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Ways around Philippines Foreign Investment Act

April 9, 2017August 12, 2013

Many people ask how they may circumvent the Philippines laws on foreign ownership as stated in the foreign investment negative list.

Most inquires pertain to foreign ownership of land and foreign ownership of corporations engaged in retail business or where the foreign equity is restricted to 40% or less.

No legal solutions exist for a foreigner to own land in their own name or to own more than the legal percentage of a business allowed to him by law. The use of nominees with side agreements is illegal and is a violation of the Anti-Dummy Law.

The Department of Justice Opinion No. 165, Series of 1984 indicates what may determine that the Anti-Dummy Law is being violated:

•   That the foreign investor provides practically all the funds for the joint investment undertaken by Filipino businessmen and their foreign partner.
•   That the foreign investors undertake to provide practically all the technological support for the joint venture.
•   That the foreign investors, while being minority stockholders, manage the company and prepare all economic viability studies.

Foreign investors may think they are protected by side agreements naming them the beneficial owners, however when the time comes to use the agreement in court, they will discover that the agreement has no value being a document that violates the law. Another common occurrence is for the foreign investor to find that the nominee has taken over the business or has sold all the business’s assets.

No matter what people may tell you, the best way to do business in the Philippines is to obey the foreign investment act regulations regarding foreign ownership. Shortcuts only equal unnecessary risks.

Rules of Court of the Philippines, Rule 138

April 2, 2017May 9, 2013

Rule 138 – Rules of Court
Attorneys and Admission to Bar

ATTORNEYS & ADMISSION TO BAR

Rule 138

Section 1. Who may practice law. – Any person heretofore duly admitted as a member of the bar, or hereafter admitted as such in accordance with the provisions of this rule, and who is in good and regular standing, is entitled to practice law.

Sec. 2. Requirements for all applicants for admission to the bar. – Every applicant for admission as a member of the bar must be a citizen of the Philippines, at least twenty-one years of age, of good moral character, and a resident of the Philippines; and must produce before the Supreme Court satisfactory evidence of good moral character, and that no charges against him, involving moral turpitude, have been filed or are pending in any court in the Philippines.

Sec. 3. Requirements for lawyers who are citizens of the United States of America. – Citizens of the United States of America who, before July 4, 1946, were duly licensed members of the Philippine Bar, in active practice in the courts of the Philippines and in good and regular standing as such may, upon satisfactory proof of those facts before the Supreme Court, be allowed to continue such practice after taking the following oath of office:

“I, _________________________, having been permitted to continue in the practice of law in the Philippines, do solemnly swear that I recognize the supreme authority of the Republic of the Philippines; I will support its Constitution and obey the laws as well as the legal orders of the duly constituted authorities therein; I will do no falsehood, nor consent to the doing of any in court; I will not wittingly or willingly promote or sue any groundless, false or unlawful suit, nor give aid nor consent to the same; I will delay no man for money or malice, and will conduct myself as a lawyer according to the best of my knowledge and discretion with all good fidelity as well to the courts as to my clients; and I impose upon myself this voluntary obligation without any mental reservation or purpose of evasion. So help me God.”

Sec. 4. Requirements for applicants from other jurisdictions. – Applicants for admission who, being Filipino citizens, are enrolled attorneys in good standing in the Supreme Court of the United States or in any circuit court of appeals or district court therein, or in the highest court of any State or Territory of the United States, and who can show by satisfactory certificates that they have practiced at least five years in any of said courts, that such practice began before July 4, 1946, and that they have never been suspended or disbarred, may, in the discretion of the Court, be admitted without examination.

Sec. 5. Additional requirements for other applicants. – All applicants for admission other than those referred to in the two preceding sections shall, before being admitted to the examination, satisfactorily show that they have regularly studied law for four years, and successfully completed all prescribed courses, in a law school or university, officially approved and recognized by the Secretary of Education. The affidavit of the candidate, accompanied by a certificate from the university or school of law, shall be filed as evidence of such facts, and further evidence may be required by the court.

No applicant shall be admitted to the bar examinations unless he has satisfactorily completed the following courses in a law school or university duly recognized by the government: civil law, commercial law, remedial law, criminal law, public and private international law, political law, labor and social legislation, medical jurisprudence, taxation and legal ethics.

Sec. 6. Pre-Law. – No applicant for admission to the bar examination shall be admitted unless he presents a certificate that he has satisfied the Secretary of Education that, before he began the study of law, he had pursued and satisfactorily completed in an authorized and recognized university or college, requiring for admission thereto the completion of a four-year high school course, the course of study prescribed therein for a bachelor’s degree in arts or sciences with any of the following subjects as major or field of concentration: political science, logic, english, spanish, history and economics.

Sec. 7. Time for filing proof of qualifications. – All applicants for admission shall file with the clerk of the Supreme Court the evidence required by section 2 of this rule at least fifteen (15) days before the beginning of the examination. If not embraced within sections 3 and 4 of this rule they shall also file within the same period the affidavit and certificate required by section 5, and if embraced within sections 3 and 4 they shall exhibit a license evidencing the fact of their admission to practice, satisfactory evidence that the same has not been revoked, and certificates as to their professional standing. Applicants shall also file at the same time their own affidavits as to their age, residence, and citizenship.

Sec. 8. Notice of applications. – Notice of applications for admission shall be published by the clerk of the Supreme Court in newspapers published in Pilipino, English and Spanish, for at least ten (10) days before the beginning of the examination.

Sec. 9. Examination; subjects. – Applicants, not otherwise provided for in sections 3 and 4 of this rule, shall be subjected to examinations in the following subjects: Civil Law; Labor and Social Legislation; Mercantile Law; Criminal Law; Political Law (Constitutional Law, Public Corporations, and Public Officers); International Law (Private and Public); Taxation; Remedial Law (Civil Procedure, Criminal Procedure, and Evidence); Legal Ethics and Practical Exercises (in Pleading and Conveyancing).

Sec. 10. Bar examination, by questions and answers, and in writing. – Persons taking the examination shall not bring papers, books or notes into the examination rooms. The questions shall be the same for all examinees and a copy thereof, in English or Spanish, shall be given to each examinee. Examinees shall answer the questions personally without help from anyone.

Upon verified application made by an examinee stating that his penmanship is so poor that it will be difficult to read his answers without much loss of time, the Supreme Court may allow such examinee to use a typewriter in answering the questions. Only noiseless typewriters shall be allowed to be used.

The committee of bar examiners shall take such precautions as are necessary to prevent the substitution of papers or commission of other frauds. Examinees shall not place their names on the examination papers. No oral examination shall be given.

Sec. 11. Annual examination. – Examinations for admission to the bar of the Philippines shall take place annually in the City of Manila. They shall be held in four days to be designated by the chairman of the committee on bar examiners. The subjects shall be distributed as follows: First day: Political and International Law (morning) and Labor and Social Legislation (afternoon); Second day: Civil Law (morning) and Taxation (afternoon); Third day: Mercantile Law (morning) and Criminal Law (afternoon); Fourth day: Remedial Law (morning) and Legal Ethics and Practical Exercises (afternoon).

Sec. 12. Committee of examiners. – Examinations shall be conducted by a committee of bar examiners to be appointed by the Supreme Court. This committee shall be composed of a Justice of the Supreme Court, who shall act as chairman, and who shall be designated by the court to serve for one year, and eight members of the bar of the Philippines, who shall hold office for a period of one year. The names of the members of this committee shall be published in each volume of the official reports.

Sec. 13. Disciplinary measures. – No candidate shall endeavor to influence any member of the committee, and during examination the candidates shall not communicate with each other nor shall they give or receive any assistance. The candidate who violates this provision, or any other provision of this rule, shall be barred from the examination, and the same to count as a failure against him, and further disciplinary action, including permanent disqualification, may be taken in the discretion of the court.

Sec. 14. Passing average. – In order that a candidate may be deemed to have passed his examinations successfully, he must have obtained a general average of 75 per cent in all subjects, without falling below 50 per cent in any subject. In determining the average, the subjects in the examination shall be given the following relative weights: Civil Law, 15 per cent; Labor and Social Legislation, 10 per cent; Mercantile Law, 15 per cent; Criminal Law; 10 per cent; Political and International Law, 15 per cent; Taxation, 10 per cent; Remedial Law, 20 per cent; Legal Ethics and Practical Exercises, 5 per cent.

Sec. 15. Report of the committee; filing of examination papers. – Not later than February 15th after the examination, or as soon thereafter as may be practicable, the committee shall file its reports on the result of such examination. The examination papers and notes of the committee shall be fixed with the clerk and may there be examined by the parties in interest, after the court has approved the report.

Sec. 16. Failing candidates to take review course. – Candidates who have failed the bar examinations for three times shall be disqualified from taking another examination unless they show to the satisfaction of the court that they have enrolled in and passed regular fourth year review classes as well as attended a pre-bar review course in a recognized law school.

The professors of the individual review subjects attended by the candidates under this rule shall certify under oath that the candidates have regularly attended classes and passed the subjects under the same conditions as ordinary students and the ratings obtained by them in the particular subject.

Sec. 17. Admission and oath of successful applicants. – An applicant who has passed the required examination, or has been otherwise found to be entitled to admission to the bar, shall take and subscribe before the Supreme Court the corresponding oath of office.

Sec. 18. Certificate. – The Supreme Court shall thereupon admit the applicant as a member of the bar for all the courts of the Philippines, and shall direct an order to be entered to that effect upon its records, and that a certificate of such record be given to him by the clerk of court, which certificate shall be his authority to practice.

Sec. 19. Attorneys’ roll. – The clerk of the Supreme Court shall keep a roll of all attorneys admitted to practice, which roll shall be signed by the person admitted when he receives his certificate.

Sec. 20. Duties of attorneys. – It is the duty of an attorney:
(a) To maintain allegiance to the Republic of the Philippines and to support the Constitution and obey the laws of the Philippines;

(b) To observe and maintain the respect due to the courts of justice and judicial officers;

(c) To counsel or maintain such actions or proceedings only as appear to him to be just, and such defenses only as he believes to be honestly debatable under the law;

(d) To employ, for the purpose of maintaining the causes confided to him, such means only as are consistent with truth and honor, and never seek to mislead the judge or any judicial officer by an artifice or false statement of fact or law;

(e) To maintain inviolate the confidence, and at every peril to himself, to preserve the secrets of his client, and to accept no compensation in connection with his client’s business except from him or with his knowledge and approval;

(f) To abstain from all offensive personality and to advance no fact prejudicial to the honor or reputation of a party or witness, unless required by the justice of the cause with which he is charged;

(g) Not to encourage either the commencement or the continuance of an action or proceeding, or delay any man’s cause, from any corrupt motive or interest;

(h) Never to reject, for any consideration personal to himself, the cause of the defenseless or oppressed;

(i) In the defense of a person accused of crime, by all fair and honorable means, regardless of his personal opinion as to the guilt of the accused, to present every defense that the law permits, to the end that no person may be deprived of life or liberty, but by due process of law.

Sec. 21. Authority of attorney to appear. – An attorney is presumed to be properly authorized to represent any cause in which he appears, and no written power of attorney is required to authorize him to appear in court for his client, but the presiding judge may, on motion of either party and on reasonable grounds therefor being shown, require any attorney who assumes the right to appear in a case to produce or prove the authority under which he appears, and to disclose, whenever pertinent to any issue, the name of the person who employed him, and may thereupon make such order as justice requires. An attorney wilfully appearing in court for a person without being employed, unless by leave of the court, may be punished for contempt as an officer of the court who has misbehaved in his official transactions.

Sec. 22. Attorney who appears in lower court presumed to represent client on appeal. – An attorney who appears de parte in a case before a lower court shall be presumed to continue representing his client on appeal, unless he files a formal petition withdrawing his appearance in the appellate court.

Sec. 23. Authority of attorneys to bind clients. – Attorneys have authority to bind their clients in any case by any agreement in relation thereto made in writing, and in taking appeals, and in all matters of ordinary judicial procedure. But they cannot, without special authority, compromise their client’s litigation, or receive anything in discharge of a client’s claim but the full amount in cash.

Sec. 24. Compensation of attorneys; agreement as to fees. – An attorney shall be entitled to have and recover from his client no more than a reasonable compensation for his services, with a view to the importance of the subject matter of the controversy, the extent of the services rendered, and the professional standing of the attorney. No court shall be bound by the opinion of attorneys as expert witnesses as to the proper compensation, but may disregard such testimony and base its conclusion on its own professional knowledge. A written contract for services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable.

Sec. 25. Unlawful retention of client’s funds; contempt. – When an attorney unjustly retains in his hands money of his client after it has been demanded, he may be punished for contempt as an officer of the Court who has misbehaved in his official transactions; but proceedings under this section shall not be a bar to a criminal prosecution.

Sec. 26. Change of attorneys. – An attorney may retire at any time from any action or special proceeding, by the written consent of his client filed in court. He may also retire at any time from an action or special proceeding, without the consent of his client, should the court, on notice to the client and attorney, and on hearing, determine that he ought to be allowed to retire. In case of substitution, the name of the attorney newly employed shall be entered on the docket of the court in place of the former one, and written notice of the change shall be given to the adverse party.

A client may at any time dismiss his attorney or substitute another in his place, but if the contract between client and attorney has been reduced to writing and the dismissal of the attorney was without justifiable cause, he shall be entitled to recover from the client the full compensation stipulated in the contract. However, the attorney may, in the discretion of the court, intervene in the case to protect his rights. For the payment of his compensation the attorney shall have a lien upon all judgments for the payment of money, and executions issued in pursuance of such judgment, rendered in the case wherein his services had been retained by the client.

Sec. 27. Attorneys removed or suspended by Supreme Court on what grounds. – A member of the bar may be removed or suspended from his office as attorney by the Supreme Court for any deceit, malpractice, or other gross misconduct in such office, grossly immoral conduct, or by reason of his conviction of a crime involving moral turpitude, or for any violation of the oath which he is required to take before admission to practice, or for a wilfull disobedience of any lawful order of a superior court, or for corruptly or wilfully appearing as an attorney for a party to a case without authority so to do. The practice of soliciting cases at law for the purpose of gain, either personally or through paid agents or brokers, constitutes malpractice.

Sec. 28. Suspension of attorney by the Court of Appeals or a Court of First Instance. – The Court of Appeals or a Court of First Instance may suspend an attorney from practice for any of the causes named in the last preceding section, and after such suspension such attorney shall not practice his profession until further action of the Supreme Court in the premises.

Sec. 29. Upon suspension by Court of Appeals or Court of First Instance, further proceedings in Supreme Court. – Upon such suspension, the Court of Appeals or the Court of First Instance shall forthwith transmit to the Supreme Court a certified copy of the order or suspension and a full statement of the facts upon which the same was based. Upon the receipt of such certified copy and statement, the Supreme Court shall make full investigation of the facts involved and make such order revoking or extending the suspension, or removing the attorney from his office as such, as the facts warrant.

Sec. 30. Attorney to be heard before removal or suspension. – No attorney shall be removed or suspended from the practice of his profession, until he has had full opportunity upon reasonable notice to answer the charges against him, to produce witnesses in his own behalf, and to be heard by himself or counsel. But if upon reasonable notice he fails to appear and answer the accusation, the court may proceed to determine the matter ex parte.

Sec. 31. Attorneys for destitute litigants. – A court may assign an attorney to render professional aid free of charge to any party in a case, if upon investigation it appears that the party is destitute and unable to employ an attorney, and that the services of counsel are necessary to secure the ends of justice and to protect the rights of the party. It shall be the duty of the attorney so assigned to render the required service, unless he is excused therefrom by the court for sufficient cause shown.

Sec. 32. Compensation for attorneys de oficio. – Subject to availability of funds as may be provided by law the court may, in its discretion, order an attorney employed as counsel de oficio to be compensated in such sum as the court may fix in accordance with section 24 of this rule. Whenever such compensation is allowed, it shall not be less than thirty pesos (P30.00) in any case, nor more than the following amounts: (1) Fifty pesos (P50.00) in light felonies; (2) One hundred pesos (P100.00) in less grave felonies; (3) Two hundred pesos (P200.00) in grave felonies other than capital offenses; (4) Five hundred pesos (P500.00) in capital offenses.

Sec. 33. Standing in court of persons authorized to appear for Government. – Any official or other person appointed or designated in accordance with law to appear for the Government of the Philippines shall have all the rights of a duly authorized member of the bar to appear in any case in which said government has an interest direct or indirect.

Sec. 34. By whom litigation conducted. – In the court of a justice of the peace a party may conduct his litigation in person, with the aid of an agent or friend appointed by him for that purpose, or with the aid of an attorney. In any other court, a party may conduct his litigation personally or by aid of an attorney, and his appearance must be either personal or by a duly authorized member of the bar.

Sec. 35. Certain attorneys not to practice. – No judge or other official or employee of the superior courts or of the Office of the Solicitor General, shall engage in private practice as a member of the bar or give professional advice to clients.

Sec. 36. Amicus curiae. – The court may, in special cases, and upon proper application, permit the appearance, as amici curiae, of those lawyers who in its opinion can help in the disposition of the matter before it; or it may, on its own initiative, invite prominent attorneys to appear as amici curiae in such special cases.
Sec. 37. Attorneys’ liens. – An attorney shall have a lien upon the funds, documents and papers of his client which have lawfully come into his possession and may retain the same until his lawful fees and disbursements have been paid, and may apply such funds to the satisfaction thereof. He shall also have a lien to the same extent upon all judgments for the payment of money, and executions issued in pursuance of such judgments, which he has secured in a litigation of his client, from and after the time when he shall have caused a statement of his claim of such lien to be entered upon the records of the court rendering such judgment, or issuing such execution, and shall have caused written notice thereof to be delivered to his client and to the adverse party; and he shall have the same right and power over such judgments and executions as his client would have to enforce his lien and secure the payment of his just fees and disbursements.

Article No. XII 1987 Constitution

March 5, 2020May 7, 2013

THE 1987 CONSTITUTION
OF THE
REPUBLIC OF THE PHILIPPINES

ARTICLE XII
NATIONAL ECONOMY AND PATRIMONY

Section 1. The goals of the national economy are 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; and an expanding productivity as the key to raising the quality of life for all, especially the under-privileged.

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. With the exception of agricultural lands, all other natural resources shall not 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 co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per cent-um of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.

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 technical or financial assistance 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 are classified into agricultural, forest or timber, mineral lands and national parks. Agricultural lands of the public domain may be further classified by law according to the uses to which they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof, by purchase, homestead, or grant.

Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the conditions therefor.

Section 4. The Congress shall, as soon as possible, determine, by law, the specific limits of forest lands and national parks, marking clearly their boundaries on the ground. Thereafter, such forest lands and national parks shall be conserved and may not be increased nor diminished, except by law. The Congress shall provide for such period as it may determine, measures to prohibit logging in endangered forests and watershed areas.

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.

The Congress may provide for the applicability of customary laws governing property rights or relations in determining the ownership and extent of ancestral domain.

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.

Section 8. Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of private lands, subject to limitations provided by law.

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 cent-um 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. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per cent-um of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty 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, domestic materials and locally produced goods, and adopt measures that help make them competitive.

Section 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity.

