section fourteen of the same Act is amended to read as follows:

"Sec. 14. Exemption from tax. All reparations goods obtained by the government shall be exempt from the payment of all duties, fees and taxes. Reparations goods obtained by private parties shall be exempt from the payment of customs duties, compensating tax, consular fees and the special import tax."

Section 15. Between Sections fifteen and sixteen of the same Act, there is hereby inserted a new section to read as follows:

"Sec. 15-A. Foreign Exchange Requirements. Every applications for reparations shall specify the foreign exchange requirements, if any, of the project in terms of the goods and/or services which can not be procured as reparations under the reparations agreement. No applications shall be approved until after all the foreign exchange requirements of the project shall have been ascertained and shown in the project study and a certificate of the Central Bank secured attesting to the availability, when and as required, of the required foreign exchange for the project."

Section 16. Paragraphs (a) and (b) of Section nineteen of the same Act are amended to read as follows:

"Sec. 19. Violations and Penalties. (a) Any person who fails to utilize any capital goods acquired from the Commission for the purpose for which they were intended within a period of twenty-four months after actual complete physical delivery, or does not continue to utilize the same without any reasonable cause as long as they are serviceable after having started operations, shall be subject to a fine of five per cent of the value of such goods for every year of default or fraction thereof and to imprisonment for not less than five years nor more then ten years. In addition thereto, the goods, as well as the payments already made thereon, shall be subject to confiscation and forfeiture to the government.

Section 17. Section nineteen of the same Act is hereby amended by inserting between paragraphs (a) and (b), and (b) and (c) thereof two new paragraphs to read, respectively, as follows:

Section 18. Paragraphs (c) and (f) of Section nineteen of the same Act are hereby amended to read as follows:

"In all cases, the guilty parties shall, in addition, be disqualified from subsequently applying for/or utilizing any reparations or loans, whether in the form of goods or services, or the proceeds from the sale of reparations goods for the utilization of services."

Section 19. Section twenty of the same Act is amended to read as follows:

"Sec. 20. Anti-dummy. In all cases in which any provision of this Act requires Philippine or any other specific citizenship as a requisite for the exercise or enjoyment or right, franchise, privilege, reparations goods, machinery, equipment or services, of whatever nature, any citizen of the Philippines or of any other specific country who allows his name or citizenship to be used for the purpose of evading such provision, and any alien or foreigner profiting thereby, shall be punished by imprisonment of not less than ten nor more than twenty years, and by a fine of not less than the value of the right, franchise, privilege, reparations goods, machinery, equipment or services, which is enjoyed or acquired in violation of the provisions hereof but in no case less than ten thousand pesos. In all cases of violations hereof, the pertinent provisions of Commonwealth Act Numbered One hundred eight, as amended by Republic Act Numbered One hundred thirty-four and Republic Act Numbered Eleven hundred thirty, whenever applicable, are hereby extended thereto."

Section 20. This Act shall take upon its approval, except that the amendment contained in Section seven hereof relating to the requirements for procurement orders including the requirement of down payment by private applicant end-users shall not apply to procurement orders already duly issued and verified at the time of the passage of this amendatory Act, and except further that the amendment contained in Section ten relating to the insurance of the reparations goods by the end-users upon delivery shall apply also to goods covered by contracts already entered into by the Commission and the end-user prior to the approval of this amendatory Act as well as goods already delivered to the end-user, and except further that the amendments contained in Sections eleven and twelve hereof relating to the terms of installment payments on capital goods disposed of to private parties, and the execution of a performance bond before delivery of reparations goods, shall not apply to contracts for the utilization of reparations goods already entered into by the Commission and the end-users prior to the approval of this amendatory Act: Provided, That any end-user may apply for the renovation of his utilization contract with the Commission in order to avail of any provision of this amendatory Act which is more favorable to an applicant end-user than has heretofore been granted in like manner and to the same extent as an end-user filing his application after the approval of this amendatory Act, and the Commission may agree to such renovation on condition that the end-user shall voluntarily assume all the new obligations provided for in this amendatory Act.

Approved: June 17, 1961