Volume 14 Number 1 (January to March 2003) - University of the ...

January - March 2003 National Administrative Register 1 

BANGKO SENTRAL NG PILIPINAS 

Date Filed: 07 January 2003 

Circular No. 362 

Grounds for the Disqualification and the Procedures in the Watchlisting 

of Erring Directors/Officers/Employees of Banks, Quasi-banks and Trust 

Entities as Provided for Under Circular No. 296 dated September 17, 2001 

Shall Also Be Applicable to All Other Institutions Under the Supervisory and 

Regulatory Powers of the Bangko Sentral ng Pilipinas (BSP) 

Pursuant to Monetary Board Resolution No. 1772 dated December 5, 2002, the grounds 

for the disqualification and the procedures in the watchlisting of erring directors/officers/ 

employees of banks, quasi-banks and trust entities as provided for under Circular No. 296 

dated September 17, 2001 shall also be applicable to all other institutions under the supervisory 

and regulatory powers of the Bangko Sentral ng Pilipinas (BSP), except the ground for 

disqualification due to failure to attend the required seminar for board of directors conducted 

or accredited by the BSP. 

Existing rules and regulations which are inconsistent with these rules are hereby repealed. 

This Circular shall take effect immediately. 

Adopted: 17 Dec. 2002 


(SGD.) RAFAEL B. BUENAVENTURA 

Governor 

--o0o-- 


Policy Changes in Order to Help Promote the Development 

of the Small and Medium Enterprises 

The Monetary Board, in its Resolution No. 1699 dated 21 November 2002 as amended 

by Resolution No. 1768 dated 5 December 2002, approved the following policy changes in 

order to help promote the development of the small and medium enterprises: 

1. To postpone the implementation of the market-based pricing mechanism for rediscount 

loans as provided for under Circular No. 354 dated 4 October 2002 for a period of one year 

from 4 October 2002 to 3 October 2003. During said period, the rediscount rate shall continue 

to be one (1) percentage point below the 91-day Treasury Bill rate of the last auction 

week of the previous month. On 4 October 2003, the rediscount rate shall automatically 

revert to the market-based pricing mechanism provided for under Circular No. 354. 

2. To reduce the regular reserve requirement to 6 percent for demand deposits, deposit 

substitutes, and NOW accounts of thrift banks, and for demand deposits and NOW accounts

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National Administrative Register Volume 14/1 

of rural/cooperative banks. The applicable regular reserve requirements for thrift banks and 

rural/cooperative banks effective 21 November 2002 are as follows: 

TYPES OF ACCOUNTS TBs RBs/Coop Banks 

From To From To 

Demand Deposits 8% 6% 7% 6% 

NOW accounts 8% 6% 7% 6% 

Deposit Substitutes 8% 6% n.a. n.a. 

Savings Deposits 6% 6% 2% 2% 

Time Deposits/Negotiable 

Certificates of Time 

Deposits/Long-Term Non- 

Negotiable Tax-Exempt 

Certificates of Time 

Deposits 6% 6% 2% 2% 

The liquidity reserve requirement for deposit and deposit substitute liabilities of thrift 

banks shall be maintained at 2 percent. 



Adopted: 9 Jan. 2003 



Governor 

--o0o-- 


Reducing to Seventy-Five Percent (75%) the Risk Weight 

Applicable to SMEs and Microfinance Loan Portfolios 

(Text Available at Office of the National Administrative Register, 

U.P. Law Complex, Diliman, Quezon City) 


Governor 

--o0o-- 


On Micro-Finance Oriented Banks


Pursuant to Monetary Board Resolution No. 1822 dated 12 December 2002, Section 

3(e) of Circular No. 340 dated 30 July 2002 is hereby amended to read as follows: 

ìe. For micro-finance oriented banks 

i. Has been in profitable operation for at least one (1) year, or in the case of 

newly established banks, the submitted projection showed that profitability will be 

attained on the third year of operations, at the latest: Provided, That at the time of 

filing the application, the bankís risk-based capital adequacy ratio is not lower 

than twelve percent (12%) and the required minimum capital requirement has 

been complied with.î 


Adopted: 16 January 2003 



Governor 

--o0o-- 


FCDU/EFCDU Lending to RBU 

The Monetary Board, in its Resolutions No. 1603 and No. 4 dated 07 November 2002 

and 03 January 2003, respectively, approved the amendment of certain provisions of BSP 

Circular No. 342 dated 08 August 2002 as follows -- 

1. Item a 

FCDU/EFCDU may lend funds to RBU only after it has fully complied with the 

prescribed 100% asset cover/30% liquidity cover on FCDU/EFCDU liabilities. 

2. Item b.1 

FCDU/EFCDU lending to RBU shall be -- 

1. Capped at the lower of total outstanding balance on RBUs on balance sheet 

foreign currency trade assets 1 * or 30% of the level of FCDU/EFCDU deposit 

liabilities, computed at the average daily balance (using 2-month rolling data) as 

of end of the second week prior to the reference week (refer to Annex ìAî* for 

sample computation). Total outstanding balance of FCDU/EFCDU lending to RBU 

shall, at all times, be within the prescribed cap. Any breach thereon shall be 

subject to the imposition of a monetary penalty of P30,000 per day, commencing 

on the day the cap was breached until the same is corrected. 

*Text Available at Office of the National Administrative Register, U.P. Law Complex, Diliman, 

Quezon City.

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2. First paragraph of Item f 

Banks shall submit to the appropriate BSP supervising department within five (5) 

banking days from end of reference month, a certification under oath (prescribed 

format attached as Annex ìBî*, signed by the Bankís President or Country Manager, 

in case of local branch/subsidiary of foreign banks, Compliance Officer 

and Head of Treasury, to the effect that, at any day of the reference month, the 

outstanding balance on funds borrowed from FCDU/EFCDU did not exceed the 

prescribed cap (i.e, lower of total outstanding balance on RBUís on-balance sheet 

foreign currency trade assets or 30% of the level of FCDU/EFCDU deposit liabilities 

and were utilized by RBU solely for foreign currency trade transactions. 



Date Filed: 14 February 2003 


Governor 

--o0o-- 


Minimum Capital Requirements for FCDU 

The Monetary Board, in its Resolution No. 45 dated 9 January 2003, approved the 

amendment of Section 4. Transitory Provisions of Circular No. 322 dated 7 March 2002, as 

follows: 

Thrift banks authorized to operate and are actually operating an FCDU are hereby 

given a period of two (2) years reckoned from 7 March 2002 within which to comply with the 

minimum capital requirements for FCDU: Provided, that this requirement may be substituted 

by a capital build-up program for a period of not more than five (5) years or only up to 31 

December 2007 and which must be approved by the Monetary Board. Banks which failed to 

comply with the required capitalization upon expiration of said two (2)-year period given 

them or those which failed to comply with approved capital build-up program shall liquidate 

their FCDU business within one (1) year and shall surrender to the Bangko Sentral ng 

Pilipinas their corresponding FCDU licenses. The license of thrift banks already authorized 

to operate FCDU but not yet operating the same shall be automatically revoked if they do not 

comply with the above minimum capital requirements as of 7 May 2002. 

This takes effect immediately. 

Adopted: 6 Feb. 2003 


Governor 

--o0o-- 


Quezon City.



Circular Letter 

Sales of FOREX Subject to Documentary Require Units 

This is to remind all concerned that sales of foreign exchange are subject to the 

documentary requirements under the attached Circular Letters dated August 9, 2001 and 

January 24, 2002. 

Violations of the aforesaid Circular Letters will be dealt with accordingly. 


Date Filed: 28 February 2003 

(SGD.) ALBERTO V. REYES 

Officer-in-Charge 

--o0o-- 


Guidelines on the Collection of Service Fees by Employers of 

Members-Borrowers of Non-Stock Savings and Loan Associations (NSSLAs) 

The Monetary Board, in its Resolution No. 153, dated January 30, 2003 approved the 

following guidelines that shall govern the collection of service fees by employers of members-borrowers 

of Non-Stock Savings and Loan Associations (NSSLAs) pursuant to Section 

7 of Republic Act No. 8367 (The Revised Non-Stock Savings and Loan Associations Act of 

1997): 

1. The determination of reasonable service fees that may be collected by employers of 

members-borrowers of NSSLA shall be left to the mutual agreement between the employer 

and the NSSLA concerned. The service fee, however, shall not be more than 1/2 of 1% of 

total collections, net of capital contributions/deposits; 

2. The application of fees shall also be subject to pertinent provisions in the Collective Bargaining 

Agreements or Personnel Policy and Procedure Manuals already in place; provided 

that the fees cannot exceed the rate stated in No. 1 above; 

3. In meritorious cases, employers may collect service fee in excess of 1/2 of 1% subject to 

prior Bangko Sentral ng Pilipinas approval and submission by the NSSLA/employer of : (a) 

justification for the collection of a higher fee; (b) Board of Trusteesí Resolution on the 

approval of the service fee; and (c) copy of the agreement between the employer and the 

NSSLA concerned; 

4. The additional expense due to the imposition of service fees by the employer shall not be 

passed on to the members-borrowers; and

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5. The period within which the employer shall remit collections to the NSSLA shall be agreed 

upon between the employer and NSSLA concerned. 




Governor 

--o0o-- 


Establishment of Branches/Other Offices Nationwide of 

Thrift Banks and Other National Cooperative Banks 

Pursuant to Monetary Board Resolution No.123, dated 23 January 2003, Section 3.b 

of Circular No. 340 dated 30 July 2002 is hereby amended, to read as follows: 

ìb. For thrift banks and national cooperative banks: 

i. A thrift bank or national cooperative bank, which have complied with the 

minimum capital applicable to them may establish branches/other offices on a 

nationwide basis: Provided, That in the case of a thrift bank with head office 

outside the National Capital Region (NCR), it may establish a branch/other office 

in the NCR only after it has put up the minimum capital requirement for a new 

thrift bank in the NCR.î 





Governor 

--o0o-- 

Memorandum 

Guidelines for the Issuance of Unsecured Subordinated 

Debt (USD) Eligible as Tier 2 (Supplementary Capital) 

Pursuant to Monetary Board Resolution No. 150 dated 30 January 2003, the guidelines 

for the issuance of unsecured subordinated debt (USD) eligible as Tier 2 (supplementary) 

capital under items b.b.1 (8) and b.b.2(1), Subection X 116.1 of the Manual of Regulations 

for Banks (MOR) are hereby issued, as follows:


A. Minimum Features of USD 

a. Form - A USD that will be publicly distributed may either be scripless in form or evidence 

by certificates such as: promissory note, debenture or other appropriate certificate of indebtedness. 

A USD in scripless form shall comply with the provisions of R.A. No. 8792, 

otherwise known as the ìElectronic Commerce Actî, particularly on the existence of an 

assurance on the integrity, reliability and authenticity of the USD in electronic form. An 

independent third party USD Registry shall maintain unissued USD Certificates and the 

USD Registry Book, which must be Electronic if the USD is scripless in form. A USD that will 

be issued privately or on a negotiated basis shall be evidenced by certificates. 

All USD shall be registered in the name of individuals or entities and pre-numbered serially. 

b. Denomination - The USD must be issued in minimum denominations of Five Hundred 

Thousand Pesos (P500,000.00) or its equivalent if denominated in a foreign currency. 

c. Mandatory Provisions - If the USD is not scripless in form, the following provisions must 

appear in bolder prints on the face of every note, debenture or other certificate evidencing 

the same: 

i. This obligation is not a deposit and is not insured by the Philippine Deposit 

Insurance Corporation (PDIC); and 

ii. This obligation is subordinated to the claims of depositors and ordinary creditors, 

unsecured, not covered by the guaranty of (name of Bank) or its subsidiaries 

and affiliates, and ineligible as collateral for a loan granted by (name of Bank), 

its subsidiaries and affiliates. 

If the USD is scripless in form, the foregoing provisions/information shall be furnished 

every buyer/investor in a separate written instrument receipt of which must be duly acknowledged 

by him. 

d. Term - The minimum maturity of a USD shall be ten (10) years for Upper Tier 2 capital 

and five (5) years for Lower Tier 2 capital. 

B. PRIOR BANGKO SENTRAL NG PILIPINAS (BSP) APPROVAL 

No USD shall be issued without the prior approval of the BSP. 

C. PRE-QUALIFICATION REQUIREMENTS OF ISSUING BANK 

A bank applying for authority to issue a USD shall comply with the following requirements: 

1. It has complied with the minimum amount of capital required under Subsection X 106.1 of 

the MOR or its paid-in capital is at least equal to the amount required therein. 

2. It has established a risk management system appropriate to its operations characterized 

by clear delineation of responsibility for risk management, adequate risk measurement systems,

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appropriately structured risk limits, effective internal controls and complete, timely and efficient 

risk reporting system. 

3. It is a locally incorporated bank: Provided, That it must have quasi-banking authority if it is 

not a universal bank or commercial bank and it is applying for authority to issue USD to more 

than nineteen (19) investors. 

D. PUBLIC ISSUANCE OF UNSECURED SUBORDINATED DEBT 

Public issuance of USD is an issuance offered to the general public, which may or 

may not be qualified investors/buyers as hereinafter defined. The Issuing Bank must be 

rated by an independent credit rating agency recognized by the BSP and a Public Trustee 

shall be appointed for investor protection. 

1. Application for Authority 

a. The application shall be signed by the President or officer of equivalent rank of the 

applicant Bank; 

b. The application for authority on each USD issue/issue program shall be filed with the 

appropriate supervising and examining department of the BSP: Provided, That the period of 

an issue program of two (2) or more tranches shall not exceed one (1) year from date of 

approval; and 

c. The application shall be accompanied by: 

1. A certified true copy of the resolution of the Issuing Bankís board of directors 

authorizing the issuance of the USD indicating, among others, the issue size, 

terms and conditions, offering period, purpose or intended use of proceeds thereof, 

the names of the Underwriter/Arranger, USD Registry, Selling Agent(s) and Market 

Maker(s), and Public Trustee; 

2. A certification by the Corporate Secretary that the issuance of the USD has 

been approved by the stockholders owning or representing at least two-thirds (2/ 

3) of the outstanding capital stock of the Issuing Bank if the USD has convertibility 

feature; 

3. A written confirmation from the President or officer of equivalent rank of the 

Issuing Bank stating that all the conditions for USD under item b.b.1 (8) or item 

b.b.2(1), Subsection X116.1 of the MOR are complied with and that such conditions 

shall be contained in the USD Certificates if the USD is not in scripless 

form, in the Information Disclosure and Purchase Advice; 

4. A written undertaking from the President or officer of equivalent rank of the 

Issuing Bank not to support, directly or indirectly, by extending loans, issuing 

payment guarantees or otherwise, the buyer/holder of the USD of the Issuing 

Bank; 


Issuing Bank stating that the designated Underwriter/Arranger, USD Registry,


Selling Agent(s) and Market Maker(s) were provided with a complete list of subsidiaries 

and affiliates of the Issuing Bank including their subsidiaries and affiliates; 


Issuing Bank to update the above-mentioned list within three (3) banking days 

from the date of change in composition thereof; and 

7. Specimen of the USD. 

2. Additional Requirements for the Issuance of USD 

After a bankís application to issue a USD has been approved, the applicant shall submit 

the following additional requirements to the appropriate supervising and examining department 

of the BSP: 

a. At least fifteen (15) days before the date of offering: 


Issuing Bank stating that the bank has been rated by an independent credit 

rating agency duly recognized by the BSP; 

2. Information disclosure of the USD issuance prepared by the Underwriter/ 

Arranger; 

3. Promotional materials; 

4. Specimen of the proposed Purchase Advice and Registry Confirmation; and 

5. Copy of the agreements between the Issuing Bank and the Underwriter/Arranger/USD 

Registry/Selling Agent(s)/Market Maker(s), and Public Trustee. 

The BSP reserves the right to suspend the date of offering, within the fifteen (15) 

banking day period from submission of the above-mentioned requirements. 

b. Within ten (10) banking days after issuance of the initial and subsequent tranches: 

1. A written notice of the actual date of issuance/offering of each initial and 

subsequent tranches. 

3. Requirements for Other Parties Involved 

a. Underwriter/Arranger 

1. It is either a universal bank or an investment house: Provided, That if an 

offering is on a best effort basis, the Arranger may also be a commercial bank: 

Provided, further, That if an offering is denominated in foreign currency, the 

Underwriter/Arranger may also be any reputable international investment bank.

10 


2. It must be an independent third party that has no subsidiary/affiliate or any 

other relationship with the Issuing Bank that would undermine the objective conduct 

of due diligence. 

3. If Underwriter, it must have adequate risk management and must be well capitalized, 

which for a local Underwriter, shall be evidenced by compliance with the 

risk based capital adequacy ratio prescribed under Sec. X116 of the MOR for the 

past sixty (60) days immediately preceding the date of application where applicable. 

b. USD Registry 

1. It may be a universal bank, a commercial bank, or such other specialized 

entity that may be qualified by the Monetary Board. 

2. It must be a third party that has no subsidiary/affiliate or any other relationship 

with the Issuing Bank that would undermine its independence. 

3. It must not be an Underwriter, a Selling Agent or a Market Maker of the USD. 

4. It must have adequate facilities and the organization to do the following: 

i. maintain Certificates of unissued USD and the Registry Book which must be 

electronic if the USD is in scripless form; 

ii. deliver transactions within the agreed trading period; and 

iii. issue Registry Confirmations and USD Certificates if they are not in scripless 

form to buyers/holders of USD. 

5. It must have a CAMELS Composite Rating of at least 3 in the last regular 

examination, where applicable. 

c. Selling Agent 

1. It may be any financial institution with dealership or brokering license and is 

under the supervision of the BSP. 



d. Market Maker 

1. It must be a financial institution with a dealership or brokering license and is 

under the supervision of the BSP. 


with the Issuing Bank that would undermine its independence.


3. It must have adequate risk management and must be well capitalized as evidenced 

by compliance with the risk based capital adequacy ratio prescribed 

under Sec. X116 of the MOR for the past sixty (60) days immediately preceding 

the date of application where applicable. 

There is no need for a Market Maker if the USD is to be held on to maturity: 

Provided, That this condition is properly disclosed in the Purchase Advice, Registry 

Confirmation and Prospectus/Information Disclosure. 

e. Public Trustee 

1. It must be a financial institution authorized by the BSP to engaged in trust and 

other fiduciary business. 



3. It must have adequate risk management and must be well capitalized as evidenced 

by compliance with the risk-based capital adequacy ratio prescribed 

under Sec. X 116 of the MOR for the past sixty (60) days immediately preceding 

the date of application where applicable. 

4. It may also be the USD Registry. 

5. A Public Trustee is mandatory if USD shall be offered to the general public and 

optional if offering will be limited to qualified investors/buyers. 

4. Functions/Responsibilities of Other Parties Involved 

The respective parties shall have among others, the following functions/responsibilities: 

a. Underwriter/Arranger 

1. Conducts due diligence on the Issuing Bank and determines the valuation/ 

pricing of the primary issue; 

2. Prepares the prospectus/information disclosure, including updates for multitranche 

USD issues; 

3. Formulates the distribution/allocation plan for the initial offering and ensures 

proper and orderly distribution of the primary offering of the USD; 

4. Disseminates information to prospective investors of USD on the terms and 

conditions of the issue (including information of non pre-termination at the initiative 

of the holder and the liquidity mechanism in secondary trading) and the rights 

and obligations of the holder, issuer, Underwriter/Arranger, USD Registry, Selling 

Agent, Market Maker and Public Trustee; and 

5. When selling to its clients, it must perform the functions/responsibilities of the 

Selling Agent under item c hereof.

12 

b. USD Registry 


1. Keeps unissued USD certificates and maintains USD Registry book, which 

must be electronic if USD is scripless in form; 

2. Records initial issuance of the USD and subsequent transfer of ownership; 

3. Issues USD Certificates for primary offerings if USD is not scripless in form; 

4. Issues Registry Confirmation to buyers/holders; 

5. Functions as paying agent for periodic interest and principal payments; 

6. Monitors compliance with the prohibitions on holdings of USD, as prescribed 

under item H hereof; and 

7. Submits within ten (10) banking days from end of reference month, an exception 

report on item H hereof (Prohibitions on Holdings of USD) to the appropriate 

supervising and examining department of the BSP. This report shall be classified 

as a ìCategory Bî report. 

c. Selling Agent 

1. Verifies identity of each investor to ascertain that item H hereof (Prohibitions 

on Holdings of USD) is not violated and applies appropriate standards to combat 

money laundering as required under existing BSP regulations; 

2. Determines the suitability of the investor and ensures that he fully understands 

the features of the USD and the risk involved therein; and 

3. Issues the Purchase Advice for the primary offering of the USD to the buyer 

and sends a copy thereof to the USD Registry. 

The sale or distribution of USD may also be performed by the issuer through its head 

office and branches subject to the following conditions: 

i. The in-house distribution shall not exceed fifty percent (50%) of the total 

issue; 

ii. The sale/distribution must be done under the supervision of an officer of the 

Issuing Bank who is capable of determining the suitability of the investor and 

ensuring that he fully understands the risk in USD; 

iii. All personnel assigned to distribute/sell USD must be capable of determining 

the suitability of the investor and ensuring that he fully understands the risk in 

USD; and 

iv. It must also perform the functions/responsibilities of the Selling Agent.


d. Market Maker 

1. Sets an independent pricing for the secondary trading of USD; 

2. Posts daily the bid and offer prices for the USD on the screen of at least one of 

the information providers until the operation of a fixed income exchange for USD; 

3. Verifies identity of each investor to ascertain that item H hereof (Prohibitions 

on Holdings of USD) is not violated and applies appropriate standards to combat 

money laundering as required under existing BSP regulations; 

4. Determines the suitability of the buyer and ensures that he fully understands 

the risk involved in a USD; 

5. Issues the Purchase Advice for the secondary trading of the USD to the buyer 

and sends a copy thereof to the USD Registry; and 

6. Ensures secondary market transfers and registration in coordination with the 

USD Registry. 

e. Public Trustee 

1. Monitors compliance of the Issuing Bank with the terms and conditions of the 

USD; 

2. Monitors compliance of the other parties with their functions and responsibilities 

prescribed under this Memorandum; 

3. Reports regularly to USD holders non-compliance of the Issuing Bank with the 

terms and conditions of the USD and such other developments that adversely 

affect their interest and advise them of the course of action they should take to 

protect their interest; and 

4. Act on behalf of the USD holders in case of bankruptcy of the Issuing Bank. 

5. Change of Underwriter/Arranger, USD Registry, Selling Agent(s), Market Maker(s) 

After an application for authority to issue a USD has been approved by the BSP, the 

Issuing Bank cannot change its Underwriter/Arranger, USD Registry, Selling Agent(s), Market 

Maker(s) and Public Trustee without prior BSP approval. 

6. Agreements Between Issuing Bank and Other Parties Involved 

The agreements between the Issuing Bank and the USD Registry/Selling Agent(s) and 

Market Maker(s), Public Trustee shall comply with the provisions of Sec. X169 of the MOR on 

bank service contracts. The Issuing Bank shall be liable to investors for any damages caused 

by actions of the USD Registry, Selling Agent(s) and Market Maker(s),which are contrary to 

the agreements entered into.

14 


7. Purchase Advice and Registry Confirmation 

The Purchase Advice and Registry Confirmation shall contain all the terms and conditions 

on the issuance of USD and shall conspicuously state the following caveat: 

a. This USD is not a deposit and is not insured by the PDIC. 

b. This USD is unsecured and not covered by a guarantee of the Issuer/Underwriter/Arranger 

or related party of the Issuer/Underwriter/Arranger. 

c. In case of insolvency, this USD is subordinated in the right of payment of principal, and 

interest to all depositors and other creditors of the bank, except those creditors expressed to 

rank equally with, or behind holders of the USD. 

d. This USD is not eligible as collateral for a loan made by the Issuing Bank, its subsidiaries 

or affiliates. 

e. This USD cannot be terminated by the holder nor by the Issuing Bank before (maturity 

date). However, negotiations/transfers from one holder to another do not constitute pretermination. 

(Item D.7.e above shall apply if the Issuing bank commits no pre-termination of the 

USD. Otherwise it shall read as follows): 

This USD cannot be terminated by the holder before (maturity date). However, it may 

be pre-terminated at the instance of the Issuing Bank upon: 

a) prior approval of the BSP subject to the following conditions: 

i. The bankís capital adequacy ratio is at least equal to the required minimum 

ratio; and 

ii. The debt is simultaneously replaced with the issues of new capital which is 

neither smaller in size nor of lower quality than the original issue. 

b. prior notice to holders on record. 

Negotiations/transfers from one holder to another do not constitute pre-termination. 

f. The holders/owners of this USD cannot set off any amount they owe to the Issuing Bank 

against this USD. 

g. All negotiations/transfers of this USD prior to maturity must be coursed through a Market 

Maker until the operation of a fixed income exchange. 

h. The payment of principal may be accelerated on this USD only in the event of insolvency 

of the Issuing Bank. 

i. This USD may be converted into common or preferred shares or payment of principal and 

interest thereof may be deferred at the instance of the Issuer if the capital adequacy ratio of 

the Issuing Bank becomes less than the required minimum ratio. 

j. The payment of interest on this USD shall be deferred in the event of elimination of dividends 

on all outstanding common or preferred stocks of the Issuing Bank.


k. The payment of principal and interest due on this USD shall not be made if the Issuing 

Bank is insolvent. 

N.B. The last three items (i.e., i.j, and k) are applicable only to USD qualifying under Upper 

Tier 2 capital. The foregoing information shall also be shown in the Prospectus/Information 

Disclosure. 

8. Pre-termination by the Issuer 

a. The Issuing Bank may pre-terminate the USD subject to the following conditions: 

1. The Information Disclosure, Purchase Advice and Registry Confirmation shall 

include the information that the Issuing Bank has the option to pre-terminate the 

USD; 

2. Compliance with items b.b.1(8)vi or of b.b.2(1) vi, as may be applicable, of 

Subsection X116.1 of the MOR; 

3. Prior notification of thirty (30) banking days or more to holders of record; and 

4. Notwithstanding any agreement to the contrary, the Issuer shall shoulder the 

tax due, if any, on the interest income already earned by the holders. 

b. Within ten (10) banking days after the completion of the pre-termination transaction, the 

Issuing Bank must submit a written notice to the appropriate BSP supervising and examining 

department of the following: 

1. Actual pre-termination date; and 

2. New capital composition. 

9. Primary Offering/Secondary Trading 

a. The primary offering of a USD shall be executed through an Underwriter under a firm 

commitment or through an Arranger on a best effort basis. Initial sale/distribution of USD 

shall be made by a Selling Agent, the Underwriter/Arranger or, to a limited extent, the Issuing 

Bank itself. Subsequent negotiations in secondary trading must be executed through authorized 

Market Maker(s) until the operation of a fixed income exchange. 

The primary offering as well as the secondary trading of a USD must be supported by 

Purchase Advice to be issued by the Selling Agent or the Market Maker, as the case may be, 

with the original given to the buyer and a second copy to the USD Registry. Upon presentation 

by the buyer of the original copy of Purchase Advice, the USD Registry shall: 

i. record the primary issuance in the Registry Book and issue a Registry Confirmation 

and the corresponding USD certificate to the buyer if it is not scripless in 

form; and 

ii. register the transfer of ownership in the USD Registry Book and issue a Registry 

Confirmation to the buyer, in the case of secondary trading.

16 


E. PRIVATE OR NEGOTIATED ISSUANCE OF UNSECURED SUBORDINATED DEBT 

Private or negotiated issuance of USD includes: 

- Private or negotiated issuance of USD is the negotiated or private issuance to 

not more than nineteen (19) qualified investors/buyers, whether individuals or 

institutions: Provided, That no resale or negotiation of the USD shall be allowed; 

and 

- Qualified issuance of USD is the issuance by universal banks, commercial 

banks and institutions with quasi-banking authority to qualified institutional investors/buyers. 

There is no limit on the number of qualified institutional investors/ 

buyers and on the sale or negotiation of the USD: Provided, That such sale or 

negotiation shall only be made to another qualified institutional investor/buyer. 

1. Application for Authority of the Issuing Bank 

a. The application shall be signed by the President or officer of equivalent rank of the Issuing 

Bank. 

b. The application for authority on each negotiated USD issue shall be filed with the appropriate 

supervising and examining department of the BSP. 

c. The application shall be accompanied by: 

1. A certified true copy of the resolution of the Issuing Bankís board of directors 

authorizing the private/negotiated issuance of USD indicating, among others, the 

amount, duration/maturity, interest rate, purpose or intended use of proceeds of 

the USD; 

2. A certification by the Corporate Secretary that the issuance of the USD has 

been approved by the stockholders owning or representing at least two-thirds (2/ 

3) of the outstanding capital stock of the Issuing Bank if the USD has convertibility 

feature; 


Issuing Bank stating that all the conditions for USD under item b.b.1 (8) excluding 

item (xi) or item b.b.2(1) excluding item (viii) of Subsection X 116.1 of the 

MOR are complied with and that such conditions shall be contained in the USD 

Certificates, Prospectus/Information Disclosure and Debt Agreement/Contract; 

4. An undertaking from the President or officer of equivalent rank of the issuing 

Bank that the USD shall be issued only to qualified investors/buyers; 

5. A certification from the President or officer of equivalent rank of the Issuing 

Bank that the investor/buyer shall not be among those prohibited to hold USD 

under item H hereof and that the Issuing Bank has applied appropriate standards 

to combat money laundering as required under existing BSP regulations;



Issuing Bank not to support, directly nor indirectly, by extending loans, issuing 

payment guarantees or otherwise, the buyer/holder of the USD of the Issuing 

Bank; and 

7. Specimen of the proposed Debt Agreement/Contract containing the terms and 

conditions of the USD Issuance. 

2. Additional Requirements for the Private Issuance of Unsecured Subordinated Debt 

Within ten (10) banking days after issuance of the USD, the Issuing Bank shall submit 

the following additional requirements to the appropriate supervising and examining department 

of the BSP; 

a. A written notice of the actual date of full receipt of proceeds, accompanied by a certification 

from the President or officer of equivalent rank of the Issuing Bank stating that the prequalification 

requirements under item C hereof have been complied with up to the time of full 

receipt of proceeds; 

b. A copy each of the duly signed Debt Agreements/Contracts between the Issuing Bank 

and the investor/buyer as specified in the application for authority to issue negotiated USD; 

and 

c. A copy of the income tax return of the investor/buyer in case of natural person. 

3. Debt Agreement/Contract 

The Debt Agreement/Contract shall contain all the terms and conditions on the issuance 

of USD and shall conspicuously state the following caveat: 

a. This USD is not a deposit and is not insured by the PDIC. 

b. This USD is unsecured and not covered by a guarantee of the Issuer or related party of 

the issuer. 

c. In case of insolvency, this USD is subordinated in the right of payment of principal and 

interest to all depositors and other creditors of the bank, except those creditors expressed to 

rank equally with, or behind holders of the USD. 

d. This USD is not eligible as collateral for a loan made by the Issuing Bank, its subsidiaries 

or affiliates. 

e. This USD cannot be terminated by the holder nor by the Issuing Bank before (maturity 

date). 

(Item E.3.e above shall apply if the Issuing Bank commits no pre-termination of 

the USD. Otherwise it shall read as follows): 

This USD cannot be terminated by the holder before (maturity date). However, it may 

be pre-terminated at the instance of the Issuing Bank upon:

18 


1) prior approval of the BSP subject to the following conditions: 

i. The bankís capital adequacy ratio is at least equal to the required minimum 

capital ratio; and 

ii) The debt is simultaneously replaced with the issues of new capital which is 

neither smaller in size nor or lower quality than the original issue. 

2) prior notice to investors/buyers. 

f. This USD cannot be sold or transferred and must be held on to maturity by the investor/ 

buyer (in case of negotiated issuance of USD to nineteen (19) or less investors/buyers). 

g. This USD may only be sold, transferred or negotiated to another qualified institutional 

investor/buyer (in case of qualified issuance to institutional buyers). 

h. The holders/owners of this USD cannot set off any amount they owe to the Issuing Bank 

against this USD. 

i. The payment of principal may be accelerated on this USD only in the event of insolvency of 

the Issuing Bank. 

j. This USD may be converted into common or preferred shares or payment of principal and 

interest thereof may be deferred at the instance of Issuer if the capital ratio of the Issuing 

Bank becomes less than the required minimum capital ratio. 

k. The payment of interest on this USD shall be deferred in the event of elimination of 

dividends on all outstanding common or preferred stocks of the Issuing Bank. 

l. The payment of principal and interest due on this USD shall not be made if the Issuing 

Bank is insolvent. 

N.B. The last three (3) items (j, k, and l) are applicable only to USD qualifying under Upper 

Tier 2 capital. 

4. Pre-termination by the Issuer 

a. The Issuing Bank may pre-terminate the negotiated USD subject to the following conditions: 

1. The Debt Agreement/Contract shall include the information that the Issuing 

Bank has the option to pre-terminate the USD; 

2. Compliance with items b.b.1(8) vi or b.b.2(1) vi, as may be applicable, of 

Subsection X116.1 of the MOR; 

3. Prior notification of thirty (30) banking days or more to lender/investor; and 

4. Notwithstanding any agreement to the contrary, the Issuer shall shoulder the 

tax due, if any, on the interest income already earned by the holders.


b. Within ten (10) banking days after the completion of the pre-termination transaction, the 

Issuing Bank must submit a written notice to the appropriate BSP supervising and examining 

department of the following: 

1. Actual pre-termination date; and 

2. New capital composition. 

5. Functions/Responsibilities of the Issuing Bank 

a. Prepares the Prospectus/Information Disclosure on the USD issues; 

b. Disseminates to prospective investors/buyers information on the terms and conditions of 

the USD (including information on no pre-termination at the initiative of the holder, and where 

applicable the liquidity mechanism in secondary trading) and the rights and obligations of 

the holder, and the issuer; 

c. Keeps unissued USD certificates and maintains USD Register; 

d. Records initial issuance of USD and subsequent transfer of ownership; 

e. Issues USD Certificates and Registry Confirmation to original investors/buyers; 

f. Issues Registry Confirmation to subsequent buyers/holders where applicable; 

g. Ensures compliance with item H hereof (Prohibitions on Holdings of USD) and applies 

appropriate standards to combat money laundering as required under existing BSP regulations; 

and 

h. Determines suitability of the investors/buyers (original or subsequent) and assures that 

he fully understands the risk involved in a USD. 

F. ISSUANCE OVERSEAS OF UNSECURED SUBORDINATED DEBT 

The overseas issuance of USD shall also be subject to the provisions of this Memorandum. 

Therefore, no overseas issuance of USD by domestic banks shall be allowed if the 

laws, rules and regulations of the country where said USD will be issued are inconsistent 

with the provisions of this Memorandum. 

G. QUALIFIED INVESTORS/BUYERS 

1. Banks 

Qualified buyers of, or suitable investors in, a USD can be any of the following: 

2. Investment house 

3. Insurance Company 

4. Pension or retirement fund of other entities which have no subsidiary/affiliate or any other 

relationship with the Issuing Bank.

20 


5. Investment Company 

6. Funds managed by another bank or other entities duly authorized to engage in trust or 

other fiduciary business. 

7. Domestic corporate or institutional investors with total assets of at least P100 million 

8. Foreign multilateral organizations such as, the Asian Development Bank and International 

Finance Corporation. 

9. High net worth individual investor/buyer who is sophisticated enough to understand and 

appreciate the significance of and the risk involved in USD as may be indicated by his/her 

educational background and/or employment/business experience. 

10. Stockholder, director or officer with the rank of at least a Vice-President of the Issuing 

Bank 

H. PROHIBITIONS ON HOLDINGS OF USD 

The following persons and entities are prohibited from purchasing/holding USD of the 

Issuing Bank: 

1. Subsidiaries and affiliates of the Issuing Bank including their subsidiaries and affiliates; 

and 

2. Trust and other funds managed by the Trust Department of the Issuing Bank, its subsidiaries 

and affiliates or other related entities. 

For purposes of this Memorandum, an affiliate refers to a related entity linked by 

means of ownership of at least twenty percent (20%) to not more than fifty percent (50%) of 

its outstanding voting stock. 

I. ACCOUNTING TREATMENT 

Obligations arising from the issuance of USD shall be booked under a new General 

Ledger account title ìUnsecured Subordinated Debtî, which shall be presented separately in 

the financial statements between total liabilities and capital accounts. However, only the net 

proceeds actually received from debt issues shall be considered as Tier 2 capital. Moreover, 

if the debt is issued at a premium, the premium shall not be counted as part of Tier 2 capital. 

Cost incurred related to the issuance of USD shall be charged to current operations or 

booked under ìDeferred Chargesî account to be amortized equally over a period not exceeding 

five (5) years. 

