Article 11Supplement v1, p. 11

COMMERCIAL LAWS SUPPLEMENT

for consigned equipment or those imported tax and

duty-free

by

a registered enterprise with a bonded

manufacturing warehouse shall be exempt from customs

duties

and

national

internal

revenue

taxes

payable

thereon: Provided, however, That such spare parts and

supplies are not locally available at reasonable prices,

sufficient quantity and comparable quality: Provided,

finally, That all such spare parts and supplies shall be

used only in the bonded manufacturing warehouse of the

registered enterprise under such requirements as the

Bureau of Customs may impose.

(m) Exemption from Wharfage Dues and Export Tax,

Duty, Imposts and Fee. — The provision of law to the

contrary

notwithstanding,

exports

by

a

registered

enterprise of its non-traditional export products shall be

exempted from any wharfage dues, and any export tax,

duty impost and fee.

(as amended by RA No 7918)

TITLE IV Incentives to Less-Developed-Area

Registered Enterprise

ARTICLE

40.

A

registered

enterprise

regardless

of

nationality located in a less-developed-area included in

the list prepared by the Board of Investments after

consultation with the National Economic & Development

Authority and other appropriate government agencies,

taking into consideration the following criteria: low per

capita gross domestic product; low level of investments;

high rate of unemployment and/or underemployment;

and low level of infrastructure development including its

accessibility to developed urban centers, shall be entitled

to the following incentives in addition to those provided

in the preceding article:

(a)

Pioneer

Incentives .

—

An

enterprise

in

a

less-developed-area registered with the Board under

Book I of this Code, whether proposed, or an expansion of

an existing venture, shall be entitled to the incentives

provided for a pioneer registered enterprise under its law

of registration.

(b) Incentives for Necessary and Major Infrastructure and

Public Utilities . — Registered enterprises establishing

their production, processing or manufacturing plants in

an area that the Board designates as necessary for the

proper dispersal of industry or in an area which the Board

finds deficient in infrastructure, public utilities, and other

facilities, such as irrigation, drainage or other similar

waterworks

infrastructure

may

deduct

from

taxable

income an amount equivalent to one hundred percent

(100%) of necessary and major infrastructure works it may

have undertaken with the prior approval of the Board in

consultation with other government agencies concerned;

Provided, That the title to all such infrastructure works

shall upon completion, be transferred to the Philippine

Government: Provided, further , That 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.

TITLE V General Provisions

ARTICLE

41.

Power

of

the

President

to

Rationalize

Incentives . — The President may, upon recommendation

of the Board and in the interest of national development,

rationalize the incentives scheme herein provided; extend

the period of availment of incentives or increase rates of

tax

exemption

of

any

project

whose

viability

or

profitability require such modification.

ARTICLE

42.

Refund

and

Penalties .

—

In

case

of

cancellation of the certificate granted under this Code,

the Board may, in appropriate cases, require the refund of

incentives availed of and impose corresponding fines and

penalties.

ARTICLE 43. Benefits of Multiple Area Enterprises . —

When a registered enterprise engages in activities or

endeavors that have not been declared preferred areas of

investments, the benefits and incentives accruing under

this Code to registered enterprises and investors therein

shall be limited to the portion of the activities of such

registered enterprise as is a preferred area of investment.

BOOK II Foreign Investments Without Incentives

TITLE I

CHAPTER I Definitions and Scope of this Book

ARTICLE 44. Definition of terms . — As used in this Book,

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 totalling 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 purpose and object of the business

organization.

ARTICLE 45. Non-Applicability to Banking Institutions . —

This Book shall not apply to banking institutions which

are governed and regulated by the General Banking Act

and other laws which are under the supervision of the

Central Bank.

CHAPTER II Investments

ARTICLE 46. Permitted Investments . — (1) Without need

of prior authority, anyone not a Philippine national as that

term is defined in Article 15 of this Code, and not

otherwise disqualified by law, may invest:

(a) In any enterprise registered under Book One hereof, to

the extent that the total investment of non-Philippine

nationals

therein

would

not

affect

its

status

as

a

registered enterprise under the law;

(b) In an enterprise not registered under Book One

hereof,

to

the

extent

that

the

total

investment

of

non-Philippine nationals herein shall not exceed forty

percent

(40%)

of

the

outstanding

capital

of

that

enterprise, unless existing law forbids any non-Philippine

ownership

in

the

enterprise

or limits ownership by

non-Philippine nationals to a percentage smaller than

forty percent (40%).

(2) Within thirty (30) days after notice of the investment is

received by it, the enterprise in which any investment is

made by a non-Philippine national shall register the same

with the Board of Investments for purposes of record.

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.

ARTICLE 47. Permissible Investments . — If an investment

by

a

non-Philippine

national

in

an

enterprise

not

registered under Book One hereof is such that the total

participation

by

non-Philippine

nationals

in

the

outstanding capital thereof shall exceed forty percent

(40%), the enterprise must obtain prior authority from the

Board of Investments, which authority shall be granted

unless the proposed investment —

(a) Would conflict with existing constitutional provisions

and laws regulating the degree of required ownership by

Philippine nationals in the enterprise; or

(b) Would pose a clear and present danger of promoting

monopolies or combinations in restraint of trade; or

© Compiled by RGL

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