Section 14. The sustained development of a reservoir of national talents consisting of Filipino scientists, entrepreneurs, professionals, managers, high-level technical manpower and skilled workers and craftsmen in all fields shall be promoted by the State. The State shall encourage appropriate technology and regulate its transfer for the national benefit.

The practice of all professions in the Philippines shall be limited to Filipino citizens, save in cases prescribed by law.

Section 15. The Congress shall create an agency to promote the viability and growth of cooperatives as instruments for social justice and economic development.

Section 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability.

Section 17. In times of national emergency, when the public interest so requires, the State may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately-owned public utility or business affected with public interest.

Section 18. The State may, in the interest of national welfare or defense, establish and operate vital industries and, upon payment of just compensation, transfer to public ownership utilities and other private enterprises to be operated by the Government.

Section 19. The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed.

Section 20. The Congress shall establish an independent central monetary authority, the members of whose governing board must be natural-born Filipino citizens, of known probity, integrity, and patriotism, the majority of whom shall come from the private sector. They shall also be subject to such other qualifications and disabilities as may be prescribed by law. The authority shall provide policy direction in the areas of money, banking, and credit. It shall have supervision over the operations of banks and exercise such regulatory powers as may be provided by law over the operations of finance companies and other institutions performing similar functions.

Until the Congress otherwise provides, the Central Bank of the Philippines operating under existing laws, shall function as the central monetary authority.

Section 21. Foreign loans may only be incurred in accordance with law and the regulation of the monetary authority. Information on foreign loans obtained or guaranteed by the Government shall be made available to the public.
Section 22. Acts which circumvent or negate any of the provisions of this Article shall be considered inimical to the national interest and subject to criminal and civil sanctions, as may be provided by law.

Article No. XVI

April 2, 2017May 6, 2013

THE 1987 CONSTITUTION
OF THE
REPUBLIC OF THE PHILIPPINES

ARTICLE XVI
GENERAL PROVISIONS

Section 1. The flag of the Philippines shall be red, white, and blue, with a sun and three stars, as consecrated and honored by the people and recognized by law.

Section 2. The Congress may, by law, adopt a new name for the country, a national anthem, or a national seal, which shall all be truly reflective and symbolic of the ideals, history, and traditions of the people. Such law shall take effect only upon its ratification by the people in a national referendum.

Section 3. The State may not be sued without its consent.

Section 4. The Armed Forces of the Philippines shall be composed of a citizen armed force which shall undergo military training and serve as may be provided by law. It shall keep a regular force necessary for the security of the State.

Section 5. (1) All members of the armed forces shall take an oath or affirmation to uphold and defend this Constitution.

(2) The State shall strengthen the patriotic spirit and nationalist consciousness of the military, and respect for people’s rights in the performance of their duty.

(3) Professionalism in the armed forces and adequate remuneration and benefits of its members shall be a prime concern of the State. The armed forces shall be insulated from partisan politics.

No member of the military shall engage, directly or indirectly, in any partisan political activity, except to vote.

(4) No member of the armed forces in the active service shall, at any time, be appointed or designated in any capacity to a civilian position in the Government, including government-owned or controlled corporations or any of their subsidiaries.

(5) Laws on retirement of military officers shall not allow extension of their service.cralaw

(6) The officers and men of the regular force of the armed forces shall be recruited proportionately from all provinces and cities as far as practicable.

(7) The tour of duty of the Chief of Staff of the armed forces shall not exceed three years. However, in times of war or other national emergency declared by the Congress, the President may extend such tour of duty.

Section 6. The State shall establish and maintain one police force, which shall be national in scope and civilian in character, to be administered and controlled by a national police commission. The authority of local executives over the police units in their jurisdiction shall be provided by law.

Section 7. The State shall provide immediate and adequate care, benefits, and other forms of assistance to war veterans and veterans of military campaigns, their surviving spouses and orphans. Funds shall be provided therefor and due consideration shall be given them in the disposition of agricultural lands of the public domain and, in appropriate cases, in the utilization of natural resources.

Section 8. The State shall, from time to time, review to increase the pensions and other benefits due to retirees of both the government and the private sectors.

Section 9. The State shall protect consumers from trade malpractices and from substandard or hazardous products.

Section 10. The State shall provide the policy environment for the full development of Filipino capability and the emergence of communication structures suitable to the needs and aspirations of the nation and the balanced flow of information into, out of, and across the country, in accordance with a policy that respects the freedom of speech and of the press.

Section 11. (1) The ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations, cooperatives or associations, wholly-owned and managed by such citizens.

The Congress shall regulate or prohibit monopolies in commercial mass media when the public interest so requires. No combinations in restraint of trade or unfair competition therein shall be allowed.

(2) The advertising industry is impressed with public interest, and shall be regulated by law for the protection of consumers and the promotion of the general welfare.

Only Filipino citizens or corporations or associations at least seventy per centum of the capital of which is owned by such citizens shall be allowed to engage in the advertising industry.

The participation of foreign investors in the governing body of entities in such industry shall be limited to their proportionate share in the capital thereof, and all the executive and managing officers of such entities must be citizens of the Philippines.

Section 12. The Congress may create a consultative body to advise the President on policies affecting indigenous cultural communities, the majority of the members of which shall come from such communities.

Article No. XIV

March 5, 2020April 29, 2013

THE 1987 CONSTITUTION
OF THE
REPUBLIC OF THE PHILIPPINES

ARTICLE XIV
EDUCATION, SCIENCE AND TECHNOLOGY, ARTS,
CULTURE AND SPORTS
EDUCATION

Section 1. The State shall protect and promote the right of all citizens to quality education at all levels, and shall take appropriate steps to make such education accessible to all.

Section 2. The State shall:

(1) Establish, maintain, and support a complete, adequate, and integrated system of education relevant to the needs of the people and society;

(2) Establish and maintain, a system of free public education in the elementary and high school levels. Without limiting the natural rights of parents to rear their children, elementary education is compulsory for all children of school age;

(3) Establish and maintain a system of scholarship grants, student loan programs, subsidies, and other incentives which shall be available to deserving students in both public and private schools, especially to the under-privileged;

(4) Encourage non-formal, informal, and indigenous learning systems, as well as self-learning, independent, and out-of-school study programs particularly those that respond to community needs; and

(5) Provide adult citizens, the disabled, and out-of-school youth with training in civics, vocational efficiency, and other skills.

Section 3. (1) All educational institutions shall include the study of the Constitution as part of the curricula.

(2) They shall inculcate patriotism and nationalism, foster love of humanity, respect for human rights, appreciation of the role of national heroes in the historical development of the country, teach the rights and duties of citizenship, strengthen ethical and spiritual values, develop moral character and personal discipline, encourage critical and creative thinking, broaden scientific and technological knowledge, and promote vocational efficiency.

(3) At the option expressed in writing by the parents or guardians, religion shall be allowed to be taught to their children or wards in public elementary and high schools within the regular class hours by instructors designated or approved by the religious authorities of the religion to which the children or wards belong, without additional cost to the Government.

Section 4. (1) The State recognizes the complementary roles of public and private institutions in the educational system and shall exercise reasonable supervision and regulation of all educational institutions.

(2) Educational institutions, other than those established by religious groups and mission boards, shall be owned solely by citizens of the Philippines or corporations or associations at least sixty per cent-um of the capital of which is owned by such citizens. The Congress may, however, require increased Filipino equity participation in all educational institutions.

The control and administration of educational institutions shall be vested in citizens of the Philippines.

No educational institution shall be established exclusively for aliens and no group of aliens shall comprise more than one-third of the enrollment in any school. The provisions of this subsection shall not apply to schools established for foreign diplomatic personnel and their dependents and, unless otherwise provided by law, for other foreign temporary residents.

(3) All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties. Upon the dissolution or cessation of the corporate existence of such institutions, their assets shall be disposed of in the manner provided by law.

Proprietary educational institutions, including those cooperatively owned, may likewise be entitled to such exemptions, subject to the limitations provided by law, including restrictions on dividends and provisions for reinvestment.

(4) Subject to conditions prescribed by law, all grants, endowments, donations, or contributions used actually, directly, and exclusively for educational purposes shall be exempt from tax.

Section 5. (1) the State shall take into account regional and sectoral needs and conditions and shall encourage local planning in the development of educational policies and programs.

(2) Academic freedom shall be enjoyed in all institutions of higher learning.

(3) Every citizen has a right to select a profession or course of study, subject to fair, reasonable, and equitable admission and academic requirements.

(4) The State shall enhance the right of teachers to professional advancement. Non-teaching academic and non-academic personnel shall enjoy the protection of the State.

(5) The State shall assign the highest budgetary priority to education and ensure that teaching will attract and retain its rightful share of the best available talents through adequate remuneration and other means of job satisfaction and fulfillment.

Commonwealth Act No. 141

April 2, 2017March 21, 2013

COMMONWEALTH ACT NO. 141

COMMONWEALTH ACT NO. 141* – AN ACT TO AMEND AND COMPILE THE LAWS RELATIVE TO LANDS OF THE PUBLIC DOMAIN

TITLE I
TITLE AND APPLICATION OF THE ACT, LANDS TO WHICH IT REFERS, AND CLASSIFICATION, DELIMITATION, AND SURVEY — THEREOF FOR CONCESSION

CHAPTER I
SHORT TITLE OF THE ACT, LANDS TO WHICH IT APPLIES, AND OFFICERS CHARGED WITH ITS EXECUTION

Section 1. The short title of this Act shall be “The Public Land Act.

Section2. The provisions of this Act shall apply to the lands of the public domain; but timber and mineral lands shall be governed by special laws and nothing in this Act provided shall be understood or construed to change or modify the administration and disposition of the lands commonly called “friar lands” and those which, being privately owned, have reverted to or become the property of the Commonwealth of the Philippines, which administration and disposition shall be governed by the laws at present in force or which may hereafter be enacted.

Section3. The Secretary of Agriculture and Commerce shall be the executive officer charged with carrying out the provisions of this Act through the Director of Lands, who shall act under his immediate control.

Section4. Subject to said control, the Director of Lands shall have direct executive control of the survey, classification, lease, sale or any other form of concession or disposition and management of the lands of the public domain, and his decisions as to questions of fact shall be conclusive when approved by the Secretary of Agriculture and Commerce.

Section5. The Director of Lands, with the approval of the Secretary of Agriculture and Commerce shall prepare and issue such forms, instructions, rules, and regulations consistent with this Act, as may be necessary and proper to carry into effect the provisions thereof and for the conduct of proceedings arising under such provisions.

CHAPTER II
CLASSIFICATION, DELIMITATION, AND SURVEY OF LANDS OF THE PUBLIC DOMAIN, FOR THE CONCESSION THEREOF

Section6. The President, upon the recommendation of the Secretary of Agriculture and Commerce, shall from time to time classify the lands of the public domain into —

(a) Alienable or disposable;

(b) Timber, and

and may at any time and in a like manner transfer such lands from one class to another, for the purposes of their administration and disposition.

Section7. For the purposes of the administration and disposition of alienable or disposable public lands, the President, upon recommendation by the Secretary of Agriculture and Commerce, shall from time to time declare what lands are open to disposition or concession under this Act.

Section8. Only those lands shall be declared open to disposition or concession which have been officially delimited and classified and, when practicable, surveyed, and which have not been reserved for public or quasi-public uses, nor appropriated by the Government, nor in any manner become private property, nor those on which a private right authorized and recognized by this Act or any other valid law may be claimed, or which, having been reserved or appropriated, have ceased to be so However, the President may, for reasons of public interest, declare lands of the public domain open to disposition before the same have had their boundaries established or been surveyed, or may, for the same reason, suspend their concession or disposition until they are again declared open to concession or disposition by proclamation duly published or by Act of the National Assembly.

Section9. For the purpose of their administration and disposition, the lands of the public domain alienable or open to disposition shall be classified, according to the use or purposes to which such lands are destined, as follows:

(a) Agricultural

(b) Residential commercial industrial or for similar productive purposes

(d) Reservations for town sites and for public and quasi-public uses.

The President, upon recommendation by the Secretary of Agriculture and Commerce, shall from time to time make the classifications provided for in this section, and may, at any time and in a similar manner, transfer lands from one class to another.

Section10. The words “alienation, “‘disposition, or “concession” as used in this Act, shall mean any of the methods authorized by this Act for the acquisition, lease, use, or benefit of the lands of the public domain other than timber or mineral lands.

TITLE II
AGRICULTURAL PUBLIC LANDS

CHAPTER III
FORMS OF CONCESSION OF AGRICULTURAL LANDS

Section11. Public lands suitable for agricultural purposes can be disposed of only as follows, and not otherwise:

(1) For homestead settlement
(2) By sale
(3) By lease
(4) By confirmation of imperfect or incomplete titles:

(a) By judicial legalization

(b) By administrative legalization (free patent).

Section12. Any citizen of the Philippines over the age of eighteen years, or the head of a family, who does not own more than twenty-four hectares of land in the Philippines or has not had the benefit of any gratuitous allotment of more than twenty-four hectares of land since the occupation of the Philippines by the United States, may enter a homestead of not exceeding twenty-four hectares of agricultural land of the public domain.

Section13. Upon the filing of an application for a homestead, the Director of Lands, if he finds that the application should be approved, shall do so and authorize the applicant to take possession of the land upon the payment of five pesos, Philippine currency, as entry fee. Within six months from and after the date of the approval of the application, the applicant shall begin to work the homestead, otherwise he shall lose his prior right to the land.

Section14. No certificate shall be given or patent issued for the land applied for until at least one-fifth of the land has been improved and cultivated. The period within which the land shall be cultivated shall not be less than one or more than five years, from and after the date of the approval of the application. The applicant shall, within the said period, notify the Director of Lands as soon as he is ready to acquire the title. If at the date of such notice, the applicant shall prove to the satisfaction of the Director of Lands, that he has resided continuously for at least one year in the municipality in which the land is located, or in a municipality adjacent to the same, and has cultivated at least one-fifth of the land continuously since the approval of the application, and shall make affidavit that no part of said land has been alienated or encumbered, and that he has complied with all the requirements of this Act, then, upon the payment of five pesos, as final fee, he shall be entitled to a patent.

Section15. At the option of the applicant, payment of the fees required in this chapter may be made to the municipal treasurer of the locality, who, in turn, shall forward them to the provincial treasurer. In case of delinquency of the applicant, the Director of Lands may, sixty days after such delinquency has occurred, either cancel the application or grant an extension of time not to exceed one hundred and twenty days for the payment of the sum due.

Section16. If at any time before the expiration of the period allowed by law for the making of final proof, it shall be proven to the satisfaction of the Director of Lands, after due notice to the homesteader, that the land entered is under the law not subject to home-stead entry, or that the homesteader has actually changed his residence, or voluntarily abandoned the land for more than six months at any one time during the years of residence and occupation herein required, or has otherwise failed to comply with the requirements of this Act, the Director of Lands may cancel the entry.

Section17. Before final proof shall be submitted by any person claiming to have complied with the provisions of this chapter, due notice, as prescribed by the Secretary of Agriculture and Commerce shall be given to the public of his intention to make such proof, stating therein the name and address of the homesteader, the description of the land, with its boundaries and area, the names of the witness by whom it is expected that the necessary facts will be established, and the time and place at which, and the name of the officer before whom, such proof will be made.

Section18. In case the homesteader shall suffer from mental alienation, or shall for any other reason be incapacitated from exercising his rights personally, the person legally representing him may offer and submit the final proof on behalf of such incapacitated person.

Section19. Not more than one homestead entry shall be allowed to any one person, and no person to whom a homestead patent has been issued by virtue of the provisions of this Act regardless of the area of his original homestead, may again acquire a homestead; Provided, however, That any previous homesteader who has been issued a patent for less than twenty-four hectares and otherwise qualified to make a homestead entry, may be allowed another homestead which, together with his previous homestead shall not exceed an area of twenty-four hectares.

Section20. If at any time after the approval of the application and before the patent is issued, the applicant shall prove to the satisfaction of the Director of Lands that he has complied with all the requirements of the law, but cannot continue with his homestead, through no fault of his own, and there is a bona fide purchaser for the rights and improvements of the applicant on the land, and that the conveyance is not made for purposes of speculation, then the applicant, with the previous approval of the Director of Lands may transfer his rights to the land and improvements to any person legally qualified to apply for a homestead, and immediately after such transfer, the purchaser shall file a homestead application for the land so acquired and shall succeed the original homesteader in his rights and obligations beginning with the date of the approval of said application of the purchaser. Any person who has so transferred his rights may not again apply for a new homestead. Every transfer made without the previous approval of the Director of Lands shall be null and void and shall result in the cancellation of the entry and the refusal of the patent.

Section21. Any non-Christian Filipino who has not applied for a home-stead, desiring to live upon or occupy land on any of the reservations set aside for the so-called “non-Christian tribes” may request a permit of occupation for any tract of land of the public domain reserved for said non-Christian tribes under this Act, the area of which shall not exceed four hectares. It shall be an essential condition that the applicant for the permit cultivate and improve the land, and if such cultivation has not been begun within six months from and after the date on which the permit was received, the permit shall be cancelled. The permit shall be for a term of one year. If at the expiration of this term or at any time prior thereto, the holder of the permit shall apply for a homestead under the provisions of this chapter, including the portion for which a permit was granted to him, he shall have the priority, otherwise the land shall be again open to disposition at the expiration of the permit.

For each permit the sum of one peso shall be paid.

CHAPTER IV
SALE

Section22. Any citizen of lawful age of the Philippines, and any such citizen not of lawful age who is a head of a family, and any corporation or association of which at least sixty per centum of the capital stock or of any interest in said capital stock belongs wholly to citizens of the Philippines, and which is organized and constituted under the laws of Philippines, and corporate bodies organized in the Philippines authorized under their charters to do so; may purchase any tract of public agricultural land disposable under this Act, not to exceed one hundred and forty-four hectares in the case of an individual and one thousand and twenty-four hectares in that of a corporation or association, by proceeding as prescribed in this chapter: Provided, That partnerships shall be entitled to purchase not to exceed one hundred and forty-four hectares for each member thereof. But the total area so purchased shall in no case exceed the one thousand and twenty-four hectares authorized in this section for associations and corporations.

Section23. No person, corporation, association, or partnership other than those mentioned in the last preceding section may acquire or own agricultural public land or land of any other denomination or classification, which is at the time or was originally, really or presumptively, of the public domain, or any permanent improvement thereon, or any real right on such land and improvement: Provided, however, That persons, corporations, associations or partnerships which, at the date upon which the Philippine Constitution took effect, held agricultural public lands or land of any other denomination, that belonged originally, really or presumptively, to the public domain, or permanent improvements on such lands, or a real right upon such lands and Constitution took improvements, having acquired the same under the laws and regulations in force at the date of such acquisition, shall be authorized to continue holding the same as if such persons, corporations, associations, or partnerships were qualified under the last preceding section; but they shall not encumber, convey, or alienate the same to persons, corporations, associations, or partnerships not included in section twenty-two of this Act, except by reason of hereditary succession, duly legalized and acknowledged by competent courts.