A USD denominated in foreign currency may be recorded in the regular banking unit 

(RBU) or foreign currency deposit unit (FCDU/EFCDU) of the Issuing Bank: Provided, That 

if booked in the FCDU/EFCDU, the following conditions shall be strictly observed: 

1. The Issuing Bank shall indicate in its application that the USD shall be booked in its 

FCDU/EFCDU;


2. The USD shall remain in the FCDU/EFCDU books until full settlement; and 

3. The USD shall be issued only to non-residents and offshore banking units in accordance 

with Section 72.2.e of CB Circular No. 1389, as amended. 

J. SANCTIONS 

Without prejudice to the other sanctions prescribed under Section 37 of R.A. No. 7653 

(The New Central Bank Act) and the provisions of Section 16 of R.A. No. 8791, otherwise 

known as the ìThe General Banking Law of 2000î, sanctions shall be imposed on the Issuing 

Bank, USD Registry and other parties involved in the transaction for failure to perform their 

respective functions/responsibilities and the non-disclosure or misrepresentation of information, 

as follows: 

1. On the Issuing Bank 

a. Suspension of its authority to issue remaining tranches, if any; 

b. Disqualification from future issuances of USD; 

c. Disqualification of all outstanding issues as eligible Tier 2 capital; and 

d. Monetary penalty of Thirty Thousand Pesos (P30,000.00) for each violation. 

2. On the Underwriter/Arranger 

a. Disqualification from being Underwriter/Arranger for three (3) years; and 

b. Monetary penalty of Thirty Thousand Pesos (P30,000.00) for each violation. 

3. On the USD Registry 

a. Disqualification from being appointed as USD Registry for three (3) years; and 


4. On the Selling Agent/Market Maker 

a. Disqualification from being appointed as Selling Agent or Market Maker for 

three (3) years; and 


5. On the Public Trustee 

a. Disqualification from being appointed as Public Trustee for three (3) years; 

and

22 



6. On the Certifying Officer - A fine of Five Thousand Pesos (P5,000.00) per banking day 

from the time of required disclosure up to the time disclosure was made, or from the time 

misrepresentation was made up to the time the information was corrected, and a possible 

disqualification if warranted by the gravity of the offense committed. 

7. On the Responsible Officer - A fine of Thirty Thousand Pesos (P30,000.00) for participating 

in or tolerating the non-disclosure or misrepresentation of information, and a possible 

disqualification by the gravity of the offense committed. 

This Memorandum shall take effect after 15 days following the completion of its publication 

either in the Official Gazette or in a newspaper of general circulation. 




Governor 

--o0o-- 


Report on Bank Liabilities to Non-Residents 

Pursuant to MB Resolution No. 943 dated June 21, 2001 approving the 1999 Updates 

to the Manual of Regulations for Banks (MORB), the Report on Bank Liabilities to Non- 

Residents, formerly Schedule 15, has been renumbered Schedule 8a of the Consolidated 

Statement of Condition (CSOC) or DCB I/II Form 2A.1 and 2A.2 

As a Category A-2 Report, the applicable penalty for delayed/unsubmitted/erroneous/ 

incomplete Schedule 8a of the CSOC shall be P1,200.00 per business day of default as 

prescribed under Subsection X 162.2 of the MORB. 

In the implementation of the foregoing policy, the following guidelines shall be observed: 

a. Delay or default shall start to run on the day following the last day required for the 

submission of reports. However, should the last day for filing fall on a non-working day in the 

locality where the reporting bank is situated, delay or default shall start on the day following 

the next banking day (Subsection X162.2b p.43 of the MORB); 

b. Delayed submission of the hard copy Bank Certification for/amendments to Schedule 8a, 

which are considered attachments to the report, shall be considered late reporting subject to 

the above penalties; 

c. The hard copy Bank Certification shall be signed by the president, executive vice president, 

vice president or by an officer holding equivalent position. Specimen signatures of the


designated signatories shall likewise be submitted to International Operations Department 

(IOD) within 15 days from publication of this Circular. Any changes in the authorized signatories 

shall be immediately communicated in writing to IOD with the specimen signatures. 

d. Reports shall be considered as submitted only upon receipt thereof by IOD via cc: Mail 

(MEDD at CB-DDF) or in 3.5î diskette, in case of problems in communication lines; and 

e. It shall be the responsibility of the reporting/transmitting bank to confirm with IOD the 

latterís actual receipt of Schedule 8a and its attachments on or before deadline date. 

The imposition of the new penalty rate shall take effect fifteen (15) days after the 

complete publication of this Circular Letter in the Official Gazette and/or in a newspaper of 

general circulation. 



(SGD.) AMANDO M. TETANGCO, JR. 

Deputy Governor 

--o0o-- 


Authorizing the Lowering of the Requirement on Physical Attendance 

of Directors of Banks, Quasi-banks and Trust Entities in Board Meetings 

Pursuant to Monetary Board Resolution No. 23 dated 3 January 2003 authorizing the 

lowering of the requirement on physical attendance of directors of banks, quasi-banks and 

trust entities in board meetings, the Manual of Regulations for Banks and Non-Bank Financial 

Institutions are hereby amended, as follows: 

SECTION 1. The last paragraph of Subsections X141.1 and 4141Q.1 of the Manual of 

Regulations for Banks and the Manual of Regulations for Non-Bank Financial Institutions are 

hereby amended to read as follows: 

ìThe meetings of the board of directors may be conducted through modern technologies 

such as, but not limited to, teleconferencing and video-conferencing as 

long as the director who is taking part in said meetings can actively participate in 

the deliberations on matters taken up therein: Provided, that every member of the 

board shall participate in at least fifty percent (50%) and shall physically attend 

at least twenty-five percent (25%) of all board meetings every year.î 

SECTION 2. Subsections X 143.1.b.2 and 4143Q.1.b.2 are hereby amended to read 

as follows: 

ìDirectors who have been absent or who have not participated for whatever reasons 

in more than fifty per cent (50%) of all meetings, both regular and special, of 

the board of directors during their incumbency, or any twelve (12) month period

24 


during said incumbency and directors who failed to physically attend for whatever 

reasons in at least twenty-five per cent (25%) of all board meetings in any 

year. This disqualification applies for purposes of the succeeding election.î 



Date Filed: 13 March 2003 


Governor 

--o0o-- 


Technology Fraud on ATM Systems 

Please be advised that there were incidents in other countries regarding technology 

fraud in ATM systems perpetrated by unscrupulous individuals and/or syndicates. 

These acts are carried out by using: 

1. A specialized scanner attached to the ATM card slot, and; 

2. A pinhole camera. 

The specialized scanner captures the stored personal identification number (PIN), 

card number, and other relevant information from the magnetic strip of the ATM card. The 

hidden pinhole camera is used to capture the actual entry/input of the PIN into the ATM by 

the cardholder. The captured information from the specialized scanner is then copied into 

another ATM card, thereby producing a duplicate of the original card. Using the replicated 

ATM card and the captured PIN from the pinhole camera, the unscrupulous individuals the 

make unauthorized withdrawals from the ATMs. 

In this regard, banks are advised to conduct a regular physical inspection of their 

ATMs and check for any unusual attachments to the machine and implement appropriate 

additional internal controls. 

For information and guidance. 

Adopted: 7 March 2003 

(SGD.) ALBERTO V. REYES 

Deputy Governor 

--o0o--




Forward Contracts 

In its Resolution No. 343 dated 13 March 2003, the Monetary Board decided that, 

effective immediately, forward contracts, i.e., outright forward and forward leg of swap, to 

cover long-term foreign currency requirements shall have a maximum tenor of six (6) months. 

This policy shall be subject to quarterly review by the BSP. 





--o0o-- 


Allowable Open FX Position 

Pursuant to Monetary Board Resolution No. 344 dated 13 March 2003, Item 2 of 

Circular No. 1327 dated 30 January 1992, as amended, is hereby further amended to read 

as follows: 

ì2. Allowable open FX position - Bankís long FX position shall not go beyond 2.5 

percent (2.5%) of their unimpaired capital or US$5 million whichever is lower. 

Any excess beyond the allowable limit shall be settled on a daily basis. 

Banks which are in excess of the overbought limit as of effectivity of this Circular 

shall have two (2) banking days within which to bring down their net overbought 

FX position to within the allowable limit.î 

This Circular amends BSP Circular No. 171 dated 29 August 1998 and shall take effect 

immediately. 




--o0o--

26 




Barangay Micro Business Enterprises 

Pursuant to Monetary Board Resolution No. 284 dated 27 February 2003, the implementing 

rules and regulations of Section 9 and the second Paragraph of Section 13 of R.A. 

No. 9178, otherwise known as the ìBarangay Micro Business Enterprises (BMBEs) Act of 

2002î are hereby issued as follows: 

SECTION 1. Credit Delivery - Pursuant to the provisions of Section 9 of R.A. 9178, the 

Land Bank of the Philippines (LBP), the Development Bank of the Philippines (DBP), the 

Small Business Guarantee and Finance Corporation (SBGFC), and the Peoples Credit and 

Finance Corporation (PCFC) shall set up a special credit window that will service the financing 

needs of duly registered BMBEs consistent with BSP policies, rules and regulations. 

Said special credit window shall service the credit needs of BMBEs either through retail or 

wholesale lending, or both, as the concerned financial institutions may deem consistent with 

their corporate policies and objectives. The Government Service Insurance System (GSIS) 

and the Social Security System (SSS) shall likewise set up credit window that will serve the 

financing needs of their respective members who may wish to establish a BMBE. 

Said financial institutions are encouraged to wholesale funds to accredited private 

financial institutions including community based organizations such as cooperatives, nongovernment 

organizations (NGOs) and peopleís organizations engaged in granting credit, 

for relending to BMBEs. 

Private banking and other financial institutions are hereby encouraged to lend to BMBEs. 

SECTION 2. Interest on Loans to BMBEs - Interest on BMBE loans shall be just and 

reasonable as may be determined by management of the concerned entity to be consistent 

with its credit policies. 

SECTION 3. Amortization of loans to BMBEs - The schedule of loan amortization shall 

take into consideration the projected cash flow of the borrowers. Thus, loans granted to 

BMBEs may, at the discretion of the lender, be amortized daily, weekly, monthly or at such 

interval as the conditions of the business of the BMBEs may warrant. 

SECTION 4. Waiver of Documentary Requirements - Banks and other financial institutions 

shall not require from duly registered BMBE borrowers the submission of income tax 

returns as a condition to the grant of loans considering that BMBEs are exempted from 

income tax for income arising from their operations. They may, at their discretion, also waive 

the requirement of submission of financial statements from BMBEs. Provided, That before 

granting any loan, banks shall undertake reasonable measures to determine that the borrower 

is capable of fulfilling his/its commitments: 

SECTION 5. Incentives to Participating Financial Institutions - To encourage BMBE 

lendings, the following incentives shall be granted to banks and other financial institutions as 

may be applicable:


a. All loans from whatever sources granted to BMBEs under this Act shall be considered as 

part of alternative compliance to Presidential Decree No. 717 (Agri-Agra Law) or to Republic 

Act No. 6977, otherwise known as the ìMagna Carta for Small and Medium Enterprisesî, as 

amended. For purposes of compliance with Presidential Decree No. 717 and Republic Act 

No. 6977, as amended, loans granted to BMBEs under R.A. No. 9178 shall be computed at 

twice the amount of the outstanding balance of the loans: Provided, That loans used as 

alternative compliance with PD 717 which were computed at twice their outstanding balance 

shall no longer be eligible as compliance with R.A. 6977 during the same period and vice 

versa: Provided, further, that said loans may be used as alternative compliance with PD 717 

and R.A. No. 6977, as amended at the same time at the maximum amount of 100% of their 

outstanding balance; Provided, still further, that funds loaned by government financial institutions 

to accredited private banking and other financial instututions for relending to BMBEs 

shall be eligible as part of alternative compliance to PD 717 or to R.A. No. 6977, as amended, 

at the maximum amount of 100% of their outstanding balance. 

b. Any existing laws to the contrary notwithstanding, interests, commissions and discounts 

derived from the loans by the LBP, DBP, PCFC, SBGFC granted to BMBEs as well as loans 

extended by the GSIS and SSS to their respective member-employees under R.A. No. 9178 

and this Implementing Rules and Regulations shall be exempt from gross receipt tax (GRT) 

c. As an exception to the general moratorium on the establishment of new banking offices, 

banks may, subject to compliance with applicable BSP rules and regulations, also be allowed 

to establish branches that will cater primarily to the credit needs of BMBEs: Provided, that at 

least seventy percent (70%) of the deposits generated by said branches shall be lent out to 

BMBEs and their outstanding loans to BMBEs shall at all times be at least fifty percent (50%) 

of their gross loan portfolio. 

SECTION 6. Credit Guarantee - The SBGFC and the Quedan and Rural Credit Guarantee 

Corporation (Quedancor) under the Department of Agriculture, in case of agri-business 

activities, shall set up a special guarantee window to provide credit guarantee to BMBEs 

under their respective guarantee. 

SECTION 7. Records - The LBP, DBP, PCFC and SBGFC shall maintain separate 

records of loans granted to BMBEs and the GSIS and SSS shall maintain records of loans 

extended to their respective members who wish to establish BMBEs. 

SECTION 8. Submission of Reports to BSP - Banks shall submit a quarterly on loans 

granted to BMBEs as attachment to the quarterly Report on Compliance with the Mandatory 

Credit Allocation with Small and Medium Enterprises and to the quarterly Report on the 

Utilization of Loanable Funds Generated Which Were Set Aside for Agrarian Reform Credit/ 

Agricultural Credit, to the Supervisory Reports and Studies Office, within fifteen (15) banking 

days after the end of each reference quarter (Annex ìAî* and ìBî*). 

SECTION 9. Reports to Congress - As provided under Section 9 of R.A. 9178, the 

LBP, DBP, PCFC, SBGFC, SSS, GSIS and Quedancor shall report annually to the appropriate 

Committees of both Houses of Congress the status of their implementation of the provisions 

of Section 9 of R.A. No. 9178. 


Quezon City.

28 


SECTION 10. Administrative Sanctions - Pursuant to the provisions of the second 

paragraph of Section 13 of R.A. No. 9178, any violation by the concerned government 

financial institution of the provisions of Section 9 of said Act shall be subject to a fine of not 

less than Five Hundred Thousand Pesos (P500,000.00) to be imposed by the BSP and 

which shall be payable to the BMBE Development Fund. In case of a banking institution, the 

foregoing fine shall be without prejudice to the administrative sanctions provided for under 

Section 37 of R.A. No. 7653 (The New Central Bank Act). 

SECTION 11. Effectivity - This Circular shall take effect fifteen (15) days after its 

publication in the Official Gazette or in at least two (2) newspapers of general circulation. 





--o0o-- 


Services by a Bank in Favor of Subsidiaries, Affiliates and 

Companies Related to it By at Least 5% Common Ownership 

In implementation of Section 53.3 of Republic Act No. 8791 (The General Banking Law 

of 2000, a bank may be authorized, upon prior Monetary Board approval, to render the 

following services in favor of subsidiaries, affiliates and companies related to it by at least 

5% common ownership: 

a. Credit card, bank and loans reconciliation; 

b. Credit card billing; 

c. Time deposit processing; 

d. Merchant settlement and care service; 

e. Collections; 

f. Credit application processing; 

g. Call center support; 

h. Telemarketing of bank and credit card products; 

i. Human resource-related service; 

j. Finance/accounting functions; 

k. Documentation; 

l. Cashiering; 

m. Reports preparation; and 

n. Safekeeping of securities; 

subject to the following conditions: 

i. The particular type of service to be rendered by the bank should be submitted 

for prior approval of the Monetary Board;


ii. As service provider, the following shall be upheld by the bank: 

a. Confidentiality of bank deposits and investment in government bonds (R.A. 

No. 1405); 

b. Prohibition against outsourcing of inherent banking functions (Section 55.1 

(e) of R.A. No. 8791 and Circular No. 268 ; and 

c. Prohibition on cross-selling except as allowed under applicable regulations. 

This Circular shall take effect after fifteen (15) days following the completion of its 

publication in any newspaper of general circulation. 


BUREAU OF CUSTOMS 



Governor 

LTO-BOC-BIR Joint Department Order No. 2002-82 

Executive Order No. 142 Requiring Owners of Taxable Imported Motor 

Vehicles to Secure Clearances from the Bureau of Customs (BOC) 

and Bureau of Internal Revenue (BIR) as a Precondition for Their Initial 

Registration or Renewal of Registration with the 

Land Transportation Office (LTO) 

Pursuant to Section 5 of Executive Order No. 142, the following rules and regulations 

are hereby issued in order to effectively implement Executive Order No. 142 and attain the 

objectives thereof. 

A. Objectives 

1. To collect the unpaid duties, taxes and fees due on imported vehicles. 

2. To facilitate the registration and/or renewal of registration of imported motor vehicles after 

the issuance of the prescribed clearance(s) by the concerned agency. 

B. Scope 

This Joint Department Order shall cover taxable imported vehicles, except those imported 

under the Car Development Program of the Philippines by car manufacturers and 

assemblers duly registered with the Board of Investments.

30 


C. General Provisions 

1. This Order shall initially cover taxable completely built-up (CBU) units of imported motor 

vehicles, including motorcycles, except those imported under the Car Development Program 

of the Philippines by car manufacturers and assemblers duly registered with the 

Board of Investments. The issuance of clearance for locally assembled and/or re-assembled 

motor vehicles using imported parts shall be covered by a separate Joint Department 

Order. 

2. Applications for initial registration of unregistered imported motor vehicles under this 

Order and outside customs zones may be availed until April 30, 2003 pursuant to Section 

5 (a) of Executive Order No. 142. For registered imported motor vehicles, this Order shall 

initially be implemented for those imported from January 01, 2000 to December 31, 2002. 

The periods stated herein shall not preclude owners of imported motor vehicles from 

availing of the provisions of this Joint Department Order. 

3. The requirement to secure clearances from the Bureau of Customs and/or the Bureau of 

Internal Revenue shall be a one-time requirement, such that the owner of a taxable imported 

motor vehicle which has already been cleared pursuant to this Order shall no 

longer be required to obtain clearances for the succeeding renewal of registration. 

4. The Land Transportation Office shall not allow the initial registration or renewal of the 

registration on any imported motor vehicle covered by this Order, unless the appropriate 

clearances have been issued by the Bureau of Customs and/or the Bureau of Internal 

Revenue certifying that the correct/proper taxes, duties and fees accruing thereon have 

been previously paid, or subsequently settled in accordance with this Order. 

5. All concerned LTO, BIR and BOC personnel shall extend assistance to vehicle owners to 

facilitate acceptance of full payment of duties and taxes and/or clearance, as well as the 

registration or renewal of registration, as the case may be, so as to ensure the least 

inconvenience to affected vehicle owners. For this purpose, a One-Stop-Shop Clearance 

Office (OSSCO) shall be established to be housed at the LTO Compound, East Avenue, 

Quezon City. 

6. LTO, BIR and BOC shall issue their respective memorandum orders to disseminate and 

execute the provisions of these Implementing Guidelines in their respective jurisdiction. 

7. LTO, BIR and BOC shall take disciplinary action against their respective personnel found 

violating any of the provisions of Executive Order No. 142 and its implementing guidelines. 

8. LTO, BIR and BOC shall establish and maintain an information feedback loop for the 

resolution of any problem(s) arising from the issuance of Certificates of Tax Clearance for 

purposes of initial or renewal of registration of imported motor vehicles. 

D. Specific Provisions 

In order to effectively delineate the duties and responsibilities of the various agencies 

involved in the implementation of EO 142, the following are hereby issued, to wit:


1. Land Transportation Office (LTO) 

1.1 Provide adequate office space and facilities to accommodate the OSSCO responsible 

in the processing and issuance of the necessary clearances for the efficient and 

fast delivery of service to the transacting public. 

1.2 Accept applications for the initial registration or renewal of registration of motor 

vehicles. 

1.3 Forward the applications together with all supporting documents to the BOC personnel 

and/or BIR assigned at the OSSCO for verification. 

1.4 Register vehicles after clearance(s) has been issued by BOC and/or BIR and after 

compliance with other LTO rules and regulations. 

2. Assignment of BOC/BIR personnel at the OSSCO, LTO - For facilitation in the acceptance 

of the payment of duties, taxes and other fees and the issuance of the BOC/BIR 

clearance pursuant to E.O. 142, a BOC/BIR Clearance Unit with the sufficient personnel 

directly under their respective Commissioners shall be detailed at the OSSCO, LTO with 

the following functions: 

2.1 Bureau of Customs 

2.1.1 Receive applications for registration with supporting documents from LTO for 

verification and BOC clearance after duties, taxes and other fees have been 

paid. 

2.1.2 Receive payment for duties, taxes and other fees due on the motor vehicle and 

issue certificate of payment for initial registration for vehicles where no previous 

payments of duties and taxes have been paid. 

2.1.3 Issue BOC clearance; 

2.1.4 Issue car stickers after clearance shall have been obtained; 

2.2 Bureau of Internal Revenue (BIR) 

2.2.1 Receive applications for registration with supporting documents from LTO for 

verification and BOC clearance after duties, taxes and other fees have been 

paid. 

2.2.2 Verify the authenticity of the documents presented by applicants for Tax Clearance 

of imported motor vehicles covered by these joint rules and regulations. 

2.2.3 Issue a Certificate of Tax Clearance on all imported motor vehicles whenever 

applicable. 

E. Repealing Clause 

All Orders issued which are inconsistent herewith shall be deemed revoked/superseded. 

F. Effectivity

32 


This Joint Department Order shall take effect immediately. 

Adopted: 26 Nov. 2002 

Recommending Approval: 

(SGD.) ROBERTO T. LASTIMOSO 

Land Transportation Office 

(SGD.) ANTONIO M. BERNARDO 

Bureau of Customs 

(SGD.) GUILLERMO L. PARAYNO, JR. 

Bureau of Internal Revenue 

APPROVED: 

(SGD.) LEANDRO R. MENDOZA 

Secretary, Department of Transportation and Communication 


(SGD.) JOSE ISIDRO N. CAMACHO 

Secretary, Department of Finance 

óo0oó 

Customs Memorandum Order No. 1-2003 

Procedures to Implement Executive Order 142 in Relation to 

Joint Department Order No. 2002-82 and Department Order No. 79-2002 

as clarified by Department Order No. 1-2003 Requiring Owners of Imported 

Motor Vehicles to Secure BOC-BIR Clearance as a Precondition for their Initial 

Registration or Renewal of Registration with the Land Transportation Office 

I. Objectives 

To ensure that the payment of duties and taxes as provided for under Executive Order 

No. 142, Joint Order No. 2002-82 and Department Order No. 79-2002 as clarified by Department 

Order No. 1-2003 are properly collected before any imported vehicle covered by 

the Executive Order is given Customs clearance and registered. 

II. Scope 

This Order shall initially cover taxable completely built-up (CBU) units of imported motor 

vehicles, including motorcycles, except those imported under the Motor Vehicles Development 

Program by manufacturers and assemblers duly registered with the Board of Investments. 

III. Administrative Provisions


1. For unregistered motor vehicles the provisions of this Order may be availed of only from 

the effectivity of EO 142 extended to April 30, 2003. 

2. As a general rule, renewal of registration of imported motor vehicles shall be done as they 

fall due. 

However, an owner of a registered imported motor vehicle may at any time cause the 

renewal of the registration of his vehicle under this scheme within the period stated therein. 

3. A Customs Collection Office to be called the Customs Clearance Unit (CCU) directly 

under the Office of the Commissioner shall be set up at the Land Transportation Office 

Compound, East Avenue, Quezon City (at any other location hereinafter determined by 

the Secretary of Finance upon recommendation of the Commissioner of Customs taking 

into consideration the convenience of the transacting public). 

4. All vehicles covered by Executive Order 142 whose owners fail to avail of this program 

within the period stated shall be issued Warrants of Seizure and Detention under Section 

2503 in relation to Section 2503 of the Tariff and Customs Code in relation to Executive 

Order No. 142. 

5. The CCU shall issue Customs receipts for payment of duties and taxes and the corresponding 

Customs clearance and BOC stickers after receipt of the payment or complete 

settlement of the deficiency in duty and tax. 

6. LTO registered motor vehicles covered by spurious Certificate of Registration (CR), Official 

Receipt (OR) and/or Certificate of Payment (CP) shall be considered as unregistered 

motor vehicles. 

1. Unregistered Imported Motor Vehicles 

IV. Operational Procedure 

After receipt of the referral by CCU from LTO the following procedures shall be followed: 

1.1 The owner or his duly authorized representative shall file a sworn application offering 

to pay duties and taxes on his imported motor vehicles together with an accomplished 

Informal Entry Form (B.C. No. 177). 

1.2 The assigned COO III shall examine the motor vehicle, stencil the chassis and 

engine numbers and assess duties and taxes based on the following: 

1.2.1 Appraisal of the vehicle shall be based on existing valuation system at time 

of payment. 

1.2.2 The straight line method of 10% per year up to 90% depreciation shall be 

applied. 

1.2.3 An allowance not to exceed 20% of the dutiable value shall be allowed for 

damages other than those resulting from the ordinary wear and tear of the 

motor vehicle. 

1.2.4 Rate of exchange shall be the rate of exchange as of the date of payment.

34 


1.2.5 Rates of duty, ad valorem and VAT shall be the rates existing at the time of 

payment. 

1.3 The Principal Appraiser (COO V) shall review the findings and the computation of 

the assessed duties and taxes. 

1.4 The Head of the CCU shall approve/correct the assessment made based on the 

guidelines in 1.2 above. 

1.5 The owner or his duly authorized representative shall pay in Manager or Cashierís 

check payable to Land Bank for credit to the Bureau of Customs for the account of the 

owner/applicant. 

1.6 After issuance of the Official Receipt covering the assessed duties and taxes by the 

CCU Cashier, the CCU Chief shall issue the Certificate of Payment and the Certificate of 

Clearance. The originals shall be forwarded to the Registration Division of LTO and the 

green copy of the Certificate of Payment given to the owner/applicant. 

1.7 The Security Sticker specially issued for this purpose shall be affixed by the assigned 

personnel, Warrant and Motor Vehicles Office (WMVO) personnel at the upper 

right hand corner of the windshield of the motor vehicle. 

2. Registered Imported Motor Vehicles 

After receipt by CCU of the referral by LTO together with supporting documents, the 

following procedures shall be followed: 

2.1 The owner or his duly authorized representative shall file with the CCU a sworn 

application for clearance. 

2.2 The assigned CCO III shall examine the vehicle, stencil the chassis and engine 

numbers. 

2.3 The WMVO personnel assigned at CCU shall retrieve the copies of Certificate of 

Payment and IEIRD on file at the BOC and submit certified true copy to the assigned 

COO III for verification. 

2.4 If found to have no discrepancy, the CCU Chief shall issue the Certificate of Clearance, 

original copy to be forwarded to LTO Diliman Office and the duplicate copy to the 

owner/applicant who shall be notified by phone, text message or fax. 

2.5 The assigned WMVO personnel shall then affix the Security Sticker at the upper 

right hand corner of the windshield of the motor vehicles. 

2.6 If found to have paid sufficient duties and taxes the owner/applicant shall file an 

Informal Entry (BC Form 177). 

2.7 The COO III shall indicate in BC 177 the computation of the duties and taxes that 

should have been paid at the time of entry and deduct the amount originally paid to arrive 

at the discrepancy.


2.8 The COO V shall review the findings and computation of duties and taxes. 

2.9 The owner/applicant shall pay the deficiency in Managerís/Cashierís check payable 

to Land Bank for credit to the Bureau of Customs for the account of owner/applicant. 

2.10 After payment of the deficiency, the CCU Chief shall issue the Certificate of Clearance, 

original copy to be forwarded to LTO, Diliman Office and duplicate copy to the 

owner/applicant who shall be notified by phone/fax or text. 

2.11 The assigned WMVO personnel shall affix the security sticker at the upper right 

hand corner of the windshield of the motor vehicles. 

The provisions of this Order shall not apply to those motor vehicles still in Customs 

custody as well as those undergoing seizure proceedings. 

V. Repealing Clause 

Customs Memorandum Orders and other regulations inconsistent with this Order are 

hereby revoked or modified accordingly. 

This Order shall take effect immediately. 



VI. Effectivity 


Commissioner 

óo0oó 


Rules and Regulations in the Administration Proceedings on the 

Closure of Bonded Warehouse as Implemented in CAO 2-91 and CMO 39-91 

I. Objectives 

1. To provide a uniform procedure in the administrative proceedings on the closure of Bonded 

Warehouse. 

2. To effectively implement the provision of CAO 2-91 and CMO 39-91. 

II. General Provision 

1. The Deputy Commissioner, Assessment and Operations Coordinating Group, Deputy 

Commissioner, Intelligence and Enforcement Group, Deputy Commissioner, Revenue Collection 

Monitoring Group, The Chiefs of the Warehouse Operating Divisions, Chief, WAMU,

36 


Chief, WID, Chairman, CBWC and such other Customs personnel or any government 

agency (e.g. GTEB) may initiate the filing of a closure proceeding against the operator of 

a Bonded Warehouse by filing a formal request to the District Collector of Customs having 

jurisdiction over the said CBW on the following grounds: 

a. Failure to file application for renewal. 

b. Filing an application for renewal found to contain false information. 

c. Being inactive for at least one (1) continuous year, i.e. no importation, or if there is 

one, no corresponding legal withdrawal of imported goods or exportation of finished 

products. 

d. Upon written request of the CBW operator. 

e. Violation of the provisions of the TCCP and existing Customs rules and regulations 

governing the creation and operation of a Bonded Warehouse. 

f. Violation of certain rules and regulations being implemented by government agency in 

relation to the operation of a Bonded Warehouse. 

2. This is without prejudice to the authority of the Commissioner of Customs to order that 

closure proceedings be instituted against a CBW. 

III. Procedure 

1. The District Collector, upon receipt of the formal complaint which shall enumerate the 

violation(s) committed as a ground(s) for closure, shall order the Chief of the Law Division 

to conduct a hearing and allow the bonded warehouse operator to controvert the evidence 

of the prosecution. 

2. The administrative proceedings should be summary in nature which should be terminated 

within seven (7) working days from receipt of the order. 

3. The assigned Hearing Officer may, upon approval of the District Collector, continue the 

hearing beyond the seven (7) days period on valid grounds not intended to delay the 

disposition of the case but in no case shall exceed the non-extendible period of another 

fifteen (15) days; 

4. After the hearing is terminated, an Order shall be issued by the District Collector decreeing 

the closure of a Bonded Warehouse specifically citing the facts and circumstances of 

the case and the grounds as basis for the closure thereof, or dismiss the complaint 

subject to review by the Commissioner of Customs. After the order for closure proceeding 

becomes final and executory, all importations by such warehouse shall be withheld release 

unless the warehouse operator shall pay the duties and taxes due on the importations 

and has settled all his accountabilities with Customs. 

5. All finished products for exports shall be allowed to be exported. 

6. If the decision of the District Collector of Customs is adverse to the warehouse operator 

he may file an appeal or motion for reconsideration with the Commissioner of Customs 

within five (5) days from receipt of the Order of Closure. Any ruling by the District Collector 

short of closure shall be considered as an adverse decision and subject to automatic 

review by the Commissioner of Customs.


IV. Repealing Clause 

All rules and regulations inconsistent herewith are deemed repealed, superseded or 

modified accordingly. 

V. Effectivity 





Commissioner 

óo0oó 


Issuance of Clearance to Customs Bonded Warehouse (CBW) 

A. Objective 

To facilitate the processing of application related to Customs warehousing operations. 

This Order shall apply to all CBWs. 

B. Coverage 

C. Administrative Provisions 

1. Clearance for the following application/request related to Customs warehousing operation 

shall be issued by Warehousing Documentation and Records Division in lieu of separate 

clearance issued by various offices mandated under Section IV.1.2 of CMO 39-91: 

1.1 Renewal of license to operate a Customs bonded warehouse 

1.2 Request to increase raw material importations 

1.3 Relocation of Customs bonded warehouse 

1.4 Other activities related to Customs warehousing operations 

2. The following offices shall collate all records of derogatory information, accountability, 

violations and the like of all CBWs and submit to Warehousing Documentation & Records 

Division (WDRD) within ten (10) days from effectivity hereof, viz: 

2.1 Operating Divisions (CBWD, PPBWD, MMBWD, GTMBWD) 

2.2 Warehousing Inspection Division or equivalent unit 

2.3 Warehousing Assessment Monitoring Unit (WAMU) 

2.4 Law Division of all District Ports

38 


2.5 Liquidation & Billing Division of all District Ports 

2.6 Collection Service, Revenue Collection Monitoring Group 

2.7 Legal Service, Revenue Collection Monitoring Group 

2.8 Customs Intelligence & Investigation Service, Intelligence & Enforcement Group 

2.9 Enforcement & Security Service, Intelligence & Enforcement Group 

2.10 Bonds Division of all District Ports 

D. Procedural Provisions 

1. On or before fifteen (15) days from the effectivity hereof, all offices under paragraph C.2 

immediately abovementioned shall forward a list of all CBWs with derogatory information 

to the Chief, WDRD, POM. 

2. WDRD shall encode all the information received in a computer databank. 

3. Management Information Systems & Technology Group (MISTG) shall, within twenty (20) 

days from effectivity hereof, develop a computer program to screen derogatory records 

and accountability by the matching of information in the computer file with that of the 

CBW applicant. The program shall also allow the Chief, WDRD to access the specifics of 

the derogatory information. Once positive matching is established detailed information 

shall be provided by the computer. 

4. Submission of required information and records by concerned offices to WDRD shall be 

on continuing basis or as soon as such derogatory information can be transmitted after 

validation to update the databank at WDRD. 

5. Any Division or Service that fails to comply with the prescribed task shall be interpreted to 

mean that no derogatory information or records on the applicantís accountability is in the 

records of that office. Should the contrary be the case, the Division or Service Chief, shall 

be held solely responsible and answerable therefor. 

6. Clearances issued by WDRD shall be forwarded to the Head, Technical Working Group, 

Customs Bonded Warehouse Committee for its reference in evaluating the applicant/ 

warehouse concerned. 

E. Other Matters 

1. For CBWs under jurisdiction of provincial Collection District, clearances shall still be 

issued by equivalent unit/division in the Port as provided for under CMO 39-91 which shall 

be furnished the Secretariat, CBWC, however, final clearance shall be issued by the 

Chief, WDRD as Head of the Secretariat of the Customs Bonded Warehouse Committee 

and the procedure on D.5 above shall be observed. 

2. Issuance of clearance for purposes other than warehousing shall be made by the Director, 

CIIS using the same concept and procedure as abovementioned. A separate Customs 

Memorandum Order shall issue for that purpose. 

F. Repealing Clause


This Order specifically supersedes Section IV.1.2 of CMO 39-91 and all Customs 

orders, memoranda, rules and/or regulations inconsistent herewith are hereby deemed 

amended or modified accordingly. 




G. Effectivity 


Commissioner 

óo0oó 

Memorandum 

Customs Administrative Order No. 7-2002 

Hereto quoted is the provision of No. 2, Item No. V of CAO 7-2002 which states: 

ì2. Existing CBTWs shall have three months from the effectivity date of this Order 

to convert into an ICBW.î 

You are hereby reminded that the time frame within which to convert the existing CBTWs 

is only for three (3) months from the date of the effectivity of CAO 7-2002. The effectivity 

date of CAO 7-2002 is fifteen (15) days after publication in a newspaper of general circulation. 

CAO 7-2002 was published in the December 07, 2002 issue of the Philippine Star. 

In view whereof, the Customs Bonded Trading Warehouse under your respective jurisdiction 

should be advised officially to take the necessary steps to convert now to an Industry 

Specific Customs Bonded Warehouse (ICBW) or face closure after March 22, 2003. 

Please be guided accordingly. 



(SGD.) GEORGE M. JEREOS 

Deputy Commissioner 

óo0oó 

Memorandum 

Used Clothings/Other Donations

40 


To clarify the role of Customs officials and personnel in the turn-over/donations of 

forfeited/abandoned articles, please be reminded of the following rules: 

1. Forfeited used clothings under Presidential Memorandum Order No. 23, and such other 

donations pursuant to Sec. 2610 of the TCCP, may be directly donated/turned over only to 

a DSWD unit/office specifically authorized to receive such donations; to be received, in 

the presence of a COA representative, by a DSWD representative duly designated for the 

purpose by the DSWD Secretary. 

2. Such transfer/donation to DSWD shall be subject to clearance by the Commissioner of 

Customs, as per existing regulations. 

3. It is the prerogative of the DSWD to determine/identify/select in accordance with its 

regulations the beneficiaries of said donations. Therefore, when turning over the donated 

articles, District/Port Collectors are prohibited to make reservations/set conditions as to 

who shall be the beneficiaries of donations. 

4. Any request for donation presented to the BOC/any of its units shall be referred to the 

DSWD for appropriate action. 

This reminder is issued to ensure the smooth turnover of subject donations to DSWD. 





Commissioner 

óo0oó 

Customs Memorandum Circular No. 22-2003 

Appropriate Disposal of Meat Contaminated with Dioxin or BSE 

Please find attached letter, dated 04 December 2002, of Executive Director Efren C. 

