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.
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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
September 30, 1968
Case Overview and Summary
Summary of Republic Act No. 5455Definitions and Scope (Section 1):
- Defines "investment" as equity participation in Philippine enterprises.
- Defines "doing business" to include various commercial activities in the Philippines.
- Excludes banking institutions governed by other laws.
Permitted Investments (Section 2):
- Non-Philippine nationals can invest:
- In enterprises registered under the Investment Incentives Act, without affecting their registered status.
- In non-registered enterprises, up to 30% of outstanding capital, unless existing law prohibits or limits foreign ownership.
- Investments must be registered with the Board of Investments and Central Bank within 30 days.
Permissible Investments (Section 3):
- Investments exceeding 30% in non-registered enterprises require prior Board of Investments approval, unless:
- It conflicts with laws on Philippine ownership requirements (Section 3a).
- It poses a danger of promoting monopolies or restraint of trade (Section 3b).
- The area is adequately exploited by Philippine nationals (Section 3c).
- It conflicts with the Investments Priorities Plan (Section 3d).
- It does not contribute to sound and balanced economic development (Section 3e).
Licenses to Do Business (Section 4):
- Foreign entities cannot do business in the Philippines without a Board of Investments certificate confirming:
- Consistency with the Investments Priorities Plan (Section 4.1).
- Contribution to sound and balanced economic development (Section 4.2).
- No conflict with the Constitution or laws (Section 4.3).
- The area is not adequately exploited by Philippine nationals (Section 4.4).
- No danger of promoting monopolies or restraint of trade (Section 4.5).
- Additional requirements for foreign entities include:
- Appointing a resident agent (Section 4.1).
- Establishing an office and notifying the SEC (Section 4.2).
- Bringing in capital assets as required by the Board (Section 4.3).
- Proving reciprocity for Philippine nationals in their home country (Section 4.4).
- Submitting charter, by-laws, and financial statements to the SEC (Section 4.5).
- Keeping accounting records with the resident agent (Section 4.6).
- Prioritizing resident creditors upon insolvency (Section 4.7).
- Giving advance notice of stopping business operations (Section 4.8).
- Not terminating agreements with Philippine residents without just cause and compensation (Section 4.9).
Mergers and Consolidations (Section 5):
- The Act applies to mergers, consolidations, or combinations resulting in over 30% foreign ownership.
Local Government Action (Section 6):
- No government agency can take action conflicting with or nullifying the Act.
Publication and Posting of Notices (Section 7):
- Applications must be published in the Official Gazette and a local newspaper for 3 consecutive weeks.
- Copies must be posted in conspicuous places.
- No approval is valid without publication and posting.
Judicial Relief (Section 8):
- Applicants or affected parties can seek judicial relief from the Court of First Instance of Manila for Board decisions or inaction within 60 days.
Rules and Regulations (Section 9):
- The Board of Investments shall promulgate rules and regulations to enforce the Act, effective 30 days after publication.
Penal Clause (Section 10):
- Violations are punishable by a fine of 10,000 to 25,000 pesos and 5 to 10 years imprisonment.
- Corporate officers responsible for violations will be penalized.
- Alien violators will be deported after serving their sentence.
- Government officials aiding violations will be disqualified from public office.
Separability Clause (Section 11):
- If any part of the Act is declared unconstitutional, the remaining parts remain valid.
Repealing Clause (Section 12):
- All inconsistent laws are repealed or modified accordingly.
Appropriation (Section 13):
- 1 million pesos is appropriated from the National Treasury to carry out the Act.
Effectivity (Section 14):
- The Act takes effect upon approval.
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Statutes
Republic Acts
foreign investments
doing business in the Philippines
non-Philippine nationals
Board of Investments
Investment Incentives Act
Central Bank
Securities and Exchange Commission
resident agent
monopolies
restraint of trade
Investments Priorities Plan
economic activity
foreign exchange
assets transfer
license requirements
penalties
separability clause
repealing clause
appropriation
Law
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
•September 30, 1968
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.
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...
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