Section24. Lands sold under the provisions of this chapter must be appraised in accordance with section one hundred and sixteen of this Act. The Director of Lands shall announce the sale thereof by publishing the proper notice once a week for six consecutive weeks in the Official Gazette, and in two newspapers one published in Manila and the other published in the municipality or in the province where the lands are located, or in a neighboring province, and the same notice shall be posted on the bulletin board of the Bureau Of Lands in Manila, and in the most conspicuous place in the provincial building and the municipal building of the province and municipality, respectively, where the land is located, and, if practicable, on the land itself; but if the value of the land does not exceed two hundred and forty pesos, the publication in the Official Gazette and newspapers may be omitted. The notices shall be published one in English and the other in Spanish or in the local dialect, and shall fix a date not earlier than sixty days after the date of the notice upon which the land will be awarded to the highest bidder, or public bids will be called for, or other action will be taken as provided in this chapter.

Section25. Public agricultural lands which are not located within ten (10) kilometers from the boundaries of the city proper in chartered cities or within five (5) kilometers from the municipal hall or town occupants plaza of any municipality may be sold to actual occupants who do not own any parcel of land or whose total land holdings do not exceed five hectares and who comply with the minimum requirements of Commonwealth Act numbered one hundred forty-one, as amended, and who have resided on the land applied for at least two years prior to the date of the application.

All bids must be sealed and addressed to the Director of Lands and must have enclosed therewith cash or certified check, treasury warrant, or post-office money order payable to the order of the Director of Lands for ten per centum of the amount of the bid, which amount shall be retained in case the bid is accepted as part payment of the purchase price: Provided, That no bid shall be considered the amount of which is less than the appraised value of the land.

In addition to existing publication requirements in section twenty-four of Commonwealth Act Numbered one hundred forty-one, as amended, notices and of applications shall be posted for a period of not less than thirty days in at least three conspicuous places in the municipality where the parcel of land is located, one of which shall be at the municipal building, and other, in the barrio council building of the barrio where the land is located.

Section26. Upon the opening of the bids, the land shall be awarded to the highest bidder. If there are two or more equal bids which are higher than the others, and one of such equal bids is that of the applicant, his bid shall be accepted. If, however, the bid of the applicant is not one of such equal and higher bids, the Director of Lands shall at once submit the land for public bidding, and to the person making the highest bid on such public auction the land shall be awarded. In any case, the applicant shall always have the option of raising his bid to equal that of the highest bidder, and in this case the land shall be awarded to him. No bid received at such public auction shall be finally accepted until the bidder shall have deposited ten per centum of his bid, as required in Section twenty-five of this Act. In case none of the tracts of land that are offered for sale or the purchase of which has been applied for, has an area in excess of twenty-four hectares, the Director of Lands may delegate to the District Land Officer concerned the power of receiving bids, holding the auction, and proceeding in accordance with the provisions of this Act, but the District Land Officer shall submit his recommendation to the Director of Lands, for the final decision of the latter in the case.

The District Land Officer shall accept and process any application for the purchase of public lands not exceeding five hectares subject to the approval of the Director of Lands within sixty days after receipt of the recommendation of said District Land Officer.

Section27. The purchase price shall be paid as follows: The balance of the purchase price after deducting the amount paid at the time of submitting the bid, may be paid in full upon the making of the award, or in not more than ten equal annual installments from the date of the award.

Section28. The purchaser shall have not less than one-fifth of the land broken and cultivated within five years after the date of the award; and before any patent is issued, the purchaser must show of occupancy, cultivation, and improvement of at least one-fifth of the land applied for until the date on which final payment is made: Provided, however, That in case land purchased is to be devoted to pasture, it shall be sufficient compliance with this condition if the purchaser shall graze on the land as many heads of his cattle as will occupy at least one-half of the entire area at the rate of one head per hectare.

Section29. After title has been granted, the purchaser may not, within a period of ten years from such cultivation or grant, convey or encumber or dispose said lands or rights thereon to any person, corporation or association, without prejudice to any right or interest of the Government in the land: Provided, That any sale and encumbrance made in violation of the provisions of this section, shall be null and void and shall produce the effect of annulling the acquisition and reverting the property and all rights thereto to the State, and all payments on the purchase price theretofore made to the Government shall be forfeited.

Section30. If at any time after the date of the award and before the issuance of patent, it is proved to the satisfaction of the Director of Lands, after due notice to the purchaser, that the purchaser has voluntarily abandoned the land for more than one year at any one time, or has otherwise failed to comply with the requirements of the law, then the land shall revert to the State, and all prior payments made by the purchaser and all improvements existing on the land shall be forfeited.

Section31. No person, corporation, association, or partnership shall be permitted, after the approval of this Act, to acquire the title to or possess as owner any lands of the public domain if such lands, added to other lands belonging to such person, corporation, association, or partnership shall give a total area greater than area the acquisition of which by purchase is authorized under this Act. Any excess in area over this maximum and all right, title, interest, claim or action held by any person, corporation, association, or partnership resulting directly or indirectly in such excess shall revert to the State.

This section shall, however, not be construed to prohibit any person, corporation, association, or partnership authorized by this Act to require lands of the public domain from making loans upon real necessary for the recovery of such loans; but in this case, as soon as the excess above referred to occurs, such person, corporation, association, or partnership shall dispose of such lands within five years, for the purpose of removing the excess mentioned. Upon the land in excess of the limit there shall be paid, so long as the same is not disposed of, for the first year a surtax of fifty per centum additional to the ordinary tax to which such property shall be subject, and for each succeeding year fifty per centum shall be added to the last preceding annual tax rate, until the property shall have been disposed of.

The person, corporation, association, or partnership owning the land in excess of the limit established by this Act shall determine the portion of land to be segregated.

At the request of Secretary of Agriculture and Commerce, the Solicitor-General or the officer acting in his stead shall institute the necessary proceedings in the proper court for the purpose of determining the excess portion to be segregated, as well as the disposal of such portion in the exclusive interest of the Government.

Section32. This chapter shall be held to authorize only one purchase of the maximum amount of land hereunder by the same person, corporation, association, or partnership; and no corporation, association, or partnership, any member of which shall have received the benefits of this chapter or of the next following chapter, either as an individual or as a member of any other corporation, association, or partnership, shall purchase any other lands of the public domain under this chapter. But any purchaser of public land, after having made the last payment upon and cultivated at least one-fifth of the land purchased, if the same shall be less than the maximum allowed by this Act, may purchase successively additional agricultural public land adjacent to or not distant from the land first purchased, until the total area of such purchases shall reach the maximum established in this chapter: Provided, That in making such additional purchase or purchases, the same conditions shall be complied with as prescribed by this Act for the first purchase.

CHAPTER V
LEASE

Section33. Any citizen of lawful age of the Philippines, and any corporation or association of which at least sixty per centum of the capital stock or of any interest in said capital stock belongs wholly to citizens of the Philippines, and which is organized and constituted under the laws of the Philippines, may lease any tract of agricultural public land available for lease under the provisions of this Act, not exceeding a total of one thousand and twenty-four hectares. If the land leased is adapted to and be devoted for grazing purposes, an area not exceeding two thousand hectares may be granted. No member, stockholder, of officer, representative, attorney, agent, employee or bondholder of any corporation or association holding or controlling agricultural public land shall apply, directly or indirectly, for agricultural public land except under the homestead and free patent provisions of this Act: Provided, That no lease shall be permitted to interfere with any prior claim by settlement or occupation, until the consent of the occupant or settler is first had, or until such claim shall be legally extinguished, and no person, corporation, or association shall be permitted to lease lands here-under which are not reasonably necessary to carry on his business in case of an individual, or the business for which it was lawfully created and which it may lawfully pursue in the Philippines, if an association or corporation.

Section34. A notice of the date and place of the auction of the right to lease the land shall be published and announced in the same manner as that prescribed for the publication and announcement of the notice of sale, in section twenty-four of this Act.
Section35. All bids must be sealed and addressed to the Director of Lands and must have enclosed therewith cash or a certified check, Treasury warrant, or post-office money order payable to the order of the Director of Lands, for a sum equivalent to the rental for at least, the first three months of the lease: Provided, That no bid shall be considered in which the proposed annual rental is less than three per centum of the value of the land according to the appraisal made in conformity with section one hundred and sixteen of this Act.

Section36. The auction of the right to lease the land shall be conducted under the same procedure as that prescribed for the auction sale of agricultural lands as described in section twenty-six of this Act: Provided, That no bid shall be accepted until the bidder shall have deposited the rental for at least the first three months of the lease.

Section37. The annual rental of the land leased shall not be less than three per centum of the value of the land, according to the appraisal and reappraisal made in accordance with section one hundred sixteen of this Act; except for lands reclaimed by the Government, which shall not be less than four per centum of the appraised and reappraised value of the land: Provided, That one-fourth of the annual rental of these lands reclaimed prior to the approval of this Act shall accrue to the construction and improvement portion of the Portworks Funds: And provided, further, That the annual rental of not less than four per centum of the appraised and reappraised value of the lands reclaimed using the Portworks Fund after the approval of this Act shall all accrue to the construction and improvement portion of the Portworks Fund. But if the land leased is adapted to and be devoted for granting purposes, the annual rental shall be not less than two per centum of-the appraised and reappraised value thereof- Every contract of lease under the provisions of this chapter shall contain a cause to the effect that are appraisal of the land leased shall be made every ten years from the date of the approval of the lease, if the term of the same shall be in excess of ten years. In case the lessee is not agreeable to the reappraisal and prefers to give up his contract of lease, he shall notify the Director of Lands of his desire within the six months next preceding the date on which the reappraisal takes effect, and in case his request is approved, the Director of Lands may, if the lessee should so desire, proceed in accordance with section one hundred of this Act.

Section38. Leases shall run for a period of not more than twenty-five years, but may be renewed once for another period of not to exceed twenty-five years, in case the lessee shall have made important improvements which, in the discretion of the Secretary of Agriculture and Commerce justify a renewal. Upon the final expiration of the lease, all buildings and other permanent improvements made by the lessee, his heirs, executors, administrators, successors, or assigns shall become the property of the Government, and the land together with the said improvements shall be disposed of in accordance with the provisions of chapter five of this Act.

Section39. It shall be an inherent and essential condition of the lease that the lessee shall have not less than one-third of the land broken and cultivated within five years after the date of the approval of the lease: Provided, however, That in case the land leased is to be devoted to pasture, it shall be sufficient compliance with this condition if the lessee shall graze on the land as many heads of cattle as will occupy at least one-half of the entire area at the rate of one head per hectare.

Section40. The lessee shall not assign, encumber, or sublet his rights without the consent of the Secretary of Agriculture and Commerce, and the violation of this condition shall avoid the contract: Provided, That assignment, encumbrance, or subletting for purposes of speculation shall not be permitted in any case: Provided, further, That nothing contained in this section shall be understood or construed to permit the assignment, encumbrance, or subletting of lands leased under this Act, or under any previous Act, to persons, corporations, or associations which under this Act, are not authorized to lease public lands.

Section41. The lease of any lands under this chapter shall not confer the right to remove or dispose of any valuable timber except as provided in the regulations of the Bureau of Forestry for cutting timber upon such lands. Nor shall such lease confer the right to remove or dispose of stone, oil, coal, salts. or other minerals, or medicinal mineral waters existing upon the same. The lease as to the part of the land which shall be mineral may be canceled by the Secretary of Agriculture and Commerce, after notice to the lessee, whenever the said part of the land is more valuable for agricultural purposes.

The commission of waste or violation of the forestry regulations by the lessee shall work a forfeiture of his last payment of rent and render him liable to immediate dispossession and suit for damage.

Section42. After having paid rent for at least the first two years of the lease, and having complied with the requirements prescribed in section thirty nine, the lessee of agricultural public land with an area than the maximum allowed by law, may lease successively additional agricultural public land adjacent to or near the land originally leased until the total- area of such leases shall reach the maximum established in this chapter: Provided, That in making such additional lease, the same conditions shall be complied with as prescribed by this Act for the first lease.

Section43. During the life of the lease, any lessee who shall have complied with all the conditions thereof and shall have the qualifications required by section twenty-two, shall have the option of purchasing the land leased subject to the restrictions of chapter five of this Act.

CHAPTER VI
FREE PATENTS

Section44. Any natural-born citizen of the Philippines who is not the owner of more than twenty-four hectares and who since July fourth, nineteen hundred and twenty-six or prior thereto, has continuously occupied and cultivated, either by himself or through his predecessors-in-interest, a tract or tracts of agricultural public lands subject to disposition, or who shall have paid the real estate tax thereon while same has not been occupied by any person shall be entitled, under the provisions of this chapter, to have a free patent issued to him for such tract or tracts of such land not to exceed twenty-four hectares.

A member of the national cultural minorities who has continuously occupied and cultivated, either by himself or through his predecessors-in-interest, a tract or tracts of land, whether disposable or not since July 4, 1955, shall be entitled to the right granted in the preceding paragraph of this section: Provided, That at the time he files his free patent application he is not the owner of any real property secured or disposable under this provision of the Public Land Law

Section45. The President of the Philippines (Prime Minister), upon recommendation of the Secretary of Natural Resources, shall from time to time fix by proclamation the period which applications for Proclamation free patents may be filed in the district, chartered city, of period province, municipality or region specified in such proclamation, and upon the expiration of the period so designated, unless the same be extended by the President (Prime Minister) all the land comprised within such district, chartered city, province, municipality or region subject thereto under the provisions of this chapter may be disposed of as agricultural public land without prejudice to the prior right of the occupant and cultivator to acquire such land under this Act by means other than free patent. The time to be fixed in the entire Archipelago for the filing of applications under this Chapter shall not extend beyond December 31, 1987, except in the provinces of Agusan del Norte, Agusan del Sur, Cotabato, South Cotabato, Bukidnon, Lanao del Norte, Lanao del Sur, Davao del Norte, Davao del Sur, Davao Oriental, Sulu, Mt. Province, Benguet, Kalinga-Apayao, and Ifugao where the President of the Philippines, upon recommendation of the Secretary of Natural Resources, shall determine or fix the time beyond which the filing of applications under this Chapter shall not extend. The period fixed for any district, chartered city, province, or municipality shall begin to run thirty days after the publication of the proclamation in the Official Gazette and if available in one newspaper of general circulation in the city, province or municipality concerned. A certified copy of said proclamation shall be furnished by the Secretary of Natural Resources within 30 days counted from the date of the presidential proclamation to the Director of Lands and to the provincial board, the municipal board or city council and barangay council affected, and copies thereof shall be posted on the bulletin board of the Bureau of Lands at Manila and at conspicuous places in the provincial building and at the municipal building and barangay hall or meeting place. It shall moreover, be announced by government radio whenever available, in each of the barrios of the municipality.

Section46. If, after the filing of the application and the investigation, the Director of Lands shall be satisfied of the truth of the allegations contained the application and that the applicant comes within the provisions chapter, he shall cause a patent to issue to the applicant or his legal successor for the tract so occupied and cultivated, provided its area does not exceed twenty-four hectares: Provided, That no application shall be finally acted upon until notice thereof has been published in the municipality and barrio in which the land is located and adverse claimants have had an opportunity to present their claims.

CHAPTER VII
JUDICIAL CONFIRMATION OF IMPERFECT OR INCOMPLETE TITLES

Section47. The persons specified in the next following section are hereby granted time, not to extend beyond December 31, 1987 within which to take advantage of the benefit of this chapter: Provided, That this extension shall apply only where the area applied for does not exceed 144 hectares. Provided, further, That the several periods of time designated by the President in accordance with section forty-five of this Act shall apply also to the lands comprised in the provisions of this chapter, but this section shall not be construed as prohibiting any of said persons from acting under this chapter at any time prior to the period fixed by the President.

Section48. The following-described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Land Registration Act , to wit:

(a) Those who prior to the transfer of sovereignty from Spain to the prior United States have applied for the purchase, composition or other form of grant of lands of the public domain under the laws and royal decrees then in force and have instituted and prosecuted the proceedings in connection therewith, but have with or without default upon their part, or for any other cause, not received title therefor, if such applicants or grantees and their heirs have occupied and cultivated said lands continuously since the filing of their applications.

(b) Those who by themselves or through their predecessors in interest have been in open, continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter.

(c) Members of the national cultural minorities who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of lands of the public domain suitable to agriculture, whether disposable or not, under a bona fide claim of ownership for at least 30 years shall be entitled to the rights granted in sub-section (b) hereof.

Section49. No person claiming title to lands of the public domain not possession of the qualifications specified in the last preceding section may apply for the benefits of this chapter.

Section50. Any person or persons, or their legal representatives or successors in right, claiming any lands or interest in lands under the provisions of this chapter, must in every case present an application to the proper Court of First Instance, praying that the validity of the alleged title or claim be inquired into and that a certificate of title be issued to them under the provisions of the Land Registration Act.

The application shall conform as nearly as may be in its material allegations to the requirements of an application for registration under the Land Registration Act, and shall be accompanied by a plan of the land and all documents evidencing a right on the part of the applicant to the land claimed. The application shall also state the citizenship of the applicant and shall set forth fully the nature of the claim and when based upon proceeding initiated under Spanish laws, it shall specify as exactly as possible the date and form of application for purchase composition or other form of grant, the extent of the compliance with the conditions required by the Spanish laws and royal decrees for the acquisition of legal title, and if not fully complied with, the reason for such noncompliance, together with a statement of the length of time such land or any portion thereof has been actually occupied by the claimant or his predecessors in interest; the use made of the land, and the nature of the enclosure, if any. The fees provided to be paid for the registration of lands under the Land Registration Act shall be collected from applicants under this chapter.

Section51. Applications for registration under this chapter shall be heard in the Court of First Instance in the same manner and shall be subject to the same procedure as established in the Land Registration Act for other applications, except that a notice of all such applications, together with a plan of the lands claimed, shall be immediately forwarded to the Director of Lands, who may appear as a party in such cases: Provided, That prior to the publication for hearing, all of the papers in said case shall be transmitted papers by the clerk to the Solicitor General or officer acting in his stead, in order that he may, if he deems it advisable for the interests of the Government, investigate all of the facts alleged in the application or otherwise brought to his attention. The Solicitor-General shall return such papers to the clerk as soon as practicable within three months.

The final decree of the court shall in every case be the basis for the original certificate of title in favor of the person entitled to the property under the procedure prescribed in section forty-one of the Land Registration Act.

Section52. In cadastral proceedings, instead of an application, an answer or claim may be filed with the same effect as in the procedure provided in the last preceding two sections.

Section53. It shall be lawful for the Director of Lands, whenever in the opinion of the President the public interests shall require it, to cause to be filed in the proper Court of First Instance, through the Solicitor-General or the officer acting in his stead, a petition against the holder, claimant, possessor, or occupant of any land who shall not have voluntarily come in under the provisions of this chapter or of the Land Registration Act, stating in substance that the title of such holder, claimant, possessor, or occupant is open to discussion; or that the boundaries of any such land which has not been brought into court as aforesaid are open to question; or that it is advisable that the title to such lands be settled and adjudicated, and praying that the title to any such land or the boundaries thereof or the right to occupancy thereof be settled and adjudicated. The judicial proceedings under this section shall be in accordance with the laws on adjudication of title in cadastral proceedings.

Section54. If in the hearing of any application arising under this chapter the court shall find that more than one person or claimant has an interest in the land, such conflicting interests shall be adjudicated by the court and decree awarded in favor of the person or persons entitled to the land according to the laws, but if none of said person is entitled to the land, or if the person who might be entitled to the same lacks the qualifications required by this Act for acquiring agricultural land of the public domain, the decision shall be in favor of the Government.