Nuestro, National Meat Inspection Commission, informing on the proper disposal of meat 

contaminated with dioxin or BSE. 

Take note of his recommendation to have such importations re-exported to the country 

of origin, pursuant to Republic Act 7394, unless there are violations of TCCP which shall 

warrant their seizure by the Bureau of Customs. 

Be guided accordingly. 

Adopted: 10 January 2003


Attachment: 

December 4, 2002 

Hon. Antonio M. Bernardo 

Commissioner 


Manila 

Sir: 


Commissioner 

This has reference to your letter of 12 November 2002 seeking advice on the appropriate 

disposal of meat contaminated with dioxin or BSE. 

Dioxin contaminated meat can be disposed by incineration at 850 o C to 1,000 o C or higher 

temperature. Meat with BSE can also be effectively destroyed through incineration at 1,160 o C 

or by rendering at 133 o C 3 bar for 20 minutes. However, since these methods are very 

costly, we recommend that imported meat with these contaminants should be re-exported 

to the country of origin. This is an option pursuant to R.A. 7394 or The Consumer Act of the 

Philippines. 

We appreciate your seeking advice and hope to have shed light in this regard. 

Very truly yours, 

(Sgd.) EFREN C. NUESTRO 

Executive Director 


óo0oó 

Customs Administrative Order No. 1-2003 

BOIís Industrial Policy on MVDP Importations 

Pursuant to the letter, dated 14 January 2003, the Board of Investments, Department of 

Trade and Industry, clarifying the tax status of CBUs assembled from imported CKDs by 

participants of the Motor Vehicle Development Program located inside ecozones/PEZA, it is 

hereby directed that: 

CBUs, assembled from imported CKDs by participants of the Motor Vehicle 

Development Program located inside ecozones/PEZA, shall upon withdrawal 

for local consumption be assessed the corresponding CKD tariff 

rates and not the tariff rates for CBUs. 

Provided that the withdrawal for local consumption shall not exceed the 

threshold allowed or permitted for such withdrawals pursuant to existing 

laws, rules and regulations. Those in excess of the threshold allowed shall 

be assessed the corresponding tariff rates for CBUs.

42 


This rule has been adopted to provide a level playing field for all MVDP participants. 

This also recognizes the intent of Executive Order No. 156, issued on 12 December 2002, to 

support the motor vehicle industry as a significant sector in economic development. 

EO 156 envisions to transform the Philippines into an ASEAN hub for certain motor 

vehicles and parts and components with considerable exports to the region and elsewhere. 

To realize this vision, it is imperative to keep existing motor vehicle assemblers/exporters in 

the country and to attract new ones. Sales to domestic market is considered an important 

component in the choice of regional manufacturing bases by vehicle makers to achieve 

optimal production volumes. 

All CAOs, CMOs and related issuances inconsistent with this Order are deemed amended 

and modified. 




Commissioner 

APPROVED: 


Secretary of Finance 

óo0oó 

Memorandum 

Special Safeguard Duty on Onions 

Be informed that as mandated by Sec. 23 (b) of RA 8800, ì(b) The special safeguard 

duty to be imposed subject to the conditions stated under the volume test shall be appropriately 

set to a level not exceeding one-third of the applicable out-quota Customs duty on the 

agricultural product under consideration in the year when it is imposed: Provided, that this 

duty shall only be maintained until the end of the year in which it is imposed: Provided, 

further, that this duty may be reduced or terminated in special cases such as when a 

shortage of a particular agricultural product exists, as determined by the Secretary.î 

It is clear in the abovequoted provision that any Safeguard duty imposed shall only be 

effective until the end of the year in which it is imposed. Hence, the questioned Special 

Safeguard Duty is applicable only until December 31, 2002. The term of the said measure 

being self-expiring, its application cannot be extended beyond its term (2002) unless another 

Safeguard Measure is imposed by the Department of Agriculture, in proper cases. 

In view thereof, you are hereby directed to immediately cease from imposing the 

Special Safeguard Duty on onions.


For your information. 

Adopted: 10 February 2003 



Commissioner 

óo0oó 

Customs Administrative Order No. 2-2003 

Rules and Regulations Rationalizing the Use and Operation of Public CBWs; 

Supplementing/Modifying CAO 2-91 and Other Related Issuances 

By authority of Section 608 and pursuant to Title V of the Tariff and Customs Code of 

the Philippines, as amended, in relation to CAO Nos. 2-91 and 7-2002 and other related 

issuances, the following rules and regulations are hereby promulgated: 

I. Objectives 

1. To rationalize the use and operations of Public Customs Bonded Warehouses (Public 

CBWs) such that only those that the business of the port requires shall be established/ 

allowed to operate. 

2. To ensure that these facilities shall not be used to delay or evade the payment of lawful 

duties and taxes accruing on imported articles entering such warehouses, or in any 

scheme that would defraud the government of its lawful revenues. 

II. Scope 

This Order covers Public CBWs duly registered with, and authorized by the BOC to 

operate as such, when the business of the port so requires. 

III. General Provisions 

1. For purposes of this Order, a ìPublic Customs Bonded Warehouseî is defined as a 

facility licensed by the Bureau of Customs, when the business of the port requires, to 

receive, store and take custody of general cargoes, under bond, for exportation, transfer 

to another customs bonded warehouse or ecozone/PEZA, or for local consumption, in the 

same state and condition the cargoes were when imported. 

2. Except as otherwise herein provided, applications for the establishment/operations of 

Public CBWs shall be processed following the documentary and procedural requirements 

for the establishment of CBWs under existing laws, rules and regulations. 

3. The establishment/operation of Public CBWs shall only be allowed upon determination 

that the business of a particular port requires such facility, on recommendation of the 

District Collector and the Customs Bonded Warehouse Committee, subject to the approval 

of the Commissioner of Customs. 

4. On a per shipment basis, imported articles shall be entered into a public CBW upon 

certification by the arrastre operator that the port has no available space and/or has no

44 


available equipment/facilities specially required to handle such articles; and upon certification 

by the Public CBW operator that he/she has the necessary space for storing such 

materials and/or the necessary special equipment/facilities to handle the same, on the 

recommendation of the chief of the operating division, with the approval of the District 

Collector. 

5. Imported articles entered into Public CBWs may be stored therein for a period not exceeding 

one (1) year to be counted from the date of their arrival. 

A. Transfers from the Port to Public CBWs 

IV. Specific Provisions 

1. Authorized transfers from the port to Public CBWs may be effected upon filing of the 

corresponding warehousing entry, which shall be processed in accordance with the existing 

Selectivity System and upon the posting of the required bond. 

2. In ports where the Selectivity System for warehousing entries is not yet operational, the 

transfer of the imported warehousing articles from the Customs zone shall be made under 

a Transshipment Permit, in which case the warehousing entry shall be filed within five (5) 

days from date of transfer, which period may be extended for another five (5) days by the 

District Collector as provided for under CMO 39-91. 

3. Regulated articles without the corresponding clearance and/or import authority duly issued 

by a competent authority shall not be allowed transfer from the port to a Public CBW 

and shall be subject to seizure/forfeiture, without prejudice to other appropriate penalties 

imposable under existing laws and regulations. Prohibited articles shall be subject to immediate 

seizure and such other sanctions. 

4. The transfer of imported articles from the port to a Public CBW shall be under continuous 

guarding by Customs guard until delivery at the warehouse is acknowledged in the covering 

boatnote by the Customs personnel assigned thereat. 

B. Withdrawals from Public CBWs 

1. Withdrawals for local consumption shall be allowed only upon payment of duties and 

taxes. 

2. Withdrawals for transfer to another CBW or ecozone/PEZA shall be allowed without payment 

of Customs duties and taxes; 

Provided that the transfer to another CBW shall be under bond; and provided further that 

the articles sought to be transferred fall within the authority/license of the receiving CBW; 

and provided finally that such transfer shall be approved by the chief of the concerned 

operating division of the receiving CBW. 

Subsequent transfer from a receiving CBW to another CBW shall as a rule no longer be 

allowed. 

In case of transfers to ecozones/PEZA, the articles sought to be transferred shall be 

covered by an import authority duly issued by the concerned ecozone/PEZA authority 

duly designated for the purpose. The chief of the operating division shall verify the authenticity 

and due execution of the ecozone/PEZA import authority.


3. Articles not withdrawn at the end of the one-year storage period shall be sold at public 

auction pursuant to Sec. 1908, Tariff and Customs Code of the Philippines. 

C. Liquidation of Warehousing Entry and Cancellation of Bonds 

1. The liquidation of imported articles under bond shall be done within 30 days from sale/ 

transfer/withdrawal, provided that the 30-day period shall fall within the one-year storage 

period. 

2. Only upon the full liquidation of materials and their covering entries shall the bonds be 

cancelled. 

V. Transitory Provisions 

1. Within the first three (3) months from the effectivity of this Order, the Bonded Warehouse 

Committee shall review all existing Public CBWs, whether licensed or operating as such, 

for the purpose of clearly determining whether these facilities are operating in conformity 

with this Order taking into account their individual storage capacity and facilities/equipment, 

among others. 

2. Existing Public CBWs found not to be operating in conformity with the provisions of this 

Order may convert at their option to Industry Specific CBWs in accordance with Customs 

Administrative Order (CAO) 7-2002, or to any other type of CBW not covered by the 

moratorium under CMO 3-98, within three (3) months from the effectivity of this Order. 

3. Public CBWs found to be operating not in conformity with the provisions of this Order and 

which opts not to convert within the three-month period shall be deemed closed. 

VI. Penalties 

1. In addition to the penalties provided for under CAO 7-2002, violations of any provisions 

hereof shall subject the imported goods to seizure proceedings, public auction and such 

other appropriate actions. The above administrative penalties shall be without prejudice to 

the criminal sanctions against the importer, consignee and/or operator of the CBW as 

provided for under existing laws, rules and regulations. 

2. Any Customs officer who willfully or negligently allows or permits the violation of any 

provisions hereof shall be subject to administrative and criminal liabilities as provided for 

by existing laws. 

VII. Authority of the Commissioner to Promulgate Additional Rules 

The Commissioner of Customs is hereby authorized to issue additional rules and regulations 

to more effectively implement this Order. 

VIII. Repealing Clause 

All Orders, Memoranda, or Circulars, inconsistent herewith are hereby repealed and/ 

or deemed modified accordingly. 

IX. Effectivity 

This Order shall take effect upon the approval of the Secretary of Finance and after 

fifteen (15) days from publication in a newspaper of general circulation in the Philippines.

46 





Commissioner of Customs 

Approved: 



óo0oó 

Customs Tariff Circular No. 1-2003 

HS Subheading 

In order to facilitate trade and at the same time protect the local industry and government 

revenue, the above circular is being issued to enable your Customs officers to distinguish 

plastic bags or sacks classifiable under HS Subheading 3923.21 from those classified 

under HS Code 6305.33 00. 

Based on documents reviewed by this Office, subject article declared as ìPP BAGSî 

are actually textile bags as these bags were made from high tenacity polypropylene yarn that 

were woven either into 25 or 50 kg. load bearing bags. Its strength and durability makes it 

ideal for the packing of rice, fertilizer and other goods for transport, storage and sale. 

HS Code 6305.33 00 of the TCCP, as amended, provides for sacks and bags made of 

polyethelene or polypropylene strips or the like of a kind used for the packing of goods. 

Explanatory Notes to HS Code 63.05 further states that that it covers textile sacks and 

bags of a kind normally used for the packing of goods for transport, storage and sale. 

As distinguished from the bags and sacks of heading 39.23, which are manufactured 

by extrusion of plastic resins, subject article is manufactured by weaving polyethylene or 

polypropylene yarn/strips. 

In view thereof, subject article is classifed in HS Subheading 6305.33 00 of the Tariff 

and Customs Code, with a rate of duty of 10% ad valorem. 

For your guidance and immediate implementation. 



Commissioner 

óo0oó




Guidelines Implementing Customs Concerns Under Executive Order No. 156 

Pursuant to Executive Order No. 156, Providing for a Comprehensive Industrial Policy 

and Directions for the Motor Vehicle Development Program and Its Implementing Guidelines, 

dated 12 December 2002, which took effect on 01 January 2003; and the letter, dated 05 

February 2003, of the Department of Trade and Industry (DTI), clarifying certain issues 

related thereto, and circularized through Customs Memorandum Circular No. 42-2003, dated 

07 February 2003; the following is hereby prescribed: 

Section I - CKD Importations Under the Motor Vehicle Development Program of 

the Philippines (MVDP) 

1. Only brand-new CKD parts and components for assembly purposes and sourced from a 

foreign Original Equipment Manufacturer (OEM) shall be allowed for importations under 

the Motor Vehicle Development Program (MVDP). 

2. Brand-new CKD parts and components imported by participants of the MVDP and covered 

by a Certificate of Authority to Import CKD at CKD tariff rates, duly issued by the 

Board of Investment, Department of Trade and Industry (BOI-DTI) on a per shipment 

basis, shall be subject to the applicable CKD duty rates specific to MVDP importations in 

accordance with existing rules and regulations and/or as may be determined by BOI-DTI. 

3. Brand-new CKD parts and components importations not covered by a Certificate of Authority 

to Import CKD at CKD tariff rates shall be subject to the regular rates following the 

ìessential characterî principle under the rules of classification laid down in Sec. 103 of 

the Tariff and Customs Code of the Philippines (TCCP). 

4. To ensure the proper application of E.O. 156 and this Order, the Bureau of Customs shall 

closely and continually coordinate with BOI to maintain an updated list of MVDP participants 

and of their respective foreign OEMs. 

5. For the purpose of this Section, the following terms as defined in E.O. 156 are hereby 

adopted: 

a. ìCKDî ñ refers to completely knocked down parts and components, including subparts/parts 

and sub-assemblies/assemblies of motor vehicles for assembly into a 

complete unit. 

b. ìSub-assemblies/assemblies/componentsî ñ refers to major parts and components 

such as engines, transmissions, axle assemblies, chassis, body assemblies and 

the like. 

c. ìSub-parts/partsî ñ refers to parts that are necessary for producing sub-assemblies/assemblies/components 

and/or other parts forming part of the CKD pack. 

d. ìOriginal Equipment Manufacturerî ñ refers to a producer of CKD parts/components, 

sub-assemblies/assemblies or sub-parts/parts to be supplied to an MVDP participant.

48 


Section II ñ Motor Vehicle Parts/Components, and Motorcycles, Parts and Components 

The importation of the following motor vehicle parts/components, and motorcycles, 

parts and components, shall be governed by Central Bank Circular (CBC) No. 1389, as 

amended, and accordingly shall require prior clearance from the Board of Investments (BOI- 

DTI): 

1. Used reciprocating piston engines of a cylinder capacity exceeding 50 cc, for tractors. 

2. Used reciprocating piston engines of a cylinder capacity exceeding 250 cc, for trucks 

and buses 

3. Used diesel and semi-diesel engines for tractors 

4. Chassis fitted with engines, for motor vehicles for the transport of persons other than 

public transport type. 

5. Bodies (including cabs) for motor vehicles for the transport of persons other than public 

transport type. 

6. Seats of a kind used for motor vehicles. 

7. Other parts and accessories of motor vehicles for the transport of persons other than 

public transport type, to wit: 

dashboards plate brackets 

doors running boards 

fenders radiator cowlings 

floor boards trunk/trunk lids 

grille visors 

hood wings 

luggage compartments mudguards 

luggage racks (exterior) floor mats (other than of textile material/rubber) 

8. Used motor scooters 

9. Other used motorcycles 

10. Parts of sidecars of all kinds 

11. Saddles of motorcycles 

12. Other parts of motorcycles (excluding rubber tires, engines, electric parts, completely 

knocked-down parts, storage batteries, chassis and frames), to wit: 

brakes of all kinds handle bars, handle bar grips 

clutches kick starter, levers 

forks and parts thereof luggage rack


fuel tanks mud guards 

gearing, gear boxes shock absorbers 

stands transmission and parts thereof 

wheels and parts thereof (hubs, rims, spokes, etc.) 

Section III ñ Used Motor Vehicles 

1. Used motor vehicles are banned importations through all ports, including special economic 

zones and/or free ports, except the following under certain conditions herein specified: 

a. Personally owned motor vehicles (MVs), imported by returning residents/immigrants 

for personal use under the No-Dollar Importation (NDI) Scheme, provided said vehicles 

are covered by an Import Authority issued by the Department of Trade and Industry- 

Bureau of Import Services (DTI-BIS); provided further that the vehicles do not exceed 

GVW of 3 tons and are not sold within three years from date of importation; 

b. Motor vehicles for the use of officials of the Diplomatic Corps, authorized for importation 

by the Department of Foreign Affairs; 

c. Trucks, but excluding pick-up trucks, with GVW of 2.5-6.0 tons, provided these are 

covered by an authority to import issued by DTI-BIS. Those with GVW of more than 6.0 

tons do not require such authority; 

d. Buses with GVW of 6-12 tons, provided they are covered with authority to import 

issued by DTI-BIS. Those with GVW of more than 12 tons do not require such authority; 

and 

e. Special Purpose Vehicles, which also do not require any import authority. Specifically, 

these are: 

ï Fire trucks 

ï Ambulances 

ï Funeral hearses/coaches 

ï Crane lorries 

ï Tractor heads or truck tractors 

ï Boom trucks 

ï Tanker trucks 

ï Tank lorries with high pressure spray gun 

ï Reefers or refrigerated trucks 

ï Mobile drilling derricks 

ï Transit/concrete mixers 

ï Mobile radiological units 

ï Wreckers or tow trucks 

ï Concrete pump trucks 

ï Aerial/bucket flatform trucks 

ï Street sweepers 

ï Vacuum trucks 

ï Garbage compactors

50 


ï Self loader trucks 

ï Man lift trucks 

ï Lighting trucks 

ï Trucks mounted with special purpose equipment 

ï All other types of vehicles designed for a specific purpose 

2. The importation of liberalized used motor vehicles (those whose importation does not 

require import authority from DTI-BIS as herein provided) shall also be covered by a 

Certificate of Roadworthiness and Certificate of Compliance to Emission Standards issued 

by the appropriate agency in the country of origin. 

3. The importation of regulated used motor vehicles (those that require import authority from 

DTI-BIS as herein provided) shall also be covered by a Release Certificate issued by DTI- 

BIS. 

4. In the absence of the above documents (Release Certificate, Certificate of Roadworthiness/ 

Compliance of Emission Standard), the covering Certificate of Payment shall be withheld 

until the above requirements are complied with accordingly, or a similar certification to 

that effect shall have been issued by the competent authority. 

5. For purposes of this Section, the following terms as defined in E.O. 156 are hereby 

adopted: 

a. Truck ñ any motor vehicle whose body configuration is designed to carry heavy 

loads, general freight, or for special purposes regardless of gross vehicle weight, provided 

that pick-ups are not considered as trucks. 

b. Bus ñ a motor vehicle intended for mass transport or carrying of passengers. 

c. Special Purpose Vehicles ñ a range of motor vehicles specially constructed or 

adapted, equipped with various devices that enable them to perform certain non-transport 

functions. 

d. Fire Truck ñ a motor vehicle designed for fire fighting, equipped with a water pump 

that is usually driven by the vehicleís engine. 

e. Crane Lorry ñ an equipment consisting of a motor vehicle chassis on which a cab 

and a rotating crane permanently mounted. 

f. Mobile Drilling Derrick ñ a lorry fitted with a derrick assembly, winches and other 

appliances for drilling. 

g. Ambulance ñ a vehicle equipped with medical equipment or facilities and used for 

transporting the injured or sick. 

h. Hearse ñ a vehicle for conveying the dead. 

i. Truck Tractor/Tractor Head ñ a vehicle constructed essentially for hauling or pushing 

another vehicle, appliance or load.


j. Concrete-Mixer Lorry ñ a vehicle consisting of a cab and a chassis, on which is 

permanently mounted a concrete mixer, capable of use for both making and transporting 

concrete. 

k. Mobile Radiological Unit ñ a vehicle fitted with an examination room, dark room and 

complete radiological equipment. 

l. Pick-Up Truck ñ a light truck having an enclosed cab and an open body with low 

sides and tailgate. For purposes of this Order, a pick-up truck is a vehicle with a gross 

weight of up to three (3) tons. 

Section IV ñ Brand-New Motor Vehicles 

1. Brand-new motor vehicles of whatever type/kind shall remain liberalized importations, 

pursuant to E.O. 264, s. 1995 and Monetary Board Circular No. 92, s. 1995, thus, do not 

require any import authority. 

2. For this purpose, brand-new motor vehicles shall be defined as the current/advance year 

models or immediately preceding year models, provided that the latter have 200-km. or 

less mileage and the same was acquired from the dealer by the importer as the first 

owner. 

3. Also for this purpose, motor vehicles falling outside the definition of brand-new vehicles 

shall be considered used and thus banned importation, except as prescribed in Sec. 2 

hereof. 

Section V ñ Reporting 

The District/Port Collector concerned is hereby directed to submit a monthly report, on 

the 15 th of the succeeding month, with the following information pertaining to the importation 

of motor vehicles to the Office of the Secretary, DTI, copy furnished the Office of the 

Customs Commissioner: 

1. Name of importer 

2. Importerís address 

3. Make, model and identification numbers of vehicles 

4. Tariff classification and rate of duty per vehicle 

5. Quantity and invoice values of vehicles 

6. Assessed values of the vehicles 

7. Total amount of taxes and duties paid on the shipment 

8. Date of importation 

9. Other relevant information on the importation of the vehicles 

Section VI ñ Accountabilities 

The Customs officers and personnel are directed to perform their responsibilities as 

required herein, otherwise they shall be liable to administrative/criminal sanctions as mandated 

by law:

52 


1. The District Collectors shall ensure that this Order shall be implemented efficiently. 

2. The examiners/appraisers shall be liable for any error caused by/emanating from their 

examination/appraisal. 

3. All signatories to any certificate/report required under this Order shall be liable for any 

flaw/defect found therein. 

Section VII ñ Penalties 

Violations of this Order shall be dealt with in accordance with the TCCP and, additionally, 

as provided under E.O. 156, as follows: 

1. The motor vehicle involved shall be subject to seizure by the Bureau of Customs, without 

benefit of redemption. 

2. Any person, entity, government instrumentality or institution, found to be violating or grossly 

negligent in executing the mandates of this EO shall result in the expulsion from office of 

any or all of the following personnel: the chief executive; responsible directors, responsible 

rank and file and other responsible operating officers. Notwithstanding any provision 

of law to the contrary, they shall likewise be prohibited from holding any government 

position for at least two (2) years. 

Section VIII ñ Continuity/Repealing Clause 

Except as herein provided, existing rules and regulations, as well as their documentary 

requirements, governing the importation, assessment and clearance of motor vehicles shall 

remain in force and effect. 

Motor vehicles allowed to be imported under E.O. 156 and this Order shall be subject to 

payment of taxes, duties and other applicable charges, unless otherwise exempted by law. 

Right hand vehicles (RHD), brand-new or used, shall remain banned importations as 

mandated by R.A. 8506. 

All rules and regulations inconsistent with this Order are hereby deemed repealed, 

superseded or modified accordingly. 

Section IX ñ Separability Clause 

Pursuant to Section 3, Article 7 of E.O. 156, the provisions of this Order are hereby 

declared separable and in the event any of the provisions is declared unconstitutional, the 

other provisions that are not affected thereby shall remain in force and effect. 

Section X ñ Effectivity 


This Order, however, shall not cover used motor vehicles imported prior to 01 January 

2003, and falling under any of the following conditions:


1. Those that were already in transit; 

2. Those covered by L/Cs already opened. In the case of amended L/Cs, the amendment 

shall not increase the quantity of used vehicles prohibited or regulated under EO 156; 

3. Those covered by B/Ls already issued; and 

4. Those whose payments have been effected as evidenced by bank certifications. 




Commissioner 

óo0oó 


Rules and Regulations in the Disposition of Goods by 

Public Auction/Negotiated Sale 

I. Objectives 

1. To institutionalize the mechanics/system in the disposition of goods by way of public 

auction/negotiated sale 

2. To optimize revenues from public auction/negotiated sale by institutionalizing the system 

in setting up the floor price and in advertising such sale to generate the widest participation. 

3. To provide the mechanism such that said sales would not pose undue competition to local 

industries or disrupt market conditions. 

II. Scope 

This Order covers the disposition of property in Customs custody by way of public 

auction/negotiated sale pursuant to the Tariff and Customs Code of the Philippines, as amended. 


1. Pursuant to Sec. 2601 of the TCCP, the following property shall be subject to public 

auction/negotiated sale: 

a. abandoned articles 

b. articles entered under warehousing entry not withdrawn nor the duties and taxes 

paid thereon within the period described under Sec. 1908 of this Code. 

c. seized property, other than contraband, after liability to sale shall have been 

established by proper administrative or judicial proceedings in accordance with law.

54 


d. any article subject to a valid lien for Customs duties, taxes or other charges collectible 

by the Bureau of Customs, after the expiration of the period allowed for the satisfaction 

of the same. 

2. Articles subject to sale at public auction shall be sold at a floor price not less than the 

wholesale domestic market value of the same, identical and similar articles in the usual 

wholesale quantities and in the ordinary course of trade, as herein determined. 

3. Every public auction/negotiated sale shall be covered by a Notice of Public Auction/ 

Negotiated Sale. 

4. A Notice of Auction/Negotiated Sale shall be subject to a clearance from the Commissioner 

of Customs. Where any sale lot carries a floor price of PHP50 Million or more, the 

same shall also be subject to clearance from the Office of the President through the 

Secretary of Finance. 

5. The Notice of Auction/Negotiated Sale shall be posted/advertised at least ten (10) calendar 

days prior to the date of auction/negotiated sale, or in the case of perishable goods, 

three (3) calendar days. 

6. Only qualified bidders shall be allowed to participate in an auction/negotiated sale. 

7. The sealed bid system shall be adopted to ensure competitive bidding, except when clustering 

occurs and/or an open negotiated sale ensues as herein provided. 

8. After a second failed bidding, the sale lot shall be subjected to re-appraisal and the same 

may be disposed of, subject to the approval of the Commissioner of Customs, in any of 

the following modes: 

a. negotiated sale; 

b. donation; 

c. re-exportation pursuant to Section 2610 of the TCCP; 

d. official use by the Bureau of Customs or by the National Government pursuant to 

Section 2610, TCCP; and/or 

e. such other modes of disposition under existing laws. 

A. Setting the Floor Price 

IV. Operational Provisions 

The concerned examiner/appraiser, subject to the approval of the Chief, ACDD, shall 

set the floor price on the basis of any of the following, whichever is higher: 

1. The price at which the same, like or similar item was bought in a public auction/negotiated 

sale not more than three (3) months ago; 

2. The price recommended by the concerned industry sector; 

3. The average of at least three canvassed domestic wholesale prices;


4. The domestic wholesale price arrived at through backward computation using as basis 

the average of three canvassed retail prices; 

5. The total landed cost of the article plus taxes and 25% mark-up. 

B. Notice of Public Auction/Negotiated Sale 

1. The Notice of Public Auction/Negotiated Sale shall be prepared by the Chief, Auction 

Cargo Disposal Division (ACDD) or its equivalent unit and approved by the District Collector. 

2. The Chief, ACDD, or its equivalent, shall ensure that such notice shall contain the following 

information: 

a. Sale Lot No. per sale lot 

b. Sufficient description of the goods covered by every sale lot, including their quality 

and volume. In the case of motor vehicles, the notice shall specify the Vehicle 

Identification No. (VIN) or the Chassis No. 

c. Floor price per sale lot 

d. Specific times, dates and places for public viewing and of auction/negotiated sale of 

the covered sale lots, which should be scheduled at least two (2) days apart upon 

securing the required clearance from the Commissioner of Customs or the Secretary 

of Finance. 

e. The terms and conditions of the Public Auction/Negotiated Sale, such as, the 

registration requirements, sealed bid system, clustering, failed bidding, second 

auction, re-offering of the unsold lots, awarding and payment. 

C. Clearance from the Commissioner of Customs and Office of the President 

1. In forwarding the Notice of Auction/Negotiated Sale for clearance to the Commissioner of 

Customs, the District Collector shall ensure that said notice is supported by the following 

accompanying documents: 

a. Inventory of each sale lot covered by the Notice of Auction/Negotiated Sale 

b. The basis of the floor price, indicating that such is the highest arrived at from among 

methods employed, as provided for in Section IV (A) 

c. Certificate of Finality of Forfeiture/Declaration of Abandonment or an Order of the 

District Collector to sell in a public auction in satisfaction of a tax lien and/or to place 

the proceeds thereof under escrow 

d. In the case of perishable items, certification from the assigned examiner/appraiser 

attesting to the fact that the goods are perishable, and approved by the Chief, 

ACDD. 

2. In the case of a negotiated sale, the District Collector shall forward to the Commissioner 

of Customs such notice supported by the following accompanying documents, in addition 

to the accompanying documents specified under Section IV.c.1 hereof. 

a. Brief auction history of covered sale lot 

b. Newspaper clippings of the Notice of Auction/Negotiated Sale, with date of issue

56 


c. District Collectorís Certification to the effect that there had been two failed biddings 

conducted for said sale lot 

d. Commissionerís Clearance for the auction sale of covered sale lot. 

D. Posting/Advertising of Notice of Public Auction/Negotiated Sale 

1. Upon issuance of the clearance by the Commissioner of Customs and/or Secretary of 

Finance, the Chief, ACDD shall incorporate into/indicate in the Notice of Public Auction/ 

Negotiated Sale the date and place for public viewing and for auction of the covered sale 

lot/s. 

2. The Notice of Public Auction/Negotiated Sale shall be posted at a conspicuous place/ 

bulletin board within the premises of the concerned port; except for Manila, Cebu, Cagayan 

de Oro and Davao, it shall also be posted on the bulletin board of the city/municipal hall 

where the port is located. 

3. The Notice shall also be advertised in newspapers of general circulation except for public 

auctions/negotiated sales conducted outside Metro Manila ports, whose aggregate amount 

of the covered sale lots is one (1) million pesos or below, in which case the notice shall be 

advertised in any local newspaper circulated in the region where the port is located. 

4. A copy of the Notice of Public Auction/Negotiated Sale submitted for actual posting/ 

advertisement shall be furnished to the Commissioner of Customs by the Chief of the 

ACDD concerned at least three (3) days before the date of auction/negotiated sale. 

E. Registration 

It shall be the responsibility of the Chief, ACDD, to ensure that all participating bidders 

have complied with the following qualifying requirements: 

1. File the appropriate, duly accomplished registration form 

2. Pay a non-refundable registration fee of PHP2,000.00 

3. Post a duly receipted cash bond for PHP20,000.00, which the District Collector may 

increase depending on the value of the goods to be auctioned. The bond shall be refunded 

to the losing bidder after the closing of the auction/negotiated sale. In the event 

that the floor price of a sale lot is less than PHP10,000.00, a cash bond shall not be 

required. 

4. In the case of auction/negotiated sales involving regulated commodities, such as, rice or 

sugar, the bidder shall submit to the ACDD proof of qualifications (i.e. NFA/SRA licenses) 

as an importer of such goods. 

5. The names, addresses, TIN and other relevant circumstances of the registrants shall be 

indicated in the logbook for the registered bidders. 

F. Sealed Bid Systems


1. The Auction Committee shall be headed by the Chief, ACDD or its equivalent unit, and 

composed of at least of two other members to be appointed by the District Collector from 

among the ranks of Customs officers in his/her district. 

2. The sealed bids shall be submitted and opened in public by the Auction Committee at a 

time, date and place specified in the Notice of Auction Sale. The highest bid shall be 

declared as the winner, except when clustering occurs as described hereunder. 

G. Clustering System 

1. Clustering occurs when at least two of the sealed bids submitted in an auction fall within 

ten (10%) percent of the highest bid and these are above the floor price. 

2. Those in the cluster shall immediately go into an open bidding with the highest sealed bid 

serving as the new floor price of the particular lot being sold. 

3. In the open-bidding, the highest offer shall be declared as the winning bid, provided the 

same is at least three (3) percent more than the new floor price; less than that, the highest 

bid in the sealed bidding shall be considered as the winner. 

4. Where the floor price is PHP3 Million or more, the District Collector may go lower than 

three (3%) percent in setting the minimum ìout-bidî price. 

H. Failed Bidding and Second Auction 

1. A failed bidding shall be declared by the Auction Committee when any of the following 

circumstances occurs: 

a. At the close of the submission of sealed bids, the number of sealed bids submitted 

is less than two (2); 

b. At the time of the opening of the sealed bids, the bids higher than the floor price 

number less than two (2); 

c. The winning bidder fails to pay the initial or the final payment within the deadlines 

prescribed herein. 

2. When a failed bidding is declared, the sale lot shall be offered in a second auction to be 

held on the third business day after the first failed auction at the same floor price, without 

need of further advertisement. In the case of perishable goods, the second auction shall 

be conducted on the first business day following the first failed bidding. 

I. Awarding to Winning Bidder and Payment of Bid Price 

1. At the end of each bidding, the highest bidder shall be required to pay 50% of the bid 

price either in cash and/or managerís check before the next sale lot in the dayís auction is 

offered, if any; provided that such payment shall be made within 30 minutes from the 

awarding of the won bid. 

2. Where there is only one (1) lot to be auctioned for the day, or in the case of the winning 

bidder of the last lot, the initial payment of 50% shall be made immediately after the 

bidding; provided such payment is made not later than two (2) hours from the awarding of

58 


the won bid. The remaining balance of 50% of the bid price shall be paid within the next 

business day. 

3. Should the winning bidder fail to pay within the deadlines, the bidding shall be declared a 

failed bid and the lot shall be re-offered in a second auction to be held on the third 

business day after the first failed auction at the same floor price, without need of advertisement. 

Said bidder shall then be disqualified from participating further in the sale without 

prejudice to the forfeiture of his cash bond and the imposition of other sanctions as 

may be warranted. 

4. In the case of perishable goods, the second auction shall be conducted on the first 

business day after the first failed bidding. 

J. Re-Offering of Unsold Lots Through Negotiated Sale After Two Failed Biddings 

After the second failed bidding and compliance with the publication and registration 

requirements herein provided, a particular lot may be offered to all qualified bidders for 

negotiated sale, as follows: 

1. For a successful negotiated sale, at least three offers shall be tendered in sealed envelopes 

and shall be opened in public by the Auction Committee in the presence of a COA 

representative at a time, date and place specified in the Notice of Negotiated Sale. 

2. The highest offer from the sealed bids shall serve as the starting amount in the open 

negotiation that follows among the participants of the negotiated sale. Only those who 

submitted sealed bids for the negotiated sale shall be admitted as participants in the open 

negotiation. 

3. The highest offer from among the participants in the open negotiation, which shall in no 

way be lower than the starting amount, shall immediately be announced as the winning 

offer, and thereafter referred to the Commissioner of Customs and the Secretary of 

Finance for approval. The announcement of the winning offer by the Auction Committee 

shall serve to conclude the negotiated sale, after which no other offer shall be considered. 

4. A guarantee deposit in cash or managerís check equivalent to 20% of the highest offer 

shall be paid prior to its referral for the Commissionerís approval. 

5. An additional thirty percent (30%) of the offer shall be paid by the party concerned within 

forty eight (48) hours from receipt of the notice from ACDD, informing the concerned 

party of the DOF Secretaryís approval. The remaining fifty percent (50%) shall be paid 

within seven (7) calendar days therefrom under pain of forfeiture of the initial payments. 

6. The provisions of Sec. III (8) hereof, shall be applied in case of a failed negotiated sale or 

when the price offer is rejected by the Commissioner of Customs or the Secretary of 

Finance. 

K. Assignment of Accepted Bid 

No assignment of accepted bid or approved offer shall be allowed in all instances.


V. Reporting 

Immediately after every bidding/negotiated sale, the Chief, ACDD or its equivalent unit, 

shall submit to the Commissioner of Customs a report on the results of the bidding, including 

therein the sale lot no. and contents, floor price, the participating bidders and their respective 

bids, as well as the winning bidder, if any. 

VI. Accountabilities 

1. The Customs officers and personnel are directed to perform their responsibilities as 

required herein. 

2. The District Collector shall be responsible for the smooth, proper and effective implementation 

of this Order in all cases, under his/her districtís jurisdiction, where it applies. 

3. The Chief, ACDD shall ensure that all requirements herein for the issuance of the appropriate 

notices and clearances are complied with. 

4. The Chairman and all members of the Auction Committee shall be responsible in ensuring 

that all participating bidders are properly qualified and that the winning bids or failed 

biddings are properly declared. 

5. The examiners/appraisers shall be liable for any error caused by/emanating from their 

examination/appraisal. 

6. All signatories to any certificate/report required under this Order shall be liable for any 

flaw/defect found therein. 

VII. Repealing Clause 

CMO 36-2002 and all other Customs rules and regulations inconsistent with this Order 

are deemed amended and/or repealed accordingly. 




VIII. Effectivity 


Commissioner 

óo0oó 

Customs Memorandum Circular No. 97-2003 

Release of Used Motor Vehicles Without Required Certificates

60 


Attached is a copy of letter, dated 12 March 2003, from Hon. Luis M. Catibayan, 

Officer-in-Charge, Bureau of Import Services, regarding the release of used motor vehicles 

from Customs premises, without the required Certificate of Roadworthiness and Certificate 

of Compliance with Emission Standards issued by the country of origin and authenticated by 

the Philippine Embassy/Consulate or agency authorized by the Philippine government. 

Please take note of applicable provisions of law relative to the required certificates, as 

cited therein. 

For your information and guidance. 


Attachment: 

12 March 2003 

Mr. Antonio M. Bernardo 

Commissioner 


Port Area, Manila 

Dear Comm. Bernardo: 


Commissioner 

We have been informed that imported used motor vehicles are being released from the 

Customs premises without the required certificates of worthiness and compliance to emission 

standards issued from the country of origin duly authenticated by the Philippine Embassy/Consulate 

and/or by any agency authorized and accredited by the Philippine Government. 

We wish to inform you that a Certificate of Roadworthiness and Compliance to 

Emission Standards is required prior to the release of the imported used motor 

vehicles classified as regulated and liberalized commodities from the customs premises 

and the subsequent registration at the LTO. This is in compliance with the provisions 

of Rule XXXII, Section 2, para. 3 of Republic Act (RA) No. 8749 otherwise known as 

the Philippine Clean Air Act of 1999 and its implementing rules and regulations which states 

that a Certificate of Compliance to Emission Standards authenticated by the Philippine 

Embassy/Consulate from the country of origin is required for imported used motor vehicles, 

and BIS regulations pursuant to Rule XXXII, Section 2, para. 5 of the same Act, which mandates 

the DTI-BIS to formulate guidelines to ensure that rebuilt and imported second motor 

vehicles satisfy the emission standards for rebuilt and imported second hand motor vehicles. 

May we request for the dissemination of this information in all the major ports of the 

country for the guidance of all concerned. 

Thank you for the usual support and cooperation on matter of mutual concerns. 

Very truly yours, 

(Sgd.) Luis M. Catibayan 

Officer-in-Charge


BUREAU OF FISHERIES AND AQUATIC RESOURCES 


Fisheries Administrative Order No. 195-1, s. 2003 

Amendment to Section 9, FAO No. 195 

SECTION 1. Section 9 of Fisheries Administrative Order No. 195, s. 1999, is hereby 

amended to read as follows: 

ìSec. 9. Accreditation - a. Tuna fish and tuna-like species not limited to the 

blue marlin, sailfish and swordfish landed by foreign fishing vessels at the Davao 

Fish Port Complex which fail to meet the standards for exportation may be sold to 

domestic fish processing establishments and institutional buyers duly accredited 

by BFAR. Such establishments are those engaged in tuna canning and in the 

processing of processed/frozen fish and fishery products.î 

ìb. The fish processing establishments and institutional buyers to be accredited, 

where applicable, shall meet the following requirements. 

1) Registration with the Department of Trade and Industry; 

2) With Mayorís Permit to operate for single proprietorship, while registration with 

the Securities and Exchange Commission for corporations; 

3) With License to Operate (LTO) issued by the Department of Health/Bureau of 

Food and Drugs (DOH-BFAD); and 

4) Compliant with the Sanitation Standard Operating Procedure (or SSOP).î 

ìc. The procedure for accreditation, where applicable, shall be as follows: 

1. Submission of Letter of Intent for accreditation to BFAR, accompanied by the 

following documents -- 

a. Copy of LTO issued by DOH-BFAD. 

b. Mayorís Permit to operate for single proprietorship, while SEC registration 

for corporations; 

c. Copy of written SSOP being implemented. 

2. Consistent compliance to SSOP as verified by BFAR through plant inspection; 

3. Only plants maintaining AB, BA, or better rating on plant and equipment 

requirements shall be accredited and be allowed to buy the fishery products;

62 


4. Under no circumstance shall accredited processing plants be allowed to sell 

tuna and tuna like species unloaded from foreign vessels at the Davao Fish Port 

in its unprocessed or original form. Processing requires a significant value added 

that would alter form and substance except for sashimiî. 

SECTION 2. Effectivity - This order shall take effect fifteen (15) days after its publication 

in the Official Gazette and/or in two (2) newspapers of general circulation and fifteen 

(15) days after registration with the Office of the National Administrative Register. 


Date Filed: 17 Mrch 2003 

(SGD.) LUIS P. LORENZO, JR. 

Secretary 

Recommended by: 

(SGD.) MALCOLM I. SARMIENTO, JR. 

Director 

Bureau of Fisheries and Aquatic Resources 

(SGD.) CESAR M. DRILON, JR. 

Undersecretary for Fisheries 

Chairman, NFARMC 

--o0o-- 

Fisheries Administrative Order No. 214-1, s. 2003 

Amending Section 13 [c] of FAO 214 

SECTION 1. Section 13 [c] of Fisheries Administrative Order No. 214, s. 2001, is 


ìc. The level of primary productivity in inland waters that could support the 

good growth of planktivorous species like tilapia, carp and milkfish shall not be 

less than 10gC/m 3 or 33,000 cells per ml.î 


in the Official Gazette and/or in two (2) newspapers of general circulation and fifteen 

(15) days after registration with the Office of the National Administrative Register. 



Secretary 

Recommended by:









--o0o-- 

Fisheries Administrative Order No. 221, s. 2003 

Further Regulating the Importation of Live Fish and 

Fishery/Aquatic Products Under FAO No. 135 s. 1981 to 

Include Microorganisms and Biomolecules 

Pursuant to Sections 10, 61 (d), 65, 67, 100 and 107 of Republic Act No. 8550 and 

Section 7 of Presidential Decree No. 704 and further regulating the importation of live fish 

and fishery/aquatic products to include aquatic microorganisms under FAO No. 135, s. 

1981, this order regulating the importation of live fish and fishery products, aquatic microorganisms 

and biomolecules conformably with the international agreements for aquatic environmental 

protection is hereby issued for compliance by all concerned. 

SECTION 1. Definition - The terms as used in this order shall be construed as follows: 

a. Aquatic Microorganisms - include, but are not limited to, viruses, bacteria, fungi, parasites, 

and other similar organisms, and their products in any form. 

b. Biomolecules - Organic molecules and their synthetic forms occuring in living organisms. 

c. Competent Authority - The national aquatic animal health authority of a country/territory 

with the officially approved responsibility and competence to ensure and supervise the implementation 

of aquatic animal health management. 

d. Fish and Fishery Products - include not only finfish but also mollusks, crustaceans, 

echinoderms, marine mammals and other species of aquatic flora and fauna and all other 

products of aquatic living resources in any form. 

e. Genetically Modified Organisms (or GMO) - Living organisms the genetic material of 

which have been altered or modified by any of the varieties of modern molecular biology to 

make them capable of producing new substances or perform new functions. 

f. Health Certificate - A certificate issued by an exporting countryís competent authority or a 

BFAR recognized institution attesting to the health status of a shipment of imported fish and 

other aquatic organisms.

64 


g. Import Risk Analysis (or IRA) - The process by which all factors associated with the 

importation of live fish and other aquatic organisms are assessed for negative, positive or no 

impact to the Philippine environment. 

h. Introduced Species (non-indigenous, exotic alien species) - Any species intentionally or 

accidentally transported and released by man into an environment outside its historical or 

natural range, e.g., goldfish and imported hybrids. 

i. Quarantine - The holding or rearing of fish and fishery products under conditions which 

prevent their escape, and escape of any pathogens they may be carrying, into the surrounding 

environment. This usually involves sterilization or disinfection of all effluent and quarantine 

materials. 

j. Risk - Probability of negative impact on live fish/aquatic organismís health, public health, 

environmental biodiversity, and habitat and/or socio-economic investments. 

k. Transferred or Transplanted Species - Any species intentionally or accidentally transported 

by man within the established or historical range of species (i.e., milkfish or Chanos 

chanos). 

SECTION 2. Coverage - This order shall cover the importation of live fish and fishery 

aquatic products, aquatic microorganisms, biomolecules including GMOs and endangered 

species subject to the agreement and regulations of the Bureau of Plant Industry, Bureau of 

Animal Industry, Protected Areas and Wildlife Bureau, Bureau of Food and Drugs, and other 

concerned offices and agencies. 

SECTION 3. Categories Based on Risk - Upon receipt of the application for an import 

permit, the legality of importation of live fish shall be determined based on the CITES, to be 

categorized as follows: 

a. Low-Risk Species - Species, such as aquarium fish, that are perceived to present no 

ecological, genetic and disease threats to native Philippine Species and to aquaculture. 

b. Medium Risk Species - Species used in aquaculture or in aquarium or ornamental fish 

grade considered by BFAR to pose potential environmental impact. This may include species 

both native or transferred species and previously introduced species in natural bodies 

of water. 

c. High-Risk Species - Exotic species known for its potential use for food or sport which 

have not been introduced in Philippine waters, to include fish or aquarium/ornamental trade 

that may most likely pose adverse environmental impact. This may include exotic species for 

food or sport that have been introduced into the country but with limited distribution and 

GMOs and species the eradication or restriction of which is considered desirable. 

d. Prohibited or Banned Species - Species banned for importation under national and 

international laws or agreements. This includes exotic species the importation of which is 

prohibited due to their known adverse effect on local fauna, human health and the environment. 

SECTION 4. Prohibition - It shall be unlawful to import or cause to be imported live 

fish and fishery products, aquatic microorganisms and biomolecules without a valid license 

or permit therefor issued by the Director of BFAR.


SECTION 5. Filing of Application to Import - The importer shall file a duly accomplished 

application with the BFAR at least five (5) working days prior to the importation of low 

risk species while ten (10) to fifteen (15) days for medium risk species upon payment of an 

application fee of one hundred fifty (P150.00) pesos, non-refundable, together with the 

following documents: (a) Pro-forma Invoice, and (b) Business Permit or Articles of Incorporation 

and By-Laws of Incorporation duly approved by the Securities and Exchange Commission. 

The decision to import high risk species will be given thirty (30) days after upon 

evaluation of the proposal and other documents which may be required by the IRA Panel. 

Requests for importation of prohibited species shall be rejected. 

SECTION 6. Review - All importation of live fish and fishery products, microorganisms 

and biomolecules shall be subject to review by the IRA Panel created by the BFAR Director 

which shall categorize whether they are low, medium, high risk, or prohibited species. The 

Panel shall serve as the secretariat and clearing house of all IRA cases and may tap a group 

of experts to resolve individual cases whenever necessary. 

The Panel shall be chaired by a fish health officer who has the expertise on import risk 

analysis and shall have five (5) permanent members to be appointed by the BFAR Director 

who shall have the following minimum qualifications: 

a. one member shall be a member of the Philippine Bar; 

b. one member shall be a fish health officer; 

c. one member shall be a regulatory fisheries quarantine officer; 

d. one member shall be a member of NFARMC; and 

e. one member shall be a fishery biologist (on call depending on this expertise) 

SECTION 7. Importation requirements - 

a. For low risk species - Duly accomplished form. Risk analysis shall not be required except 

when there is a reported significant disease outbreak in the country of origin. 

b. For medium risk species - 

1. Duly accomplished application form; 

2. Duly accomplished proposal form with emphasis on health, ecological and 

genetic impacts of the proposed importation; 

3. Import risk analysis by the IRA Panel; 

4. Health certificate from the competent authority of the country of origin to be 

presented upon arrival of the consignment at the NAIA or other designated ports 

of entry. On a case to case basis, BFAR may specify certification requirements 

for individual species and/or shipments to ensure freedom from specified diseases 

as deemed necessary; and 

5. The quarantine and inspection requirements shall be based on the decision of 

the BFAR IRA Panel which may require a quarantine period of 24 -28 days on a 

case to case basis after the release of the shipment from the airport to the BFARís 

quarantine facility, with costs to be borne by the importer. 

c. For high risk species -

66 


1. Duly accomplished application form; 

2. Duly accomplished proposal form with emphasis on health, ecological and 

genetic impacts of the proposed importation; 

3. Import risk analysis by the IRA Panel; 

4. Health certificate from the competent authority of the country of origin to be 

presented upon arrival of the consignment at the NAIA or other designated ports 

of entry. On the case to case basis, BFAR may specify certification requirements 

for individual species and/or shipments to ensure freedom from specified diseases 

as deemed necessary; and 

5. Quarantine and inspection until the first generation (F 1 ) offspring for high risk 

species (to be imposed after release of the shipment from the airport to the BFAR 

quarantine facilities with costs to be borne by the importer) 

d. The prohibited species, based on a list prepared by the IRA Panel, shall not be issued any 

import permit. 

SECTION 8. Issuance and duration of import permit - An import permit shall be issued 

by the BFAR Director for every shipment after an application therefor has been filed and all 

requirements pursuant to this order have been satisfied. Such permit shall expire thirty (30) 

days after its issuance. 

SECTION 9. Inspection - Upon arrival, the consignment shall be subjected to the 

following inspection requirements: 

a. The importer shall submit the original copy of the import permit, photocopies of the proforma 

invoice, packing list and airway bill (bill of lading) to the BFAR Fisheries Quarantine 

Officer for low, medium and high risk species. In the case of medium and high risk species, 

a copy of the health certificate shall accompany each consignment/shipment. This shall also 

apply to handcarried shipments. Consignments not accompanied by import permit and/or 

health certificate shall be confiscated and destroyed. 

b. The Fisheries Quarantine Officer shall check the species identity and conduct visual 

inspection. If the fish is clearly unhealthy, he shall require the consignee to treat the shipment 

in the importerís holding facility under the supervision of a fish health officer or if the 

unhealthy fish poses high risk of contaminating healthy stocks, the shipment shall be confiscated 

and destroyed. A laboratory examination of the shipment shall be conducted by the 

BFAR Fish Health Officer at the expense of the importer. 

SECTION 10. Transitory Provision - High risk and prohibited species which have 

already entered the country without any valid import permit prior to promulgation of this order 

shall be monitored and evaluated by the IRA Panel and those that are found to be causing 

any adverse effect on the local fauna, human health and environment shall be confiscated 

for destruction. 

SECTION 11. Penalty - Violation of this order shall subject the offender to the penalty 

of eight (8) years imprisonment and a fine of eighty thousand pesos (P80,000.00) including 

the destruction of the live fish and fishery products or forfeiture of the non-live fishery 

species in favor of the BFAR for its disposition; Provided, That the offender shall also be 

banned from being members or stockholders of companies currently engaged in fisheries or 

in such companies to be created in the future.


SECTION 12. Repeal - FAO No. 135, s. 1981 and all orders, rules and regulations 

including policies or parts thereof which are not consistent with this order are hereby repealed 

or modified accordingly. 


in the Official Gazette and/or in the two (2) newspapers of general circulation, and 

fifteen (15) days after its registration with the Office of the National Administrative Register. 

Adopted: 6 March 2003. 

BUREAU OF IMMIGRATION 



Secretary 








Memorandum Order No. ADD-02-058 

Work Permits for Holders of Special Resident Retiree Visas 

Under Executive Order No. 1037 (Creating the Philippine Retirement Park System, 

Providing Funds Therefor and for Other Purposes, s. of 1985), Implementing Rule III, Section 

1 (e) classifies holders of Special Resident Retiree Visas (SRRV) as non-immigrants, 

who are afforded residence in the Philippine for an indefinite period. As non-immigrants, 

SRRV holders shall secure alien employment permits (AEP) from the Department of Labor 

and Employment under Presidential Decree No. 442 (The Labor Code), as amended. 

Pending the issuance of the AEP, SRRV holders shall be required to obtain a Bureau 

of Immigration Special Work Permit (SWP) under Commonwealth Act No. 613, Section 42 

(a) (32). The SWP shall be valid for an initial period of three months. It may be extended for 

succeeding three-month periods, but not exceeding one year. The SWP shall, however, be 

deemed cancelled upon the issuance of by the AEP.

68 


This memorandum shall take effect immediately. 



(SGD.) ANDREA D. DOMINGO 

Commissioner 

--o0o-- 

Memorandum Order No. ADD -03-003 

Special Work Permits for DOT-Accredited South Korean Tour Guides 

In line with the Visit RP 2003 program of the Department of Tourism (DOT) and in 

appreciation for the South Korean Governmentís efforts to promote tourism in the Philippines 

by issuing positive travel advisories, these guidelines are issued to govern the issuance 

of special work permits (SWP) to DOT-accredited South Korean tour guides. 

A SWP shall be issued to a DOT-accredited South Korean tour guide, upon application 

to the Commissioner of Immigration under Commonwealth Act (C.A.) No. 613, Section 

42 (a) (32). 

Each SWP issued to a DOT-accredited South Korean tour guide under these guidelines 

shall be renewed every three-months without need of re-application, subject to the 

following: 

1. The total extensions for each SWP shall not exceed one year; 

2. After such one-year period, the South Korean tour guide concerned may opt to apply for 

a pre-arranged employment visa under C.A. No. 613, Section 9(g), provided, an alien employment 

permit is secured from the Department of Labor and Employment; and 

3. The SWP shall remain valid within the periods provided in paragraphs (1) and (2) of these 

guidelines, despite temporary visits abroad by the South Korean tour guide concerned. 

These guidelines shall remain effective until such time that the DOT certifies that the 

services of a local tour guide can be engaged in lieu of the South Korean tour guide 

concerned. 



(SGD.) ANREA D. DOMINGO 

Commissioner 

--o0o--


Office Memorandum Order No. ADD-03-002 

Streamlining of BI Procedures 

Under the Bureauís existing policy for foreigners marrying a Filipino, he/she is required 

to submit a Certificate of Legal Capacity to Contract Marriage duly issued by his/her 

embassy or consular office, in addition to the other documentary requirements, to justify his/ 

her application for a permanent/temporary residence visa under Section 13(a) of the PIA, 

as amended. 

In line with the government policy of streamlining procedures for efficient public service 

and to eliminate red tape, it is hereby ordered that the submission of Certificate of Legal 

Capacity To Contract Marriage may be waived and in lieu thereof, a Marriage Certificate 

authenticated by the National Statistics Office (NSO) may be accepted. Since the Certificate 

of Legal Capacity to Contract Marriage is a requirement for the issuance of Marriage License 

(an essential requisite for a valid marriage), the submission of such Certificate is a 

surplus age. 

For compliance/guidance. 


Date Filed: 20 Feb. 2003 


Commissioner 

--o0o-- 


Guidelines for the Implementation of Hold Departure Orders 

The Supreme Court (SC) has acknowledged that the right to travel is not absolute, but 

must yield to the inherent police power of the State (Kant Kwong, et al. vs. PCGG, G.R. No. 

794384, 7 December 1987). Thus, on 19 June 1997, the SC issued Circular No. 39-97 that 

governs hold departure orders (HDO) issued by the Regional Trial Courts. However, this 

circular provides, among others, that RTC-issued HDO shall contain the following: 

1. The complete name ( including the middle name), the date of birth and the place of the 

last residence of the person to whom an HDO has been issued or whose departure from the 

country has been enjoined; 

2. The complete title and docket number of the case in which the HDO was issued; 

3. The specific nature of the case; and

70 


4. The date of the HDO. If available, a recent photograph of the person against whom an 

HDO has been issued or whose departure from the country has been enjoined should also 

be included. (Italics ours) 

In deference to the right to travel, therefore, any RTC issued HDO that does not comply 

with SC Circular No. 39-97 shall not be implemented by this Bureau. 





Commissioner 

--o0o-- 


Violation of Philippine Retail Trade Law 

It has been observed that a swift increase on the number of cases involving holders of 

permanent residents visa either under the Philippine Immigration Act of 1940 or under Republic 

Act 7919 (otherwise known as The Alien Social Integration Act of 1995), as well as 

holders of Temporary Residents Visa (TRV) under Letter of Instructions No. 33 are now 

engaged in retail trade business. 

Foreign nationals regardless of their immigration status are prohibited to engage in 

retail trade as provided in Republic Act No. 8762 (otherwise known as Retail Trade Liberalization 

Act of 2000): 

ìSection 5. Foreign Equity Participation - Foreign-owned partnerships, associations 

and corporations formed and organized under the law of the Philippines 

may, upon registration with the Securities and Exchange Commission (SEC) 

and the Department of Trade and Industry (DTI) or in case of foreign-owned 

single proprietorship, with the DTI, engaged or invest in the retail trade business, 

subject to the following categories: 

Category A - Enterprises with paid-up capital of the equivalent in Philippine 

Pesos of less than Two Million Five Hundred Thousand US Dollars 

($2,500,000.00) shall be reserved exclusively for Filipino citizens and corporations 

wholly-owned by Filipino citizens. 

Category B - Enterprises with a minimum paid-up capital of the equivalent 

in Philippine Pesos of Two Million Five Hundred Thousand US Dollars 

($2,500,000.00) may be wholly owned by foreigners except for the first two 

(2) years after the effectivity of this Act wherein foreign participation shall be 

limited to not more than (60%) of total equity.


Category C - Enterprises with a minimum paid-up capital of the equivalent 

in Philippine Pesos of Seven Million Five Hundred Thousand US Dollars 

($7,500,000.00) or more maybe wholly owned by foreigners: Provided, however, 

that in no case shall the investments for establishing a store in categories 

B and C be less than the equivalent in Philippine Pesos of Eight Hundred Thirty 

Thousand US Dollars (US$830,000.00). 

Category D - Enterprises especializing in high-end or luxury products with a 

paid-up capital of equivalent in Philippine Pesos of Two Hundred Fifty Thousand 

US Dollars ($250,000.00) per store may be wholly owned by foreigners. 

The foreign investor shall be required to maintain in the Philippines, the full 

amount of the prescribed minimum capital. Unless the foreign investor has 

notified the SEC and the DTI of its intention to repatriate its capital and cease 

operations in the Philippines. The actual use in the Philippine operations of the 

inwardly remitted minimum capital requirements shall be monitored by the SEC. 

Future retail stores shall secure a certification from the Bangko Sentral ng 

Pilipinas (BSP) and the DTI, which will verify or confirm inward remittance of 

the minimum required capital investment. 

SECTION 6. Foreign Investors Acquiring Shares of Stock of Local Retailers - 

Foreign investors acquiring shares from existing retail stores whether or not publicly 

listed whose net worth is in excess of the peso equivalent to Two Million Five Hundred 

Thousand US Dollars (US$2,500,000.00) may purchase only up to a minimum of sixty 

(60%) per cent of the equity thereof within the first two (2) years from the effectivity of 

this Act and thereafter, they may acquire the remaining percentage consistent with the 

allowable foreign participation as herein provided. 

SECTION 7. Public Offering of the Shares of Stock - All retail trade enterprises 

under Categories B and C in which foreign ownership exceeds eighty percent (80%) of 

equity shall offer a minimum of thirty (30%) percent of their equity to the public through 

any stock exchange in the Philippines within eight (8) years from their start of operations. 

SECTION 8. Qualification of foreign retailers - No foreign retailer shall be allowed to 

engage in retail trade in the Philippines unless all the following qualifications are met: 

a. a minimum of Two Hundred Million US Dollars ($US200,000,000.00) net 

worth in its parents corporation for Categories B and C, and Fifty Million US 

Dollars ($US50,000,000.00) net worth in its parent corporation for Category D; 

b. Five (5) retailing brances or franchises in operation anywhere around the 

world unless such retailers has at least one (1) store capitalized at a minimum 

of Twenty-Five Million US Dollars (US$25,000,000.00) 

c. Five (5) year track record in retailing; and 

d. Only nationals from or judicial entities formed or incorporated in, countries 

which allow the entry of Filipino retailers, shall be allowed to engage in retail 

trade in the Philippines.

72 


The DTI is hereby authorized to pre-qualify all foreign retailers, subject to the provisions 

of this Act, before they are allowed to conduct business in the Philippines. x x x ì 

Any violation of the above-mentioned provisions shall be punished in accordance with 

Section 12 of the same law: 

ìAny person who shall be found guilty of violation of any provision of this Act shall 

be punished by imprisonment of not less than six (6) years and one (1) day, but not more 

than eight (8) years, and a fine of not less than One Million Pesos (Php1,000,000.00) but 

not more than Twenty Million Pesos (Php20,000,000.00) 

In the case of Associations, partnerships or corporations, the penalty shall be 

imposed upon its partners, presidents, directors, managers and other officers responsible 

for the violation. If the offender is not a citizen of the Philippines, he shall be deported 

immediately after the service of sentence. x x x ì 

The Bureau of Immigration, adhering to the mandate provided by law, will not in any 

manner tolerate, much less allow foreign nationals, even if holders of resident visas, to 

engage in retail trade business in violation of the Philippine Retail Trade Law. Thus we will 

continue with our mission to go after those foreign nationals who violate the Philippine Immigration 

Act in particular and other internal laws of the Philippines in general. 

In view hereof, Stern warning is given to all alien residents who are engaged in retailing. 

This Bureau is committed to strictly implement the retail trade law and any foreign 

national caught in the act of retailing shall be arrested, charged and deported for violation of 

Republic Act 6785 and Section 37(a)(7) of the Philippine Immigration Act of 1940 as 

amended. 

For strict compliance. 



Commissioner 

BUREAU OF INTERNAL REVENUE 


Revenue Memorandum Circular No. 1-2003 

Clarifying Certain Provisions of Revenue Regulations No. 3-2002 as 

Amended by Revenue Regulations No. 19-2002 amending Section 2.83 of 

Revenue Regulations 2-98 in Relation to the Substituted Filing of Income 

Tax Returns of Qualified Pure Compensation Income Earners


The Bureau of Internal Revenue (BIR), in its mission of providing an efficient and 

convenient service to its taxpayers, is implementing a ìhassle-freeî method of filing Individual 

Income Tax Returns (BIR Form 1700). This method of filing recognizes under certain 

circumstances, the employerís Annual Information Return (BIR Form No. 1604CF) as the 

ìsubstituteî income tax return filed by the employee since it contains the same information 

found in the income tax return ordinarily filed. 

This Circular aims to provide some basic information and answers to questions frequently 

asked on substituted filing. 

1. What is ìSubstituted Filingî? 

Substituted Filing is when the employerís annual return (BIR Form 1604CF) may be 

considered as the ìsubstituteî Income Tax Return (ITR) of employee inasmuch as the 

information provided in his income tax return (BIR Form 1700) would exactly be the same 

information contained in the employerís annual return (BIR Form No. 1604-CF). 

2. How is ìSubstituted Filingî different from ìNon-Filingî? 

Under ìsubstituted filingî, an individual taxpayer although required under the law to file 

his income tax return, will no longer have to personally file his own income tax return but 

instead the employerís annual information return filed will be considered as the ìsubstituteî 

income tax return of the employee inasmuch as the information in the employerís return is 

exactly the same Information contained in the employeeís return. 

ìNon-filingî is applicable to certain types of individual taxpayers who are not required 

under the law to file an income tax return. An example is an employee whose pure 

compensation income does not exceed P60,000, and has only one employer for the taxable 

year and whose tax withheld is equivalent to his tax due. 

3. Who are qualified and under what conditions will substituted filing of BIR Form No. 1700 

apply? 

Substituted filing applies only to individuals who meet all the following conditions: 

a. The employee receives purely compensation income (regardless of amount) during the 

taxable year. 

b. The employee receives the income only from one employer in the Philippines during the 

taxable year. 

c. The amount of tax due from the employee at the end of the year equals the amount of tax 

withheld by the employer. 

d. The employeeís spouse also complies with all three (3) conditions stated above. 

e. The employer files the annual information return (BIR Form No. 1604-CF). 

f. The employer issues BIR Form 2316 (Oct 2002 ENCS) version to each employee.

74 


4. Who are not qualified for substituted filing of BIR Form 1700? 

The following individuals are not qualified for substituted filing: 

a. Individuals deriving compensation income from two or more employees, concurrently or 

successively at anytime during the taxable year. 

b. Employees deriving compensation income, regardless of amount, whether from a single 

or several employers during the calendar year, the income tax of which has not been 

withheld correctly (i.e. tax due is not equal to the tax withheld) resulting to a collectible or 

refundable return 

c. Employees whose monthly gross compensation income does not exceed Five Thousand 

Pesos (P5,000) or the statutory minimum wage, whichever is higher, and opted for nonwithholding 

of tax on said income. 

d. Individuals deriving other non-business, non-profession-related income in addition to compensation 

not otherwise subject to final tax. 

e. Individuals deriving purely compensation income from a single employer, although the 

income of which has been correctly subjected to withholding tax, but whose spouse is not 

entitled to substituted filing. 

f. Non-resident aliens engaged in trade or business in the Philippines deriving purely compensation 

income or compensation income and other business or professional related 

income. 

5. What will be presented in case an ITR is required? 

BIR Form 2316 (Oct 2002 ENCS version) is a statement signed by both the employee 

and the employer and serves the same purpose as if BIR Form No. 1700 had been filed. 

This, however, is not to be submitted or filed with the BIR if the employee is qualified for 

substituted filing. 

6. What are contained in BIR Form No. 2316 Certificate? 

The new BIR Form 2316 (Oct 2002 ENCS version) consists of the following parts: 

a. Part I - Employee Information (items 3 to 12) 

This refers to employeeís personal information as declared by him in the Certificate 

of Update of Exemption and Employerís and Employeeís Information (BIR 

Form 2305). The same information should likewise be consistent with the information 

in the Annual Information Return (BIR Form 1604CF). 

b. Part II - Present Employer Information (items 13 to 15A) 

The information herein refers to the present employer. 

c. Part III - Previous Employer Information (items 16 to 24A)


In cases where an employee has previous employer in the same taxable year, 

the present employer should mention the previous employerís information as 

contained in the employeeís BIR Form 2316 issued by the previous employer. 

d. Part IV - Details of Compensation Income and Tax Withheld from the Present 

Employer (items 25 to 50) 

This part contains the details and summary of all taxable and non-taxable regular 

and supplementary compensation received by the employee including the 

summary of taxes withheld from the compensation of the employee. 

e. 1 st Signature Box (items no. 51 and 52) 

This contains a declaration by the present employer that all the information 

contained in BIR Form 2316 (Parts I to IV and Summary) was made in good faith, 

verified, and to the best of their knowledge and belief, is true and correct pursuant 

to the provisions of the National Internal Revenue Code. 

f. 2nd (Substituted Filing) Signature Box (items 53 and 54) 

This box shall be accomplished under the substituted filing scheme. 

7. Who shall prepare and issue BIR Form 2316? 

In general, every employer or other person who is required to deduct and withhold the 

tax on compensation including fringe benefits given to rank and file employees, shall furnish 

every employee from whose compensation taxes have been withheld the Certificate of 

Compensation Payment/Tax Withheld (BIR From 2316 Oct 2002 ENCS version). 

8. When should the employer issue BIR Form 2316? 

Employers should issue BIR Form 2316 to the employee on or before January 31 of 

the succeeding calendar year, or if employment is terminated before the close of such 

calendar year, on the day on which the last payment of compensation is made. 

9. What is contained in the Substituted Filing signature box in BIR Form 2316? 

The lowest portion of BIR Form 2316 (Oct 2002 ENCS version) shall be accomplished 

only for substituted filing. It consists of two parts namely, matters certified to by the employer 

and matters certified to by the employee. The employer and employee, under the pain of 

perjury, shall sign the boxes for substituted filing. 

10. For substituted filing, what are the matters being certified to by the EMPLOYER? 

The matters being certified to by the employer are as follows: 

a. That the information contained in BIR Form 2316 (Oct 2002 ENCS version) are the same 

as reported and declared in BIR Form 1604 CF, i.e., 

l The employeeís information is the same as that declared by the employee in 

BIR Form 2305

76 


l If employee had previous employer/s, the previous employerís information is 

the same as that declared in previous employerís BIR Form 2316 issued to said 

employee 

l The information pertaining to the present employer is true and correct 

l The details of compensation and taxes withheld is true and correct. 

b. That the employer filed with the BIR the Annual Information Return (BIR Form 1604CF) 

11. For substituted filing, what are the matters being certified to by the EMPLOYEE? 

The matters being certified to by the employee are as follows: 

a. That the employee is qualified under the substituted filing of income tax returns (BIR Form 

1700), i.e., 

l The employee receives purely compensation income (regardless of amount) during 

the taxable year 

l The employee receives the income only from one employer in the Philippines 

during the taxable year. 

l The amount of tax due from the employee at the end of the year equals the 

amount of tax withheld by the employer. 

b. If married, that the employeeís spouse also complies with all three (3) conditions stated 

above. 

c. That the employee has none of the instances for disqualification for substituted filing. 

(refer to question no. 4 of this issuance) 

d. That the BIR Form 1604CF filed by his employer shall constitute as his income tax return. 

e. That BIR Form 2316 (Oct 2002 ENCS version) shall serve as the same purpose as if BIR 

Form 1700 had been filed pursuant to the provisions of RR 3-2002 as amended by RR 19- 

2002. 

12. For other government agencies and other offices, public and private, requiring presentation 

of individual income tax return (BIR Form 1700) as proof of income earnings, 

what would be a replacement for BIR Form 1700 for those qualified for substituted 

filing? 

For those qualified for substituted filing, BIR Form 1700 should no longer be required 

as proof of financial capacity or proof of income earnings. Presentation of BIR Form 2316 

(Oct 2002 ENCS version) is sufficient proof of income earnings since it is a statement 

signed by both the employee and the employer and it shall serve the same purpose as if BIR 

Form No. 1700 had been filed.


13. What is the use of the BIR Form 2316, for those qualified for substituted filing? 

The BIR Form 2316 (Oct 2002 ENCS version) can be used for the following purposes: 

a. As proof of financial capacity for purposes of loan, credit card, or other application. 

b. As proof of payment of tax or for availing tax credit in the employeeís home country. 

c. In securing travel permits and travel tax exemptions when necessary; and 

d. For other purposes to meet the requirements of various government/private agencies 

14. When substituted filing take effect? 

It took effect for taxable year 2001 on a voluntary basis and is mandatory for income 

compensation earned starting taxable year 2002 . Thus, employees who qualify for substituted 

filing for taxable year 2002 and beyond will no longer file BIR Form 1700 on or before the 

15th of April of every year. 

15. What will an employee do with BIR Form 2316 issued by the employer? 

If the BIR Form 2316 was issued by a previous employer as a result of termination of 

employment and the employee has been subsequently employed within the same calendar 

year, the employee should submit a copy of BIR Form 2316 issued by the previous employer 

to his present employer, for consolidation with his current compensation received from the 

present employer. 

If the employee is qualified for substituted filing, the employee concerned should sign 

the substituted filing signature box of BIR Form 2316 and have the same signed by the 

employer. A copy of BIR Form 2316 signed both by the employer and employee shall be 

retained and kept by the employer and the employee. 

If an employee is not qualified for substituted filing, he is required by law to file his 

income tax return (BIR Form 1700 or BIR Form 1701). BIR Form 2316 should be attached as 

proof of his compensation income and withholding taxes as well as other necessary and 

applicable attachments, like financial statements, certificate of creditable withholding taxes. 

16. For those qualified for substituted filing, is it necessary to have BIR Form 2316 notarized? 

No, it is not necessary to have BIR Form 2316 notarized for those qualified for substituted 

filing. 

17. Can an employee file an ITR (BIR Form No. 1700) even if he is qualified for substituted 

filing? 

No, for taxable year 2002 and beyond, substituted filing is mandatory for qualified 

employees.

78 





Commissioner 

--o0o-- 

Revenue Memorandum Order No. 35-2002 

Prescribing the Guidelines and Procedures in the Processing and 

Issuance of AUTHORITY TO RELEASE IMPORTED GOODS 

(ATRIG) for Excise and Value-Added Tax Purposes 

I. OBJECTIVES 

This order is issued to: 

1. Provide uniform procedure for the processing and issuance of Authority to Release Imported 

Goods (ATRIG); 

2. Prescribe the use of the official accountable form for ATRIG; 

3. Prescribe reporting requirements for the effective control and monitoring of all processed 

applications and issued ATRIGs; and 

4. Delineate the duties and responsibilities of all revenue offices and personnel responsible 

in the processing of ATRIGs as well as in the requisition, utilization and custody of the 

ATRIG form. 

II. POLICIES AND GUIDELINES 

1. An Application for ATRIG (Annex ìAî*) for value-added tax purposes shall be filed in 

duplicate with the Revenue District Office (RDO) having jurisdiction over the port of entry. 

For excise tax purposes, however, the Application for ATRIG shall be filed with the Excise Tax 

District Office (ETDO) where the taxpayer-importer is registered or required to be registered. 

The application for ATRIG shall be distributed as follows: 

Original - RDO/ETDO 

Duplicate - Importer/Broker 

Each importation shall be covered by a separate application for ATRIG. In cases where 

the importation involves articles of the same kind but are covered by two or more Bills Of 

Lading issued to the same importer under the same vessel, the consolidated application may 

be accepted and processed. The application for ATRIG shall be notarized and properly 

accomplished and signed by the importer or his duly authorized representative with the 

prescribed documentary stamp affixed thereon. 