Section55. Whenever, in any proceedings under this chapter to secure registration of an incomplete or imperfect claim of title initiated prior to the transfer of sovereignty from Spain to the United States, it shall appear that had such claims been prosecuted to completion under the laws prevailing when instituted, and under the conditions of the grant then contemplated, the conveyance of such land to the applicant would not have been gratuitous, but would have involved payment therefor to the Government, then and in that event the court shall, after decreeing in whom title should vest, further determine the amount to be paid as a condition for the registration of the land. Such judgment shall be certified to the Director of Lands by the clerk of the court for collection of the amount due from the person entitled to conveyance.

Upon payment to the Director of Lands of the price specified in the judgment, he shall so certify to the proper Court of First Instance and said court shall forthwith order the registration of the land in favor of the competent person entitled thereto. If said person shall fail to pay the amount of money required by the decree within a reasonable time fixed in the same, the court shall order the proceeding to stand dismissed and the title to the land shall then be in the State free from any claim of the applicant.

Section56. Whenever any judgment of confirmation or other decree of the court under this chapter shall become final, the clerk of the court concerned shall certify that fact to the Director of Lands, with a certified copy of the decree of confirmation or judgment of the court and the plan and technical description of the land involved in the decree or judgment of the court.

Section57. No title or right to, or equity in, any lands of the public domain may hereafter be acquired by prescription or by adverse possession or occupancy, or under or by virtue of any law in effect prior to American occupation, except as expressly provided by laws enacted after said occupation of the Philippines by the United States.

TITLE III
LANDS FOR RESIDENTIAL, COMMERCIAL OR INDUSTRIAL PURPOSES AND OTHER SIMILAR PURPOSES

CHAPTER VIII
CLASSIFICATION AND CONCESSION OF PUBLIC LANDS SUITABLE FOR RESIDENCE, COMMERCE AND INDUSTRY

Section58. Any tract of land of the public domain which, being neither timber nor mineral land, is intended to be used for residential purposes or for commercial, industrial, or other productive purposes other than agricultural, and is open to disposition or concession, shall be disposed of under the provisions of this chapter and not otherwise.

Section59. The lands disposable under this title shall be classified as follows:

(a) Lands reclaimed by the Government by dredging, filing, or other means;

(b) Foreshore;

(d) Lands not included in any of the foregoing classes.

Section60. Any tract of land comprised under this title may be leased or sold, as the case may be, to any person, corporation, or association authorized to purchase or lease public lands for agricultural purposes. The area of the land so leased or sold shall be such as shall, in the judgment of the Secretary of Agriculture and Natural Resources, be reasonably necessary for the purposes for which such sale or lease is requested, and shall in no case exceed one hundred and forty-four hectares: Provided, however, That this limitation shall not apply to grants, donations, transfers made to a province, municipality or branch or subdivision of the Government for the purposes deemed by said entities conducive to the public interest; but the land so granted donated, or transferred to a province, municipality, or branch or subdivision of the Government shall not be alienated, encumbered, or otherwise disposed of in a manner affecting its title, except when authorized by Congress: Provided, further, That any person, corporation, association or partnership disqualified from purchasing public land for agricultural purposes under the provisions of this Act, may lease land included under this title suitable for industrial or residential purposes, but the lease granted shall only-be valid while such land is used for the purposes referred to.

Section61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be disposed of to private parties by lease only and not otherwise, as soon as the President, upon recommendation by the Secretary of Agriculture and Commerce shall declare that the same are not necessary for the public service and are open to disposition under this chapter. The lands included in class (d) may be disposed of by sale or lease under the provisions of this Act.

Section62. The lands reclaimed by the Government by dredging, filling or otherwise shall be surveyed and may, with the approval of the Secretary of Agriculture and Commerce, be divided by the Director of Lands into lots and blocks, with the necessary streets and alley-ways between them, and said Director shall give notice to the public by publication in the Official Gazette or by other means, that the lots or blocks not needed for public purposes shall be leased for commercial or industrial or other similar purposes.

Section63. Whenever it is decided that lands covered by this chapter are not needed for public purposes, the Director of Lands shall ask the Secretary of Agriculture and Commerce for authority to dispose of the same. Upon receipt of such authority, the Director of Lands shall give notice by public advertisement in the same manner as in the case of leases or sales of agricultural public land, that the Government will lease or sell, as the case may be, the lots or blocks specified in the advertisement, for the purpose stated in the notice and subject to the conditions specified in this chapter.

Section64. The leases executed under this chapter by the Secretary of Agriculture and Commerce shall, among other conditions, contain the following:

(a) The rental shall not be less than three per centum of the appraised or reappraised value of the land plus one per centum of the appraised or reappraised value of the improvements, except for lands reclaimed by the Government which shall not be less than four per centum of the appraised or reappraised value of the land plus two per centum of the appraised or reappraised value of the improvements thereon: Provided, That twenty-five per centum of the total annual rental on all lands reclaimed prior to the approval of this Act and one per centum of the appraised or reappraised value of improvements shall accrue to the construction and improvement portion of the Portworks Fund: And provided, further, That the annual rental on lands reclaimed using the Portworks Fund together with the fee due on account of the improvement thereon after the effectivity of this Act shall all accrue to the construction and improvement portion of the Portworks Fund.

(b) The land rented and the improvements thereon shall be reappraised every ten years if the term of the lease is in excess of that period.

(d) The lessee shall construct permanent improvements appropriate for the purpose for which the lease is granted, shall commence the construction thereof within six months from the date of the award of the right to lease the land, and shall complete the said construction within eighteen months from said date.

(e) At the expiration of the lease or of any extension of the same, all improvements made by the lessee, his heirs, executors, administrators, successors, or assigns shall become the property of the Government.

(f) The regulation of all rates and fees charged to the public; and the annual submission to the Government for approval of all tariffs of such rates and fees.

(g) The continuance of the easements of the coast police and other easements reserved by existing law or by any laws hereafter enacted.

(h) Subjection to all easements and other rights acquired by the owners of lands bordering upon the foreshore or marshy land.

The violation of one or any of the conditions specified in the contract shall give rise to the rescission of said contract. The Secretary of Agriculture and Commerce may, however, subject to such conditions as he may prescribe, waive the rescission arising from a violation of the conditions of subsection (d), or extend the time within which the construction of the improvements shall be commenced and completed.

Section65. The sale of the lands comprised in classes (c) and (d) of section fifty-nine shall, among others, comprise the following conditions:

(a) The purchaser shall make improvements of a permanent character appropriate for the purpose for which the land is purchased, shall commence work thereon within six months from the receipt of the order of award, and shall complete the construction of said improvements within eighteen months from the date of such award; otherwise the Secretary of Agriculture and Natural Resources may rescind the contract.

(b) The purchase price shall be paid in cash or in equal annual installments, not to exceed ten.

The contract of sale may contain other conditions not inconsistent with the provisions of this Act.

Section66. The kind of improvements to be made by the lessee or the purchaser, and the plans thereof, shall be subject to the approval of the Secretary of Public Works and Communications, in case they are constructions or improvements which if by the Government, would properly have to be executed under the supervision of the Bureau of Public Works.

Section67. The lease or sale shall be made through oral bidding; and adjudication shall be made to the highest bidder. However, where an applicant has made improvements on the land by virtue of a permit issued to him by competent authority, the sale or lease shall be made by sealed bidding as prescribed in section twenty-six of this Act, the provisions of which shall be applied wherever applicable. If all or part of the lots remain unleased or unsold, the Director of Lands shall from time to time announce in the Official Gazette or in any other newspapers of general circulation, the lease or sale of those lots, if necessary

Section68. The Secretary of Agricultural and Commerce may grant to qualified persons temporary permission, upon payment of a reasonable charge, for the use of any portion of the lands covered by this chapter for any lawful private purpose, subject to revocation at any time when, in his judgment, the public interest shall require it.

TITLE IV
LANDS FOR EDUCATIONAL, CHARITABLE, AND OTHER SIMILAR PURPOSES

CHAPTER IX
CONCESSION OF LANDS FOR EDUCATIONAL, CHARITABLE, AND OTHER SIMILAR PURPOSES

Section69. Whenever any province, municipality, or other branch or subdivision of the Government shall need any portion of the land of the public domain open to concession for educational, charitable or other similar purposes, the President, upon recommendation by the Secretary of Agriculture and Commerce, may execute contracts in favor of the same. in the form of donation, sale, lease, exchange, or any other form, under terms and conditions to be inserted in the contract; but land so granted shall in no case be encumbered or alienated, except when the public service requires their being leased or exchanged, with the approval of the President, for other lands belonging to private parties, or if the National Assembly disposes otherwise.

Section70. Any tract of public land of the class covered by this title may be sold or leased for the purpose of founding a cemetery, church, college, school, university, or other institutions for educational, charitable or philanthropically purposes or scientific research, the area to be such as may actually and reasonably be necessary to carry out such purpose, but not to exceed ninety-six hectares in any case. The sale or lease shall be made subject to the same conditions as required for the sale and lease of agricultural public land, but the Secretary of Agriculture and Commerce may waive the conditions requiring cultivation. The Secretary of Agriculture and Commerce, if conveyance he sees fit, may order the sale to be made without public auction, at a price to be fixed by said Secretary, or the lease to be granted without auction, at a rental to be fixed by him. In either case it shall be a condition that the purchaser or lessee or their successors or assigns shall not sell transfer, encumber or lease the land for the purposes of speculation or use it for any purpose other than that contemplated in the application, and that the violation of this condition shall give rise to the immediate rescission of the sale or lease, as the case may be, and to the forfeiture to the Government of all existing improvements: Provided, That it shall in no case be sublet, encumbered or resold under the conditions above set forth except with the approval of the Secretary of Agriculture and Commerce.

TITLE V
RESERVATIONS

CHAPTER X
TOWN SITE RESERVATIONS

Section71. Whenever it shall be considered to be in the public interest to found a new town. The Secretary of Agriculture and Commerce shall direct the Director of Lands to have a survey made by his Bureau of the exterior boundaries of the site on which such town is to be established, and upon the completion of the survey he shall send the same to said Secretary, with his recommendations.

Section72. The Secretary of Agriculture and Commerce, if he approves the recommendations of the Director of Lands, shall submit the matter to the President to the end that the latter may issue a proclamation reserving the land surveyed, or such part thereof as he may deem proper, as a town site, and a certified copy of such proclamation shall be sent to the Director of Lands and another to the register of deeds of the province in which the surveyed land lies.

Section73. It shall then be the duty of the Director of Lands, after having recorded the proclamation of the President and the survey accompanying the same, and having completed the legal proceedings prescribed in chapter thirteen of this Act, to direct a subdivision in accordance with the instructions of the Secretary of Agriculture and Commerce, if there shall be such instructions, and if there shall not be any, then in the manner which may to the Director of Lands seem best adapted to the convenience and interest of the public and the residents of the future town.

Section74. The plat of the subdivision shall designate certain lots for commercial and industrial uses and the remainder as residence lots, and shall also reserve and note the lots owned by private individuals as evidenced by record titles, or possessed or claimed by them as private property. Such lots, whether public or private, shall be numbered upon a general plan or system.

The plat prepared by the Director of Lands shall be submitted to the Secretary of Agriculture and Commerce for consideration, modification, amendment, or approval.

Section75. Unless the necessary reservations are made in the proclamation of the President, the Director of Lands, with the approval of the Secretary of Agriculture and Commerce, shall reserve out of the land by him to be subdivided lots of sufficient size and convenient situation for public use, as well as the necessary avenues, streets, alleyways, parks, and squares. The avenues, streets, alleys, parks, plazas, and lots shall be laid out on the plat as though the lands owned or claimed by private persons were part of the public domain and part of the reservation, with a view to the possible subsequent purchase or condemnation thereof, if deemed necessary by the proper authorities.

Section76. At any time after the subdivision has been made, the President may, in case the public interest requires it, reserve for public purposes any lot or lots of the land so reserved and not disposed of.

Section77. If, in order to carry out the provisions of this chapter, it shall be necessary to condemn private lands within the limits of the new town, the President shall direct the Solicitor-General or officer acting in his stead to at once begin proceedings for condemnation, in accordance with the provisions of existing law.

Section78. When the plat of subdivision has been finally approved by the Secretary of Agriculture and Commerce, the Director of Lands shall record the same in the records of his office and shall forward a certified copy of such record to the register of deeds of the province in which the land lies, to be by such register recorded in the records of his office

Section79. All lots, except those claimed by or belonging to private parties and those reserved for parks, buildings, and other public uses, shall be sold, after due notice, at public auction to the highest bidder, after the approval and recording of the plat of subdivision as above provided, but no bid shall be accepted that does not equal at least two-thirds of the appraised value, nor shall bids be accepted from persons, corporations, associations, or partnerships not authorized to purchase public lands for commercial, residential or industrial purposes under the provisions of this Act. The provisions of sections twenty-six and sixty-five of this Act shall be observed in so far as they are applicable. Lots for which satisfactory bids have not been received shall be again offered for sale, under the same conditions as the first time, and if they then remain unsold, the Director of Lands shall be authorized to sell them at private sale for not less than two-thirds of their appraised value.

Section80. All funds derived from the sale of lots shall be covered into the Philippine Treasury as part of the general funds.

Section81. Not more than two residence lots and two lots for commercial and industrial uses in any one town site shall be sold to any one person, corporation, or association without the specific approval of the Secretary of Agriculture and Commerce.

Section82. The Assembly shall have the power at any time to modify, alter, rescind, repeal, annul, and cancel, with or without conditions, limitation, exceptions, or reservations, all and any dispositions made by the executive branch of the Philippine Government by virtue of this chapter, and the exercise of this power shall be understood as reserved in all cases, as an inherent condition thereof.

CHAPTER XI
RESERVATIONS FOR PUBLIC AND SEMI-PUBLIC PURPOSES

Section83. Upon the recommendation of the Secretary of Agriculture and Commerce, the President may designate by proclamation any tract or tracts of land of the public domain as reservations for the use of the Commonwealth of the Philippines or of any of its branches, or of the inhabitants thereof, in accordance with regulations prescribed for this purpose, or for quasi-public uses or purposes when the public interest requires it, including reservations for highways, rights of way for railroads, hydraulic power sites, irrigation systems, communal pastures or leguas comunales, public parks, public quarries, public fishponds, workingman’s village and other improvements for the public benefit.

Section84. Upon recommendation of the Secretary of Agriculture and Commerce, the President, may by proclamation, designate any tract or tracts of the public domain for the exclusive use of the non-Christian Filipinos, including in the reservation, in so far as practicable, the lands used or possessed by them, and granting to each member not already the owner, by title or gratuitous patent, of four or more hectares of land, the use and benefit only of a tract of land not to exceed four hectares for each male member over eighteen years of age or the head of a family. As soon as the Secretary of the Interior shall certify that the majority of the non-Christian inhabitants of any given reservation have advanced sufficiently in civilization, then the President may order that the lands of the public domain within such reservation be granted under the general provisions of this Act to the said inhabitants, and the subdivision and distribution of said lands as above provided shall be taken into consideration in the final disposition of the same. But any non-Christian inhabitant may at any time apply for the general benefits of this Act provided the Secretary of Agriculture and Commerce is satisfied that such inhabitant is qualified to take advantage of the provisions of the same: Provided, That all grants, deeds, patents and other instruments of conveyance of land or purporting to convey or transfer rights of property, privileges, or easements appertaining to or growing out of lands, granted by sultans, datus, or other chiefs of the so-called non-Christian tribes, without the authority of the Spanish Government while the Philippines were under the sovereignty of Spain, or without the consent of the United States Government or of the Philippine Government since the sovereignty over the Archipelago was transferred from Spain to the United States, and all deeds and other documents executed or issued or based upon the deeds, patents, and documents mentioned, are hereby declared to be illegal, void, and of no effect.

Section85. Upon recommendation by the Secretary of Agriculture and Commerce, the President may, by proclamation designate any tract or tracts of land of the public domain for the establishment of agricultural colonies; and although the disposition of the lands to the colonists shall be made under the provisions of this Act, yet, while the Government shall have the supervision and management of said colonies, the Secretary of Agriculture and Commerce may make the necessary rules and regulations for the organization and internal administration of the same. The Secretary of Agriculture and Commerce may also, under conditions to be established by the Assembly, turn over a colony so reserved to any person or corporation, in order that such person or corporation may clear, break, and prepare for cultivation the lands of said colony and establish the necessary irrigation system and suitable roads and fences; but final disposition shall be made of the land in accordance with the provisions of this Act, subject, however, to such conditions as the National Assembly may establish for the reimbursement of the expense incurred in putting such lands in condition for cultivation: Provided, That the National Assembly may direct that such land so prepared for cultivation may be disposed of only by sale or lease.

CHAPTER XII
PROVISIONS COMMON TO RESERVATIONS

Section86. A certified copy of every proclamation of the President issued under the provisions of this title shall be forwarded to the Director of Lands for record in his office, and a copy of this record shall be forwarded to the register of deeds of the province or city where the land lies. Upon receipt of such certified copy, the Director of Lands shall order the immediate survey of the proposed reservation if the land has not yet been surveyed, and as soon as the plat has been completed, he shall proceed in accordance with the next following section.

Section87. If all the lands included in the proclamation of the President are not registered under the Land Registration Act, the Solicitor-General, if requested to do so by the Secretary of Agriculture and Commerce, shall proceed in accordance with the provision of section fifty-three of this Act.

Section88. The tract or tracts of land reserved under the provisions of section eighty-three shall be non-alienable and shall not be subject to occupation, entry, sale, lease, or other disposition until again declared alienable under the provisions of this Act or by proclamation of the President.

TITLE VI
GENERAL PROVISIONS

CHAPTER XIII
APPLICATIONS: PROCEDURE, CONCESSION OF LANDS, AND LEGAL RESTRICTIONS AND ENCUMBRANCES

Section89. All applications filed under the provisions of this Act shall be addressed to the Director of Lands.

Section90. Every application under the provisions of this Act shall be made under oath and shall set forth:

(a) The full name of applicant, his age, place of birth, citizenship, civil status, and post-office address. In case the applicant is a corporation, association or co-partnership, the application shall be accompanied with a certified copy of its articles of incorporation, association or co-partnership together with an affidavit of its President, manager, or other responsible officer, giving the names of the stockholders or members, their citizenship, and the number of shares subscribed by each.

(b) That the applicant has all the qualifications required by this Act in the case.

(d) That the application is made in good faith, for the actual purpose of using the land for the object specified in the application and for no other purpose, and that the land is suitable for the purpose to which it is to be devoted.

(e) That the application is made for the exclusive benefit of the application and not, either directly or indirectly, for the benefit of any other person or persons, corporation, association, or partnership.

(f) As accurate a description of the land as may be given, stating its nature the province, municipality, barrio, and sitio where it is located, and its limits and boundaries, specifying those having reference to accidents of the ground or permanent monuments, if any.