Quezon City.


2. No application shall be accepted if the importer-applicant and/or broker-representative is/ 

are not duly registered taxpayer(s) with the BIR. In cases where the intended importation 

consists of excisable articles, raw materials, machineries, equipments, apparatus or any 

mechanical contrivances especially used for the production of excisable articles, the application 

for ATRIG shall likewise not be accepted if the importer-applicant does not have a 

separate Permit to Operate as an Importer for excise tax purposes. 

3. BIR Form No. 1918 (Annex ìBî*) shall be used whether for excise or value-added tax 

(VAT) purposes and shall be approved and issued by the Revenue District Officer of the 

RDO/ETDO authorized to process and approve the ATRIG. For this purpose, upon initial 

receipt of the new sets of this form, reproductions and/or issuances of pro-forma ATRIGs 

shall thereafter be strictly prohibited. 

The form shall be filled-up completely, prepared in triplicate and distributed as follows: 

Original - Bureau of Customs 

Duplicate - Issuing RDO/ETDO 

Triplicate - Business Intelligence Division (National Office) 

The above provision notwithstanding, all applications for ATRIG for excise tax purposes 

shall be filed with and processed by the concerned Excise Tax District Office having jurisdiction 

over the importer. 

4. For excise tax purposes, the ATRIG shall be issued for all importations of articles subject to 

excise tax (whether exempt or taxable), including the raw materials in the production thereof, 

as well as the machineries, equipment, apparatus or any mechanical contrivances especially 

used for its assembly/production. 

For VAT purposes, the ATRIG shall be issued on all importations of articles exempt from 

VAT except on those articles specifically identified and enumerated in the Circular issued 

jointly by the Bureau of Internal Revenue and the Bureau of Customs. 

5. The ATRIG shall be processed, approved and issued within one (1) day from the time of 

the actual receipt of the application, in cases where the application for ATRIG is supported 

by complete documents and there is no legal/factual issue on the taxability of the imported 

article. 

6. Proper coordination with the authorized representatives of the Bureau of Customs shall 

always be maintained if an ocular inspection is needed in order to verify the actual description 

of the imported article or to secure a sample thereof for purposes of laboratory analysis. 

With respect to imported automobiles, prior ocular inspection shall be conducted at all 

times to determine its taxability and compliance with the prescribed seating capacity criteria 

under existing revenue issuances. 

7. For purposes of filing, identification and classification of articles, either for excise or VAT 

purposes, the authorized issuing offices shall add such descriptive letters or word which 

shall be printed right below the ATRIGís pre-printed serial number according to the following 

order: 


Quezon City.

80 


a) PRODUCT CODE (for excise) or VAT CODE (for VAT exemption) 

b) YEAR OF ISSUE 

c) RDO NUMBER 

d) RDO, RR, ETDO or NO Office CONTROL NUMBER 

8. Applications for ATRIG with legal issues on the taxability or exemption of the imported 

articles shall be referred to the Legal Division of the Regional Office or to the Law Division, 

National Office, as the case maybe, for appropriate resolution. Any request for a ruling on 

an article involving factual issues requiring laboratory comment/evaluation/recommendation, 

for purposes of identification and/or classification shall be referred to BIR Laboratory Unit in 

the National Office prior to referral to the proper legal office. In case the request for a ruling 

affecting the application for ATRIG is directly filed by the taxpayer with the Legal Division or 

Law Division in the Regional or National Office, respectively, or the VAT Review Committee, 

the same shall nevertheless be referred to the BIR Laboratory Unit prior to the formulation 

and issuance of the appropriate ruling. 

For issues not requiring legal resolution, samples of the imported goods requiring 

laboratory analysis shall be referred to the BIR Laboratory Section National Office, for 

appropriate action. In this connection, physical laboratory analysis/comment/evaluation shall 

be conducted on samples of every shipment of alcohol and alcohol products, petroleum 

products, and such other articles to determine its taxability and proper tax classification. 

Samples thereof shall be taken directly from the shipment by authorized BIR representative(s) 

in the customs premises, in coordination with the customsí authorized representatives. 

In the event that the correct product classification and basis of taxation of imported 

articles can be sufficiently determined on the basis of acceptable Certificate of Analysis 

and/or Material Safety Data Sheet (MSDS) together with complete product specification 

and/or product data/information, whichever is applicable, the conduct of actual laboratory 

analysis may be dispensed with. However, these documents shall be referred to the BIR 

Laboratory Unit for appropriate evaluation and document, prior to the issuance of ATRIG. 

9. All requests for the issuance of BIR strip stamps or labels for alcohol or tobacco products, 

whichever is applicable, shall be processed in accordance with existing revenue issuances 

only after the submission by the taxpayer-importer of proofs of excise tax payment on the 

imported excisable articles covered by the application for ATRIG. 

10. In cases where the articles covered by the application for ATRIG have already been 

released from customí custody prior to the issuance thereof, no ATRIG shall be allowed to be 

issued just to complete the documentation of the importation for BOC purposes. 

11. The issuing RDO/ETDO shall ensure that the articles subject to excise tax, whether 

taxable or exempt, are delivered to the importerís place of business/production. For this 

purpose, the Revenue Officer(s) assigned to process the application for ATRIG shall be 

designated to supervise the release of imported articles from the customs premises up to the 

importerís place of business/production. In addition to the foregoing, proper coordination 

and/or notification shall be made by the ATRIG issuing office to the BIR office having jurisdiction 

over the excise tax establishments with Revenue Officer(s) Assigned on Premises 

(ROOPs). Such notification shall be made prior to the release of imported articles from 

customs custody to ensure that said ROOPs are duly alerted on incoming deliveries/shipments.


12. For purposes of uniformity in the use of VAT codes and product codes, the following 

codes for each product description shall be strictly observed: 

VAT/PRODUCT CODES DESCRIPTION 

a) AGRI Agricultural & Marine Food Products and Breeding Stock 

& Genetic Materials 

b) FERT Fertilizers 

c) FEEDS Feeds and Feed Ingredients 

d) ALCO Alcoholic Products 

e) COOP Agricultural and Electric Cooperatives 

f) OSLA Other Special Laws or International Agreements 

g) VAT All Other Articles Subject to VAT (Articles held to be ìvatableî 

and do not fall under the other product codes) 

h) TOB Tobacco Products 

i) OIL Petroleum Products 

j) MIN Mineral Products 

k) AUTO Automobiles 

l) NEG Non-Essential Goods & Other Articles 

All ATRIGS issued for machineries, equipment, apparatus or any mechanical 

contrivances used for the assembly/production of articles subject to excise tax shall bear the 

same product codes of the assembled/manufactured products. 

Examples: 

a) For excise tax purposes 

OIL-2002-50-00000001 

b) For VAT-exempt purposes 

FEEDS-2002-50-00000001 

c) For Articles Subject to VAT (Articles held to be ìvatableî and do not fall under the 

other product codes) 

VAT-2001-41-00000001 

13. The issuing RDO/ETDO shall maintain an ATRIG Registry Book and shall enter all ATRIGs 

that have been issued in a sequential manner according to the Control Number thereof. The 

Registry Book shall contain the following information: 

a. ATRIG Control Number 

b. Date of issue 

c. Name and address of importer/applicant 

d. Importerís TIN 

e. Name and address of Broker 

f. Brokerís TIN

82 


g. Description of imported article(s) 

h. Bill of Lading/Airway Bill Number 

i. Name of Carrier and Voyage Number 

j. Value of Importation (in US Dollars) 

Likewise, an ATRIG control card for each/importer/applicant shall be prepared containing 

the following information: 

a. Name and address of importer/applicant; 

b. Importerís TIN; 

c. Name and address of broker; 

d. Brokerís TIN; 

e. ATRIG Control Number; 

f. Date of ATRIG; 

g. Letter of Credit (LC) Number, if applicable; 

h. Description of article(s) imported; 

i. Airway bill/Bill of lading number; 

j. Name of carrier; 

k. Quantity; 

l. Value in US dollar; 

m. Date released; 

n. Amount of Taxes paid; 

14. A monthly summary report (Annex C*), together with the triplicate copies of ATRIGs that 

have been issued, shall be transmitted on a regular basis to the Business Intelligence Division 

at the National Office for purposes of reconciliation and verification with their database, 

indicating the following information: 

a. Name and address of importer/applicant 

b. Importerís TIN 

c. Name and address of Broker 

d. Brokerís TIN 

e. Permit to Import Number 

f. Date of Issuance of Permit to Import 

g. ATRIG Control Number 

h. Date of ATRIG 

i. Letter of Credit Number 

j. Import Entry Declaration Number 

k. Description of imported article(s) 

l. Volume of Importation 

m. Value of Importation (in US Dollars) 

n. Bill of Lading/Airway Bill Number 

o. Name of Carrier/Voyage/Flight Number 

p. VAT Due, if applicable 

q. Excise Tax Due, if applicable 

The Business Intelligence Division shall, after performing such reconciliation, transmit 

a monthly summary report on the results of its findings which should include among others, 

whether or not, each importation is covered with ATRIG and such other discrepancies to the 

concerned Revenue District Office, Excise Tax District Office, and/or Excise Taxpayers Data 


Quezon City.


Reconciliation & Analysis Division in the National Office, as the case may be, where the 

importer is registered or required to be registered. 

The summary report received by the RDO, ETDO or Excise Taxpayers Data Analysis & 

Reconciliation Division in the National Office, as the case may be, shall form part of respective 

database for purposes of audit and monitoring of the activities of the taxpayers under their 

jurisdiction. 

15. In monitoring the stock balance of the ATRIG Form, a computer file shall be maintained 

by the Accountable Officer using any appropriate software program, in lieu of ìStock Cardsî, 

containing the following columnar headings described below: 

RECEIVED ISSUED BALANCE 

DATE Serial Requesting Serial Serial 

QTY Number Office/Name of QTY Number QTY Number 

From To Acct. Officer From To From To 

16. The provisions provided under Revenue Memorandum Order No. 32-98, dated March 5, 

1998 shall govern the handling, requisition, loss, damage, cancellation, disposal, inventory 

and reporting requirements of the said form. 

17. ATRIGs that have been issued may be subject anytime to post audit or review by any 

Office authorized by the Commissioner or the Deputy Commissioner for Operations. 

III. PROCEDURES 

A. Revenue District Office (RDO) Having Territorial Jurisdiction over the Port of 

Entry 

Receiving Officer 

1. Check whether or not the Application for ATRIG is properly filled up and attached with 

complete supporting documents. The attachments are complete if the following documents 

are present: 

a. Commercial Invoice; 

b. Consular Invoice; 

c. Bill of Lading or Airway Bill, whichever is applicable; 

d. Packing List; 

e. Import of Entry & Internal Revenue Declaration; 

f. Copies of Certificates for registration in the appropriate RDO, if the importer/broker 

is applying for ATRIG for the first time; 

g. Duly notarized Certificate of Undertaking (for automobiles, feed ingredients, petroleum 

additives, etc.); and 

h. Other documents that may be required to substantiate the application for ATRIG, 

(e.g. Certification from Bureau of Animal Industry, Fertilizer and Pesticides Authority, Food 

and Drug Authority, etc.).

84 


In case of imported excisable articles, the following supporting documents are to be 

attached, in addition to the abovementioned applicable requirements: 

a. Permit to Operate as Excise taxpayer, if the importer is applying for the first time. 

b. Permit to Import, when the articles to be imported are tobacco/alcohol products, raw 

materials in the assembly/production of these products or any apparatus or mechanical 

contrivances used in the production thereof. 

c. Requisition for Revenue Strip Stamps & Labels (BIR Form No. 2620) for the issuance 

of strip stamps, auxillary and regular labels, in cases of importation of cigars, cigarettes and 

alcohol products. 

2. Verify if the importer and the broker, if applicable, are registered with the BIR. 

a. Check whether or not the Tax Identification Numbers of the Importer and Broker as 

declared in the application are existing in the Registration System of the Integrated Tax 

System (ITS). 

b. Determine if the information reflected in the Registration System tallies with the 

declaration in the application. 

3. If the importer/broker, is/are not registered or where there are inconsistencies in the 

information declared in the application with that of the Registration System, return the application 

and require the importer or the broker to register first or file a registration update with 

the appropriate BIR Office. 

4. In cases where the application is in order, the same shall be received in the following 

manner: 

a. Stamp or print the word ìRECEIVEDî on the original and duplicate copies of the 

application; 

b. Indicate the time and date of receipt of the application; and 

c. Affix the receiving officerís signature or initials on the appropriate space in the 

application form. 

Revenue Officer Assigned to Process the Application for ATRIG 

1. Process the application: 

a. Check authenticity of each supporting document. 

b. Verify whether the article sought to be exempted from VAT falls within the exemption 

provided for under Section 109 of the Tax Code. 

c. Verify whether the importer is BIR-registered for VAT and excise tax purposes. If 

not, the importer shall be required first to register in accordance with existing regulations on 

registration before its application for ATRIG shall be processed.


d. Verify the existence of a Permit to Import for excise tax purposes, as required under 

existing regulations. The same shall first be required before the application is processed. 

e. Verify if the importer of excisable articles has subsisting surety bond as prescribed 

under Section 160 of the Tax Code. 

f. Require submission of the following, in cases where there are doubts on the 

representations made by the importer on its application, whichever is applicable: 

i. Samples of the imported goods to be taken directly and personally from the 

shipment by the processing revenue officer and/or BIR laboratory representatives 

for BIR laboratory analysis. 

ii. Literatures/brochures/product data containing product description of imported 

goods. 

iii. Certification from appropriate regulatory government offices authenticating 

the representations made by the importer/applicant. 

iv. Conduct actual ocular inspection of motor vehicles. 

g. Evaluate product information/literature, in case the articles require no laboratory 

analysis. 

h. Check existence of applicable BIR Rulings on the taxability or exemption of articles 

listed on the application; 

i. Refer to the Legal Division of the Regional Office or the Law Division in the National 

Office, as the case maybe, when the application for ATRIG requires legal resolution; and 

j. Refer to the BIR Laboratory Section samples of imported goods requiring laboratory 

analysis in order to determine their correct classification for taxation purposes. 

2. Prepare the ATRIG for approval and signature by the duly authorized official. 

3. Forward the ATRIG to the approving official for final review and signature. 

4. File in sequential order the duplicate copies of all approved ATRIG together with all the 

supporting documents. 

5. Coordinate with importer as to the exact details of release from customs custody (date, 

time, mode of delivery and place of destination of the imported articles), in cases where the 

ATRIGs are issued for excise tax purposes. 

6. Prepare the monthly summary reports of all ATRIGs issued, and transmit the same, together 

with the triplicate copies of the ATRIGs that have been issued, to the Business Intelligence 

Division at the National Office not later than the tenth (10th) day of the succeeding 

month.

86 


Releasing Officer 

1. Prepare the transmittal letter addressed to BOC covering all approved ATRIGs for the day, 

for signature by the approving official. 

2. Post all the information on the approved ATRIG to the ATRIG Control Card and the ATRIG 

Registry Book. 

3. Send the transmittal letter, together with all the original copy(ies) of the approved ATRIG 

thru a designated Revenue Officer, directly to the BOC not later than 12:00 noon of the 

following day. The original copy of the approved ATRIG shall, in no case, be allowed to be 

delivered to the BOC thru the importer/applicant or broker/representative. 

Revenue Officer(s) Designated to Supervise Release of Imported Articles 

1. Proceed to the Bureau of Customs at the designated place and time to oversee the 

physical release of imported articles. 

2. Obtain copy of proof payment of excise tax from importer/applicant, in appropriate cases, 

which document shall be included in the docket for ATRIG. 

3. Check whether the required auxiliary official labels or internal revenue stamps are duly 

affixed on the package and/or container of imported articles, whenever applicable, prior to 

release of the imported articles from customs custody. 

4. Accompany the shipment from the time of its release from the customsí warehouse up to 

the time of its actual receipt at the place of destination. 

5. Verify the exact location of the premises upon arrival at the actual unloading point. Make 

sure that the intended destination is the same as the actual unloading place; otherwise, any 

deviation thereto shall be fully disclosed in the release report. 

6. Verify whether or not ROOPs are assigned at the unloading point. 

a. If in the affirmative, prepare and properly accomplish the Certificate of Supervision 

(Annex D) and require the revenue officers assigned on premises to acknowledge and 

sign the Certificate of Supervision attesting to the fact of the actual supervision of the 

release and delivery of the imported articles from the point of release from customs 

custody to the designated place of unloading. 

b. If in the negative, proceed to supervise the unloading and the inspection of the imported 

articles in the premises of the importer. In the presence of the importerís representatives, 

count the quantity/volume of the articles unloaded and verify the details from the 

import documents. Prepare and properly accomplish the Certificate of Supervision (Annex 

D*) and require the person in-charge of operations at the time of unloading to acknowledge 

the supervision of release from customs custody and the results of the inspec- 

* Text Available at Office of the National Administrative Register, U.P. Law Complex, 

Diliman, Quezon City.


tion conducted on the unloaded articles and to sign the Certificate of Supervision herein 

prescribed. 

7. Submit a written report within two (2) days from the time the articles are unloaded from the 

importerís premises together with the copy of the said Certificate. The proposed assessment 

for any discrepancy discovered during actual inspection shall be submitted not later than the 

following day when supervision and inspection was made. 

B. Law Division (National Office) or Legal Division (Regional Office), as the case may 

be 

1. Receive from RDO/ETDO the application for ATRIG requiring legal resolution. 

2. Prepare resolution on the application in question and transmit the same to the RDO/ETDO 

within twenty four (24) hours from receipt thereof, if possible. 

3. Forward the Application together with the legal opinion to RDO/ETDO for preparation of 

appropriate ATRIG. 

C. BIR Laboratory Section 

1. Receive from the RDO sample of imported goods or take samples directly from the shipment 

in coordination with RDO/ETDO and the representatives from the Bureau of Customs 

and the importer/broker. 

2. Conduct laboratory testing of samples to determine correct classification of imported 

articles for tax purposes (e.g. whether the imported goods are actually in their original state 

to qualify for exemption from VAT or whether the imported article is subject to VAT or excise 

tax, or both. 

3. Evaluate product literature, in case the articles are not subjected to laboratory analysis. 

4. Issue appropriate certification to RDO to be used as basis in the preparation of ATRIG. 

D. Business Intelligence Division at the National Office 

1. Receive the Monthly Summary Reports from the Issuing Office together with the triplicate 

copies of all approved ATRIGs. 

2. Conduct review and evaluation of all submitted Monthly Summary Reports together with 

the triplicate copies of all approved ATRIGs according to established procedures. 

3. Compare ATRIG data with data obtained from BOC linkages. 

4. Check whether the classification/taxability of articles in the ATRIG is correctly applied by 

Bureau of Customs. 

5. Check whether all the goods released requiring ATRIGs are duly covered by approved 

ATRIGs.

88 


6. Prepare and transmit to the appropriate BIR Office where the importer is registered or 

required to be registered a summary report on its findings which shall include importations 

during the given month not covered by an ATRIG and such other discrepancies that have 

been found as a result of the reconciliation that have been conducted. 

7. Coordinate with the Bureau of Customs for the appropriate course(s) of action with regards 

to discrepancies that have been determined or discovered. 

8. Segregate copies of ATRIG according to articles subject to excise tax or VAT, VAT-exempt 

and exempt from excise, to be filed for future reference. 

E. Revenue District Office where the Importer is Required to be Registered and/or 

Excise Taxpayers Data Reconciliation & Analysis Division at the National Office 

Authorized to Conduct Data Reconciliation 

1. Receive the summary report transmitted by the Business Intelligence Division. 

2. Maintain a database on the information indicated in the said summary report for purposes 

of audit and monitoring of activities of the importer. 

3. Perform such appropriate action on the information received from the BID such as the 

imposition of administrative penalties, in case of failure to secure the ATRIG, misrepresentation 

on declarations made in the application to evade payment of correct taxes, etc. 

IV. TRANSITORY PROVISION 

Pending the implementation of the new organizational structure of the Bureau under 

Executive Order No. 114, the following transitory provisions shall be strictly observed: 

1. All applications for processing and issuance of ATRIG in accordance with the procedures 

prescribed by this Order shall be performed by the following Offices: 

a. Revenue District Offices having jurisdiction over the port of entry - For ATRIGs on 

VAT exemptions. 

b. Large Taxpayers Assistance Division II - For ATRIGs on excisable articles, raw 

materials, machineries, equipment, apparatus or any mechanical contrivances especially 

used for the production thereof by importers required to be registered with any divisions/ 

office under the Large Taxpayers Service or any district office falling under Revenue Region 

Nos. 4 to 9. 

c. Excise Tax Areas (EXTAs) - For ATRIGs on excisable articles, raw materials, 

machineries, equipment, apparatus or any mechanical contrivances especially used for the 

production thereof by importers falling under their jurisdictions. 

2. The approval of ATRIGs processed by the above processing offices shall be made by the 

following: 

a. Assistant Commissioner for Large Taxpayers Service - For ATRIGs processed by 

Large Taxpayers Assistance Division II.


b. Regional Director - For ATRIGs processed by RDOs and EXTAs. 

3. The monitoring, evaluation and reportorial functions prescribed herein shall be performed 

by the following Offices: 

a. Audit Information, Tax Exemption and Incentives Division with respect to procedures 

to be undertaken by the Business Intelligence Division and the monitoring of the issuance of 

ATRIGs by the Large Taxpayers Service (Excise Tax Group) in the National Office; and 

b. Field Operations Division with respect to the procedures to be undertaken in the 

monitoring of the issuance of ATRIGs by EXTAs/Revenue Regions for excise tax purposes. 

V. REPEALING CLAUSE 

All issuances and/or portions thereof inconsistent herewith are hereby repealed and 

amended accordingly. 

VI. PENALTY CLAUSE 

Strict compliance herewith is enjoined. Any violation of the provisions of this Order 

shall be subject to disciplinary action and shall be dealt with accordingly. 

VII. EFFECTIVITY 

This Order takes effect immediately. 

Adopted: 28 Oct. 2002 



Commissioner of Internal Revenue 

--o0o-- 

Revenue Regulations No. 30-2002 

Revenue Regulations Implementing Sections 7(c), 204(A) and 290 

of the National Internal Revenue Code for 1997 on Compromise 

Settlement of Internal Revenue Tax Liabilities Superseding 

Revenue Regulations Nos. 6-2000 and 7-2001 

SECTION 1. Scope and Objectives - Pursuant to Section 244 of the National Internal 

Revenue Code of 1997 (Code), these regulations are hereby promulgated for the purpose of 

implementing Sections 7(c), 204(A) and 290 of the same Code, superseding Revenue 

Regulations (RR) Nos. 6-2000 and 7-2001 and giving an authority to the Commissioner of 

Internal Revenue to compromise the payment of internal revenue tax liabilities of certain 

taxpayers with outstanding receivable accounts and disputed assessments with the Bureau 

of Internal Revenue and the Courts.

90 


SEC. 2. Cases which maybe compromised - The following cases may, upon taxpayerís 

compliance with the basis set forth under Section 3 of these Regulations, be the subject 

matter of compromise settlement, viz: 

1. Delinquent accounts; 

2. Cases under administrative protest after issuance of the Final Assessment Notice to the 

taxpayer which are still pending in the Regional Offices, Revenue District Offices, Legal 

Service, Large Taxpayers Service (LTS), Collection Service, Enforcement Service and 

other offices in the National Office; 

3. Civil tax cases being disputed before the courts; 

4. Collection cases filed in courts; 

5. Criminal violations, other than those already filed in court or those involving criminal tax 

fraud. 

EXCEPTIONS: 

1. Withholding tax cases, unless the applicant-taxpayer invokes provisions of law that cast 

doubt on the taxpayerís obligation to withhold; 

2. Criminal tax fraud cases confirmed as such by the Commissioner of Internal Revenue or 

his duly authorized representative; 

3. Criminal violations already filed in court; 

4. Delinquent accounts with duly approved schedule of installment payments; 

5. Cases where final reports of reinvestigation or reconsideration have been issued resulting 

to reduction in the original assessment and the taxpayer is agreeable to such decision by 

signing the required agreement form for the purpose. On the other hand, other protested 

cases shall be handled by the Regional Evaluation Board (REB) or the National Evaluation 

Board (NEB) on a case to case basis; 

6. Cases which become final and executory after final judgment of a court, where compromise 

is requested on the ground of doubtful validity of the assessment; and 

7. Estate tax cases where compromise is requested on the ground of financial incapacity 

of the taxpayer. 

SEC. 3. Basis for Acceptance of Compromise Settlement - The Commissioner may 

compromise the payment of any internal revenue tax on the following grounds: 

1. Doubtful validity of the assessment - The offer to compromise a delinquent account or 

disputed assessment under these Regulations on the ground of reasonable doubt as to the 

validity of the assessment may be accepted when it is shown that: 

(a) The delinquent account or disputed assessment is one resulting from a jeopardy 

assessment (For this purpose, ìjeopardy assessmentî shall refer to a tax 

assessment which was assessed without the benefit of complete or partial audit 

by an authorized revenue officer, who has reason to believe that the assessment 

and collection of a deficiency tax will be jeopardized by delay because of the 

taxpayerís failure to comply with the audit and investigation requirements to present 

his books of accounts and/or pertinent records, or to substantiate all or any of the 

deductions, exemptions, or credits claimed in his return); or 

(b) The assessment seems to be arbitrary in nature, appearing to be based on 

presumptions and there is reason to believe that it is lacking in legal and/or factual 

basis; or


(c) The taxpayer failed to file an administrative protest on account of the alleged 

failure to receive notice of assessment and there is reason to believe that the 

assessment is lacking in legal and/or factual basis; or 

(d) The taxpayer failed to file a request for reinvestigation/reconsideration within 

30 days from receipt of final assessment notice and there is reason to believe that 

the assessment is lacking in legal and/or factual basis; or 

(e) The taxpayer failed to elevate to the Court of Tax Appeals (CTA) an adverse 

decision of the Commissioner, or his authorized representative, in some cases, 

within 30 days from receipt thereof and there is reason to believe that the assessment 

is lacking in legal and/or factual basis; or 

(f) The assessments were issued on or after January 1, 1998, where the demand 

notice allegedly failed to comply with the formalities prescribed under Sec. 228 

of the National Internal Revenue Code of 1997; or 

(g) Assessments made based on the ìBest Evidence Obtainable Ruleî and there 

is reason to believe that the same can be disputed by sufficient and competent 

evidence; or 

(h) The assessment was issued within the prescriptive period for assessment 

as extended by the taxpayerís execution of Waiver of the Statute of Limitations 

the validity or authenticity of which is being questioned or at issue and there is 

strong reason to believe and evidence to prove that it is not authentic. 

2. Financial incapacity - The offer to compromise based on financial incapacity may be 

accepted upon showing that: 

(a) The corporation ceased operation or is already dissolved. Provided, that tax 

liabilities corresponding to the Subscription Receivable or Assets distributed/ 

distributable to the stockholders representing return of capital at the time of 

cessation of operation or dissolution of business shall not be considered for 

compromise; or 

(b) The taxpayer, as reflected in its latest Balance Sheet supposed to be filed 

with the Bureau of Internal Revenue, is suffering from surplus or earnings deficit 

resulting to impairment in the original capital by at least 50%, provided that amounts 

payable or due to stockholders other than business-related transactions which 

are properly includible in the regular ìaccount payableî are by fiction of law 

considered as part of capital and not liability, and provided further that the 

taxpayer has no sufficient liquid asset to satisfy the tax liability; or 

(c) The taxpayer is suffering from a networth deficit (total liabilities exceed total 

assets) computed by deducting total liabilities (net of deferred credits and amounts 

payable to stockholders/owners reflected as liabilities, except business-related 

transactions) from total assets (net of prepaid expenses, deferred charges, 

pre-operating expenses, as well as appraisal increases in fixed assets), taken 

from the latest audited financial statements, provided that in the case of an indi-

92 


vidual taxpayer, he has no other leviable properties under the law other than his 

family home; or 

(d) The taxpayer is a compensation income earner with no other source of income 

and the familyís gross monthly compensation income does not exceed the 

levels of compensation income provided for under Sec. 4.1.1 of these Regulations, 

and it appears that the tapayer possesses no other leviable or distrainable 

assets, other than his family home; or 

(e) The taxpayer has been declared by any competent tribunal/authority/body/ 

government agency as bankrupt or insolvent. 

The Commissioner shall not consider any offer for compromise settlement on the ground 

of financial incapacity of a taxpayer with Tax Credit Certificate (TCC), issued under the 

National Internal Revenue Code of 1997 or Executive Order No. 226, on hand or in transit, 

or with pending claim for tax refund or tax credit with the Bureau of Internal Revenue, 

Department of Finance One-Stop-Shop Tax Credit and Duty Drawback Center (Tax Revenue 

Group or Investment Incentive Group) and/or the courts, or with existing finalized agreement 

or prospect of future agreement with any party that resulted or could result to an increase 

in the equity of the taxpayer at the time of the offer for compromise or at a definite future 

time. Moreover, no offer of compromise shall be entertained unless and until the taxpayer 

waives in writing his privilege of the secrecy of bank deposits under Republic Act No. 1405 

or under other general or special laws, and such waiver shall constitute as the authority of 

the Commissioner to inquire into the bank deposits of the taxpayer. 

Presence of circumstances that would place the taxpayer-applicantís inability to pay in 

serious doubt can be a ground to deny the application for compromise based on financial 

incapacity of the taxpayer to pay the tax. 

SEC. 4. Prescribed Minimum Percentages of Compromise Settlement - The 

compromise settlement of the internal revenue tax liabilities of taxpayers, reckoned on a per 

tax type assessment basis, shall be subject to the following minimum rates based on the 

basic assessed tax: 

1. For cases of ìfinancial incapacityî - 

1.1 If taxpayer is an individual whose only source of income 

is from employment and whose monthly salary, if single, 

is P10,500 or less, or if married, whose salary together with 

his spouse is P21,000 per month, or less, and it appears that 

the taxpayer possesses no other leviable/distrainable assets, 

other than his family home - 10% 

1.2 If taxpayer is an individual without any source of income - 10% 

1.3 Where the taxpayer is under any of the following conditions: 

1.3.1 Zero networth computed in accordance with Sec. 3.2(c) hereof - 10% 

1.3.2 Negative networth computed in accordance with Sec. 3.2(c) hereof - 10% 

1.3.3 Dissolved corporations - 20% 

1.3.4 Already non-operating companies for a period of: 

(a) three (3) years or more as of the date of application for 

compromise settlement - 10%


(b) Less than 3 years - 20 % 

1.3.5 Surplus or earnings deficit resulting to impairment in the original 

capital by at least 50% - 40% 

1.3.6 Declared insolvent or bankrupt, - 20% 

unless taxpayer falls squarely under any situation as discussed 

above, thus resulting to the application of the appropriate rate. 

2. For cases of ìdoubtful validityî - A minimum compromise rate equivalent to forty percent 

(40%) of the basic assessed tax. 

The taxpayer may, nevertheless, request for a compromise rate lower than forty percent 

(40%): Provided, however, that he shall be required to submit his request in writing 

stating therein the reasons, legal and/or factual, why he should be entitled to such lower 

rate: Provided, further, that for applications of compromise settlement based on doubtful 

validity of the assessment involving an offer lower than the minimum forty percent (40%) 

compromise rate, the same shall be subject to the prior approval by the NEB. 

The herein prescribed minimum percentages shall likewise apply in compromise 

settlement for assessments consisting solely of increments, i.e., surcharge, interest, etc., 

based on the total amount assessed. 

SEC. 5. Documentary Requirements 

1. If the application for compromise is premised under Sec. 4.1.1 hereof, the taxpayerapplicant 

shall submit with his application (a) a certification from his employer on his prevailing 

monthly salary, including allowances; and (b) a sworn statement that he has no other 

source of income other than from employment. 

2. If the application is premised under Sec. 4.1.2 hereof, the taxpayer-applicant shall submit 

with his application a sworn statement that he derives no income from any source whatever. 

3. If the application is premised under Sec. 4.1.3 hereof, a copy of the applicantís latest 

audited financial statements or audited Account Information Form filed with the BIR shall be 

submitted with the application. Nonetheless, for situation under Sec. 4.1.3.3 hereof, the 

ìNotice of Dissolutionî submitted to SEC or other similar or equivalent document should 

likewise be submitted. For situation under Sec. 4.1.3.6, a copy of the order declaring bankruptcy 

or insolvency shall be submitted. 

In all cases of offer based on financial incapacity, Waiver of the Secrecy of Bank 

Deposit under R.A. 1405 and Sworn Statement saying that he has no Tax Credit Certificate 

(TCC) on hand or in transit or claim for tax refund or TCC under the National Internal 

Revenue Code of 1997 and Executive Order No. 226 pending in any office shall be submitted. 

Moreover, additional requirements prescribed under the existing Revenue Memorandum 

Order (RMO) shall still be complied with unless amended and/or expanded by an amendatory 

RMO. 

SEC. 6. Approval of Offer of Compromise - Except for offers of compromise where 

the approval is delegated to the REB pursuant to the succeeding paragraph, all compromise 

settlements within the jurisdiction of the National Office (NO) shall be approved by a majority

94 


of all the members of the NEB composed of the Commissioner and the four (4) Deputy 

Commissioners. All decisions of the NEB, granting the request of the taxpayer or favorable 

to the taxpayer, shall have the concurrence of the Commissioner. 

Offers of compromise of assessments issued by the Regional Offices involving basic 

deficiency taxes of Five Hundred Thousand Pesos (P500,000) or less and for minor criminal 

violations discovered by the Regional and District Offices, shall be subject to the approval by 

the Regional Evaluation Board (REB), comprised of the following Officers of the Region: 

Regional Director - Chairman 

Members: 

l Assistant Regional Director 

l Chief, Legal Division 

l Chief, Assessment Division 

l Revenue District Officer having jurisdiction over the taxpayer-applicant 

Provided, however, if the offer of compromise is less than the prescribed rates set forth 

in Sec. 4 hereof, the same shall always be subject to the approval of the NEB. 

The compromise offer may be paid before or after the approval of the offer of 

compromise by the Board (NEB or REB), at the option of the taxpayer. In case of disapproval 

of compromise offer previously paid, the same shall be dealt with in accordance with the 

prevailing procedures embodied in the Revenue Memorandum Order issued for this purpose, 

including amendments thereto. 

SEC. 7. Report of the Commissioner on the Exercise of His Authority to Compromise 

to the Congressional Oversight Committee - The Commissioner shall submit to the 

Congressional Oversight Committee through the Chairmen of the Committee on Ways and 

Means of both the Senate and House of Representatives, every six (6) months of each 

calendar year, a report on the exercise of his powers to compromise the tax liabilities of 

taxpayers. In this regard, the REB should submit to the Commissioner all the necessary 

reports and data in due time for the latter to be able to submit the required reports to the 

Congressional Oversight Committee. 

SEC. 8. Repealing Clause - These Regulations supersede Revenue Regulations No. 6- 

2000, and Revenue Regulations No. 7-2001. All other issuances inconsistent with the 

provisions of these Regulations are hereby amended, modified or repealed accordingly. 

SEC. 9. Effectivity - The provisions of these Regulations shall take effect after fifteen 

(15) days following publication in any newspaper of general circulation except for cases the 

compromise of which have been confirmed by the Secretary of Finance in which case these 

Regulations shall take effect immediately upon publication. 




Recommending Approval:





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Revenue Regulation No. 29-2002 

Enhancing the Rules on the Advance Payment of Value Added Tax 

on Sale of Refined Sugar, thereby Amending Revenue Regulations 

No. 7-89, and for Other Purposes* 


(*Text Available at Office of the National Administrative Register, 








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Amending Revenue Regulations No. 5-99, Further Implementing 

Section 34(E) of the Tax Code of 1997 on the Requirements for Deductibility 

of Bad Debts from Gross Income 

SECTION 1. Scope - Pursuant to the provisions of Section 244 of the Tax Code of 

1997, these regulations are hereby promulgated to amend Revenue Regulations No. 5-99 

thereby further implementing the provisions of Section 34(E) of the same Code on the 

requirements for deductibility of bad debts from the gross income of a corporation, including 

banks and insurance companies, or an individual, estate and trust that is engaged in trade 

or business or a professional engaged in the practice of his profession. 

SEC. 2. Amendment - Section 3 of RR 5-99 on the requisites for valid deduction of 

bad debts from gross income is hereby amended by deleting the penultimate paragraph of 

the said Section and should now read as follows: 

ìSec. 3. Requisites for valid deduction of bad debts from gross income - The 

requisites for deductibility of bad debts are:

96 


(1) There must be an existing indebtedness due to the taxpayer which must be 

valid and legally demandable; 

(2) The same must be connected with the taxpayerís trade, business or practice 

of profession; 

(3) The same must not be sustained in a transaction entered into between 

related parties enumerated under Sec. 36(B) of the Tax Code of 1997; 

(4) The same must be actually charged off the books of accounts of the taxpayer 

as of the end of the taxable year; and 

(5) The same must be actually ascertained to be worthless and uncollectible as 

of the end of the taxable year. 

ìBefore a taxpayer may charge off and deduct a debt he must ascertain and 

be able to demonstrate with reasonable degree of certainty the uncollectibility 

of the debt. The Commissioner of Internal Revenue will consider all pertinent 

evidence, including the value of the collateral, if any, securing the debt and 

financial condition of the debtor in determining whether a debt is worthless, or 

the assigning of the case for collection to an independent collection lawyer who 

is not under the employ of the taxpayer and who shall report on the legal 

obstacle and the virtual impossibility of collecting the same from the debtor and 

who shall issue a statement under oath showing the propriety of the deductions 

thereon made for alleged bad debts. Thus, where the surrounding circumstances 

indicate that a debt is worthless and uncollectible and that legal action to enforce 

payment would in all probability not result in the satisfaction of execution 

on a judgment, a showing of those facts will be sufficient evidence of the worthlessness 

of the debt for the purpose of deduction. 

In the case of banks, the Commissioner of Internal Revenue shall determine 

whether or not bad debts are worthless and uncollectible in the manner provided 

in the immediately preceding paragraph. Without prejudice to the 

Commissionerís determination of the worthlessness and uncollectibility of debts, 

the taxpayer shall submit a Bangko Sentral ng Pilipinas/Monetary Board written 

approval of the writing off of the indebtedness from the banksí books of accounts 

at the end of the taxable year. 

ìAlso, in no case may a receivable from an insurance or surety company be 

written-off from the taxpayerís books and claimed as bad debts deduction unless 

such company has been declared closed due to insolvency or for any 

such similar reason by the Insurance Commissioner.î 

SEC. 3. Repealing Clause - The provisions of any revenue regulations, revenue 

memorandum order, revenue memorandum circular or any other revenue issuances 

inconsistent with these Regulations are hereby repealed, amended, or modified accordingly. 

SEC. 4. Effectivity Clause - These Regulations shall take effect after fifteen (15) days 

following publication in any newspaper of general circulation and shall apply to taxable year 

2002.









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Regulations Prescribing the Information to be Periodically Required or 

Obtained by The Commissioner Relative to the Registration/Recording of 

Transfer of Real Properties with the Register of Deeds/Assessors Pursuant to 

Section 5(B) of the National Internal Revenue Code of 1997 in Relation to 

Sections 58(E), 95, and 236(J) of the Same Code as well as Providing for the 

Manner of the Issuance of Certificate Authorizing Registration (CAR) 










--o0o-- 

Revenue Memorandum Circular No. 56-2002 

Taxability of Health Maintenance Organizations (HMOs) for VAT Purposes 

For the information and guidance of all concerned, quoted hereunder are pertinent 

portions of C.T.A. Case No. 616, entitled, ìPhilippine Health Care Providers, Inc., petitioner, 

vs. The Commissioner of Internal Revenue, respondentî, dated April 05, 2002, which reiterated 

the view of the VAT Review Committee under VAT Ruling No. 18-98, dated June 23, 1998, 

that Health Maintenance Organizations (HMOs) are considered service contractors and, 

therefore, subject to VAT at the rate of ten percent (10%), to wit:

98 


ì xxx xxx xxx 

ìAs can be gleaned from the records of the case, petitioner was actually 

organized to establish, maintain, conduct and operate a prepaid group practice 

health care delivery system or a health maintenance organization to take care 

of diseased and disabled persons who are enrolled in the health care plan . . . 

(Exhibit 1-a). Under the prepaid group practice health care delivery system 

adopted by petitioner, individuals enrolled in its health care program are entitled 

to medical services to be conducted by duly licensed physicians, specialists 

and other professional technical staff in a hospital or clinic owned, operated 

and accredited by petitioner. To be entitled to receive such medical services, 

an individual must enroll in petitionerís health care program and pay an annual 

fee. Enrolment thereon is on a year-to-year basis and enrollees are issued 

identification cards (Exibit P). Thus, it can be inferred from the foregoing that 

petitioner actually provides and arranges for the provision of pre-need health 

care services to its members for a fixed prepaid fee for a specified period of 

time. Petitioner contracts the services of physicians, medical and dental practitioners, 

clinics and hospitals to perform such services to its enrolled members. 

Petitioner also enters into contract with clinics, hospitals, medical professionals 

and then negotiates with them regarding payment schemes, financing 

and other procedures in the delivery of health servies. In choosing which to 

accredit, they actually set the parameters, rules and guidelines for the accreditation 

of the participating clinics and hospitals. 

ìThus, it is evident that petitioner is not actually rendering medical service 

but merely acting as a conduit between the members and their accredited 

recognized hospitals and clinics. Apparently, they are subject to VAT under 

Section 102 [now Section 108] of the Tax Code as service contractors, thus: 

ëSection 102 [now 108] - Value-added tax on sale of services and use or 

lease of properties. - (a) Rate and base of tax. - There shall be levied, assessed 

and collected, a value -added tax equivalent to 10% of gross receipts 

derived from the sale or exchange of services, including the use or lease of 

properties. 

ëThe phrase ësale or exchange of serviceí means the performance of all 

kinds of services in the Philippines for others for a fee, remuneration or consideration, 

including those performed or rendered by construction and service 

contractors;....(underlining supplied) 

ìSuffice it to say, that what is really taxed in this case is the service rendered 

by petitioner in providing and arranging for the provisions of health case 

services to its members in exchange for a pre-negotiated, pre-paid membership 

fees. The records do not show any proof that petitioner actually owned a 

hospital or clinic nor is it directly engaged in the rendering of medical services. 

ìVAT Ruling No. 231-88 dated June 9, 1988 is not in accord with the facts 

and the applicable law thus we cannot adopt the same in arriving at a just 

conclusion of this case. Thus, petitioner can be validly assessed of VAT 

deficiency , considering the erroneous interpretation by the BIR of the facts


surrounding the case at bar. It bears stressing that the Government can never 

be in estoppel, particularly in matters involving taxes. It is a well-known rule 

that erroneous application and enforcement of the law by public officers do not 

preclude subsequent correct application of the statute, and that the Government 

is never estopped by mistake or error on the part of its agents (Philippine 

Basketball Association, G.R. 119122, 337 SCRA 358, August 8, 2000). Thus, in 

the case of Philippine Bank of Communications vs. Commissioner of Internal 

Revenue, G.R. No. 112024, 302 SCRA 241, January 28, 1999: 

ìxxx xxx xxxî 

ìThe next issue is concerned with the question of whether or not membership 

fees in connection with prepaid group practice health care program are 

subject to VAT. We answer in the affirmative. The revenues of health care 

providers are actually derived from the application and membership fees being 

paid by their members. Thus, the basis for computing the VAT in case of sellers 

of services shall be the gross receipts, which in this case shall be the payments 

for medical plans and application fees actually received from the members, 

undiminished by any amount paid or payable to owners/operators of hospitals, 

clinics and medical and dental practitioners.î 

ìxxx xxx xxxî 

ìWHEREFORE, in view of the foregoing, the instant Petition for Review is 

PARTIALLY GRANTED. Petitioner is hereby ORDERED to PAY the deficiency 

VAT amounting to P22,054,831.75 inclusive of 25% surcharge plus 20% interest 

from January 20, 1997 until fully paid for the 1996 VAT deficiency and 

P31,094,163.87 inclusive of 25% surcharge plus 20% interest from January 20, 

1998 until fully paid for the 1997 VAT deficiency. Accordingly, VAT Ruling No. 

361-88 is declared void and without force and effect. xxx xxx xxxî 

SO ORDERED.î 

Thus, without doubt, HMOs are subject to the value added tax on their gross receipts. 

All internal revenue officers and employees are hereby enjoined to give this Circular as 

wide a publicity as possible. 





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Clarifying Certain Issues Relative to the Staggered Filing of Returns 

Pursuant to Revenue Regulations No. 26-2002

100 National Administrative Register Volume 14/1 

This Circular presented in question and answer format is being issued for the purpose 

of clarifying issues identified relative to the staggered filing of returns promulgated by Revenue 

Regulations No. 26-2002. 

1. What is staggered filing of returns? 

Staggered filing of returns refers to the observance of returns filing deadline by industry 

group. Revenue Regulations 26-2002 prescribes specific deadline dates per tax type and 

form type per industry. 

Example: The deadline date for the e-filing of the monthly VAT Declaration of a 

construction company is on the twenty fifth (25th) day following end of the month while that of 

a taxpayer whose primary industry is renting of goods and equipment is on the twenty 

second (22nd) day following end of the month. The former belongs to Industry Group A while 

the latter belongs to Industry Group D. 

2. Who are covered by staggered filing? 

Taxpayers mandated by existing regulations to file returns through Electronic Filing and 

Payment System (EFPS) of the Bureau as well as those who voluntarily enrolled in EFPS 

shall observe the industry group deadline when e-filing their returns. 

3. What is the scope of staggered filing? 

Only monthly withholding tax returns (except withholding of value-added tax), monthly 

VAT declarations and monthly percentage tax returns are covered by the requirement of 

staggered filing of returns under Revenue Regulations No. 26-2002 based on industry group 

prescribed deadlines. 

December Returns which are due for e-filing on January 11-15 shall no longer have an 

additional 5-day grace period as previously prescribed by Revenue Regulations No. 12- 

2001. However, since RR 26-2002 speaks only of e-filing of returns, the payment of the tax 

due thereon shall still follow the deadline set in RR 12-2001 (i.e., additional five days from 

due date which is on January 20, 2003). 

4. Are the payment due dates affected by RR 26-2002? 

RR 26-2002 speaks only of e-filing and, therefore, due dates on the payment of taxes 

remain unaffected by the Regulations. 

5. What are the different scenarios of effecting e-payment? 

Payment shall be made through the e-payment facilitiy of EFPS after e-filing of a 

return. Since the different Accredited EFPS Banks have their own ways of acknowledging 

and implementing the e-Payment Instruction of a taxpayer, it is the responsibility of the EFPS 

Banks to train their client on how to use the bankís system in preparing and confirming 

payment. 

5.1 Scenario 1 - e-Payment through an EFPS Bank with Payment Warehousing or Maker/ 

Authorizer facility.


Immediately after the e-filing of a return, the taxpayer shall ìProceed to Paymentî, indicate 

the amount to be paid and select a bank. On the bankís website, the taxpayer ìsubmitsî 

his payment instruction. Depending on the bankís e-Payment facility, actual debit of 

the taxpayerís account shall only be effected: 

(a) upon confirmation of the taxpayer by logging in directly to the bankís website to 

confirm the implementation of a debit instruction on or before the payment due date; or, 

(b) automatically, if the bankís system includes a provision for the taxpayer to specify the 

date when to debit his account in favor of tax payment without the need for a confirmation 

on the said date. 

5.2 Scenario 2 - e-Payment through an EFPS Bank with no Payment Warehousing 

Capability. 

The taxpayer needs to log-in to the BIR website and access EFPS on the date when he 

wants to pay the tax due for the return e-filed earlier. The taxpayer must then select the 

Return Filing Reference number and ìProceed to Paymentî on order to select a bank and 

pay the corresponding tax due on the return. 

Since the payment due dates per tax type and form type are the same for all industry 

groups, the taxpayer employing this scenario is encouraged to e-pay earlier than payment 

due date to avoid the long queue and network traffic during deadlines. 

It is the intention of RR 26-2002 for all Accredited EFPS Banks to comply with Scenario 

1. Inasmuch as this is a new requirement, the banks are given time to effect the necessary 

enhancement to their system. It is therefore the responsibility of the banks to inform and train 

their clients on any change implemented in their system affecting client interface. 

6. When is the deadline for the submission of attachments to the returns and is there a 

penalty for late submission thereof? 

Submission of the attachments to a return is due fifteen (15) days after the e-filing 

deadline for each industry group and should not be construed to be reckoned from the date 

of e-payment. 

Failure to file an information return and other attachments is penalized under Section 

250 and other pertinent provisions of the Tax Code of 1997 as well as other applicable 

issuances thereto. 

7. Up to what time can a return be e-filed? 

EFPS is available twenty-four (24) hours a day seven (7) days a week. To ensure that 

the BIR receives the e-filed return before midnight of the due date, taxpayers are encouraged 

to e-file and ìsubmitî their returns on or before 10:00 p.m. of the said due date. 

8. Is there a penalty to be imposed in case a return was filed beyond the due date 

prescribed under RR 26-2002 even if the payment was made on the due date prescribed for 

payment?

102 


Yes, as provided for under Section 255 and other pertinent provisions of the Tax Code 

of 1997 as well as other applicable issuances thereto. 

All internal revenue officials are hereby enjoined to give this Circular as wide a publicity 

as possible. 





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Clarifying Certain Issues Relative to the Services Rendered by Individual 

Professional Practitioners, General Professional Partnerships, Entertainers, 

and Professional Athletes who are Subject to the Value-Added Tax 

or Percentage Tax, Whichever is Applicable, Beginning January 1, 2003 

Q-1. What are the services that are newly covered by the VAT System starting January 

1, 2003? 

A-1. Services performed in the exercise or practice of profession or calling by individuals 

subject to the professional tax under the Local Government Code or Republic Act No. 

7160, and professional services rendered by general professional partnerships (GPP); 

services performed by actors/actresses, talents, singers, emcees, radio/television broadcasters, 

choreographers, musical/radio/movie/television/stage directors, and professional 

athletes; services rendered by customs, real estate, stock, immigration and commercial 

brokers; as well as services rendered by banks, non bank financial intermediaries, finance 

companies and other financial intermediaries not performing quasi-banking functions 

are the services that are newly covered by the VAT System starting January 1, 2003. 

The performance of the aforesaid services should not be in pursuit of an employeremployee 

relationship between the service-provider and the service-recipient. 

It is to be emphasized, however, that only services performed in the Philippines are 

subject to the 10% VAT imposed under Section 108 of the 3% percentage tax under 

Section 116, both of the National Internal Revenue Code (NIRC) of 1997. Further, those 

whose gross receipts exceed P550,000 in any 12-month period are mandatorily covered 

by the VAT system while those whose gross receipts do not exceed P550,000 may choose 

to be covered either by the VAT or the NON-VAT (percentage tax) system but absence of 

choice automatically puts the taxpayer under the coverage of the NON-VAT (percentage 

tax) system. 

In determining the P550,000 threshold limit, the same shall include the aggregate gross 

receipts from all taxable lines of activity and/or all establishments (head office/branches) 

in any 12-month period.


Q-2. Is there a possibility that some services enumerated in A-1 be covered by other 

type of tax or exempted from the VAT system? 

A-2. Yes, if there is a new law issued deferring the implementation of the VAT or the 3% 

percentage tax, whichever is applicable, on selected services starting January 1, 2003. 

Q-3. What law originally imposed the VAT on the services enumerated in A-1? 

A-3. Republic Act No. 7716 (Expanded VAT Law) implemented in 1996 expanded the coverage 

of the VAT system to include all sales of goods/properties and services with the 

exception only of the transactions enumerated in Section 103 of the National Internal 

Revenue Code of 1977, as amended (now Section 109 of the National Internal Revenue 

Code of 1997). 

Q-4. What was the reason why VAT was never implemented on the services enumerated 

in A-1 since 1996? 

A-4. Several laws were issued deferring the implementation of VAT on the services mentioned 

in A-1, among others. These laws are the following: 

LAW YEAR OF EFFECTIVITY DURATION OF DEFERMENT 

a) R.A. No. 7716 1996 Until December 31, 1996 

b) R.A. No. 8241 1997 Until December 31, 1997 

c) R.A. No. 8424 1998 Until December 31, 1999 

d) R.A. No. 8761 2000 Until December 31, 2000 

e) R.A. No. 9010 2001 Until December 31, 2002 

Q-5. What transactions and/or services are not subject to VAT or covered by the VAT 

system? 

A-5. These are the transactions and/or services enumerated under Section 109 of the National 

Internal Revenue Code (NIRC) of 1997. 

Q-6. What is the taxable base for VAT (Output Tax) in case of seller of service? 

A-6. Gross Receipts. 

Q-7. What do you mean by the term ìgross receiptsî? 

A-7. The term ìgross receiptsî means the total amount or money of its equivalent representing 

the contract price, compensation, service fee, rental or royalty, including the amount 

charged for materials supplied with the services and deposits and advanced payments 

actually or constructively received during the taxable period/quarter for the services performed 

or to be performed for another person, excluding value-added tax. 

Q-8. How do you compute the VAT on sale of services? 

A-8. The VAT on sale of services is computed by applying the factor 1/11 on the total 

amounts received in payment for sale of services in a given taxable period (monthly or

104 


quarterly) to arrive at the output VAT or the VAT on sales. This formula, however, does not 

apply to the VAT of financial institutions on selected transactions. (A separate Revenue 

Memorandum Circular will be issued discussing VAT on financial institutions as well as 

VAT on brokers.) 

Q-9. What is the basis in computing the VAT payable or excess input VAT? 

A-9. Total output tax during the period (month or quarter) less total allowable input tax during 

the same period. The allowable input tax includes a carry-over of the excess input tax from 

the preceding period in addition to those derived from current purchases. Advanced VAT 

payment and VAT withheld by authorized VAT withholding agent are likewise allowable as 

tax credits from VAT payable/excess input VAT. 

Q-10. What do you mean by the term ìprofession or calling subject to professional 

tax under the Local Government Codeî? 

A-10. The term applies to profession requiring passage in a government examination before 

a person can engage in the exercise thereof such as the one which requires license from 

the Professional Regulation Commission (PRC) or other government agencies, or the 

practice of law in the Philippines authorized by the Supreme Court. 

Q-11. What particular provisions of the Local Government Code does the phrase 

ìprofession or calling subject to the professional tax under the Local Government 

Code or R.A. No. 7160î refer to? 

A-11. Under Section 139 of the Local Government Code of 1991, the province may levy/ 

impose an annual professional tax on each person engaged in the exercise or practice of 

his profession requiring government examination at such amount and reasonable classification 

as the Sangguniang Panlalawigan may determine but shall in no case exceed three 

hundred pesos (P300). Moreover, under Section 151 of the same Code, the city may 

levy/impose the taxes, fees, and charges which the province or municipality may impose. 

Q-12. Is there a revenue issuance or Revenue Regulations issued to announce the 

implementation of VAT on professionals, entertainers, athletes, etc.? What other 

revenue regulations govern the implementation of VAT on services rendered by 

professionals (including (GPPs), entertainers, and athletes? 

A-12. Yes, Revenue Regulations No. 1-2003 implementing Section 5 of R.A. No. 8424, as 

last amended by Section 1 of R.A. No. 9010, subjects services rendered by the abovementioned 

persons to VAT beginning January 1, 2003. 

The imposition of VAT on such services shall likewise be governed by the provisions of 

Revenue Regulations No. 7-95, as amended, otherwise known as ìThe Consolidated VAT 

Regulationsî. 

Q-13. Who are those required to register as VAT-taxpayers under R.A. No. 1-2003? 

What are the consequences, if any, of failure to register? 

A-13. Individual professional practitioners liable to pay the professional tax under the Local 

Govít. Code, general professional partnerships (GPPs), actors/actresses, talents, sing-


ers, emcees, radio/television broadcasters, choreographers, musical/radio/movie/television/stage 

directors, professional athletes, as well as customs/real estate/stock/immigration/commercial 

brokers, with aggregate gross receipts or expected aggregate gross receipts, 

for new taxpayers, in all taxable lines of activity exceeding P550,000 for any 12month 

period are required to register as VAT-taxpayers. As such, they are required to file 

the monthly VAT Declaration and the quarterly VAT Return. They shall still pay the annual 

business registration fee of five hundred pesos (P500) for every business establishment. 

In case of failure to register, they shall, nevertheless, be liable for the payment of VAT, in 

addition to the registration fee of P500.00 per establishment, plus all the applicable penalties, 

but they cannot claim input VAT. Neither can the customers/clients of the VAT-registrable 

taxpayer claim input VAT for the non-VAT official receipt issued to them. 

Q-14. Who are those required to register as NON-VAT (percentage) taxpayers? 

What are the consequences, if any, of failure to register? 

A-14. Professionals paying the professional tax under the Local Government Code, 

general professional partnerships, actors/actresses, talents, singers, emcees, radio/television 

broadcasters, choreographers, musical/radio/movie/television/stage directors, professional 

athletes with aggregate gross receipts or expected aggregate gross receipts, for 

new taxpayers, in all taxable lines of activity for any 12-month period exceeding P100,000 

but not exceeding P550,000 and who have not opted for VAT coverage are required to 

register as NON-VAT (percentage) taxpayers liable to the 3% percentage tax based on 

gross receipts pursuant to Section 116 of the National Internal Revenue Code of 1997. As 

such, they are required to file the monthly Percentage Tax Return using BIR Form No. 

2251 M. They shall still pay the annual business registration fee of five hundred pesos 

(500) for every business establishment not later than January 31. In case of failure to 

register, they shall be liable for the payment of the 3% Percentage Tax, in addition to the 

annual registration fee of P500.00 per establishment, plus all the applicable penalties. 

Q-15. For taxpayers mentioned in A-1, who are those exempt from the payment of 

the VAT, the 3% Percentage Tax and the registration fee of P500? 

A-15. Those whose aggregate gross receipts do not exceed P100,000 in all lines of 

taxable business/profession during any 12-month period shall be exempt from the payment 

of VAT, Percentage Tax, and Registration Fee, but they are still required to register. 

Q-16. Other than the VAT or percentage tax, whichever is applicable, what other 

taxes are supposed to be paid by the individual professional practitioners, entertainers, 

athletes, etc. relative to the exercise of their profession or calling? 

A-16. The other taxes are supposed to be paid as follows: 

(1) The income taxes on the net taxable income under Title II of the NIRC of 1997; 

(2) Withholding Tax on income payments (purchases and expenditures) that are subject 

to withholding tax under Revenue Regulations No. 2-98, as amended, and RR 3-98 as 

amended; and, 

(3) Documentary Stamp Tax and expanded withholding tax on purchase of real property 

for use in the business. 

Q-17. Other than the VAT or percentage tax, whichever is applicable, what other 

taxes are supposed to be paid by the general professional partnership relative to 

the exercise of profession?


A-17. The other taxes that are supposed to be paid are as follows: 

(1) Withholding Tax on income payments (purchases and expenditures) that are subject 

to withholding tax under Revenue Regulations No. 2-98, as amended, and RR 3-98 as 

amended; and, 

(2) Documentary Stamp Tax and expanded withholding tax on purchase of real property 

for use in the business. 

It is worth stating that these rules apply only if the general professional partnership is 

formed for the practice of a common profession; otherwise, the partnership is likewise 

liable to pay income tax, in addition to the taxes herein mentioned. 

Q-18. Is a minor or person below 21 years of age performing any of the services 

mentioned in A-1 liable to pay VAT or percentage tax, whichever is applicable, 

beginning January 1, 2003? 

A-18. Yes. 

Q-19. Is the VAT or percentage tax, as the case may be, on services mentioned in A- 

1 different from the tax being required to be withheld by the payor-withholding 

agent from the income payments/accrued/payable to individual professional practitioners, 

entertainers, and athletes for remittances to the government as required 

in Revenue Regulations No. 2-98 as amended by RR 6-2001, RR 12-2001 and lastly 

amended by RR 14-2002? 

A-19. Yes, the 10% VAT or the 3% percentage tax, whichever is applicable, is a tax on 

the business transactions or activity and is an indirect tax which the seller may pass-on-or 

shift to the customer who ultimately bears or assumes the burden of the tax while the tax 

being required to be withheld under Section 2.57.2 of RR 2-97, as amended by the payor/ 

withholding agents based on the amount of income payment/accrued/payable to the income 

recipient or service-provider who actually assumes the burden of the tax since 

income tax cannot be shifted being a direct tax. 

Q-20. Who are required to register and pay the annual registration fee of P500 with 

the Revenue District Office (RDO)/Large Taxpayers District Office (LTDO) that has 

jurisdiction over (a) or (b) below: 

A-20. In general, the following are required to register and pay the annual registration 

fee of P500 each with the RDO/LTDO having jurisdiction over (a) or (b) below: 

(a) Main or head office; 

(b) Branch that generates sales. 

Thus, if an individual professional has business offices in Pasig City (main office) and in 

Mandaluyong City (branch or extension office), he must register and pay the annual 

registration fee of P500 each with RDO 43 (Pasig) and RDO 41 (Mandaluyong); 

Q-21. What is the deadline for the registration or update in registration of those 

newly covered by the VAT system or the NON-VAT payment system, whichever is 

applicable, and for the payment of the annual registration fee?


A-21. Those taxpayers newly covered by the VAT system or the NON-VAT payment 

system, whichever is applicable, as enumerated in A-1 above, shall register or update 

their registration records as either VAT-taxpayers or NON-VAT (Percentage) taxpayers, 

and pay the annual registration fee of P500 for every place of establishment on or before 

January 31, 2003. The annual registration fee for the subsequent years shall be paid on 

or before January 31 of the applicable year. 

Q-22. What compliance activities should a VAT taxpayer, after registration as such, 

do promptly or periodically? 

A-22. The following compliance activities must be performed by a VAT-registered taxpayer: 

(a) Pay the annual registration fee of P500 for every place of business or establishment 

that generates sales, after updating the registration records, including the Industry Code 

or Occupation Code, of the taxpayer with the Bureau of Internal Revenue (BIR) that need 

correction (The specific profession(s), occupation/calling/business should be included in 

the registration records); 

(b) Registration of the books of accounts of the business/occupation/calling, including 

practice of profession, before using the same; 

(c) Registration of sales invoices and official receipts as VAT-invoices or VAT official 

receipts for use on transactions subject to VAT (IP there are other transactions not subject 

to VAT, a separate set of non-VAT invoices or VAT official 1 receipts need be registered 

for use on transactions not subject to VAT); 

(d) Filing of the Monthly Value-Added Tax Declaration on or before the 20 th day following 

the end of the taxable month (for manual filers)/on or before the prescribed due dates 

enunciated in R.R. No. 26-2002 (for e-filers) using BIR Form No. 2550 M and of the 

Quarterly VAT Return on or before the 25 th day following the end of the taxable quarter 

using BIR Form No. 2550Q, reflecting therein gross receipts (for seller of service)/gross 

sales (for seller of goods) and output tax (VAT on sales); purchases of goods and services 

made in the course of trade or business/exercise of profession and input tax (VAT on 

purchase), other than allowable tax credits as in the case of advance (VAT payment and 

VAT withheld by government payors, and VAT payable or excess input VAT, whichever is 

applicable, with the accredited agent banks (AABs) of the BIR or Revenue Collection 

Officers(RCOs) of the BIR (in areas without AAB), for returns with payment, or with the 

RDO/LTDO having jurisdiction over the taxpayer (home RDO/LTDO), for returns without 

payment. (The monthly VAT Declaration and the quarterly VAT Return shall reflect the 

consolidated total for all the taxable lines of activity and all the establishmentsñ head office 

and branches); 

(e) Submit with the RDO/LTDO having jurisdiction over the taxpayer, on or before the 

deadline set in the filing of the Quarterly VAT Return, the soft copy of the Quarterly 

Schedule of Monthly Sales and Output Tax (if the quarterly sales exceed P2,500,000), and 

the soft copy of the Quarterly Schedule of Monthly Domestic Purchases and Input Tax the 

soft copy of the Schedule of Transactional/Individual Importation (if the quarterly total 

purchases exceed P1,000,000), reflecting therein the data prescribed by Revenue Regulations 

No. 8-2002.


Q-23. What compliance activities should a Non-VAT (percentage) taxpayer, after 

registration as such, do promptly or periodically? 

A-23. The following compliance activities must be performed by a Non-VAT taxpayer 

subject to percentage tax: 

a. Pay the annual registration fee of P500 for every place of business or establishment 

that generates sales, after updating the registration records, including the Industry Code 

or Occupation Code, of the taxpayer with the Bureau of Internal Revenue (BIR) that need 

correction (The specific profession(s), occupation/calling/business should be included in 

the registration records); 

b. Registration of the books of accounts of the business/occupation/calling, including 

practice of profession, before the use thereof; 

c. Registration of sales invoices and official receipts a non-VAT invoices or non-VAT 

official receipts for use in transactions not subject to VAT. (If there are other transactions 

subject to VAT, a separate set of VAT-invoices or VAT-official receipts need be registered 

for use on transactions subject to VAT): 

d. Filing of the Monthly Percentage Tax Return on or before the 20 th day following the end 

of the taxable month (for manual filers)/on or before the prescribed due dates enunciated 

in RR No. 26-2002 (for e-filers) using BIR Form No. 2551m reflecting therein, for all the 

taxable lines and all the business establishments, the aggregate gross receipts (for seller 

of service)/gross sales (for seller of goods) other allowable tax credits as in the case of 

advance tax payment, tax withheld by government payors, etc., and tax payable or refundable, 

whichever is applicable, with the accredited agent banks (AABs) of the BIR or 

Revenue Collection Officers (RCOs) of the BIR (in areas without AABs), for returns with 

payment, or with the RDO/LTDO having jurisdiction over the taxpayer (home RDO/LTDO), 

for returns without payment. 

Q-24. If VAT, being an indirect tax, is passed-on or shifted by the service-provider to 

the service-recipient, how will the latter treat such shifted VAT in his books of 

accounts or records, if any or applicable as in the case of buyer of the service who 

is engaged in business? 

A-24. If the service-recipient is a taxpayer engaged in trade, business/calling or profession 

liable to VAT on sale of goods or services or the so-called output VAT, the shifted 

VAT on purchases in the course of trade or business is considered as an input VAT which 

can be claimed as tax credit against the output VAT, among others, in arriving at the VAT 

payable or excess input tax. On the other hand, if the service-recipient is a taxpayer 

engaged in trade, business/calling or profession not liable to VAT, the shifted VAT on the 

purchases in the course of trade or business shall be treated a part of cost of purchases 

or expenses. 

It is to be emphasized, likewise, that if the service-recipient is not engaged in trade, 

business/calling or profession, or if the purchase is done not in the course of trade or 

business, the passed-on or shifted VAT shall form part of the cost or expenses he incurred 

for personal use or consumption and therefore not deductible in computing any kind of 

tax.


Q-25. If the percentage tax, being an indirect tax is shifted by the service-provider 

to the service-recipient, how will the latter treat such shifted percentage tax? 

A-25. If the service-recipient is a taxpayer engaged in trade, business/calling or profession, 

the shifted percentage tax on the purchase in the course of trade or business 

shall be treated as part of the cost of purchases or expenses in the books of accounts or 

records, whereas, if service-recipient is a taxpayer not engaged in trade, business/calling 

or profession, or if the purchase is a purchase not in the course of trade, business/calling 

or profession, the shifted percentage tax shall form part of the cost or expenses for 

personal consumption and therefore not deductible in computing any kind of tax. 

Q-26. What are the allowable input tax credits to professionals, entertainers, athletes, 

etc.? 

A-26. The allowable input tax credits are the VAT on purchases of goods and services 

made in the course of trade, business/calling or profession or those that are necessary or 

have direct connection in the earning or the taxable receipts which are reasonable in 

amount compared to the declared taxable receipts, and a ratable portion of any input tax 

on purchases of goods and services which benefited both the activity subject to VAT and 

the activity not subject to VAT. 

Example. ñ Mr. A, an actor, received a total amount of P1,100,000 from talent fees for the 

quarter ending December 31, 2003. At the same time, he also has four (4) units of 

taxicabs from which he realized P550,000. His purchases of goods/services (inclusive of 

VAT) from VAT-registered suppliers are as follows: 

(a) Purchases of wardrobes used in films P220,000 

(b) Purchases of spare parts of taxicabs 110,000 

(c) Public relations services for image build-up as 88,000 

an actor 

(d) Insurance premiums for taxicabs 55,000 

(e) Rental of office space used both for administering 

his occupation/calling and taxicab business 330,000 

Total Purchases of Goods/Services P 803,000 

======= 

In this particular example, the total amount received by Mr. A as an actor is subject to VAT 

in accordance with Section 108 of the Tax Code where VAT is determined by applying 

thereon the factor of 1/11. The amount he derived from his taxi business, on the other 

hand, shall be subject to the three percent (3%) common carrierís tax imposed under 

Section 117 of the same Code. 

The net VAT due from Mr. A as well as the allocable input tax credits that may be claimed 

thereon is computed as follows: 

Output Tax Due P100,000.00 

Total Amount Received P1,100,000 

Less: Gross Receipts (10/11) (1,000,000) 

Output Tax (1/11) P 100,000 

=========

110 


Less: Input Taxes 

(a) Directly Attributable 

(i) Purchase of wardrobes P220,000 

(2) Public relations services 88,000 

Total Purchases P308,000 

Multiplied by VAT factor x 1/11 (P 28,000.00) 

(b) Purchase of service common to both the 

activity subject to VAT and the 

activity not subject to VAT 

Rental of office space - P330,000 

Total Gross receipts 

(P1,000,000 plus P550,000) = 

P1,550,000 

Rule on Apportionment - P212,900 

P1,000,000/P1,550,000 x P330,000 = x 1/11 (P 19, 354.55) 

Net VAT Payable P 52,645.45 

=========== 

Note that input taxes incurred for the purchase of spare parts and insurance premiums 

paid for the taxicabs cannot be deducted as input taxes because these are not in anyway 

connected to the pursuit of the activities of Mr. A as an actor, the activity that is subject to 

VAT. 

For his business as common carrier, shall be liable to percentage tax at rate of 3% of his 

gross receipts or P16,500 (i.e., P550,000 x 3%) imposed under Section 117 of the National 

Internal Revenue Code (NIRC) of 1997. 

Q-27. What is the basis for computing VAT on the sale of services by professionals, 

GPPs, entertainers, athletes? 

A-27. As provided in Section 108 of the NIRC (Tax Code) of 1997, there shall be levied, 

assessed and collected a value-added tax equivalent to ten percent (10%) of gross receipts 

derived from the sale of such services. Gross receipts means ìthe total amount of 

money or its equivalent representing the contract price, compensation, service fee, or 

rental or royalty, including the amount charged for materials supplied with the services 

and deposits and advanced payments actually or constructively received during the 

taxable quarter/period for the services performed or to be performed for another person, 

excluding the value added taxî. 

VAT is determined by multiplying the total amount received by 1/11. The amount derived is 

called ìoutput taxî which is the VAT due on the sale or lease of taxable goods or properties 

or services of any person registered or required to register as VAT taxpayer in accordance 

with Section 236 of the NIRC of 1997. 

Example. ñ Mr. X is an actor. In his profession as an actor, he received a total amount of 

P3,000,000 for the year ending December 2003 representing his talent fees in appearing 

in a full-length movie and as a mainstay in a regular TV sitcom series, fees paid to him by 

an advertising agency as product endorser of a well-known food product, fees for personal 

appearances in town or provincial fiestas.


For VAT purposes, he shall be liable to VAT at the rate of 10% of the gross receipts. The 

amount of P3,000,000 he received represents 110% of gross receipts which consists of 

the gross receipts and the 10% VAT and therefore, to compute for the VAT, the factor of 1/ 

11 is applied on the total amount received as shown below: 

Total Amount Received P3,000,000.00 

Multiply by 1/11 1/11 

Output Tax P 272,727.27 

========== 

Q-28. How will the total amounts received for the sale of services be presented in 

the VAT Declarations and Returns. 

A-28. For purposes of filing the monthly VAT declarations (BIR Form No. 2550M) and 

quarterly VAT returns (BIR Form No. 2550Q), the gross receipts must be presented separately 

from the output tax. 

Example. ñ If the amount received for the taxable month amounted to P1,100,000, the 

taxable amount for the sale of services should be presented exclusive of the output tax. 

Kind of Service Gross Receipts for the Month Output Tax 

Professional fees P1,000,000 P100,000 

Q-29. Are all amounts received by professionals, actors/actresses, talents, singers 

and emcees, radio and television broadcasters, choreographers, musical radio/ 

movie/television/stage directors, and professional athletes considered part of gross 

receipts subject to the imposition of VAT? 

A-29. If the service of such persons are rendered under an employer-employee relationship, 

all remunerations received on account thereof whether these be in the form of 

salaries, wages, emoluments, honoraria or fees are considered as compensation income 

exempt from the imposition of VAT pursuant to Section 109 (0) of the NIRC (Tax Code) of 

1997. One element that may establish the existence of an employer-employee relationship 

between the person for whom the services are rendered and the person rendering such 

services is when both are required to give their respective shares for SSS, Medicare and 

Pag-ibig Contributions. 

However, amounts received on account of services rendered other than under an employer-employee 

relationship shall be subject to VAT under Section 108 of the NIRC (Tax 

Code) of 1997, subject to Section 109(z) thereof. 

Example. My. Y, a junior bank executive, also appears as one of the news anchors of 

ABS-CBN Broadcasting Company where he is paid talent fees amounting to P1,000,000 

a year. In such as case, the compensation he receives from the bank as an employee 

thereof is exempt from the VAT. However, the talent fees he receives as news anchor is 

subject to VAT. 