(g) Whether all or part of the land is occupied or cultivated or improved, and by whom, giving his post-office address, and whether the land has been occupied or cultivated or improved by the applicant or his ascendant, the name of the ascendant, the relationship with him, the date and place of the death of the ascendant, the date when the possession and cultivation began, and description of the improvements made, accompanying satisfactory evidence of the relationship of the applicant with the ascendant, and of the death of the latter and the descendants left by him, in case it is alleged that he occupied and cultivated the land first; or whether there are indications of its having been occupied, cultivated, or improved entirely or partially, and if so, in what such indications consist, whether he has made investigations as to when and by whom such improvements were made, and if so, how such investigations were made and what was the result thereof; or whether the land is not occupied, improved, or cultivated either entirely or partially, and there are no indications of it having ever been occupied, improved, or cultivated, and in this case, what is the condition of the land.

(h) That the land applied for is neither timber nor mineral land and does not contain guano or deposits of salts or coal.

(i) That the applicant agrees that a strip forty meters wide starting from the bank on each side of any river or stream that may be found on the land applied for, shall be demarcated and preserved as permanent timberland to be planted exclusively to trees of known economic value, and that he shall not make any clearing thereon or utilize the same for ordinary farming purposes even after patent shall have been issued to him or a contract of lease shall have been executed in his favor. 68

Section91. The statements made in the application shall be considered as essential conditions and parts of any concession, title, or permit issued on the basis of such application, and any false statements therein or omission of facts altering, changing, or modifying the consideration of the facts set forth in such statements, and any subsequent modification, alteration, or change of the material facts set forth in the application shall ipso facto produce the cancellation of the concession, title, or permit granted. It shall be the duty of the Director of Lands, from time to time and whenever he may deem it advisable, to make the necessary investigations for the purpose of ascertaining whether the material facts set out in the application are true, or whether they continue to exist and are maintained and preserved in good faith, and for the purposes of such investigation, the Director of Lands is hereby empowered to issue subpoenas and subpoenas duces tecum and, if necessary, to obtain compulsory process from the courts. In every investigation made in accordance with this section, the existence of bad faith, fraud, concealment, or fraudulent and illegal modification of essential facts shall be presumed if the grantee or possessor of the land shall refuse or fail to obey a subpoena or subpoena duces tecum lawfully issued by the Director of Lands or his authorized delegates or agents, or shall refuse or fail to give direct and specific answers to pertinent questions, and on the basis of such presumption, an order of cancellation may issue without further proceedings.

Section92. Although the maximum area of public land that may be acquired is fixed, yet the spirit of this Act is that the rule which must determine the real area to be granted is the beneficial use of the land. The concession or disposition shall be for less than the maximum area authorized if, at the time of the issuance of the patent or of the concession or disposition, it shall appear that the applicant is utilizing and is only able to utilize a smaller area, even though the application is for a greater area. For the purposes of this section, the Director of Lands is authorized to determine the area that may be granted to the applicant, and to deny or cancel or limit any application for concession, purchase, or lease if convinced of the lack of means of the applicant for using the land for the purpose for which he has requested it.

Section93. Lands applied for under this Act shall conform to the legal subdivisions and shall be contiguous if comprising more than one subdivision. If subdivisions have not been made on the date of the application, the lands shall be rectangular in form so far as practicable, but it shall be endeavored to make them conform to the legal subdivision as soon as the same has been made, provided the interests of the applicant or grantee are protected; and the subdivision assigned to the applicant or grantee shall, so far as practicable, include the land improved or cultivated. The regulations to be issued for the execution of the provisions of this section shall take into account the legal subdivision to be made by the Government and the inadvisability of granting the best land at a given place to only one person.

Section94. In case the legal subdivisions have already been made at the time of the filing of the application, no charge shall be made for the survey; but if the legal subdivisions have not yet been made, the cost of the survey shall be charged to the Government, except in the following cases:

(a) In purchases under chapters five and ten of this Act, the cost of the survey shall be charged to the purchaser if the same is a corporation, association, or partnership; in other purchases the purchases, whoever it be, shall pay the total cost of the survey.

(b) In leases, the cost of the survey shall be paid by the lessee; but at any time after the first five years from the approval of the lease, and during Cost of the life of the same, the lessee shall be entitled to the reimbursement of one-half of the cost of the survey, if he shows to the satisfaction of the Director of Lands that he has occupied and improved a sufficient area of the land or incurred sufficient expenses in connection therewith to warrant such reimbursement.

Section95. If before the delimitation and survey of a tract of public land the President shall declare the same disposable or alienable and such land shall be actually occupied by a person other than the applicant, the Director of Lands shall inform the occupant of his prior right to apply for the land and shall give him one hundred and twenty days time in which to file the application or apply for the concession by any of the forms of disposition authorized by this Act, if such occupant is qualified to acquire a concession under this Act.

Section96. As soon as any land of the public domain has been surveyed, delimited, and classified, the President may, in the order issued by him declaring it open for disposition, designate a term within which occupants with improvements but not entitled to free patents may apply for the land occupied by them, if they have the qualifications required by this Act.

Section97. If in the case of the two last preceding sections, the occupant or occupants have not made application under any of the provisions of this Act at the expiration of the time limit fixed, they shall lose any prior right to the land recognized by this Act, and the improvements on the land, if any, shall be forfeited to the Government.

Section98. All rights in and interest to, and the improvements and crops upon, land for which an application has been denied or canceled or a patent or grant refused, or a contract or concession rescinded or annulled, shall also be forfeited to the Government.

Section99. The Secretary of Agriculture and Commerce may order such improvements and crops to be appraised separately, for sale to the new applicant or grantee, or may declare such land open only to sale or lease.

Section100. In case the cancellation is due to delinquency on the part of the applicant or grantee, the same shall be entitled to the reimbursement of the proceeds of the sale of the improvements and crops, after deducting the total amount of his indebtedness to the Government and the expense incurred by it in the sale of the improvements or crops and in the new concession of the land.

Section101. All actions for the reversion to the Government of lands of the public domain or improvements thereon shall be instituted by the Solicitor-General or the officer acting in his stead, in the proper courts, in the name of the Commonwealth of the Philippines.

Section102. Any person, corporation, or association may file an objection under oath to any application or concession under this Act, grounded on any reason sufficient under this Act for the denial or cancellation of the application or the denial of the patent or grant. If, after the applicant or grantee has been given suitable opportunity to be duly heard, the objection is found to be well founded, the Director of Lands shall deny or cancel the application or deny patent or grant, and the person objecting shall, if qualified, be granted a prior right of entry for a term of sixty days from the date of the notice.

Section103. All the proofs, affidavits, and oaths of any kind required or necessary under this Act may be made before the justice of the peace 71 of the municipality in which the land lies, or before the judge or clerk of the Court of First Instance of the province in which the land lies, or before any justice of the peace or chargeable notary public of the province in which the land lies, or before any officer or employee of the Bureau of Lands authorized by law to administer oaths.

The fees for the taking of final evidence before any of the officials herein-before mentioned shall be as follows:

For each affidavit, fifty centavos.

For each deposition of the applicant or the witness, fifty centavos.

Section104. Any owner of uncultivated agricultural land who knowingly permits application for the same to be made to the Government and the land to be tilled and improved by a bona fide grantee without protesting to the Bureau of Lands within one year after cultivation has begun, shall lose all to the part of the land so cultivated and improved, unless he shall bring action in the proper court before such action for recovery prescribes and obtains favorable judgment therein, in which case the court shall, upon its decision becoming final, order the payment to the grantee, within a reasonable period, of the indemnity fixed by said court for the cultivation and improvement.

Section105. If at any time the applicant or grantee shall die before the issuance of the patent or the final grant of the land, or during the life of the lease, or while the applicant or grantee still has obligations pending towards the Government, in accordance with this Act, he shall be succeeded in his rights and obligations with respect to the land applied for or granted or leased under this Act by his heirs in law, who shall be entitled to have issued to them the patent or final concession if they show that they have complied with the requirements therefor, and who shall be subrogated in all his rights and obligations for the purposes of this Act.

Section106. If at any time after the approval of the application and before the issuance of a patent or the final concession of the land, or during the life of the lease, or at any time when the applicant or grantee still has obligations pending with the Government, in accordance with this Act, it appears that the land applied for is necessary, in the public interest, for the protection of any source of water or for any work for the public benefit that the Government wishes to undertake, the Secretary of Agriculture and Commerce may order the cancellation of the application or the non issuance of the patent or concession or the exclusion from the land applied for of such portion as may be required, upon payment of the value of the improvements, if any.

Section107. All patents or certificates for land granted under this Act shall be prepared in the Bureau of Lands and shall be issued in the name of the Government of the Republic of the Philippines under the signature of the President of the Philippines: Provided, however, That the President of the Philippines may delegate to the Secretary of Agriculture and Natural Resources 74 and/or the Under secretary for Natural Resources 74 the power to sign patents or certificates covering lands not exceeding one hundred forty-four hectares in area, and to the Secretary of Agriculture and Natural Resources 75 the power to sign patents or certificates covering lands exceeding one hundred forty-four hectares in area: Provided, further, That District Land Officers in every province are hereby empowered to sign patents or certificates covering lands not exceeding five hectares in area when the office of the District Land Officer is properly equipped to carry out the purposes of this Act: Provided, That no applicant shall be permitted to split the area applied for by him in excess of the area fixed in this section among his relatives within the sixth degree of consanguinity or affinity excepting the applicant’s married children who are actually occupying the land: Provided, finally, That copies of said patents issued shall be furnished to the Bureau of Lands for record purposes. No patent or certificate shall be issued by the District Land Officer unless the survey of the land covered by such patent or certificate, whether made by the Bureau of Lands or by a private surveyor, has been approved by the Director of Lands. The Director of Lands shall promptly act upon all surveys submitted to him for approval and return the same to the District Land Officer within ninety days after receipt of such surveys by his office. In case of disapproval, the Director of Lands shall state the reasons therefor. Any person aggrieved by the decision or action of the District Land Officer may, within thirty days from receipt of the copy of the said decision, appeal to the Director of Lands. Such patents or certificates shall be effective only for the purposes defined in Section one hundred and twenty-two of the land Registration Act, and actual conveyance of the land shall be effected only as provided in said section.

All surveys pending approval by the Director of Lands at the time this Act takes effect shall be acted upon by him within ninety days from the effectivity of this Act.

Section108. No patent shall issue nor shall any concession or contract be finally approved unless the land has been surveyed and an accurate plat made thereof by the Bureau of Lands.

Section109. In no case shall any land be granted under the provisions of this Act when this affects injuriously the use of any adjacent land or of the waters, rivers, creeks, foreshore, roads, or roadsteads, or vest the grantee with other valuable rights that may be detrimental to the public interest.

Section110. Patents or certificates issued under the provisions of this Act shall not include nor convey the title to any gold, silver, copper, iron, or other metals or minerals, or other substances containing minerals, guano, gums, precious stones, coal, or coal oil contained in lands granted thereunder. These shall remain to be property of the State.

Section111. All persons receiving title to lands under the provisions of this Act shall hold such lands subject to the provisions hereof and to the same public servitude as exist upon lands owned by private persons, including those with reference to the littoral of the sea and the banks of navigable rivers or rivers upon which rafting may be done.

Section112. Said land shall further be subject to a right-of-way not exceeding sixty (60) meters in width for public highways, railroads, irrigation ditches, aqueducts, telegraph and telephone lines and similar works as the Government or any public or quasi-public service or enterprise, including mining or forest concessionaires, may reasonably require for carrying on their business, with damages for the improvements only. 77

Section113. The beneficial use of water shall be the basis, the measure, and the limit of all rights thereto, and the patents herein granted shall be subject to the right of the Government to make such rules and regulations for the use of water and the protection of the water supply, and for other public purposes, as it may deem best for the public good. Whenever, by priority of possession, rights to the use of water for mining, agricultural, manufacturing, or other purposes have vested and accrued, and the same are recognized and acknowledged by the local customs, or by the laws and decisions of the courts, the possessors and owners of such vested rights shall be maintained and protected in the same, and all patents granted under this Act shall be subject to any vested and accrued rights to ditches and reservoirs used in connection with such water rights as may have been acquired in the manner above described prior to April eleven, eighteen hundred and ninety-nine.

Section114. There is hereby reserved from the operation of all patents, certificates, entries, and grants by the Government authorized under this Act the right to use for the purposes of power any flow of water in any stream running through or by the land granted, the convertible power from which at ordinary low water exceeds fifty horse power. Where the convertible power in any stream running through or by land granted under the authority of this Act thus exceeds fifty horsepower, and there is no means of using such power except by the occupation of a part of the land granted under authority of this Act, then so much land as is reasonably necessary for the mill site or site for the power house, and for a suitable dam and site for massing the water, is hereby excepted from such grants, not exceeding four hectares, and a right of way to the nearest public highway from the land thus excepted, and also a right of way for the construction and maintenance of such flumes, aqueducts, wires, poles, or order conduits as may be needed in conveying the water to the point where its fall will yield the greatest power, or the power from the point of conversion to the point of use, is reserved as a servitude or easement upon the land granted by authority of this Act: Provided, however, That when the Government or any concessionaire of the Government shall take possession of the land under this section which a grantee under this Act shall have paid for, supposing it to be subject to grant under this Act, said grantee shall be entitled to indemnity from the Government or the concessionaire, as the case may be, in the amount, if any, paid by him to the Government for the land taken from him by virtue of this section: And provided, further, That with respect to the flow of water, except for converting the same into power exceeding fifty horse power, said grantee shall be entitled to the same use of the water flowing through or along his land that other private owners enjoy under the law, subject to the governmental regulation provided in the previous section. Water power privileges in which the convertible power at ordinary low water shall exceed fifty horse power shall be disposed of only upon terms established by an Act of the Assembly concerning the use, lease or acquisition of such water privilege.

Section115. All lands granted by virtue of this Act, including homesteads upon which final proof has not been made or approved, shall, even though and while the title remains in the State, be subject to the ordinary taxes, which shall be paid by the grantee or the applicant, beginning with the year next following the one in which the homestead application has been filed, or the concession has been approved, or the contract has been signed, as the case may be, on the basis of the value fixed in such filing, approval or signing of the application, concession or contract.

Section116. The appraisal or reappraisal of the lands or improvements subject to concession or disposition under this Act shall be made by the Director of Lands, with the approval of the Secretary of Agriculture and Commerce. The Director of Lands may request the assistance of the provincial treasurer of the province in which the land lies or may appoint a committee for such purpose in the province or in the municipality in which the land lies. In no case shall the appraisal or reappraisal be less than the expense incurred or which may be incurred by the Government in connection with the application or concession, nor shall any reappraisal be made with an increase of more than one hundred per centum upon the appraisal or reappraisal next preceding.

Section117. All sums due and payable to the Government under this Act, except homestead fees, shall draw simple interest at the rate of four per centum per annum from and after the date in which the debtor shall become delinquent.

Section118. Except in favor of the Government or any of its branches, units, or institutions, lands acquired under free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the approval of the application and for a term of five years from and after the date of issuance of the patent or grant, nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period, but the improvements or crops on the land may be mortgaged or pledged to qualified persons, associations, or corporations.

No alienation, transfer, or conveyance of any homestead after five years and before twenty-five years after issuance of title shall be valid without the approval of the Secretary of Agriculture and Commerce, which approval shall not be denied except on constitutional and legal grounds.

Section119. Every conveyance of land acquired under the free patent or homestead provisions, when proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within a period of five years from the date of the conveyance.

Section120. Conveyance and encumbrance made by persons belonging to the so-called “non-Christian Filipinos” or national cultural minorities, when proper, shall be valid if the person making the conveyance or encumbrance is able to read and can understand the language in which the instrument or conveyance or encumbrances is written. Conveyances and encumbrances made by illiterate non-Christian or literate non-Christians where the instrument of conveyance or encumbrance is in a language not understood by the said literate non-Christians shall not be valid unless duly approved by the Chairman of the Commission on National Integration.

Section121. Except with the consent of the grantee and the approval of the Secretary of Natural Resources, and solely for commercial, industrial, educational, religious or charitable purposes or for a right of way, no corporation, association, or partnership may acquire or have any right, title, interest, or property right whatsoever to any land granted under the free patent, homestead, or individual sale provisions of this Act or to any permanent improvement on such land.

The provisions of Section 124 of this Act to the contrary notwithstanding, any acquisition of such land, rights thereto or improvements thereon by a corporation, association, or partnership prior to the promulgation of this Decree for the purposes herein stated is deemed valid and binding; Provided, That no final decision of reversion of such land to the State has been rendered by a court; And Provided, further, That such acquisition is approved by the Secretary of Natural Resources within six (6) months from the effectivity of this Decree.

Section122. No land originally acquired in any manner under the provisions of this Act, nor any permanent improvement on such land, shall encumbered, alienated, or transferred, except to persons, corporations, associations, or partnerships who may acquire lands of the public domain under this Act or to corporations organized in the Philippines authorized therefor by their charters.

Except in cases of hereditary succession, no land or any portion thereof originally acquired under the free patent, homestead, or individual sale provisions of this Act, or any permanent improvement on such land, shall be transferred or assigned to any individual, nor shall such land or any permanent improvement thereon be leased to such individual, when the area of said land, added to that of his own, shall exceed one hundred and forty-four hectares. Any transfer, assignment, or lease made in violation hereof, shall be null and void.

Section123. No land originally acquired in any manner under the provisions of any previous Act, ordinance, royal order, royal decree, or any other provision of law formerly in force in the Philippines with regard to public lands, terrenos baldios y realengos, or lands of any other denomination that were actually or presumptively of the public domain, or by royal grant or in any other form, nor any permanent improvement on such land, shall be encumbered, alienated, or conveyed, except to persons, corporations or associations who may acquire land of the public domain under this Act or to corporate bodies organized in the Philippines whose charters authorize them to do so: Provided, however, That this prohibition shall not be applicable to the conveyance or acquisition by reason of hereditary succession duly acknowledged and legalized by competent courts; Provided, further, That in the event of the ownership of the lands and improvements mentioned in this section and in the last preceding section being transferred by judicial decree to persons, corporations or associations not legally capacitated to acquire the same under the provisions of this Act, such persons, corporations, or associations shall be obliged to alienate said lands or improvements to others so capacitated within the precise period of five years; otherwise, such property shall revert to the Government.

Section124. Any acquisition, conveyance, alienation, transfer, or other contract made or executed in violation of any of the provisions of sections one hundred and eighteen, one hundred and twenty, one hundred and twenty-one, one hundred and twenty two, and one hundred and twenty-three of this Act shall be unlawful and null and void from its execution and shall produce the effect of annulling and cancelling the grant, title, patent, or permit originally issued, recognized or confirmed, actually or presumptively, and cause the reversion of the property and its improvements to the State.

Section125. The provisions of sections twenty-two, twenty-three, thirty-three, one hundred and twenty-two, and one hundred and twenty-three of this Act, and any other provision or provisions restricting or tending to restrict the right of persons, corporations, or associations to acquire, hold, lease, encumber, dispose of, or alienate land in the Philippines, or permanent improvements thereon, or any interest therein, shall not be applied in cases in which the right to acquire, hold or dispose of such land, permanent improvements thereon or interests therein in the Philippines is recognized by existing treaties in favor of citizens or subjects of foreign nations and corporations or associations organized and constituted by the same, which right, in so far as it exists under such treaties, shall continue and subsist in the manner and to the extent stipulated in said treaties, and only while these are in force, but not thereafter.