Q-30. Does the imposition of VAT also apply to existing contracts of services?

112 


A-30. Section 105 of the NIRC (Tax Code) of 1997 provides that the rule on the imposition 

of VAT shall apply to existing contracts of sale or lease of goods, properties or services at 

the time of the effectivity thereof. Since the imposition of VAT on professionals, GPPs, 

entertainers, and athletes became effective beginning January 1, 2003, the same shall 

cover existing contracts which these persons may have at the time of the effectivity date 

provided in RA 9010. 

If pursuant to an existing contract, an actor will receive from the producer a fixed amount 

of P550,000 per episode as a regular talent in a weekly TV sitcom beginning the month of 

July 2002 to June 2003, then the amounts to be received for appearances made for the 

weeks starting January 2003 shall be subject to VAT. Since the VAT is an indirect tax, the 

same may be shifted to the customer or buyer of service. 

Q-31. What happens to those services rendered prior to January 1, 2003 but will 

only be collected and paid on or after January 1, 2003. Will the amounts collected 

be subject to VAT? 

A-31. The same shall not be included as part of the gross receipts subject to VAT provided 

that for purposes of claiming VAT-exemption the following conditions are complied with: 

(a) An information return shall be filed showing the name/s of the contractee/s, client/s, 

customer/s and the amount/s of contract price outstanding as of December 31, 2002, and 

containing a declaration to pay the applicable percentage tax due, if any; 

(b) The seller billed the unpaid amount not later than December 31, 2002 and a copy of 

such billing is attached to the information return required in (a) hereof; 

(c) The seller has recorded in his/its books of accounts for the year 2002 the amount 

receivable; 

(d) The seller issued or should issue a non-VAT invoice and/or receipt to the buyer for this 

purpose; and 

(e) The seller files not later than January 20, 2003 or on or before the 20 th day of the next 

month, depending upon the month of collection of the consideration, the regular percentage 

tax return for the payment of the percentage tax on payments received after 2002 

(applicable to brokers only). 

Failure to comply with the above-stated conditions shall automatically subject the gross 

receipts to VAT. 

The above-mentioned guidelines equally apply to those liable to the 3% percentage tax 

imposed under Section 116 of the NIRC of 1997, the annual gross receipts not having 

exceeded P550,000 but with the exception of requirement (e) which is not necessary. 

Q-32. In the case of actors, actresses, talents, singers and emcees, radio and television 

broadcasters, choreographers, musical/radio/movie/television/stage directors 

and athletes, what could be their possible sources of input tax? 

A-32. Their sources of input tax may come from the purchase of apparels, accessories, 

cosmetics, office equipment, supplies, telecommunication expenses, fuel oil, insurance, 

advertising and promotions, representation, repairs and maintenance expenses for 

transportation vehicles as well as professional and other service fees paid for as long as


these are incurred exclusively in pursuit of their professional/occupations/calling and not 

for personal use or consumption, duly supported by VAT-registered sales invoices/Official 

Receipts issued by the sellers of goods and services and are reasonable in amount 

compared to the declared gross taxable receipts. 

It is to be noted, however, that input tax on purchase of apparels, accessories, cosmetics 

can be allowed as tax credit only to those taxpayers (i.e., actors/actresses, singers, 

emcees, but not in all cases) where physical appearance counts a lot in the earning of the 

gross taxable receipts. 

Q-33. How will the gross receipts received by a GPP be treated for VAT purposes? 

A-33. The GPP shall be treated as a separate and distinct taxable person from the 

individual partners composing the partnership. For VAT purposes, all gross receipts from 

the sales of services rendered by the partners for and in the name of the partnership shall 

be entirely taxable against the partnership. However, the sales of services made by any of 

the partners thereof, in his personal and individual capacity, shall not be attributed to the 

partnership, but shall be taxable against such partner in his individual capacity. 

Q-34. What will be the sources of input tax for GPPs and those in the practice of 

profession such as doctors, dentists, CPA, engineers, etc.? 

A-34. Their sources of input tax may come from lease/rental payments of office spaces 

or purchase of office, medical, architectural, engineering, dental supplies, as the case 

may be, medical or dental laboratory expenses, telecommunication expenses, fuel oil, 

insurance, representation, repairs and maintenance expenses incurred in pursuit of their 

respective professions and not for personal use or consumption, duly supported by VAT 

registered sales invoices/Official Receipts, issued by the sellers, and are reasonable in 

amount compared to the declared gross taxable receipts. 

Q-35. Are out-of-pocket expenses incurred by professionals, such as lawyers, which 

they later bill to their clients, also subject to the imposition of VAT? 

A-35. Liquidation of out-of-pocket expenses/advances for clients which are mere reimbursements 

of costs and are chargeable to the client are not considered professional fees 

that are subject to VAT, provided that the receipts (ORs) for the expenses are billed in the 

name of the client and therefore, can be claimed only by the client as item of deduction 

and that the partnership advances only the amount for future liquidation by the client. For 

this purpose, the collection of out-of-pocket expenses from the client must be recorded as 

liquidation of advances for and on behalf of clients. Otherwise, they shall form part of the 

gross receipts of the professional. 

Q-36. What is the basis in computing the percentage tax on the seller of service? 

A-36. The gross receipts for the month. 

Q-37. Is the net distributive share in the net income of a GPP received by a partner 

considered for purposes of computing the P550,000 VAT threshold?

114 


A-37. For VAT purposes, the GPP is treated as a separate and distinct taxable person 

from the individual partners composing the partnership. As such, in determining whether 

or not a professional is subject to VAT using the P550,000 VAT threshold, his receipt of 

the net share in the net income of the GPP of which he is partner should not be considered. 

Example. ñ Mr. B, a lawyer, received P300,000 as his share in the net income of the GPP 

of which he is partner. In addition thereto, gross receipts he derived from his personal and 

individual practice not attributable to the partnership amounted to P400,000. 

In this case, the P300,000 Mr. B derived from the GPP shall not be considered in 

computing the P550,000 VAT threshold. Neither shall it be subjected again to VAT or 

Percentage Tax. Therefore, having derived gross receipts amounting only to P400,000, 

Mr. B is not subject to VAT but instead subject to Percentage Tax at the rate of 3%. 

Q-38. What medical, dental, hospital and veterinary services are exempt from the 

imposition of VAT pursuant to Section 109(I) of the NIRC (Tax Code) of 1997? 

A-38. Medical, dental, hospital and veterinary services other than those rendered by 

professionals are exempt from VAT. Thus, in cases where the payment received by the 

hospital or clinic also includes the professional fee of the medical doctor, the professional 

fee when paid to the doctor constitutes his gross receipts inclusive of VAT which must be 

receipted by him using a VAT ñ Official Receipt. 

Q-39. In the case of an Ob-Gyne (obstetrician-gynecologist) who also owns a maternity 

clinic, how will the payments of patients treated or confined therein be 

treated for VAT purposes? 

A-39. Since payments received may consist of the professional fees of the Ob-Gyne, 

laboratory fees, charges for use of medical supplies and facilities, only that portion of 

payment not pertaining to the professional fees of the Ob-Gyne is exempt from VAT. For 

this purpose, in receiving such payments, professional fees on the services rendered by 

OB-Gyne must be issued a VAT-official receipt while those appertinent to laboratory fees, 

use of medical facilities and supplies must be receipted using a Non-VAT Official Receipt 

specifically detailing the nature of the billed fees and charges attributable to the clinic; 

otherwise, the total amount will be treated as derived from the exercise of profession and 

therefore subject to VAT. 

Q-40. During the transition period, what compliance requirements must be followed 

by the taxpayers newly covered by the VAT system starting January 1, 2003? 

A-40. During the transition, the following guidelines shall be followed: 

(a) Registration ñ Affected taxpayers are required to register as VAT taxpayers by registering 

or updating existing registration records, including specific mention of Industry 

Code or Occupation Code and actual industry or occupation/calling or profession of the 

taxpayer not later than January 31, 2003 without penalty using BIR Form No. 1905 for 

those who are already registered with the BIR. Those who will register for the first time 

shall use BIR Form No. 1901 for individuals and BIR Form No. 1903 for juridical persons.


(b) Unused Receipts ñ Taxpayers who change status from NON-VAT to VAT as a result of 

the lapse of effectivity of RA 9010 should submit on or before January 31, 2003 inventory 

of unused receipts as of December 31, 2002 indicating the number of booklets and the 

corresponding serial numbers. Unused NON-VAT receipts shall be allowed for use in 

transactions subject to VAT provided the phrase ìVAT-registered as of _______î is stamped 

on all copies thereof. These receipts with the proper stamp shall be allowed for use in 

transactions subject to VAT until June 30, 2003. 

(c) Billed but uncollected sale of services ñ Amounts due on sale of services rendered on 

or before December 31, 2002 and becoming liable to VAT starting January 1, 2003 

payment of which are due on or after that date shall be considered accrued as of December 

31, 2002 for the purpose of VAT ñexemption and payment of any applicable percentage 

tax, subject to the following conditions: 

1. An information return (Annex A*) shall be filed showing the name/s of the 

contractee/s, client/s, customer/s and the amount/s of the contract price outstanding 

as of December 31, 2002, and containing a declaration to pay the 

applicable percentage tax due, if any; 

2. The seller billed the unpaid amount not later than December 31, 2002 and a 

copy of such is attached to the information return required in (1), hereof; 

3. The seller has recorded in its books of accounts for the year 2002 the amount 

receivable; 

4. The seller issued or should issue non-VAT invoice and/or receipt to the buyer 

for his purpose; and 

5. The seller files not later than January 20, 2003 or on before the 20 th day for the 

next month, depending upon the month of collection of the consideration, the 

regular percentage tax return for the payment of the percentage tax on payments 

received after 2002 (applicable to brokers only). 

Failure to comply with the above-stated conditions shall automatically subject the gross 

receipts to value-added tax. 

(d) Transitional input tax credits ñ For goods (other than capital goods), materials or 

supplies not for sale, but purchased for use in business in their present condition which 

are not intended for further processing and are on hand on December 31, 2002, a 

presumptive input tax equivalent to 8% of the value thereof, or the actual value-added tax 

paid on such goods, materials and/or supplies, whichever is higher, shall be allowed. For 

this purpose, an inventory as of December 31, 2002 of such goods, materials and/or 

supplies showing the quantity, description and value should be filed with the RDO not later 

than January 31, 2003. In recognizing presumptive input tax as of December 31, 2002, a 

journal entry should be made in the books debiting the input tax account and crediting the 

aforementioned asset accounts. Provided, however, that this paragraph does not apply to 

brokers; 


Quezon City.

116 


Q-41. During the transition period, what compliance requirements must be followed 

by the taxpayers newly covered by the Percentage Tax payment system starting 

January 1, 2003? 

A-41. During the transition, the following guidelines shall be followed: 

(a) Registration ñ Affected taxpayers are required to register or update their registration 

with the BIR, as NON-VAT (percentage) taxpayers, by registering or updating existing 

registration records with specific mention of Industry Code or Occupation Code and 

actual industry or occupation/calling or profession of the taxpayer not later than January 

31, 2003, without penalty, using BIR Form No. 1905 for those who are already registered 

with the BIR. Those who will register for the first time shall use BIR Form No. 1901 for 

individuals and BIR Form No. 1903 for juridical persons. 

(b) Billed but uncollected sale of services ñ Amounts due on sale of services rendered on 

or before December 31, 2002 and becoming liable to percentage tax starting January 1, 

2003 payment of which are due on or after that date shall be considered accrued as of 

December 31, 2002 for the purpose of tax-exemption, subject to the following conditions: 

1. An information return (Annex A) shall be filed showing the name/s of the 

contractee/s, client/s, customer/s, and the amount/s of the contract price outstanding 

as of December 31, 2002, and containing a declaration to pay the 

applicable tax due, if any; 


copy of such is attached to the information return required in (1) hereof; 


receivable; 

4. The seller issued or should issue non-VAT invoice and/or receipt to the buyer 

for this purpose. 

Q-42. Revenue Regulations No. 1-2003 allows transitional input tax credits equivalent 

to 8%. How is this computed and how is this claimed as a tax credit? 

A-42. For those who have just been covered by the VAT System, as in the case of 

professionals, GPPs, entertainers and athletes, the Regulations provide a presumptive 

input tax of 8% of the value of goods (other than capital goods), materials or supplies not 

for sale but purchased for use in the exercise of their profession/calling and are on hand 

as of December 31, 2002 or the actual VAT (input tax) paid on such goods, materials, or 

supplies, whichever is higher, to be credited (deducted) against the output tax due on 

gross receipts realized beginning January 1, 2003, provided that an inventory list of such 

goods, materials, or supplies showing the quantity, description and value should be filed 

with the appropriate RDO not later than January 31, 2003. 


wide a publicity as possible.






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Clarifying Items That Would Constitute Gross Receipts and Costs in 

Determining ìGross Incomeî on Services for the Purpose of Computing 

the Minimum Corporate Income Tax (MCIT) Pursuant to Sections 27(E) 

and 28(A)(2) of the National Internal Revenue Code of 1997 

This Circular is hereby issued to clarify what items should comprise gross receipts and 

corresponding cost of services for purposes of computing the gross income on sale of 

services which shall be the basis of the 2% Minimum Corporate Income Tax (MCIT) imposed 

under Section 27(E) and Section 28 (A)(2) of the National Internal Revenue Code (NIRC) of 

1997. 

Gross Receipts and Cost of Services Per Industry - For purposes of applying the 

MCIT, the ëgross receiptsí and ëcost of servicesí of taxpayers engaged in the following types 

of services, or any other kind but of a similar nature, shall be determined as follows: 

(i)Banks and non-bank financial intermediaries performing quasi-banking activities pursuant 

to Sec. 22(V), (W), and (X) of the NIRC of 1997. Their gross receipts shall mean 

actual or constructive receipts from interests, commissions, and discounts from lending 

activities, and all other items treated as gross income under Section 32 of the NIRC of 

1997 that are not subject to final withholding income tax. Their cost of services shall refer 

to those incurred directly and exclusively for the following activities: 

01. Lending/investment of funds: 

02. Obtaining of funds from the public through the receipt of deposits; and, 

03. Trading of foreign exchange and other financial instruments. 

and shall be limited to the following: 

01. Salaries, wages and other employee benefits of personnel directly engaged 

in any of the said activities; 

02. Interest expense except interest charged by or paid to the head office on 

funds considered/classified as assigned capital of the branch; 

03. PDIC premium payments; and, 

04. BSP supervision fee. 

(ii) Insurance and pension funding companies refer to those enagaged in life and 

non-life insurance business as defined under the Insurance Code and pre-need companies, 

including health maintenance organizations. Their gross receipts shall mean actual 

or constructive receipts representing: net retained premiums (gross premiums net of

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returns, cancellations, and premiums ceded)/gross premium or collection from planholders; 

membership fees (in the case of HMOs); miscellaneous income; investment income not 

subject to final tax; released reserve and, in the case of pre-need companies, gross 

withdrawals from the trust funds set up independently as mandated by the Securities and 

Exchange Commission (SEC); and, all other items treated as gross income under Section 

32 of the Tax Code. Their costs of services shall refer to those incurred directly and 

exclusively in the insurance and pre-need business, including the generation of investment 

income not subject to final taxes, and shall be limited to the following: 


in said activities; 

02. Commissions on direct writings/agents of pre-need companies; 

03. Claims, losses, maturities and benefits net of reinsurance recoveries; and 

04. Net additions required by law to reserve fund (for insurance companies) and 

in the case of pre-need companies, contributions to the trust funds to be set up 

independently as mandated by the SEC. 

(iii) Finance companies and other financial intermediaries not performing quasi-banking 

activities refer to those engaged in the business of extending credit facilities to consumers 

and to industrial, commercial, or agricultural enterprises, including lending investors. 

Their gross receipts shall mean actual or constructive receipts representing interests, 

discounts, and all other items treated as gross income under Section 32 of the NIRC 

of 1997 that are not subject to final withholding income tax. Their costs of services shall 

refer to those incurred directly and exclusively in their lending, financing and generating 

of investment income not subject to final taxes, and shall be limited to the following: 

01. Salaries, wages and other employee benefits of personnel directly doing 

such functions; and, 

02. Interest expense. 

(iv) Brokers of securities (excluding banks). Their gross receipts shall mean actual or 

constructive receipts for engaging in the business of effecting transactions in securities 

for the account of others. Their costs of services shall refer to those incurred directly and 

exclusively for such activity, and shall be limited to the following: 


in said activities; 

02.Philippine Stock Exchange (PSE) terminal fees; 

03. Communications charges related to trading/sales of securities; 

04. Research fees such as access to Bloomberg and Reuters stock data; 

05. Commissions paid to its agents who are not employees of the brokerage firm; 

and 

06. Settlement/processing costs of trades, commonly known as ìexchange duesî. 

(v) Customs, insurance, real estate, immigration and commercial brokers. Their 

gross receipts shall mean actual or constructive receipts in the form of brokerage fees, 

commissions and remuneration as such broker. Their costs of services shall refer to those 

incurred directly and exclusively for brokering activities, and shall be limited to the following:


01. Salaries, wages and other employee benefit of personnel directly engaged in 

brokering activities; and, 

02. Commissions paid to its agents who are not employees of the brokerage firm. 

(vi) General engineering and/or building contractors refer to those engaged in contracting 

business in connection with fixed works requiring specialized engineering knowledge 

and skill (e.g. reclamation works, railroads, highways, streets roads, tunnels, airports), 

or with any structure built, for the support, shelter and enclosure of persons, 

animals, chattels, or movable property of any kind, requiring in its construction the use of 

more than two unrelated building trades or crafts, or to do or superintend the whole or any 

part thereto (e.g. sewers and sewerage, disposal plants and systems, parks, playgrounds, 

refineries). Their gross receipts shall mean actual or constructive receipts representing 

the contract price, including the amount charged for materials supplied with the services. 

Their costs of services shall refer to those incurred directly and exclusively for such 

activities, and shall be limited to the following: 

01. Cost of materials used in construction; 

02. Salaries, wages and other employee benefits of site laborers and supervisors; 

03. Health insurance, workers compensation and general liability insurance of 

site laborers and supervisors; 

04. Fees and costs paid to sub-contractors; 

05. Costs of performance bonds on the particular contract; 

06. Depreciation/amortization, rentals, repairs and maintenance of equipment 

directly used in the said activities; 

07. Costs of moving equipment and materials to and from the contract site; 

08. Costs of design and technical assistance; and 

09. Supplies and tools directly used in the said activities. 

(vii) Common carriers or transportation contractors. Their gross receipts shall mean actual 

or constructive receipts for engaging in the business of carrying or transporting 

passengers or goods or both, by land, water, or air, for compensation, offering their 

services to the public, including transportation contracting (e.g. operation of public utility 

buses, jeepneys, taxi-cabs and cars-for-rent). Their costs of services shall refer to those 

incurred directly and exclusively for such activities, and shall be limited to the following: 


in the operation of the transportation equipment; 

02. Toll fees (representing rental for the use of road); 

03. Parking fees (for aircraft, sea craft and motor vehicles); 

04. Franchise fees (representing rental for the use of road network); 

05. Depreciation/amortization, rentals, repairs and maintenance of: 

l Transportation equipment, and 

l Properties, building and improvements exclusively used as parking for 

aircrafts, sea crafts or motor vehicles; 

06. Fuel and lubricants of motor vehicles, aircraft or sea craft directly used in 

transporting passengers and/or goods/cargoes; 

07. Meals provided to passengers; 

08. Cost of safety paraphernalia and other supplies for use by passengers (e.g. 

life jacket, mask, etc.); and, 

09. Annual transportation equipment registration fee.

120 


(viii) Hotel, motel, rest/pension/lodging house and resort operators. Their gross receipts 

shall mean actual or constructive receipts derived from the operation of such hotel, 

motel, rest/pension/lodging house, resort and other similar places. Their costs of services 

shall refer to those incurred directly and exclusively for providing rooms and other related 

facilities (e.g. hotel premises, kitchen, restaurants, recreational facilities, other spaces 

used by customers, but should not include office premises of administrative staff) for the 

enjoyment of customers, and shall be limited to the following: 

01. Salaries, wages and other employee benefits of housekeeping staff, concierge 

personnel and other hotel/house/resort attendants; 

02. Depreciation/amortization, rentals, repairs and maintenance of building, properties 

and facilities, and equipment directly used in the said activities; 

03. Commissions paid to travel agents for bookings of guests for such establishments; 

04. In case the operator also serves food and beverage, its direct costs shall 

include those allowed to food service establishments; and, 

05. Supplies (e.g. hotel room/housekeeping, kitchen and laundry). 

(ix) Food service establishments. Their gross receipts shall mean actual or constructive 

receipts derived from the operation of such restaurant, bars, cafes, clubs, caterers, 

other eating/drinking-places, as well as take-out counters. Their costs of services shall 

refer to those incurred directly and exclusively in the preparation and serving/selling of 

foods and drinks and other requirements of the customers, and shall be limited to the 

following: 

01. Cost of raw/cooked foods and drinks prepared and served/sold; 


in the said activities; 

03. Depreciation/amortization, rentals, repairs and maintenance of properties, 

buildings, furniture and fixtures, and equipment directly used in the performance 

of said activities; 

04. Cost of cooking oil, condiments and other ingredients used in cooking the 

food; and, 

05. Royalties paid by franchisee. 

(x) Lessors of property. Those engaged in the busines of leasing out properties, 

such as real properties, equipment, and other movable properties. Their gross receipts 

shall mean actual or constructive receipts derived from such lease of properties. Their 

costs of services shall refer to those incurred directly and exclusively for the property 

leased, and shall be limited to the depreciation/amortization, rentals, real property taxes/ 

charges, and repairs and maintenance, of the properties being leased, as well as salaries 

of employees and fees of contractors hired to provide maintenance (repairs, cleaning/ 

maintenance of leased properties) and collection services. 

(xi) Telephone and telegraph, electric, gas, and water utilities. Their gross receipts 

shall mean actual or constructive receipts derived from the operation of such systems/ 

utilities covered by the law granting the franchise. Their costs of services shall refer to 

those incurred directly and exclusively for the production and delivery of such systems/ 

utilities, and shall be limited to the following:



in the said activities; 

02. Depreciation/amortization, rentals, repairs and maintenance of properties 

and equipment directly used in the said activities (i.e., water pipes, electric poles, 

antennas, etc.); 

03. Interconnection fee and/or share of foreign telecommunications administration 

(FA) for the services they perform; 

04. Fuel and lubricants on vehicles or equipment directly utilized in the said 

activities; 

05. Amortization of franchise or development fees; 

06. Franchise fees; and, 

07. Royalties. 

(xii) Radio and/or television broadcasting. Then gross receipts shall mean actual or 

constructive receipts derived from the operation of such radio/television broadcasting 

covered by the law granting the franchise. Their costs of services shall refer to those 

incurred directly and exclusively for such production and broadcasting, and shall be 

limited to the following: 

01. Fees of talents hired for production/broadcasting; 

02. Salaries, wages and other employee benefits of production and broadcasting 

personnel; 

03. Tapes and other production materials & supplies; 

04. Satellite charges & wire services; 

05. Film rights royalties and dubbing expenses; 

06. Set requirements; 

07. Rentals for production equipment & facilities; 

08. Rentals for locations used exclusively for production/broadcasting; 

09. Costumes, props & prizes; and, 

10. Depreciation on production and broadcasting equipment. 

The term ësalaries, wages and other employee benefitsí as used herein shall include 

the following employee benefits: bonuses, Pag-ibig, SSS, Medicare, and HDMF Contributions. 

If a cost or expenditure is incurred both directly to provide a service required by a client, and 

indirectly for administration, operation, or sales-promotion purposes, the taxpayer shall be 

allowed a ratable portion of such cost or expenditure to form part of the ìCost of Services.î 


wide a publicity as possible. 





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122 


Revenue Regulations No. 2-2003 

Consolidated Revenue Regulations on Estate Tax and Donorís Tax 

Incorporating the Amendments Introduced by Republic Act No. 8424, 

the Tax Reform Act of 1997* 


*Text Available at Office of the National Administrative Register, 

U.P. Law Complex, Diliman, Quezon City. 







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Amending Revenue Regulations No. 1-2003, Thereby Extending the 

Deadline for Registration and Other Compliance Requirements During the 

Transitory Period of the Imposition of Value-Added Tax (VAT) on Sale of 

Services by Persons Engaged in the Practice of Profession or Calling and 

Professional Services Rendered by General Professional Partnerships; 

Services Rendered by Actors, Actresses, Talents, Singers and Emcees; 

Radio and Television Broadcasters and Choreographers; Musical, Radio, 

Movie, Television and Stage Directors; and Professional Athletes; 

as Well as Services Rendered by Customs, Real Estate, Stock, 

Immigration and Commercial Brokers, beginning January 1, 2003 

SECTION 1. Scope- Pursuant to the provisions of Sections 244 and 108 of the National 

Internal Revenue Code of 1997, in relation to Section 5 of Republic Act No. 8424, as last 

amended by Section 1 of Republic Act No. 9010, these Regulations are hereby promulgated 

to amend the transitory provisions under RR No. 1-2003 related to the imposition of valueadded 

tax on sale of services by persons engaged in the practice of profession or calling 

and professional services rendered by general professional partnerships; services rendered 

by actors, actresses, talents, singers and emcees; radio and television broadcasters and 

choreographers; musical, radio, movie, television and stage directors; and professional 

athletes, as well as services rendered by customs, real estate, stock immigration and 

commercial brokers. 

SEC. 2. Amendment - Section 3 of Revenue Regulations No. 1-2003 is hereby amended 

to read as follows:


ìSEC. 3. Transitory Provisions - During the transition, the following guidelines 

shall be as follows: 

a. Registration - Affected taxpayers are required to register as VAT taxpayers 

without penalty not later than February 28, 2003. 

Correspondingly, the VAT Declaration covering the transactions for January 2003, 

may be filed not later than the deadline for filing of the VAT declaration covering 

the transactions in February 2003 [March 20, 2003 for regular VAT taxfilers and 

the prescribed date under the staggered filing system for those using the Electronic 

Filing and Payment System (EFPS)], without any penalty. 

It is emphasized, however, that the sale of service by professionals, etc., 

beginning January 1, 2003 is already subject to the VAT (Output tax), except 

those whose gross receipts for the preceding year (or expected gross receipts 

for the current year, for new taxpayers) do not exceed P550,000 who shall pay 

only the 3% percentage tax unless they likewise opt to be covered by the VAT 

system and, therefore, are also subject to VAT. Thus, VAT-registrable professionals, 

etc. (those required to register as VAT-persons but have not registered yet) 

are subject to the VAT beginning January 1, 2003. These newly covered taxpayers 

may, pending registration as VAT-persons and compliance with paragraph 

(b) hereof, issue Provisional or Temporary Receipts to acknowledge receipt of 

payment of service fees from their clients/customers. These Provisional or Temporary 

Receipts shall be immediately replaced by VAT Official Receipts upon the 

availability thereof and, at this point in time, the client/customer may then claim 

input tax credit. 

b. Unused receipts - Taxpayers who change status from NON-VAT to VAT as a 

result of the lapse of the effectivity of RA 9010 should submit on or before February 

28, 2003 an inventory of unused receipts as of December 31, 2002 indicating the 

number of booklets and the corresponding serial numbers. Unused NON-VAT 

receipts shall be allowed for use in tansactions subject to VAT provided the phrase 

ìVAT-registered as of __________î is stamped on all copies thereof. These receipts 

with the proper stamp shall be allowed for use in transactions subject to VAT until 

June 30, 2003. 

c. Billed but uncollected sale of services - Amounts due on sale of services 

rendered on or before December 31, 2002 and becoming liable to VAT starting 

January 1, 2003 payments of which are due on or after that date shall be considered 

accrued as of December 31, 2002 for the purpose of VAT exemption and 

payment of any applicable percentage tax, subject to the following conditions: 

1. An information return showing the name/s of the contractee/s, client/s, 

customer/s, and the amount/s of the contract price outstanding as of December 

31, 2002, and containing a declaration to pay the applicable percentage tax due, 

if any, shall be filed not later than February 28, 2003; 


copy of such billing is attached to the information return required in (1) hereof; 

3. The seller has recorded in its books of accounts for the year 2002 the 

amount receivable;

124 


4. The seller issued or should issue non-VAT official receipt to the buyer for 

this purpose; and 

5. The seller files not later than January 20, 2003 or on before the 20th day of 

the next month, depending upon the month of collection of the consideration, the 

regular percentage tax return for the payment of the percentage tax on payments 

received after 2002 (applicable to brokers only). 

Failure to comply with the above-stated conditions shall automatically subject 

the gross receipts to value added tax. 

d. Transitional input tax credits - For goods (other than capital goods), materials 

or supplies not for sale but purchased for use in business in their present 

condition which are not intended for further processing and are on hand on 

December 31, 2002, a presumptive input tax equivalent to 8% of the value thereof, 

or the actual value-added tax paid on such goods, materials and/or supplies, 

whichever is higher, shall be allowed. For this purpose, an inventory as of December 

31, 2002 of such goods, materials and/or supplies showing the quantity, 

description and value should be filed with the RDO not later than February 28, 

2003. In recognizing presumptive input tax as of December 31, 2002, a journal 

entry should be made in the books debiting the input tax account and crediting the 

aforementioned asset accounts. Provided, however, that this paragraph does not 

apply to brokers. 

In the case of brokers, any input tax outstanding in their books and corroborated 

by their VAT returns as of December 31, 1999 and still unused as of December 

31, 2002 shall be allowed as transitional input tax.î 

SEC. 3. Effectivity Clause - These regulations shall take effect immediately after 

publication in a newspaper of general circulation. 








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Amending Certain Sections of Revenue Regulations No. 14-97, as 

Amended by Revenue Regulations No. 14-99, Otherwise Known as the 

Revenue Regulations Governing the Imposition of Excise Tax on Automobiles


SECTION 1. Scope - Pursuant to the provisions of Section 244 in relation to Section 

245 of the Tax Code of 1997 (Code), these regulations are hereby promulgated to implement 

the provisions of Section 149 of Title VI of the said Code, imposing an excise tax on 

automobiles. 

SEC. 2. The Definition of Terms - Section 2 of Revenue Regulations No. 14-97, as 

amended by Revenue Regulations No. 14-99, is hereby further amended to read as follows: 

ì(a) AUTOMOBILE - shall refer to any four (4) or more-wheeled vehicle, other 

than a truck, pick-up, jeep/jeepney, bus, or vehicle used for special purpose, 

which is propelled by gasoline or diesel and specially designed to transport persons 

and not primarily to transport freight or merchandise. The term automobile 

shall also include utility vehicles and Light Commercial Vehicles (LCVs) designed 

to carry both passenger and cargo, except when the seating capacity thereof is 

at least 10 or more adult passengers, including the driver, subject to the criteria 

used in determining the seating capacity herein prescribed; 

Provided that, notwithstanding any contrary rule, closed or covered four-wheel 

drive vehicle, primarily designed to carry passengers, regardless of the number 

of seats, shall be considered and taxed as an automobile for purposes of these 

Regulations. 

Provided, finally, that ocular inspection must be conducted in all cases, taking 

careful consideration of the criteria stated in this sub-paragraph (a) for the proper 

determination as to whether or not said vehicle is an automobile. A written report 

of each ocular inspection must be prepared by the inspecting officer to enable 

the reviewing officer to determine whether the inspected vehicle meets the criteria 

of an automobile as defined in these Regulations. 

The passenger seats must conform to the following rules and area specifications 

for the uniform application of the number of seats criterion: 

1. Each seat shall be of a horizontal rectangular area with seat and feet space 

of not less than thirty-five centimeters (35 cm.) wide and sixty centimeters (60 

cm.) long for each passenger, and fifty centimeters (50 cm.) wide and sixty 

centimeters (60 cm.) long for the driver or operator. Provided, in cases of contoured 

and bucket type-seats or with shapes other than the conventional horizontal 

rectangular form, seat width shall be measured at the middle portion thereof. 

Provided further, that for the corresponding space that will be occupied by any 

obstruction such as, but not limited to, doorside built-in armrest, overhead air 

condition duct, protruding amplifier box or wheel house, an imaginary straight line 

along the obstructed space shall be drawn, measured and deducted from the total 

width of the seat. The length of seats located at the front row shall be measured 

from the lowest point of the backrest in a straight and level line up to the dashboard. 

Moreover, the distance between the passenger shoulder level and the 

backrest of the seat in front shall always approximate the minimum length measurement 

prescribed herein. In cases of passenger seats facing opposite each 

other, the length of each passenger seat, representing one half (1/2) of the entire 

distance between the points where the inner edge of each seat will intersect with 

the lowest part of its backrest, shall likewise meet the prescribed minimum length.

126 


2. The number of seats of an automobile as defined by these regulations shall 

be determined by counting the number of seat spaces that meet the minimum 

area specifications prescribed herein. Half-seat shall not be counted as one 

passenger seat even if there are multiples of half-seats. Thus, a utility vehicle with 

nine (9) and one half (1/2) seat or nine (9) and two (2) half-seats and so on shall 

be considered as an automobile subjected to ad valorem tax. A contiguous row of 

seats of seats shall have as many number of passenger seats as there are seat 

spaces that meet the minimum prescribed measurements. However, any seat 

space in excess of the aforesaid area specifications, if any, shall not be counted 

as one seat even if it meets the half-seat specifications of seventeen and one-half 

(17 1/2) wide. In cases of contiguous row of seats with shapes other than the 

conventional horizontal rectangular form, each set shall be treated individually 

applying the minimum prescribed measurements for such type of seats. 

3. Aside from meeting the aforesaid measurements, the seat area must include 

the corresponding feet spaces, leg and head rooms as described herein 

that will afford an average-built adult passenger to sit. Any seat space without 

corresponding feet spaces, leg and head rooms, even if it meets the area measurements, 

shall not be counted as a passenger seat. 

For this purpose, the feet space shall refer to the corresponding floor area 

of a passenger seat, upon which a sitting passenger normally rests both his feet. 

A passenger seat whose corresponding feet space is obstructed by a gear box 

shall be considered without seat space. Leg room shall mean that the passenger 

seat shall have enough elevation from the floor so as to allow the normal bending 

of the knees and positioning of the legs of a seated passenger. A seat laid down 

directly on the floor with only the seat itself providing its elevation from it or whose 

elevation is lower than the rest of the passenger seats thereby depriving the 

passenger to seat normally, shall be considered without leg room. Head room 

shall refer to the unobstructed ceiling space of a passenger seated upright. It 

shall be considered without head room if the ceiling or any side of the vehicle 

touches any part of the head of a passenger seated upright. These requirements 

shall be applicable to all seats of the vehicle. 

All seats, whether or not these are jump seats, fold-away or fold-down seats, 

shall be considered passenger seats if the intended passengers thereof will have 

access thereto through the side door(s) of the motor vehicle and that they are 

factory installed and meet the area specifications prescribed in these regulations; 

provided, that seats located at the rear portion of the vehicle normally utilized as 

cargo compartment and accessible through the back door shall not be considered 

as passenger seats if these are foldable or adjustable to allow for cargo 

storage even if the same are factory installed and meet the area specifications. 

4. A factory-installed seat shall be considered as a seat if the intended passenger 

is seated comfortably thereat with his back, including his shoulder, fully 

rested on the back rest of the seat. Accordingly, a seat without its own back rest 

shall not be counted notwithstanding that such seat is factory installed and complies 

with the requirements on seat measurements, feet spaces, leg and head 

rooms.


(b) LIGHT COMMERCIAL VEHICLE (LCV) - shall refer to a motor vehicle, 

whether four-wheel drive or not, such as commuter vans; utility vehicles; Sports 

Utility Vehicles (SUVs); and the like, except pick-ups. 

(c) VEHICLE USED FOR SPECIAL PURPOSE - shall refer to a vehicle 

designed and used for a special or for a specific application such as cement 

mixer, fire truck, ambulance and/or medical unit, armored military vehicle, crane, 

hearse, and the like. 

(d) TRUCK - shall refer to a motor vehicle of 3.5 tons gross vehicle weight or 

more of any configuration that is primarily designed for the carriage of goods and 

with any number of wheels and axles. 

(e) JEEP/JEEPNEY - shall refer to a locally assembled military type vehicle 

manufactured by local firms with no foreign affiliation, which is similar in appearance 

to the MacArthur or Eisenhower type with canvas or hard top shell. It shall 

also include locally assembled variant of the said vehicle primarily used for transport 

of passenger. 

(f) BUS - shall refer to a motor vehicle of 3.5 tons gross vehicle weight or 

more of any configuration, which is generally accepted and specially designed 

for the public transportation of persons and with any number of wheels and axles.î 

Items (e) to (n) of Revenue Regulations No. 14-97, as amended by Revenue Regulations 

No. 14-99, are accordingly re-numbered as items (g) to (p). 