Section126. All public auctions provided for in the foregoing chapters in the disposition of public lands shall be held, wherever possible, in the province where the land is located, or, in the office of the Bureau of Lands in Manila

CHAPTER XIV
TRANSITORY PROVISIONS

Section127. During the existence and continuance of the Commonwealth and before the Republic of the Philippines is finally established, citizens and corporations of the United States shall enjoy the same rights granted to citizens and corporations of the Philippines under this Act.

Section128. During the period specified in the next preceding section, the President of the Philippines, upon receipt of the order of the President of the United States, shall, by proclamation, designate such land as the latter may set aside for military, naval or other reservations for use of the Government of the United States.

CHAPTER XV
PENAL PROVISIONS

Section129. Any person who presents or causes to be presented, or cooperates in the presentation of, any false application, declaration, or evidence, or makes or causes to be made or cooperates in the making of a false affidavit in support of any petition, claim, or objection respecting lands of the public domain, shall be deemed guilty of perjury and punished accordingly.

Section130. Any person who voluntarily and maliciously prevents or hinders or attempts to prevent or hinder the presentation of any application for public land under this Act, or who in any manner attempts to execute or executes acts intended to dissuade or discourage, or aid to dissuade or discourage, the acquisition of public lands, shall be deemed guilty of coercion and be punished accordingly.

Section131. Any person who sells forms issued and distributed gratuitously under this Act or who, being an officer charged with distributing them, refuses or fails, without sufficient reason, to furnish the same, shall be punished for each offense by a fine of not more than one hundred pesos or by imprisonment for not more than three months, or both, in the discretion of the court.

Section132. Any person, corporation, association or partnership which, not being qualified or no longer authorized to apply for public land under the provisions of this Act, files or induces or knowingly permits another person, corporation, association or partnership to file an application in his or its behalf or for his or its interest, benefit or advantage, shall be punished by a fine of not less than two hundred nor more than five thousand pesos or by imprisonment for not less than two months nor more than five years, or both, in the discretion of the court; and the application shall be cancelled.

Section133. Any person who, without having the qualifications required by this Act, shall by deceit or fraud acquire or attempt to acquire lands of the public domain or other real property or any right, title or interest, or property right of any class to the same, and any person aiding and abetting him therein or serving as a means or tool therefor, shall, upon conviction, be punished by a fine of not more than five thousands pesos, or by the imprisonment for not more than five years, or both, in the discretion of the court.

TITLE VII
FINAL PROVISIONS

CHAPTER XVI
EFFECTIVENESS OF THIS ACT

Section134. If, for any reason, any section or provision of this Act is challenged in a competent court and is held to be unconstitutional, none of the other sections or provisions thereof shall be affected thereby and such other sections and provisions shall continue to govern as if the section or provisions so annulled, disapproved, or repealed had never been incorporated in this Act, and in lieu of the section or provision so annulled, disapproved, or repealed, the provisions of law on the subject thereof in force prior to the approval of this Act shall govern until the Assembly shall otherwise provide in the premises.

Section135. All laws and regulations, or parts thereof, inconsistent with the provisions of this Act, are hereby repealed.

Section136. This Act shall take effect on December first, nineteen hundred and thirty-six unless the President shall, in the proclamation announcing its effectiveness, designate a prior date, in which case this Act shall take effect on the date so designated.

Approved: November 7, 1936

Commonwealth Act No. 146

April 2, 2017March 20, 2013

COMMONWEALTH ACT No. 146

THE PUBLIC SERVICE LAW

(As amended, and as modified particularly by PD No. 1, Integrated Reorganization Plan and EO 546)

CHAPTER I
ORGANIZATION

Section 1. This Act shall be known as the “Public Service Act.”

Section 2. There is created under the Department of Justice a commission which shall be designated and known as the Public Service Commission, composed of one Public Service Commissioner and five Associate Commissioners, and which shall be vested with the powers and duties hereafter specified. Whenever the word “Commission” is used in this Act, it shall be held to mean the Public Service Commission, and whenever the word “Commissioner” is used in this Act it shall be held to mean the Public Service Commissioner or anyone of the Associate Commissioners. The Public Service Commissioner and the Associate Public Service Commissioners shall be natural born citizens and residents of the Philippines, not under thirty years of age; members of the Bar of the Philippines, with at least five years of law practice or five years of employment in the government service requiring a lawyer’s diploma; and shall be appointed by the President of the Philippines, with the consent of the Commission on Appointments of the Congress of the Philippines: Provided, however, That the present Commissioner and the personnel of the Commission shall continue in office without the necessity of re-appointment. The Commissioners shall have the rank and privilege of retirement of Judges of the Courts of First Instance. (As amended by Republic Act Nos. 178 and 2677)

Section 3. The Commissioner and Associate Commissioners shall hold office until they reach the age of seventy years, or until removed in accordance with the procedures prescribed in section one hundred and seventy-three of Act Numbered Twenty-seven hundred and eleven, known as the Revised Administrative Code: Provided, however, That upon retirement any Commissioner of Associate Commissioner shall be entitled to all retirement benefits and privileges for Judges of the Courts of First Instance or under the retirement law to which he may be entitled on the date of his retirement. In case of the absence, for any reason, of the Public Service Commissioner, the Associate Commissioner with seniority of appointment shall act as Commissioner. If on account of absence, illness, or incapacity of any of three Commissioners, or whenever by reason of temporary disability of any Commissioner or of a vacancy occurring therein, the requisite number of Commissioners necessary to render a decision or issue an order in any case is not present, or in the event of a tie vote among the Commissioners, the Secretary of Justice may designate such number of Judges of the Courts of First Instance, or such number of attorneys of the legal division of the Commission, as may be necessary to sit temporarily as Commissioners in the Public Service Commission.

The Public Service Commission shall sit individually or as a body en banc or in two divisions of three Commissioners each. The Public Service Commissioner shall preside when the Commission sits en banc and in one division. In the other division, the Associate Commissioner with seniority of appointment in that division shall preside. Five Commissioners shall constitute a quorum for sessions en banc and two Commissioners shall constitute a quorum for the sessions of a division. In the absence of a quorum, the session shall be adjourned until the requisite number is present.

All the powers herein vested upon the Commission shall be considered vested upon any of the Commissioners, acting either individually or jointly as hereinafter provided. The Commissioners shall equitably divide among themselves all pending cases and those that may hereafter be submitted to the Commissioner, in such manner and form as they may determine, and shall proceed to hear and determine the case assigned to each or to their respective divisions, or to the Commission en banc as follows: uncontested cases, except those pertaining to the fixing of rates, shall be decided by one Commissioner; contested cases and all cases involving the fixing of rates shall be decided by the Commission in division and the concurrence of at least two Commissioners in the division shall be necessary for the promulgation of a decision or non-interlocutory order in these cases: Provided, however, That any motion for reconsideration of a decision or non-interlocutory order of any Commissioner or division shall be heard directly by the Commission en banc and the concurrence of at least four Commissioners shall be necessary for the promulgation of a final decision or order resolving such motion for reconsideration. (As amended by Republic Act Nos. 723 and 2677)

Section 4. The Public Service Commissioner shall receive an annual compensation of thirteen thousand pesos; and each of the Associate Commissioners an annual compensation of twelve thousand pesos. The Commissioners shall be assisted by one chief attorney, one finance and rate regulation officer, one chief utilities regulation engineer, one chief accountant, one transportation regulation chief, one secretary of the Public Service Commission, and three public utilities advisers who shall receive an annual compensation of not less than ten thousand eight hundred pesos each; five assistant chiefs of division who shall receive an annual compensation of not less than nine thousand six hundred pesos each; twelve attorneys who shall receive an annual compensation of not less than nine thousand pesos each; and a technical and confidential staff to be composed of two certified public accounts, two electrical engineers, two mechanical or communication engineers, and two special assistants who shall receive an annual compensation of not less than seven thousand two hundred pesos each. (As amended by Republic Act Nos. 723, 2677 and 3792)

Section 5. The Public Service Commissioner, the Associate Public Service Commissioners, and all other officers and employees of the Public Service Commission shall enjoy the same privileges and rights as the officer and employees of the classified civil service of the Government of the Philippines. They shall also be entitled to receive from the Government of the Philippines their necessary travelling expenses while travelling on the business of the Commission, which shall be paid on proper voucher therefor, approved by the Secretary of Justice, out of funds appropriated for the contingent expenses of the Commission.

When the exigency of the service so requires and with the approval of the Secretary of Justice, and subject to the provisions of Commonwealth Act Numbered Two hundred forty-six, as amended, funds may be set aside from the appropriations provided for the Commission and/or from the fees collected under Section forty of this Act to defray the expenses to be incurred by the Public Service Commissioner or any of the Associate Commissioners, officers or employees of the Commission to be designated by the Commissioner, with the approval of the Secretary of Justice, in the study of modern trends in supervision and regulation of public services. (As amended by Republic Act No. 3792)

Section 6. The Secretary of Justice, upon recommendation of the Public Service Commissioner, shall appoint all subordinate officers and employees of the Commission as may be provided in the Appropriation Act. The Public Service Commissioner shall have general executive control, direction, and supervision over the work of the Commission and of its members, body and personnel, and over all administrative business. (As amended by Republic Act Nos. 178 and 3792)

Section 7. The Secretary of the Commission, under the direction of the Commissioner, shall have charge of the administrative business of the Commission and shall perform such other duties as may be required of him. He shall be the recorder and official reporter of the proceedings of the Commission and shall have authority to administer oaths in all matters coming under the jurisdiction of the Commission. He shall be the custodian of the records, maps, profiles, tariffs, itineraries, reports, and any other documents and papers filed with the Commission or entrusted to his care and shall be responsible therefor to the Commission. He shall have authority to designate from time to time any of his delegates to perform the duties of Deputy Secretary with any of the Commissioners.

Section 8. The Commission shall furnish the Secretary such of its findings and decisions as in its judgment may be of general public interest; the Secretary shall compile the same for the purpose of publication in a series of volumes to be designated “Reports of the Public Service Commission of the Philippines,” which shall be published in such form and manner as may be best adapted for public information and use, and such authorized publications shall be competent evidence of the reports and decisions of the Commission therein contained without any further proof or authentication thereof.

Section 9. No member or employee of the Commission shall have any official or professional relation with any public service as herein defined, or hold any office of profit or trust with the Government of the Philippines.

Section 10. The Commission shall have its office in the City of Manila or at such other place as may be designated, and may hold hearings on any proceedings at such times and places, within the Philippines, as it may provide by order in writing: Provided, That during the months of April and May of each year, at least three Commissioners shall be on vacation in such manner that once every two years at least three of them shall be on duty during April and May: Provided, however, That in the interest of public service, the Secretary of Justice may require any or all the Commissioners not on duty to render services and perform their duties during the vacation months. (As amended by Republic Act Nos. 176 and 3792)

Section 11. The Commission shall have the power to make needful rules for its Government and other proceedings not inconsistent with this Act and shall adopt a common seal, and judicial notice shall be taken for such seal. True copies of said rules and other amendments shall be promptly furnished to the Bureau of Printing and shall be forthwith published in the Official Gazette.

CHAPTER II
JURISDICTION, POWERS AND DUTIES OF THE COMMISSION

Section 13. (a) The Commission shall have jurisdiction, supervision, and control over all public services and their franchises, equipment, and other properties, and in the exercise of its authority, it shall have the necessary powers and the aid of the public force: Provided, That public services owned or operated by government entities or government-owned or controlled corporations shall be regulated by the Commission in the same way as privately-owned public services, but certificates of public convenience or certificates of public convenience and necessity shall not be required of such entities or corporations: And provided, further, That it shall have no authority to require steamboats, motor ships and steamship lines, whether privately-owned, or owned or operated by any Government controlled corporation or instrumentality to obtain certificate of public convenience or to prescribe their definite routes or lines of service.

(b) The term “public service” includes every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, sub-way motor vehicle, either for freight or passenger, or both with or without fixed route and whether may be its classification, freight or carrier service of any class, express service, steamboat or steamship line, pontines, ferries, and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine railways, marine repair shop, [warehouse] wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power water supply and power, petroleum, sewerage system, wire or wireless communications system, wire or wireless broadcasting stations and other similar public services: Provided, however, That a person engaged in agriculture, not otherwise a public service, who owns a motor vehicle and uses it personally and/or enters into a special contract whereby said motor vehicle is offered for hire or compensation to a third party or third parties engaged in agriculture, not itself or themselves a public service, for operation by the latter for a limited time and for a specific purpose directly connected with the cultivation of his or their farm, the transportation, processing, and marketing of agricultural products of such third party or third parties shall not be considered as operating a public service for the purposes of this Act.

(c) The word “person” includes every individual, co-partnership, joint-stock company or corporation, whether domestic or foreign, their lessees, trustees, or receivers, as well as any municipality, province, city, government-owned or controlled corporation, or agency of the Government of the Philippines, and whatever other persons or entities that may own or possess or operate public services. (As amended by Com. Act 454 and RA No. 2677)

Section 14. The following are exempted from the provisions of the preceding section:

(a) Warehouses;

(b) Vehicles drawn by animals and bancas moved by oar or sail, and tugboats and lighters;

(d) Radio companies except with respect to the fixing of rates;

(e) Public services owned or operated by any instrumentality of the National Government or by any government-owned or controlled corporation, except with respect to the fixing of rates. (As amended by Com. Act 454, RA No. 2031, and RA No. 2677 )

Section 15. With the exception of those enumerated in the preceding section, no public service shall operate in the Philippines without possessing a valid and subsisting certificate from the Public Service Commission known as “certificate of public convenience,” or “certificate of public convenience and necessity,” as the case may be, to the effect that the operation of said service and the authorization to do business will promote the public interests in a proper and suitable manner.

The Commission may prescribe as a condition for the issuance of the certificate provided in the preceding paragraph that the service can be acquired by the Republic of the Philippines or any instrumentality thereof upon payment of the cost price of its useful equipment, less reasonable depreciation; and likewise, that the certificate shall be valid only for a definite period of time; and that the violation of any of these conditions shall produce the immediate cancellation of the certificate without the necessity of any express action on the part of the Commission.

In estimating the depreciation, the effect of the use of the equipment, its actual condition, the age of the model, or other circumstances affecting its value in the market shall be taken into consideration.

The foregoing is likewise applicable to any extension or amendment of certificates actually in force and to those which may hereafter be issued, to permit to modify itineraries and time schedules of public services, and to authorizations to renew and increase equipment and properties.

Section 16. Proceedings of the Commission, upon notice and hearing. – The Commission shall have power, upon proper notice and hearing in accordance with the rules and provisions of this Act, subject to the limitations and exceptions mentioned and saving provisions to the contrary :

(a) To issue certificates which shall be known as certificates of public convenience, authorizing the operation of public service within the Philippines whenever the Commission finds that the operation of the public service proposed and the authorization to do business will promote the public interest in a proper and suitable manner. Provided, That thereafter, certificates of public convenience and certificates of public convenience and necessity will be granted only to citizens of the Philippines or of the United States or to corporations, co-partnerships, associations or joint-stock companies constituted and organized under the laws of the Philippines; Provided, That sixty per centum of the stock or paid-up capital of any such corporations, co-partnership, association or joint-stock company must belong entirely to citizens of the Philippines or of the United States: Provided, further, That no such certificates shall be issued for a period of more than fifty years.

(b) To approve, subject to constitutional limitations any franchise or privilege granted under the provisions of Act No. Six Hundred and Sixty-seven, as amended by Act No. One Thousand and twenty-two, by any political subdivision of the Philippines when, in the judgment of the Commission, such franchise or privilege will properly conserve the public interests, and the Commission shall in so approving impose such conditions as to construction, equipment, maintenance, service, or operation as the public interests and convenience may reasonably require, and to issue certificates of public convenience and necessity when such is required or provided by any law or franchise.

(c) To fix and determine individual or joint rates, tolls, charges, classifications, or schedules thereof, as well as commutation, mileage, kilometrage, and other special rates which shall be imposed observed and followed thereafter by any public service: Provided, That the Commission may, in its discretion, approve rates proposed by public services provisionally and without necessity of any hearing; but it shall call a hearing thereon within thirty days, thereafter, upon publication and notice to the concerns operating in the territory affected: Provided, further, That in case the public service equipment of an operator is used principally or secondarily for the promotion of a private business, the net profits of said private business shall be considered in relation with the public service of such operator for the purpose of fixing the rates.

(d) To fix just and reasonable standards, classifications, regulations, practices, measurement, or service to be furnished, imposed, observed, and followed thereafter by any public service.

(e) To ascertain and fix adequate and serviceable standards for the measurement of quantity, quality, pressure, initial voltage, or other condition pertaining to the supply of the product or service rendered by any public service, and to prescribe reasonable regulations for the examination and test of such product or service and for the measurement thereof.

(f) To establish reasonable rules, regulations, instructions, specifications, and standards, to secure the accuracy of all meters and appliances for measurements.

(g) To compel any public service to furnish safe, adequate, and proper service as regards the manner of furnishing the same as well as the maintenance of the necessary material and equipment.

(h) To require any public service to establish, construct, maintain, and operate any reasonable extension of its existing facilities, where in the judgment of said Commission, such extension is reasonable and practicable and will furnish sufficient business to justify the construction and maintenance of the same and when the financial condition of the said public service reasonably warrants the original expenditure required in making and operating such extension.

(i) To direct any railroad, street railway or traction company to establish and maintain at any junction or point of connection or intersection with any other line of said road or track, or with any other line of any other railroad, street railway or traction to promote, such just and reasonable connection as shall be necessary to promote the convenience of shippers of property, or of passengers, and in like manner direct any railroad, street railway, or traction company engaged in carrying merchandise, to construct, maintain and operate, upon reasonable terms, a switch connection with any private sidetrack which may be constructed by any shipper to connect with the railroad, street railway or traction company line where, in the judgment of the Commission, such connection is reasonable and practicable and can be out in with safety and will furnish sufficient business to justify the construction and maintenance of the same.

(j) To authorize, in its discretion, any railroad, street railway or traction company to lay its tracks across the tracks of any other railroad, street railway or traction company or across any public highway.

(k) To direct any railroad or street railway company to install such safety devices or about such other reasonable measures as may in the judgment of the Commission be necessary for the protection of the public are passing grade crossing of (1) public highways and railroads, (2) public highways and streets railway, or (3) railways and street railways.

(l) To fix and determine proper and adequate rates of depreciation of the property of any public service which will be observed in a proper and adequate depreciation account to be carried for the protection of stockholders, bondholders or creditors in accordance with such rules, regulations, and form of account as the Commission may prescribe. Said rates shall be sufficient to provide the amounts required over and above the expense of maintenance to keep such property in a state of efficiency corresponding to the progress of the industry. Each public service shall conform its depreciation accounts to the rates so determined and fixed, and shall set aside the moneys so provided for out of its earnings and carry the same in a depreciation fund. The income from investments of money in such fund shall likewise be carried in such fund. This fund shall not be expended otherwise than for depreciation, improvements, new construction, extensions or conditions to the properly of such public service.

(m) To amend, modify or revoke at any time certificate issued under the provisions of this Act, whenever the facts and circumstances on the strength of which said certificate was issued have been misrepresented or materially changed.

(n) To suspend or revoke any certificate issued under the provisions of this Act whenever the holder thereof has violated or willfully and contumaciously refused to comply with any order rule or regulation of the Commission or any provision of this Act: Provided, That the Commission, for good cause, may prior to the hearing suspend for a period not to exceed thirty days any certificate or the exercise of any right or authority issued or granted under this Act by order of the Commission, whenever such step shall in the judgment of the Commission be necessary to avoid serious and irreparable damage or inconvenience to the public or to private interests.

(o) To fix, determine, and regulate, as the convenience of the state may require, a special type for auto-busses, trucks, and motor trucks to be hereafter constructed, purchased, and operated by operators after the approval of this Act; to fix and determine a special registration fee for auto-buses, trucks, and motor trucks so constructed, purchased and operated: Provided, That said fees shall be smaller than more those charged for auto-busses, trucks, and motor trucks of types not made regulation under the subsection.

Section 17. Proceedings of Commission without previous hearing. – The Commission shall have power without previous hearing, subject to established limitations and exception and saving provisions to the contrary:

(a) To investigate, upon its own initiative, or upon complaint in writing, any matter concerning any public service as regards matters under its jurisdiction; to require any public service to furnish safe, adequate, and proper service as the public interest may require and warrant; to enforce compliance with any standard, rule, regulation, order or other requirement of this Act or of the Commission, and to prohibit or prevent any public service as herein defined from operating without having first secured a certificate of public convenience or public necessity and convenience, as the case may be and require existing public services to pay the fees provided for in this Act for the issuance of the proper certificate of public convenience or certificate of public necessity and convenience, as the case may be, under the penalty, in the discretion by the Commission, of the revocation and cancellation of any acquired rights.

(b) To require any public service to pay the actual expenses incurred by the Commission in any investigation if it shall be found in the same that any rate, tool, charge, schedule, regulation, practice, act or service thereof is in violation of any provision of this Act or any certificate, order, rule, regulation or requirement issued or established by the Commission. The Commission may also assess against any public service costs not to exceed twenty-five pesos with reference to such investigation.

(c) From time to time appraise and value the property of any public service, whenever in the judgment of the Commission it shall be necessary so to do, for the purpose of carrying out any of the provisions of this Act, and in making such valuation the Commission may have access to and use any books, documents, or records in the possession of any department, bureau, office, or board of the government of the Philippines or any political subdivision thereof.

(d) To provide, on motion by or at the request of any consumer or user of a public service, for the examination and test of any appliance used for the measuring of any product or service of a public service, and for that purpose, by its agents, experts, or examiners to enter upon any premises where said appliances may be, and other premises of the public service, for the purpose of setting up and using on said premises any apparatus necessary therefor. and to fix the fees to be paid by any consumer or user who may apply to the Commission for such examination or test to be made, and if the appliance be found defective or incorrect to the disadvantage of the consumer or user to require the fees paid to be refunded to the consumer or user by the public service concerned.

(e) To permit any street railway or traction company to change its existing gauge to standard steam railroad gauge, upon such terms and conditions as the Commission shall prescribe.

(f) To grant to any public service special permits to make extra or special trips within the territory covered by its certificates of public convenience, and to make special excursion trips outside of its own territory if the public interest or special circumstances required it: Provided, however, that in case a public service cannot render such extra service on its own line or in its own territory, a special permit for such extra service may be granted to any other public service.

(g) To require any public service to keep its books, records, and accounts so as to afford an intelligent understanding of the conduct of its business and to that end to require every such public service of the same class to adopt a uniform system of accounting. Such system conform to any system approved and confirmed by the Auditor General.

(h) To require any public service to furnish annual reports of finances and operations. Such reports shall set forth in detail the capital stock issued, the amounts of said capital stock paid up and the form of payment thereof; the dividends paid, the surplus, if any and the number of stockholders, the consolidated and pending obligations and the interest paid thereon; the cost and value of the property of the operator; concessions or franchises and equipment; the number of employees and salaries paid to each class; the accidents to passengers, employees, and other person, and the causes thereof; the annual expenditures on improvements; the manner of their investment and nature of such improvements; the receipts and profits in each of the branches of the business and of whatever source; the operating and other expenses; the balance of profits and losses; and a complete statement of the annual financial operations of the operator, including an annual balance sheet. Such reports shall also contain any information which the Commission may require concerning freight and passenger rates, or agreements, compromises or contracts affecting the same. Said reports shall cover a period of twelve months, ending on December thirty-first of each year, and shall be sworn to by the officer or functionary of the public service authorized therefor. The Commission shall also have power to require from time to time special reports containing such information as above provided for or on other matters as the Commission may deem necessary or advisable.

(i) To require every public service to file with the Commission a statement in writing, verified by the oaths of the owner or the president and the secretary thereof, if a corporation, setting forth the name, title of office or portion, and post-office address, and the authority, power and duties of every officer, member of the board of directors, trustees executive committee, superintendent, chief or head of construction and operation thereof, in such form as to disclose the source and origin of each administrative act, rule, decision, order or other action of the operator of such public service; and, within ten days after any change is made in the title of, or authority, powers or duties appertaining to any such office or position, or the person holding the same, filed with the Commission a like statement, verified in like manner, setting forth such change.

(j) To require any public service to comply with the laws of the Philippines and with any provincial resolution or municipal ordinance relating thereto and to conform to the duties imposed upon it thereby or by the provisions of its own character, whether obtained under any general or special law of the Philippines.

(k) To investigate any or all accidents that may occur on the property of any public service or directly or indirectly arising from or connected with its maintenance or operation in the Philippines; to require any public service to give the Commission immediate and effective notice of all any such accidents, and to make such order or recommendation with respect thereto as the public interest may warrant or require.

(l) To require every public service s herein defined to file within complete schedules of every classification employed and of every individual or joint rate, toll fare or charge made, charged or exacted by it for any product supplied or service rendered within the Philippines and, in the case of public carriers, to file with it a statement showing the itineraries or routes served as specified in such requirement.

CHAPTER III
OPERATORS OF PUBLIC SERVICES REGULATIONS AND PROHIBITIONS

Section 18. It shall be unlawful for any individual, co-partnership, association, corporation or joint-stock company, their lessees, trustees or receivers appointed by any court whatsoever, or any municipality, province, or other department of the Government of the Philippines to engage in any public service business without having first secured from the Commission a certificate of public convenience or certificate of public convenience and necessity as provided for in this Act, except grantees of legislative franchises expressly exempting such grantees from the requirement of securing a certificate from this Commission as well as concerns at present existing expressly exempted from the jurisdiction of the Commission, either totally or in part, by the provisions of section thirteen of this Act.

Section 19. Unlawful Acts. – It shall be unlawful for any public service:

(a) To provide or maintain any service that is unsafe, improper, or inadequate or withhold or refuse any service which can reasonably be demanded and furnished, as found and determined by the Commission in a final order which shall be conclusive and shall take effect in accordance with this Act, upon appeal of otherwise.

(b) To make or give, directly or indirectly, by itself or through its agents, attorneys or brokers, or any of them, discounts or rebates on authorized rates, or grant credit for the payment of freight charges, or any undue or unreasonable preference or advantage to any person of corporation or to any locality or to any particular description of traffic or service, or subject any particular person or corporation or locality or any particular description of traffic to any prejudice or disadvantage in any respect whatsoever; to adopt, maintain, or enforce any regulation, practice or measurement which shall be found or determined by the Commission to be unjust, unreasonable, unduly preferential or unjustly discriminatory in a final order which shall be conclusive and shall take effect in accordance with the provisions of this Act, upon repeal or otherwise.

(c) To refuse or neglect, when requested by the Director of Posts or his authorized representative, to carry public mail on the regular trips of any public land transportation service maintained or operated by any such public service; upon such terms and conditions and for a consideration in such amount as may be agreed upon between the Director of Posts and the public service carrier of fixed by the Commission in the absence of an agreement between the Director of Posts and the carrier. In case the Director of Posts and public service carrier are unable to agree on the amount of the compensation to be paid for the carriage of the mail, the Director of Posts shall forthwith request the Commission to fix a just and reasonable compensation for such carriage and the same shall be promptly fixed by the Commission in accordance with Section sixteen of this Act.

Section 20. Acts requiring the approval of the Commission. – Subject to established limitations and exceptions and saving provisions to the contrary, it shall be unlawful for any public service or for the owner, lessee or operator thereof, without the approval and authorization of the Commission previously had –

(a) To adopt, establish, fix, impose, maintain, collect or carry into effect any individual or joint rates, commutation, mileage or other special rate, toll, fare, charge, classification or itinerary. The Commission shall approve only those that are just and reasonable and not any that are unjustly discriminatory or unduly preferential, only upon reasonable notice to the public services and other parties concerned, giving them a reasonable opportunity to be heard and the burden of the proof to show that the proposed rates or regulations are just and reasonable shall be upon the public service proposing the same.

(b) To establish, construct, maintain, or operate new units or extend existing facilities or make any other addition to or general extension of the service.

(c) To abandon any railroad station or stop the sale of passenger tickets, or cease to maintain an agent to receive and discharge freight at any station now or hereafter established at which passenger tickets are now or may hereafter be regularly sold, or at which such agent is now or may hereafter be maintained, or make any permanent change in its time tables or itineraries on any railroad or in its service.

(d) To lay any railroad or street railway track across any highway, so as to make a new crossing at grade, or cross the tracks of any other railroad or street railway, provided, that this subsection shall not apply to replacements of lawfully existing tracks.

(e) Hereafter to issue any stock or stock certificates representing an increase of capital; or issue any share of stock without par value; or issue any bonds or other evidence of indebtedness payable in more than one year from the issuance thereof, provided that it shall be the duty of the Commission, after hearing, to approve any such issue maturing in more than one year from the date thereof, when satisfied that the same is to be made in accordance with law, and the purpose of such issue be approved by the Commission. (f) To capitalize any franchise in excess of the amount, inclusive of any tax or annual charge, actually paid to the Government of the Philippines or any political subdivision thereof as the consideration of said franchise; capitalize any contract for consolidation, merger or lease, or issue any bonds or other evidence of indebtedness against or as a lien upon any contract for consolidation, merger, or lease: Provided, however, that the provisions of this section shall not prevent the issuance of stock, bonds, or other evidence of indebtedness subject to the approval of the Commission by any lawfully merged or consolidated public services not in contravention of the provisions of this section.

(g) To sell, alienate, mortgage, encumber or lease its property, franchises, certificates, privileges, or rights or any part thereof; or merge or consolidate its property, franchises privileges or rights, or any part thereof, with those of any other public service. The approval herein required shall be given, after notice to the public and hearing the persons interested at a public hearing, if it be shown that there are just and reasonable grounds for making the mortgaged or encumbrance, for liabilities of more than one year maturity, or the sale, alienation, lease, merger, or consolidation to be approved, and that the same are not detrimental to the public interest, and in case of a sale, the date on which the same is to be consummated shall be fixed in the order of approval: Provided, however, that nothing herein contained shall be construed to prevent the transaction from being negotiated or completed before its approval or to prevent the sale, alienation, or lease by any public service of any of its property in the ordinary course of its business.

(h) To sell or register in its books the transfer or sale of shares of its capital stock, if the result of that sale in itself or in connection with another previous sale, shall be to vest in the transferee more than forty per centum of the subscribed capital of said public service. Any transfer made in violation of this provision shall be void and of no effect and shall not be registered in the books of the public service corporation. Nothing herein contained shall be construed to prevent the holding of shares lawfully acquired. (As amended by Com. Act No. 454.)

(i) To sell, alienate or in any manner transfer shares of its capital stock to any alien if the result of that sale, alienation, or transfer in itself or in connection with another previous sale shall be the reduction to less than sixty per centum of the capital stock belonging to Philippine citizens. Such sale, alienation or transfer shall be void and of no effect and shall be sufficient cause for ordering the cancellation of the certificate.

(j) To issue, give or tender, directly or indirectly, any free ticket free pass or free or reduced rate of transportation for passengers, except to the following persons: (1) officers, agents, employees, attorneys, physicians and surgeons of said public service, and members of their families; (2) inmates of hospitals or charity institutions, and persons engaged in charitable work; (3) indigent, destitute, and homeless persons when transported by charitable societies or hospitals, and the necessary agents employed in such transportation; (4) the necessary caretakers, going and returning, of livestock, poultry, fruit, and other freight under uniform and non-discriminatory regulation; (5) employees of sleeping car corporations, express corporations and telegraph and telephone corporations, railway and marine mail service employees, when traveling in the course of their official duly; (6) post-office inspectors, customs officers and inspectors, and immigration inspectors when engaged in inspection; (7) witnesses attending any legal investigation in which the public service is an interested party; (8) persons injured in accidents or wrecks, and physicians and nurses attending such persons; (9) peace officers and men of regularly constituted fire departments. (As amended by Com. Act No. 454.)

(k) Adopt, maintain, or apply practices or measures, rules or regulations to which the public shall be subject in its relations with the public service.

CHAPTER IV
PENALTIES FOR VIOLATIONS

Section 21. Every public service violating or failing to comply with the terms and conditions of any certificate or any orders, decisions or regulations of the Commission shall be subject to a fine of not exceeding two hundred pesos per day for every day during which such default or violation continues; and the Commission is hereby authorized and empowered to impose such fine, after due notice and hearing.

The fines so imposed shall be paid to the Government of the Philippines through the Commission, and failure to pay the fine in any case within the same specified in the order or decision of the Commission shall be deemed good and sufficient reason for the suspension of the certificate of said public service until payment shall be made. Payment may also be enforced by appropriate action brought in a court of competent jurisdiction. The remedy provided in this section shall not be a bar to, or affect any other remedy provided in this Act but shall be cumulative and additional to such remedy or remedies.

Section 22. Observance of the orders, decisions, and regulations of the Commission and of the terms and conditions of any certificate may also be enforced by mandamus or injunction in appropriate cases, or by action to compel the specific performance of the orders, decisions, and regulations so made, or of the duties imposed by law upon such public service: Provided, that the Commission may compromise any case that arise under this Act in such manner and for such amount as it may deem just and reasonable.

Section 23. Any public service corporation that shall perform, commit, or do any act or thing forbidden or prohibited or shall neglect, fail or omit to do or perform any act or thing herein to be done or performed, shall be punished by a fine not exceeding twenty-five thousand pesos, or by imprisonment not exceeding five years, or both, in the discretion of the court.

Section 24. Any person who shall knowingly and willfully perform, commit, or do, or participate in performing, committing, or doing, or who shall knowingly and willfully cause, participate, or join with others in causing any public service corporation or company to do, perform or commit, or who shall advice, solicit, persuade, or knowingly and willfully instruct, direct, or order any officer, agent, or employee of any public service corporation or company to perform, commit, or do any act or thing forbidden or prohibited by this Act, shall be punished by a fine not exceeding two thousand pesos, or imprisonment not exceeding two years, or both, in the discretion of the court: Provided, however, that for operating a private passenger automobile as a public service without having a certificate of public convenience for the same the offender shall be subject to the penalties provided for in section sixty-seven (j) of Act numbered thirty-nine hundred an ninety-two.

Section 25. Any person who shall knowingly and willfully neglect, fail, or omit to do or perform, or who shall knowingly and willfully cause or join or participate with others in causing any public service corporation or company to neglect, fail or omit to do or perform, or who shall advise, solicit, or persuade, or knowingly and willfully instruct, direct, or order any officer, agent, or employee of any public service corporation or company to neglect, fail, or omit to do any act or thing required to be done by this Act, shall be published by a fine not exceeding two thousand pesos or by imprisonment not exceeding two years, or both, in the discretion of the court.

Section 26. Any person who shall destroy, injure, or interfere with any apparatus or appliance owned or operated by to in charge of the Commission or its agents, shall be deemed guilty of a misdemeanor and upon conviction shall be published by a fine not exceeding one thousand pesos or imprisonment not exceeding six months, or both in the discretion of the court.

Any public service permitting the destruction, injury to, or interference with, any such apparatus or appliances shall forfeit a sum not exceeding four thousand pesos for each offense.

Section 27. This Act shall not have the effect to release or waive any right of action by the Commission or by any person for any right, penalty, or forfeiture which may have arisen or which may arise, under any of the laws of the Philippines, and any penalty or forfeiture enforceable under this Act shall not be a bar to or affect a recovery for a right, or affect or bar any criminal proceedings against any public service or person or persons operating such public services, its officers, directors, agents, or employees.

Section 28. Violations of the orders, decisions, and regulations of the Commission and of the terms and conditions of any certificate issued by the Commission shall prescribe after sixty days, and violations of the provisions of this Act shall prescribe after one hundred and eighty days.

CHAPTER V
PROCEDURE AND REVIEW

Section 29. All hearings and investigations before the Commission shall be governed by rules adopted by the Commission, and in the conduct thereof the Commission shall not be bound by the technical rules of legal evidence: Provided, That the Public Service Commissioner or associate commissioners may summarily punish for contempt by a fine not exceeding two hundred pesos or by imprisonment not exceeding ten days, or both, any person guilty of misconduct in the presence of the Commissioner or associate commissioners or so near the same as to interrupt the hearing or session or any proceeding before them, including cases in which a person present at a hearing, session, or investigation held by either of the commissioners refuses to be sworn as a witness or to answer as such when lawfully required to do so. To enforce the provisions of this section, the Commission may, if necessary, request the assistance of the municipal police for the execution of any order made for said purpose.

(1) While the Commission is authorized to make rules for the conduct of their business, it could not set at naught the fundamental rule of all proceedings that only parties having a real interest will be heard.

(2) A party not affected or prejudiced cannot file an opposition.

(3) One public service corporation cannot assume the name and be substituted in the place of another public service corporation.

(4) A legal representative of the estate of a deceased applicant may be substituted for the latter. If the right consists in the prosecution of unfinished proceedings upon an application for a certificate of public convenience of the deceased before the Public service Commission, it is but logical that the legal representative be empowered and entitled in behalf of the estate to make the right effective in that proceeding.

(5) One who has been granted a legislative franchise to operate an ice plant, although not yet an operator of such public utility, has sufficient interest or personality either to oppose an established operator’s application for an increase in the capacity of his existing plant, or to ask for a joint hearing of said application and the grantee’s own application for the issuance of a certificate of public convenience in order to operate under such franchise.

(6) The fact that a party is the lessee of a line does not bar him from applying for a certificate of its own in the same line. Even in cases where the owner of a certificate has sold it subject to the condition that he would not apply for a similar service on the same line sold by him, it has been held that such an argument does not bar the seller from applying and that the Public Service Commission, if it finds that there is public need for the new service applied for, may properly grant the certificate requested. In other words the primary consideration is a finding by the Commission that public interest and convenience require a given service and that parties may not by agreement deprive the Commission of its power.

(7) A case involving the grant of a Certificate of Public Convenience to the respondent becomes moot and academic where the respondent ceases to be a bus operator, and it should be dismissed.

Section 30. (a) The Commission may issue subpoenas and subpoenas duces tecum, for witnesses in any matter or inquiry pending before the Commission and require the production of all books, papers, tariffs, contracts, agreements, and all other documents, which the Commission may deem necessary in any proceeding. such process shall be issued under the seal of the Commission, signed by one of the Commissioners or by the secretary, and may be served by any person of full age, or by registered mail. In case of disobedience to such subpoena, the Commission may invoke the said of the Supreme Court or of any Court of First Instance of the Philippines in requiring the attendance and testimony of witness and the production of books, papers, and documents under the provisions of this chapter, and the Supreme Court, or any Court of First Instance of the Philippines within the jurisdiction of which such inquiry is carried on, may in case of contumacy of refusal to obey a subpoena, issue to any public service subject to the provisions of this Act, or to any person, an order requiring such public service or other person to appear before the Commission and produce and papers if so ordered and give evidence touching the matter; and any failure to obey such order of the court may be punished by such court as a contempt thereof.

(b) Any person who shall neglect or refuse to answer any lawful inquiry or produce the Commission books, paper, tariffs, contracts, agreements, and documents or other things called for by said Commission, if in his power to do so, in obedience to the subpoena or lawful inquiry of the Commission, upon conviction thereof by a court of competent jurisdiction, shall be punished by a fine not exceeding five thousand pesos or by imprisonment not exceeding one year, or both, in the discretion of the court.

(c) The Commissioner and associate commissioners, the chiefs of divisions, the attorneys of the Commission, and the deputy secretaries shall have the power to administer oaths in all matters under the jurisdiction of the Commission.

(d) Any person who shall testify falsely or make any false affidavit or oath before the Commission or before any of its members shall be guilty of perjury, and upon conviction thereof in a court of competent jurisdiction, shall be punished as provided by law.

(e) Witnesses appearing before the Commission in obedience to subpoena or subpoena duces tecum, shall be entitled to receive the same fees and mileage allowance as witnesses attending Courts of First Instance in civil cases.

(f) Any person who shall obstruct the Commission or either of the Commissioners while engaged in the discharge of Official duties, or who shall conduct himself in a rude, disrespectful or disorderly manner before the Commission or either of the Commissioners, while engaged in the discharge of official duties, or shall orally or in writing be disrespectful to, offend or insult either of the Commissioners on occasion or by reason of the performance of official duties, upon conviction thereof by a court of competent jurisdiction, shall be punished for each offense by a fine not exceeding one thousand pesos, or by imprisonment not exceeding six months, or both, in the discretion of the court.

Section 31. No person shall be excused from testifying or from producing any book, document, or paper in any investigation or inquiry by or upon the hearing before the Commission, when ordered so to do by said Commission, except when the testimony or evidence required of him may tend to incriminate him. Without the consent of the interested party no member or employee of the Commission shall be compelled or permitted to give testimony in any civil suit to which the Commission is not a party, with regard to secrets obtained by him in the discharge of his official duty.

Section 32. The Commission may, in any investigation or hearing, by its order in writing cause the deposition of witnesses residing within or without the Philippines to be taken in the manner prescribed by the Rules of Court. Where witnesses reside in places distant from Manila and it would be inconvenient and expensive for them to appear personally before the Commission, the Commission may, by proper order, commission any clerk of the Court of First Instance, municipal judge or justice of the peace of the Philippines to take the deposition of witnesses in any case pending before the Commission. It shall be the duty of the official so commissioned, to designated promptly a date or dates for the taking of such deposition, giving timely notice to the parties, and on said date to proceed to take the deposition, reducing it to writing. After the depositions have been taken, the official so commissioned shall certify to the depositions taken and forward them as soon as possible to the Commission. It shall be the duty of the respective parties to furnish stenographers for taking and transcribing the testimony taken. in case the are no stenographers available, the testimony shall be taken in long hand by such person as the clerk of court, the municipal judge or justice of the peace may designate. The Commission may also commission a notary public to take the depositions in the same manner herein provided.

The Commission may also, by proper order, authorize any of the attorneys of the legal division or division chiefs of the Commission, if they be lawyers, to hear and investigate any case filed, with the Commission and in connection therewith to receive such evidence as may be material thereto. At the conclusion of the hearing or investigation, the attorney or division chief so authorized shall submit the evidence received by him to the Commission to enable the latter to render its decision. (As amended by Rep. Act No. 723.)

Section 33. Every order made by the Commission shall be served upon the person or public service affected thereby, within ten days from the time said order is filed by personal delivery or by ordinary mail, upon the attorney of record, or in case there be no attorney of record, upon the party interested; and in case such certified copy is sent by registered mail, the registry mail receipt shall be prima facie evidence of the receipt of such order by the public service in due course of mail. All orders of the Commission to continue an existing service or prescribing rates to be charged shall be immediately operative; all other orders shall become effective upon the dates specified thereon: Provided, however, that orders, resolutions or decisions in converted matters and not referring to the continuance of an existing service or prescribing rates to be charged shall not be effective unless otherwise provided by the Commission, and shall take effect thirty days after notice to the parties.

Section 34. Any interested party may request the reconsideration of any order, ruling, or decision of the Commission by means of a petition filed not later than fifteen days after the date of the notice of the order, ruling, or decision in question. The grounds on which the request for reconsideration is based shall be clearly and specifically stated in the petition. Copies of said petition shall be served on all parties interested in the matter. It shall be the duty of the Commission to call a hearing to decide the same promptly, either denying the petition or revoking or modifying the order, ruling or decision under consideration.

Section 35. The Supreme Court is hereby given jurisdiction to review any order, ruling, or decision of the Commission and to modify or set aside such order, ruling, or decision when it clearly appears that there was no evidence before the Commission to support reasonably such order, ruling, or decision, or that the same is contrary to law, or that it was without the jurisdiction of the Commission. The evidence presented to the Commission, together with the record of the proceedings before the Commission, shall be certified by the secretary of the Commission to the Supreme Court. Any order, ruling, or decision of the Commission may likewise be reviewed by the Supreme Court upon a writ of certiorari in proper cases. The procedure for review, except as herein provided, shall be prescribed by rules of the Supreme Court.

Section 36. Any other, ruling, or decision of the may be reviewed on the application of any person or public service affected thereby, by certiorari in appropriate cases, or by petition, to be known as petition for review, which shall be filed within thirty days from the notification of such order, ruling or decision, or in case of a petition is filed in accordance with the preceding section for the reconsideration of such order, ruling or decision and the same is denied it shall be filed within fifteen days after notice of the order denying reconsideration. Said petition shall be placed on file in the office of the Clerk of the Supreme Court who shall furnish copies thereof to the Secretary of the Commission and other parties interested.

Section 37. The institution of a writ of certiorari or other special remedies in the Supreme Court shall in no case supersede or stay any order, ruling or decision of the Commission, unless the Supreme Court shall so direct, and the appellant may be required by the Supreme Court to give bond in such form and of such amount as may be deemed proper.

Section 38. The chief of the legal division or any other attorneys of the Commission shall represent the same in all judicial proceedings. It shall be the duty of the Solicitor General to represent the Commission in any judicial proceedings if, for special reason, the Commissioner shall request his intervention.

There is hereby created under the administrative supervision of the Secretary of Justice an office to be known as the Office of the People’s Counsel in the Public Service Commission. The people’s Counsel shall have two assistants and such number of employees as may be necessary to perform the functions hereinafter specified. The People’s Counsel and his assistants shall be appointed by the President of the Philippines with the consent of the commission on appointments of the Congress of the Philippines. The employees of the office of the People’s Counsel shall be appointed by the Secretary of Justice upon recommendation of the People’s Counsel.

The People’s Counsel and his assistants shall posses the qualifications of a provincial fiscal. The People’s Counsel shall receive compensation at the rate of seven thousand two hundred pesos per annum, and the first and second assistant’s People’s Counsel, at the rate of six thousand pesos per annum each.

The People’s Counsel, his assistants, and the employees of the Office of the People’s Counsel shall not, during their continuance in office, intervene directly or indirectly in the management or control of, or be financially interested directly or indirectly in any public service as defined in this Act.

It shall be the duty of the People’s Counsel (1) to institute proceedings before the Commission, in behalf of the public, for the purpose of fixing just and reasonable rates or charges to be followed and observed by public services as herein defined, whenever he has reason to believe that the existing rates or charges of such public services are unjust and unreasonable or unjustly discriminatory; (2) to represent and appear for the public before the Commission or any court of the Philippines in every case involving the interest of users of the products of, or service furnished by any public service under the jurisdiction of the Commission; (3) to represent and appear for petitioners appearing before the Commission for the purpose of complaining in matters of the rates and services; (4) to investigate the service given by the rates charged by, and the valuation of the properties of the public services under the jurisdiction of the Commission, and such other matters relating to said public services as affect the interests of users of the products or service thereof, and to take all the steps necessary for the protection of the interests of the person or persons or of the public affected thereby. In connection with such investigation he is hereby empowered to issue subpoena or subpoena duces tecum.

The People’s Counsel is authorized to call upon and obtain such assistance as he may deem necessary in the performance of his duties from any officer or employee of any department, bureau, office, agency, or instrumentality of the government including corporations owned, controlled or operated by the government. (As amended by Rep. Act No. 178.)

Section 39. Any preceding in any court of the Philippines directly affecting an order of the Commission or to which the Commission is a party, shall have preference over all other civil proceedings pending in such court, except election cases.

CHAPTER VI
FEES

Section 40. The Commission is authorized and ordered to charge and collect from any public service or applicant, as the case may be, the following fees as reimbursement of its expenses in the authorization, supervision and/or regulation of public services:

(a) The charge of fifty pesos for the registration of:

(1) Applications under the provisions of Section sixteen (a), (b), (c), and (d), and twenty (a), (b) (c), (e), (f), and (h): Provided however, That in case of transportation services an additional filing fee of five pesos shall be charged for each additional unit or vehicle in excess of five units or vehicles applied for: And provided, finally, That no filing fee shall be collected for the reduction of rates if the same does not alter or modify in any way the basic rates of the schedule.

(2) Applications for the approval or modification of maximum rates under Section fourteen.

(b) Thirty pesos shall be collected from any operator of land transportation for the registration of:

(1) Applications under Section seventeen (f).

(2) Applications for the extension of time covering a period of thirty days for the registration of motor vehicles previously authorized by the Commission.

(c) The charge of thirty pesos for the filing of other applications by any public service operator not specifically provided for in the preceding paragraphs of this section other than motions of a temporary or incidental character: Provided, however, That fifteen pesos only shall be collected for each certificate of public convenience or certificate of public convenience and necessity in diploma form issued to a public service operator.

(d) For annual reimbursement of the expenses incurred by the Commission for the supervision and regulation of the operations of motor vehicle services:

(1) For each automobile, ten pesos.

(2) For each motor vehicle, truck, or trailer of less than two tons gross transportation capacity, ten pesos.

(3) For each motor vehicle, truck, or trailer of two tons or more, but less than three tons gross transportation capacity, twenty pesos.

(4) For each motor vehicle, truck, or trailer of three tons or more but less than four tons gross transportation capacity, thirty pesos.

(5) Motor vehicles, trucks, trailers or buses of four tons or more gross capacity shall pay at the rate of ten pesos per ton gross. The fees provided in paragraphs (d) and (e) hereof shall be paid on or before September thirtieth of each year with a penalty of fifty per centum in case of delinquency: Provided, further, That if the fees or any balance thereof are not paid within sixty days from the said date, the penalty shall be increased by one per centum for every month thereafter of delinquency: Provided, however, That motor vehicles registered in the Motor Vehicles Office after September thirtieth shall be exempt from payment for said year.

(e) For annual reimbursement of the expenses incurred by the Commission in the supervision of other public services and/or in the regulation or fixing of their rates, twenty centavos for each one hundred pesos or fraction thereof, of the capital stock subscribed or paid, or if no shares have been issued, of the capital invested, or of the property and equipment, whichever is higher.

(f) For the issue or increase of capital stock, twenty centavos for each one hundred pesos or fraction thereof, of the increased capital.

(g) For each permit authorizing the increase of equipment, the installation of new units or authorizing the increase of capacity. or the extension of means or general extension in the services, twenty centavos for each one hundred pesos or fraction of the additional capital necessary to carry out the permit.

(h) For the inspection or certification made in the meter laboratory of the Commission or each apparatus or meter used by any public service, four pesos, and for examination made outside the meter laboratory of the Commission, the additional expenses as may be incurred in making the examination shall also be paid.

(i) For certification of copies of official documents in the files of the Commission, fifty centavos plus fifty centavos for each page or folio so certified.

This section shall not be applicable to the Republic of the Philippines, nor to its instrumentalities.

Aside from the appropriations for the Commission under the annual General Appropriation Act, any unexpended balance of the fees collected by the Commission under this section shall be constituted receipts automatically appropriated each year, and together with any surplus in the standardizing meter laboratory revolving fund under Commonwealth Act Numbered Three hundred forty-nine, shall be disbursed by the Public Service Commissioner in accordance with special budgets to be approved by the Department of Justice, the Budget Commission and the Office of the President of the Philippines for additional needed personal services, maintenance and operating expenses, acquisition of urgently needed vehicles, furniture and equipment, maintenance of an adequate reference library, acquisition of a lot and building for the Commission, and other expenses necessary for efficient administration and effective supervision and regulation of public services. (As amended by Com. Act No. 454 and RA No. 3792, approved June 22, 1963.)

CHAPTER VII
GENERAL AND TRANSITORY PROVISIONS

Section 41. A substantial compliance with the requirements of this Act shall be sufficient to give effect to all the rules, orders, acts and regulations of the Commission and they shall not be declared inoperative, illegal, or void for any omission of a technical nature in respect thereto.

Section 42. Copies of all official documents and orders filled or deposited in the office of the Commission, certified by either of the commissioners, or by the secretary to be true copy of the original, under the seal of the Commission shall be evidence in like manner as the originals in all courts of the Philippines.

Section 43. The Commission created under this Act shall succeed the Commission created under Act numbered thirty-one hundred and eight in the dispatch, hearing, and determination of all pending matters before the latter; and shall take charge of its archives, books, furniture, equipment, and other properties of whatsoever nature.

Section 44. In addition to the sum appropriated for the former commission under Act numbered forty-one hundred and thirty-two, the General Appropriation Act for nineteen hundred and thirty-six, the sum of six thousand seven hundred and sixty-eight pesos and thirty-four centavos is hereby appropriated out of any funds in the Philippines Treasury not otherwise; and in addition to the sum appropriated under Act numbered thirty-eight, the General Appropriation Act for nineteen hundred and thirty-seven, the sum of twenty-three thousand six hundred and ten pesos, or so much thereof as may be necessary, is hereby appropriated, out of any funds in the Philippines Treasury not otherwise appropriated, for carrying out the purposes of this Act.

Section 45. If, any reason, any section, subsection, sentence, clauses or terms of this Act is held to the unconstitutional such decision shall not affect the validity of the other provisions of this Act.

Section 46. Act numbered thirty-two hundred and forty-seven and Act numbered thirty-five hundred and eighteen shall continue in force and effect; but all provisions of Act numbered thirty-one hundred and eight and amendments thereof, and all other acts or parts or acts inconsistent with the provisions of this Act are hereby repealed.

Section 47. This Act shall take effect upon its approval.

Approved: November 7, 1936

Things You Need to Know When Setting Up A Call Center in the Philippines

April 13, 2021June 13, 2011

There are two legal entities which can be used to register a call center, BPO, KPO or outsourcing company in the Philippines.

The choice is limited to a Branch Office or a Domestic Corporation. Both can be 100% foreign owned as long as at least 60% of its services. A Representative Office can not be used for BPO, outsourcing or back office operations.

A Philippines corporation is the entity that resembles the most an LLC.

A Domestic Corporation is required to have a minimum of 5 directors. Each director must own at least one share of the corporation. Three of the directors must be residents of the Philippines.

A Branch Office must have a resident agent whose main responsibility is to receive legal summons from the government. Liability lies with the Parent Company as the branch is only an extension of its parent. Within 60 days of having receiving its license to transact business a Branch Office is required to give the SEC a security deposit of PHP100,000.00.

Once the Certificate of Incorporation or the License to Transact Business has been issued it’s time to apply for the for the local business permits. After which registration with the Social Security System can be done.

The Philippines government offers various Income Tax Holidays for most outsourcing businesses. PEZA and BOI are the agencies which grant Tax Incentives.

Philippines Business Registration.

Philippines Call Center Setup Startup — Call Center Setup

Philippines Sole Proprietorship

April 13, 2021March 16, 2011

The definition of a Sole Proprietorship or “single proprietorship” in the Philippines – is a business structure owned by an sole individual who has full control/authority of its own and owns all the assets, personally owes and answers to all liabilities and losses. A sole proprietorship must apply for a business name and be registered with the DTI-National Capital Region (NCR). In the provinces, application may be filed with the DTI regional/provincial offices.

The major disadvantage of a sole proprietorship is the unlimited liability of the owner. Creditors will not only try to obtain the assets of the business but also the personal property of the owner as payment for debts.

The sole proprietorship uses the TIN of its owner and must apply for all the usual business permits required by a business in the Philippines.

There are minimal capital requirements for Filipino citizens.

Some types of business may need other endorsements from various government agencies.

General information needed to apply for a sole proprietorship.

A. Business Details

1. Location. Indicate the barangay, city/municipality, and region where business is/will be located.

2. Tax Identification Number (TIN). Indicate TIN duly issued by BIR to you as individual taxpayer.

B. Owner’s Details

– First Name, Middle Name, Last Name, Suffix (if applicable).

– Date of Birth. Owner must be of legal age (at least eighteen [18] years old).

– Citizenship. For Filipino applicants, present two (2) primary ID or a combination of one (1) primary and one (1) secondary ID. Foreign Nationals must present the original and submit clear certified copy of the following, if applicable, namely: Certificate of Authority to Engage Business in the Philippines pursuant to Foreign Investment Act (Republic Act No. 7042 as amended); Certificate of Authority to Engage in Retail Trade per Republic Act No. 8762 (Retail Trade Liberalization Law), or such other applicable laws, as the case may be.

C. Owner’s Address

– House/Building No. This information include building name and floor number, Lot, Phase and Block numbers, and Subdivision, among others. Street, Barangay and Town/City, Province.

– Zip Code. Check the Philippine Postal Service Web site for proper Zip Code

DBC will assist you in obtaining all the necessary documents needed to apply for a Philippines sole proprietorship business registration and acquire all the necessary business permits. Contact DBC for a free assessment.

A sole proprietorship is only recommended for very small business due to the unlimited liability of the owner. We recommend setting up a corporation for most business and for foreign investors.

Philippines Business Registration Back Office Operations Setup

April 13, 2021March 15, 2011

The Philippines is a popular destination for Back Office Business Process Outsourcing (BPO). Back Offices are usually setup for data entry, accounting, bookkeeping, human resources, financial services, marketing, software development and anything that could be competently at a lower cost in the Philippines.

100% foreign ownership of back office operations is allowed in the Philippines. The business may be setup as a Branch Office or a Philippines Domestic Corporation. Both are required to register with the SEC before starting operations. Back office operations are considered an export business and therefore can be started with a lower paid-in capital than required by companies serving the domestic market.

The advantages of starting a back office in the Philippines are to expand quickly with lower manpower costs. And with a highly educated, trainable, English speaking workforce that is available in most of the country.

Many large foreign banks such as Citibank and JP Morgan have sizable back office operations in the Philippines and employ thousands of qualified employees.

We will examine what you intend to operate and advise you on the best way to start your company in the Philippines. Certain BPO operations are eligible for tax incentives from either the Board of Investments or PEZA. DBC will help you in setting up your back office operations in the Philippines, guide you through the red tape and make sure you obtain all the business permits you need to operate legally.

Contact DBC now for a free assessment of your outsourcing operations in the Philippines.