SEC. 3. Amendatory Provision on Automobiles Subject to Excise Tax - Section 4 of 

Revenue Regulations No. 14-97, as amended by Revenue Regulations No. 14-99, is hereby 

further amended to read as follows: 

ìSECTION 4. Automobiles subject to Excise Tax - The excise tax under 

Section 149 of the Tax Code of 1997 shall be imposed on the production, assembly 

or importation of automobiles, including LCVs as herein defined, payable 

before removal from place of production/assembly or from Bureau of Customsí 

custody.î 

SEC. 4. Amendatory provisions on the Registration of Brand Names under RR 14- 

97. - Section 10 of RR 14-97 is hereby amended to read as follows: 

SEC. 10. Registration of Brands/Models and Variants - Every manufacturer, 

assembler, producer, and importer of automobiles shall, before commencement 

of actual manufacture, assembly, production or importation, file with the appropriate 

BIR Office having jurisdiction over the taxpayer-registrant an application for 

brand/model registration. In cases where previously registered brands/models 

are modified, any modification shall be compared with the international version 

thereof as reflected in the original assemblerís/manufacturerís certification and 

the published international catalogue, brochure or other advertising materials to 

determine whether or not such modified version conforms to the requirements of 

these Regulations. Accordingly, such modified version shall thereafter be regis-

128 


tered with the appropriate BIR Office having jurisdiction over the taxpayer-registrant.î 

ìxxx xxx xxx.î 

SEC. 5. Amendatory Provision on Manufacturerís or Importerís Bond - Section 12 (a) 

of Revenue Regulations No. 14-97, as amended by Revenue Regulations No. 14-99, is 

hereby further amended as follows: 

ìSEC. 12. Manufacturerís and Importerís Bond - Every manufacturer/assembler 

and/or importer of automobiles for sale shall post a surety bond which shall 

be conditioned upon the faithful compliance with laws and regulations relating to 

such business and for the satisfaction of all fines and penalties imposed by the 

Code. 

(a) Basis of surety bond to be posted. - 

(1) Initial Bond - In case of initial bond, the amount shall be equal to one 

hundred thousand pesos (P100,000): Provided, however, that if after six (6) months 

of operation, the amount of the initial bond is less than the amount of the total 

excise tax paid during the period, the amount of the bond shall be adjusted to 

twice the tax actually paid for the period. 

(2) Bond for the Succeeding Years of Operation - The bonds for the succeeding 

years of operation shall be based on the actual total excise tax paid during the 

year immediately preceding the year of operation.î 

ìxxx xxx xxx.î 

SEC. 6. Transitory Provisions - 

(a) The provisions of Revenue Regulations No. 14-97, as amended by Revenue 

Regulations No. 14-99 shall be applicable to all automobiles completely 

assembled or imported (Completely-Built-Up (CBU) units, including Completelyknocked-Down 

(CKD) and Semi-Knocked-Down (SKD) units), that are still in the 

custody of the Bureau of Customs or in the place or production, assembly plant 

or warehouse, as the case may be, as of the date immediately preceding the date 

the Regulations become effective. 

(b) For this purpose, the following must be complied with: 

(i) All importers and/or assemblers shall submit a duly notarized list of inventory 

on-hand of completely assembled automobiles or CBUs, including Completely-Knocked-Down 

(CKD) and Semi-Knocked Down (SKD) units, that are 

located within the assembly plant or warehouse or the customs premises as of the 

date immediately preceding the date of effectivity of the Regulations, indicating 

the engine, body and chassis numbers thereof. The list shall be submitted to the 

Commissioner of Internal Revenue, thru the Chief, Large Taxpayers Assistance 

Division II, within ten (10) days from the date of effectivity of these Regulations.


Failure to submit the inventory list on the part of the importers/assemblers shall be 

construed that said importers/assemblers do not have any inventory on hand of 

CBUs, CKDs and SKDs as of the date immediately preceding the effectivity of 

these Regulations. 

(ii) A stocktaking of the aforesaid inventories shall be conducted by the Bureau 

of Internal Revenue for purposes of validating the said list, within five (5) 

days from the date of submission thereof. 

(iii) Prior to the date of effectivity of these Regulations per Section 8 hereof, 

an ocular inspection and measurement shall be conducted on the different brands/ 

models of vehicles to determine whether or not such brands/models are considered 

automobiles as defined under the provisions of these Regulations. 

SEC. 7. Repealing Clause - Subject to the provisions of Section 6 (b) (iii) hereof, any 

provision of Revenue Regulations No. 14-97, as amended by Revenue Regulations No. 14- 

99, or portions thereof which are inconsistent herewith are hereby amended accordingly. 

SEC. 8. Effectivity Clause - These Regulations shall take effect after fifteen (15) days 

following pubication in a newspaper of general circulation. 








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Rules and Regulations to Implement the Remittance of the following: (a) 70% 

share of the ARMM in the withholding tax payments of National Government 

Agencies (NGAs) and in the National Collections from Taxpayers other than 

NGAs as provided for under Section 9, Article IX of RA No. 9054, Amending 

Therein Certain Sections of RR No. 4-98; (b) Allotment to the Regional 

Government (RG) of the 30% share of the National Government (NG) of All 

Current Year Collections of Internal Revenue Taxes within ARMM for a Period 

of five (5) years as may be provided in the Annual Appropriations Act as 

Provided for Under Section 15, Article IX of RA No. 9054; and (c) 50% of 

the 80% Share of the NG from the Yearly Incremental Revenue from VAT 

Collections within ARMM Received by the Central Government as Provided 

for Under Section 15, in Relation to Section 9, both of Article IX of RA No. 

9054 as well as in Relation to Section 283 of the National Internal 

Revenue Code (NIRC) of 1997

130 





U.P. Law Complex, Diliman, Quezon City 






--o0o-- 


Amending Section 4 of Revenue Regulations No. 17-2002, as amended by 

Revenue Regulations No. 23-2002 and 28-2002 Relative to the Authority of the 

Commissioner of Internal Revenue to Delegate the Review and Evaluation of 

the VAAP Availments which shall likewise Apply to Unprocessed VAP 

Availments Made Pursuant to Revenue Regulations No. 8-2001, As Amended 

SECTION 1. SCOPE ñ Pursuant to Section 244 in relation to Section 6(A) of the Tax 

Code of 1997, these Regulations are hereby promulgated to amend Section 4 of Revenue 

Regulations No. 17-2002, as amended by Revenue Regulations No. 23-2002 and 28-2002 

relative to the authority of the Commissioner of Internal Revenue to delegate the review and 

evaluation of the VAAP availments which shall likewise apply to unprocessed VAP availments 

made pursuant to Revenue Regulations No. 8-2001, as amended. 

SEC. 2. AMENDATORY PROVISION ñ A new provision is hereby added to Section 4 

of Revenue Regulations No. 17-2002, as amended by Revenue Regulations No. 23-2002 and 

28-2002, as the last paragraph thereof, to be read as follows: 

ìSEC. 4. COMPUTATION OF THE AMOUNTS PAYABLE ñ xxx 

ìxxx xxx xxx 

ìxxx xxx xxx 

ìAll VAAP availments made pursuant hereto shall be subject to the review and 

evaluation of the National Office unless otherwise delegated upon order by the 

Commissioner of Internal Revenue. 

ìThe above provision shall likewise apply to all unprocessed availments made 

under the Voluntary Assessment Program (VAP) pursuant to Revenue Regulations 

No. 8-2001, as amended.î


SEC. 3. EFFECTIVITY ñ These Regulations shall take effect immediately upon approval. 








óo0oó 


Providing the Guidelines in Determining Whether a Particular Real Property 

is a Capital Asset or an Ordinary Asset Pursuant to Section 39(A)(1) of the 

National Internal Revenue Code of 1997 for Purposes of Imposing the 

Capital Gains Tax under Sections 24(D), 25(A)(3), 25(B) and 27(D)(5), 

or the Ordinary Income Tax under Sections 24(A), 25(A) & (B), 27(A), 28(A)(1) 

and 28(B)(1), or the Minimum Corporate Income Tax (MCIT) under 

Sections 27(E) and 28(A)(2) of the same Code 

SECTION 1. Scope ñ Pursuant to Section 244 of the National Internal Revenue Code 

of 1997 (Code), these Regulations are hereby promulgated to implement Sec. 39(A)(1), in 

relation to Secs. 24(D), 25(A)(3), 25(B) and 27(D)(5), and Secs. 24(A), 25(A) & (B), 27(A) 

or 27(E), 28(A)(1) or 28(A)(2), and 28(B)(1), all of the said Code, providing for the purpose 

the guidelines in determining whether a particular real property is a capital asset or an 

ordinary asset. 

SEC. 2. Definition of Terms ñ For purposes of these Regulations, the following terms 

shall be defined as follows: 

a. Capital assets shall refer to all properties held by a taxpayer, whether or not connected 

with his trade or business, and which are not included among the real properties considered 

as ordinary assets under Sec. 39(A)(1) of the Code. 

b. Ordinary assets shall refer to all real properties specifically excluded from the definition of 

capital assets under Sec. 39(A)(1) of the Code, namely: 

1. Stock in trade of a taxpayer or other real property of a kind which would properly be 

included in the inventory of the taxpayer if on hand at the close of the taxable year; or 

2. Real property held by the taxpayer primarily for sale to customers in the ordinary 

course of his trade or business; or 

3. Real property used in trade or business (i.e. buildings and/or improvements) of a 

character which is subject to the allowance for depreciation provided for under Sec. 

34(F) of the Code; or

132 


4. Real property used in trade or business of the taxpayer. 

Real properties acquired by banks through foreclosure sales are considered 

as their ordinary assets. However, banks shall not be considered as habitually 

engaged in the real estate business for purposes of determining the applicable 

rate of withholding tax imposed under Sec. 2.57.2(J) of Revenue Regulations No. 

2-98, as amended. 

c. Real Property shall have the same meaning attributed to that term under Article 415 of 

Republic Act No. 386, otherwise known as the ìCivil Code of the Philippines.î 

d. Real estate dealer shall refer to any person engaged in the business of buying and 

selling or exchanging real properties on his own account as a principal and holding 

himself out as a full or part-time dealer in real estate. 

e. Real estate developer shall refer to any person engaged in the business of developing 

real properties into subdivisions, or building houses on subdivided lots, or constructing 

residential or commercial units, townhouses and other similar units for his own account 

and offering them for sale or lease. 

f. Real estate lessor shall refer to any person engaged in the business of leasing or 

renting real properties on his own account as a principal and holding himself out as lessor 

of real properties being rented out or offered for rent. 

g. Taxpayers engaged in the real estate business shall refer collectively to real estate 

dealers, real estate developers, and/or real estate lessors. Conversely, the term ìtaxpayers 

not engaged in the real estate businessî shall refer to persons other than real estate 

dealers, real estate developers and/or real estate lessors. A taxpayer whose primary 

purpose of engaging in business, or whose Articles of Incorporation states that its primary 

purpose is to engage in the real estate business shall be deemed to be engaged in the real 

estate business for purposes of these Regulations. 

SEC. 3. Guidelines in Determining Whether a Particular Real Property is a Capital 

Asset or Ordinary Asset - 

a. Taxpayers engaged in the real estate business ñ Real property shall be classified with 

respect to taxpayers engaged in the real estate business as follows: 

1. Real Estate Dealer ñ All real properties acquired by the real estate dealer shall be 

considered as ordinary assets. 

2. Real Estate Developer ñ All real properties acquired by the real estate developer, 

whether developed or undeveloped as of the time of acquisition, and all real properties 

which are held by the real estate developer primarily for sale or for lease to customers in 

the ordinary course of his trade or business or which would properly be included in the 

inventory of the taxpayer if on hand at the close of the taxable year and all real properties 

used in the trade or business, whether in the form of land, building, or other improvements, 

shall be considered as ordinary assets. 

3. Real Estate Lessor ñ All real properties of the real estate lessor, whether land and/or 

improvements, which are for lease/rent or being offered for lease/rent, or otherwise for


use or being used in the trade or business shall likewise be considered as ordinary 

assets. 

4. Taxpayers habitually engaged in the real estate business ñ All real properties acquired 

in the course of trade or business by a taxpayer habitually engaged in the sale of 

real estate shall be considered as ordinary assets. Registration with the HLURB or HUDCC 

as a real estate dealer or developer shall be sufficient for a taxpayer to be considered as 

habitually engaged in the sale of real estate. If the taxpayer is not registered with the 

HLURB or HUDCC as a real estate dealer or developer, he/it may nevertheless be deemed 

to be engaged in the real estate business through the establishment of substantial relevant 

evidence (such as consummation during the preceding year of at least six (6) taxable real 

estate sale transactions, regardless of amount; registration as habitually engaged in real 

estate business with the Local Government Unit or the Bureau of Internal Revenue, etc.). 

A property purchased for future use in the business, even though this purpose is later 

thwarted by circumstances beyond the taxpayerís control, does not lose its character as 

an ordinary asset. Nor does a mere discontinuance of the active use of the property 

change its character previously established as a business property. 

b. Taxpayer not engaged in the real estate business ñ In the case of a taxpayer not engaged 

in the real estate business, real properties, whether land, building, or other improvements, 

which are used or being used or have been previously used in the trade or 

business of the taxpayer shall be considered as ordinary assets. These include buildings 

and/or improvements subject to depreciation and lands used in the trade or business of 

the taxpayer. 

A depreciable asset does not lose its character as an ordinary asset, for purposes of 

the instant provision, even if it becomes fully depreciated, or there is failure to take 

depreciation during the period of ownership. 

Monetary consideration or the presence or absence of profit in the operation of the 

property is not significant in the characterization of the property. So long as the property 

is or has been used for business purposes, whether for the benefit of the owner or any of 

its members or stockholders, it shall still be considered as an ordinary asset. Real property 

used by an exempt corporation in its exempt operations, such as a corporation 

included in the enumeration of Section 30 of the Code, shall not be considered used for 

business purposes, and therefore, considered as capital asset under these Regulations. 

Real property, whether single detached; townhouse; or condominium unit, not used in 

trade or business as evidenced by a certification from the Barangay Chairman or from 

the head of administration, in case of condominium unit, townhouse or apartment, and as 

validated from the existing available records of the Bureau of Internal Revenue, owned by 

an individual engaged in business, shall be treated as capital asset. 

c. Taxpayers changing business from real estate business to non-real estate business ñ 

In the case of a taxpayer who changed its real estate business to a non-real estate 

business, or who amended its Articles of Incorporation from a real estate business to a 

non-real estate business, such as a holding company, manufacturing company, trading 

company, etc., the change of business or amendment of the primary purpose of the

134 


business shall not result in the re-classification of real property held by it from ordinary 

asset to capital asset. For purposes of issuing the certificate authorizing registration 

(CAR) or tax clearance certificate (TCL), as the case may be, the appropriate officer of 

the BIR shall at all times determine whether a corporation purporting to be not engaged in 

the real estate business has at any time amended its primary purpose from a real estate 

business to a non-real estate business. 

d. Taxpayers originally registered to be engaged in the real estate business but failed to 

subsequently operate ñ In the case of subsequent non-operation by taxpayers originally 

registered to be engaged in the real estate business, all real properties originally acquired 

by it shall continue to be treated as ordinary assets. 

e. Treatment of abandoned and idle real properties ñ Real properties formerly forming part 

of the stock in trade of a taxpayer engaged in the real estate business, or formerly being 

used in the trade or business of a taxpayer engaged or not engaged in the real estate 

business, which were later on abandoned and became idle, shall continue to be treated as 

ordinary assets. Real property initially acquired by a taxpayer engaged in the real estate 

business shall not result in its conversion into a capital asset even if the same is subsequently 

abandoned or becomes idle. 

Provided however, that properties classified as ordinary assets for being used in business 

by a taxpayer engaged in business other than real estate business as defined in 

Section 2 (g) hereof are automatically converted into capital assets upon showing of proof 

that the same have not been used in business for more than two (2) years prior to the 

consummation of the taxable transactions involving said properties. 

f. Treatment of real properties that have been transferred to a buyer/transferee, whether 

the transfer is through sale, barter or exchange, inheritance, donation or declaration of 

property dividends. 

Real properties classified as capital or ordinary asset in the hands of the seller/transferor 

may change their character in the hands of the buyer/transferee. The classification 

of such property in the hands of the buyer/transferee shall be determined in accordance 

with the following rules: 

1. Real property transferred through succession or donation to the heir or donee who is 

not engaged in the real estate business with respect to the real property inherited or 

donated, and who does not subsequently use such property in trade or business, shall be 

considered as a capital asset in the hands of the heir or donee. 

2. Real property received as dividend by the stockholders who are not engaged in the real 

estate business and who do not subsequently use such real property in trade or business 

shall be treated as capital assets in the hands of the recipients even if the corporation 

which declared the real property dividend is engaged in real estate business. 

3. The real property received in an exchange shall be treated as ordinary asset in the 

hands of the transferee in the case of a tax-free exchange by taxpayer not engaged in 

real estate business to a taxpayer who is engaged in real estate business, or to a taxpayer 

who, even if not engaged in real estate business, will use in business the property received 

in the exchange.


g. Treatment of real property subject of involuntary transfer ñ In the case of involuntary 

transfers of real properties, including expropriation or foreclosure sale, the involuntariness 

of such sale shall have no effect on the classification of such real property in the 

hands of the involuntary seller, either as capital asset or ordinary asset, as the case may 

be. 

For example, real properties forming part of the inventory of a real estate dealer, which 

are foreclosed, shall, for purposes of determining the applicable tax on such foreclosure 

sale, be treated as ordinary assets. On the other hand, the nature of such real property in 

the hands of the foreclosure buyer shall be determined in accordance with the rules 

stated in sub-paragraph (f) hereof. 

SEC. 4. Applicable Taxes on Sale, Exchange or Other Disposition of Real Property ñ 

Gains/Income derived from sale, exchange, or other disposition of real properties shall, 

unless otherwise exempt, be subject to applicable taxes imposed under the Code, depending 

on whether the subject properties are classified as capital assets or ordinary assets. 

a. In the case of individual citizens (including estates and trusts), resident aliens, 

and non-resident aliens engaged in trade or business in the Philippines. 

(i) Capital gains presumed to have been realized from the sale, exchange, or other disposition 

of real property located in the Philippines, classified as capital assets, shall be subject 

to the six percent (6%) capital gains tax imposed under Sec. 24(D)(1) or 25(A)(3) of the 

Code, as the case may be, based on the gross selling price or current fair market value as 

determined in accordance with Sec. 6(E) of the Code, whichever is higher, provided, that 

if the buyer is the Government or any of its political subdivisions or agencies or a government-owned-or-controlled 

corporation, the tax liability shall, at the option of the individual 

seller (including estate or trust), be computed on the basis of either the six percent (6%) 

capital gains under Sec. 24(D)(1)/25(A)(3) or the graduated tax rates under Sec. 

24(A)(1)(c) or 25 (A)(1), all of the Code. 

(ii) The sale of real property located in the Philippines, classified as ordinary assets, shall be 

subject to the creditable withholding tax (expanded) under Sec. 2.57.2(J) of Rev. Regs. 

No. 2-98, as amended, based on the gross selling price or current fair market value as 

determined in accordance with Section 6(E) of the Code, whichever is higher, and consequently, 

to the ordinary income tax imposed under Sec. 24(A)(1)(c) or 25(A)(1) of the 

Code, as the case may be, based on net taxable income. 

b. In the case of non-resident aliens not engaged in trade or business in the Philippines 

ñ Capital gains presumed to have been realized by non-resident aliens not engaged in trade 

or business in the Philippines on the sale of real property located in the Philippines shall be 

subject to the six percent (6%) capital gains tax imposed under Sec. 25(B), in relation to 

Sec. 24(D)(1), of the Code, based on the gross selling price or current fair market value as 

determined in accordance with Sec. 6(E) of the Code, whichever is higher. 

c. In the case of domestic corporations ñ 

(i) Capital gains presumed to have been realized from the sale, exchange or disposition of 

lands and/or buildings located in the Philippines, which are classified as capital assets, 

shall be subject to a capital gains tax of six percent (6%) based on the gross selling price

136 


or current fair market value as determined in accordance with Sec. 6(E) of the Code, 

whichever is higher, of such land and/or buildings pursuant to Sec. 27(D)(5) of the Code. 

(ii) The sale of land and/or building classified as ordinary asset and other real property 

(other than land and/or building treated as capital asset), regardless of the classification 

thereof, all of which are located in the Philippines, shall be subject to the creditable 

withholding tax (expanded) under Sec. 2.57.2(J) of Rev. Regs. No. 2-98, as amended, 

and consequently, to the ordinary income tax under Sec. 27(A) of the Code. In lieu of the 

ordinary income tax, however, domestic corporations may become subject to the minimum 

corporate income tax (MCIT) under Sec. 27(E) of the Code, whichever is applicable. 

d. In the case of resident foreign corporations ñ Real property located in the Philippines, 

regardless of classification, sold by a resident foreign corporation shall be subject to the 

creditable withholding tax (expanded) under Sec. 2.57.2(J) of Rev. Regs No. 2-98, as amended, 

and consequently, to the ordinary income tax under Sec. 28(A)(1) or to the MCIT under Sec. 

28(A)(2), both of the Code, whichever is applicable. 

e. In the case of non-resident foreign corporations ñ The gain from the sale of real 

property located in the Philippines by a non-resident foreign corporation shall be subject to 

the final withholding tax at the rate of thirty-two percent (32%) imposed under Sec. 2.57.1(I) 

of Rev. Regs. No. 2-98, as amended, in relation to Sec. 28(B)(1) of the Code. 

f. Income on sale of real property not located in the Philippines ñ Gain realized from 

the sale, exchange, or other disposition of real property not located in the Philippines, 

regardless of classification, by resident citizens or domestic corporations shall be subject to 

the income tax imposed in Sec. 24(A)(1), or Sec. 27(A) or (E) of the Code, as the case may 

be. Such income/gain shall be exempt pursuant to Sec. 23(B), (D) and (F) of the Code, as 

the case may be, in the case of non-resident citizens, alien individuals and foreign corporations. 

SEC. 5. Repealing Clause ñ All existing BIR rulings, revenue rules, regulations and 

other issuances or portions thereof inconsistent with the provisions of these regulations are 

hereby modified, repealed or revoked accordingly. 

SEC. 6. Effectivity ñ These Regulations shall take effect after fifteen (15) days following 

publication in the Official Gazette or in any newspaper of general circulation. 








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Regulations Further Amending Revenue Regulations No. 14-97, 

as Last Amended by Revenue Regulations No. 4-2003 

SECTION 1. SCOPE ñ Pursuant to the provisions of Section 244, in relation to Section 

245 of the National Internal Revenue Code of 1997 (Code), these Regulations are hereby 

promulgated to defer the implementation of the amendatory provisions introduced by Revenue 

Regulations No. 4-2003 amending Revenue Regulations No. 14-97, as amended by Revenue 

Regulations No. 14-99, except for the compliance requirements provided in the transitory 

provisions of Revenue Regulations 4-2003 which must be observed not later than the dates 

so prescribed hereunder. 

SEC. 2. TRANSITORY PROVISIONS ñ Section 6 of Revenue Regulations No. 4- 

2003, further amending Revenue Regulations No. 14-97, as amended by Revenue Regulations 

No. 14-99, is hereby amended to read as follows: 

ìSEC. 6. TRANSITORY PROVISIONS ñ 

(a) The provisions of Revenue Regulations No. 14-97, as amended by Revenue 

Regulations No. 14-99 shall be applicable to all automobiles completely assembled 

or imported (Completely-Built-Up (CBU) units, including Completely-Knocked- 

Down (CKD) and Semi-Knocked-Down (SKD) Units), that are still in the custody 

of the Bureau of Customs and where import entries thereof have already been 

filed, or in the place of production, assembly plant or warehouse, as the case 

may be, as of February 15, 2003; 

(b) For this purpose, the following must be complied with: 

(i) All importers and/or assemblers shall submit a duly notarized list of inventory 

on-hand of completely assembled automobiles or CBUs, including Completely- 

Knocked-Down (CKD) and Semi-Knocked Down (SKD) units, that are located 

within the assembly plant or warehouse or the customsí premises as of the date 

immediately preceding the date of effectivity of these Regulations, indicating the 

engine, body and chassis numbers thereof. The list shall be submitted to the 

Commissioner of Internal Revenue, thru the Chief, Large Taxpayers Assistance 

Division II, not later than February 26, 2003. Failure to submit the inventory list on 

the part of the importers/assemblers shall be construed that said importers/assemblers 

do not have any inventory on hand of CBUs, CKDs and SKDs as of 

February 15, 2003; 

(ii) A stocktaking of the aforesaid inventories shall be conducted by the Bureau of 

Internal Revenue for purposes of validating the said list, within five (5) days from 

the date of submission thereof; and 

(iii) Prior to February 16, 2003, an ocular inspection and measurement shall be 

conducted on the different brands/models of vehicles to determine whether or not 

such brands/models are considered automobiles as defined under the provisions 

of these Regulations.î

138 


SEC. 3. DEFERMENT CLAUSE ñ The implementation of Revenue Regulations No. 4- 

2003 will be deferred until March 31, 2003, except as prescribed in Section 2 hereof amending 

Section 6 of Revenue Regulations No. 4-2003. 

SEC. 4. EFFECTIVITY CLAUSE ñ These Regulations shall take effect immediately. 








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Amending Certain Provisions of Revenue Regulations No. 1-97 and 

Revenue Regulations No. 2-97 Relative to the Excise Taxation of Alcohol 

Products, Cigars and Cigarettes for the Purpose of Prescribing the 

Rules and Procedures to be Observed in the Establishment of the 

Current Net Retail Price of New Brands and Variants of New Brands of 

Alcohol and Tobacco Products 

SECTION 1. Scope ñ Pursuant to Sections 244 and 245 of the National Internal 

Revenue Code of 1997 (Code) in relation to Section 141 of the same Code, these Regulations 

are hereby promulgated to amend certain provisions of Revenue Regulations No. 1-97 

pertaining to the excise taxation of cigars and cigarettes and Revenue Regulations No. 2-97 

dealing with the excise taxation of distilled spirits, wines and fermented liquors for the purpose 

of prescribing the rules and procedures to be observed in the establishment of the current 

net retail price of new brands and variants of new brands of cigars and cigarettes, distilled 

spirits, wines, and fermented liquors. 

SEC. 2. Classification and Manner of Taxation of Existing Brands, New Brands, 

Variants of Existing Brands and Variants of New Brands of Cigars and Cigarettes ñ Section 

4 of Revenue Regulations No. 1-97 is hereby amended to read as follows: 

ìSECTION 4. Classification and Manner of Taxation of Existing Brands, New 

Brands, Variants of Existing Brands and Variants of New Brands. 

ìA. Existing Brand 

ì xxx xxx xxx


ìB. New Brand 

ìNew brands shall be classified according to their current net retail price. In the meantime 

that the current net retail price has not yet been established, the taxpayerís suggested net 

retail price shall be used to determine the specific tax classification. Thereafter, a survey or 

any other alternative activity, as discussed hereunder, shall be conducted in 20 major 

supermarkets or retail outlets in Metro Manila (for brands marketed nationally) or in five (5) 

major supermarkets or retail outlets in the region (for brands which are marketed only outside 

Metro Manila) at which the product is sold on retail, three (3) months after the initial removal 

of the new brand to determine the actual net retail price, excluding the excise tax and value 

added tax, which shall then be the basis in determining the specific tax classification. 

ìThe current net retail price of new brands can be established by any or combination of 

the following: 

(a) Through a survey to be conducted by the revenue officers of the Large Taxpayers 

Service and/or Regional Offices or any equivalent office of the Bureau of Internal Revenue 

having jurisdiction over excise taxpayers; 

(b) Through the submission of a price list duly authenticated by the store owner or operator 

of the supermarkets/retail outlets carrying such items/products; 

(c) Through an information submitted by an informer which has been duly authenticated and 

validated by the store owner/operator of the supermarket/retail outlet that issued the sourcedocument; 

(d) Through the direct purchase of such items from the supermarket/retail outlet for which a 

valid receipt/invoice is issued detailing the product description and the retail price thereof; 

(e) Through photographs showing the item on the shelf of the supermarket/retail outlet and 

the corresponding price by which it is sold. The camera to be used for this purpose 

should have built-in-day- date features to indicate the exact date and time when such 

pictures were taken. 

ìIn case the current net retail price as approved is higher than the suggested net retail 

price, the former shall prevail. Otherwise, the suggested net retail price shall prevail. Any 

deficiency in specific tax due shall be assessed and collected, inclusive of increments, as 

provided for by the Code. 

ìThe survey contemplated herein to establish the current net retail price on locally 

manufactured or imported cigarettes shall be initiated and undertaken in the following manner: 

a) The Office in charge of the registration of new brands shall submit, within five (5) days 

immediately after the lapse of the third month following the introduction of the new brand 

and/or variant(s) thereof in the market, to the Commissioner of Internal Revenue (Commissioner) 

a list of brands the current net retail prices of which have to be determined. 

b) The Commissioner shall issue Mission Orders directing the conduct of the specified 

activities leading to the determination of the current net retail price of excisable products

140 


by the authorized representatives of the Office in charge of the registration of new brands 

and variant(s) thereof and by the Regional Offices having jurisdiction over the places 

where major supermarkets or retail outlets physically located. 

c) The results of the survey/other alternative activity conducted shall be submitted to the 

Assistant Commissioner, Large Taxpayers Service or any equivalent office that has jurisdiction 

over excise taxpayers for consolidation thereof. A list of the products containing 

the retail prices and the tax classification thereof shall be submitted for approval by the 

Commissioner and the Secretary of Finance. Upon approval thereof, a notification of the 

result of the survey and the official current net retail price of the surveyed product shall be 

sent to the concerned taxpayer. 

ìFor the purpose of establishing or updating the tax classification of new brands and 

variant(s) thereof, their current net retail price shall be reviewed periodically through the 

conduct of survey or any other appropriate activity, as mentioned above, every two (2) 

years unless earlier ordered by the Commissioner. However, notwithstanding any increase 

in the current net retail price, the tax classification of such new brands shall 

remain in force until the same is altered or changed through the issuance of an appropriate 

Revenue Regulations. 

ìC. Variants of Existing Brand 

ìxxx xxx xxx 

ìD. Variants of New Brand 

ìAny variant of a new brand shall be classified according to its current net retail price 

determined in the same manner as that for a new brand, provided that the tax classification 

shall not be lower than that of the highest tax classification of such new brand and any 

existing variant thereof.î 

SEC. 3. Classification and Manner of Taxation of Existing Brands, New Brands, 

Variants of Existing Brands and Variants of New Brands of Distilled Spirits, Wines and 

Fermented Liquors ñ Section 4 of Revenue Regulations No. 2-97 is hereby amended to read 

as follows: 

ìSECTION 4. Classification and Manner of Taxation of Existing Brands, 

New Brands, Variants of Existing Brands and Variants of New Brands. 

ìA. Existing Brand 

ìB. New Brand 


ìNew brands shall be classified according to their current net retail price. In 

the meantime that the current net retail price has not yet been established, the 

taxpayerís suggested net retail price shall be used to determine the specific tax 

classification. Thereafter, a survey or any other alternative activity, as discussed

January - March 2003 National Administrative Register 141 

hereunder, shall be conducted in 20 major supermarkets or retail outlets in Metro 

Manila (for brands marketed nationally) or in five (5) major supermarkets or retail 

outlets in the region (for brands which are marketed only outside Metro Manila ) 

at which the product is sold on retail, three (3) months after the initial removal of 

the new brand to determine the actual net retail price, excluding the excise tax 

and value added tax, which shall then be the basis in determining the specific tax 

classification. 

ìThe current net retail price of new brands can be established by any or combination of 


(a) Through a survey to be conducted by the revenue officers of the Large Taxpayers 

Service and/or Regional Offices or any equivalent office of the Bureau of Internal Revenue 

having jurisdiction over excise taxpayers; 

(b) Through the submission of a price list duly authenticated by the store owner or operator 

of the supermarkets/retail outlets carrying such items/products; 

(c) Through an information submitted by an informer which has been duly authenticated and 

validated by the store owner/operator of the supermarket/retail outlet that issued the sourcedocument; 

(d) Through the direct purchase of such items from the supermarket/retail outlet for which a 


(e) Through photographs showing the item on the shelf of the supermarket/retail outlet and 

the corresponding price by which it is sold. The camera to be used for this purpose 

should have built-in day-date features to indicate the exact date and time when such 

pictures were taken. 

ìIn case the current net retail price as approved is higher than the suggested net retail 

price, the former shall prevail. Otherwise, the suggested net retail price shall prevail. Any 

deficiency in specific tax due shall be assessed and collected, inclusive of increments, as 

provided for by the Code. 

ìThe survey contemplated herein to establish the current net retail price on locally 

manufactured or imported cigarettes shall be initiated and undertaken in the following 

manner: 

a) The Office in charge of the registration of new brands shall submit, within five (5) days 

immediately after the lapse of the third month following the introduction of the new brand 

and/or variant(s) thereof in the market, to the Commissioner of Internal Revenue (Commissioner) 

a list of brands the current net retail prices of which have to be determined. 

b) The Commissioner shall issue Mission Orders directing the conduct of the specified 

activities leading to the determination of the current net retail price of exciseable products 

by the authorized representatives of the Office in charge of the registration of new brands 

and variant(s) thereof and by the Regional Offices having jurisdiction over the places 

where major supermarkets or retail outlets are physically located.



c) The results of the survey/other alternative activity conducted shall be submitted to the 

Assistant Commissioner, Large Taxpayers Service or any equivalent office that has jurisdiction 

over excise taxpayers for consolidation thereof. A list of the products containing 

the retail prices and the tax classification thereof shall be submitted for approval by the 

Commissioner and the Secretary of Finance. Upon approval thereof, a notification of the 

result of the survey and the official current net retail price of the surveyed product shall be 

sent to the concerned taxpayer. 

ìFor the purpose of establishing or updating the tax classification of new brands and 

variant(s) thereof, their current net retail price shall be reviewed periodically through the 

conduct of survey or any other appropriate activity, as mentioned above, every two (2) 

years unless earlier ordered by the Commissioner. However, notwithstanding any increase 

in the current net retail price, the tax classification of such new brands shall 

remain in force until the same is altered or changed through the issuance of an appropriate 

Revenue Regulations. 

ìC. Variants of Existing Brand 


ìD. Variant of New Brand 

ìAny variant of a new brand shall be classified according to its current net 

retail price determined in the same manner as that for a new brand, provided that 

the tax classification shall not be lower than that of the highest tax classification of 

such new brand and any existing variant thereof.î 

SEC. 4. Transitory Clause ñ For all brands duly registered and introduced in the 

market beginning January 1, 1997, the current net retail price of which was not determined 

for the last two (2) years from the effectivity hereof, a determination or re-determination of 

the current net retail prices thereof shall be conducted immediately upon the effectivity of 

these Regulations. 

SEC. 5. Repealing Clause ñ All regulations, rulings, orders or portions thereof which 

are inconsistent with the provisions of these Regulations are hereby revoked and/or modified 

accordingly. 

SEC. 6. Effectivity Clause ñ These Regulations shall take effect after fifteen (15) days 

following publication in a newspaper of general circulation. 







óo0oó




Implementing the Tax Incentives Provisions of Republic Act No. 8525, 

Otherwise Known as the ìAdopt-a-School Act of 1998î 

SECTION 1. Scope ñ Pursuant to Sections 4 and 244 of the National Internal Revenue 

Code (Tax Code) of 1997, the following Regulations are hereby promulgated to implement the 

tax provisions of R.A. No. 8525, otherwise known as the ìAdopt-a-School Act of 1998.î 

SEC. 2. Definition of Terms ñ For purposes of these Regulations, the following terms 

are operationally defined as follows: 

a) ìActî ñ refers to Republic Act No. 8525, otherwise known as the ìAdopt-a-School Act of 

1998.î 

b) ìAdopt-a-School Programî ñ or ìProgramî shall refer to a program which allows private 

entities to assist a public school in a particular aspect of its educational program within an 

agreed period. 

c) ìPublic Schoolî ñ shall refer to a government school, whether elementary, secondary, 

post-secondary or tertiary, which enters into an Agreement with an adopting private entity 

concerning assistance referred to under paragraph (e) hereof. 

d) ìPrivate entityî ñ shall refer to an individual engaged in trade or business or engaged in 

the practice of his profession or other business organizations, like a partnership, corporation 

or cooperative, either resident or non-resident, who/which teams up with the Department 

of Education (DepEd), or with the Commission on Higher Education (CHED), or 

with the Technical Education and Skills Development Authority (TESDA), towards providing 

much needed assistance and service to public schools. It shall be known hereafter as 

the adopting private entity. 

e) ìAssistanceî ñ shall refer to the aid/help/contribution/donation provided by an adopting 

private entity to a public school. Assistance may be in the form of, but not limited to, 

infrastructure, teaching and skills development, learning support, computer and science 

laboratories, and food and nutrition. 

f) ìAgreementî - shall refer to a Memorandum of Agreement (MOA) or Agreement/Deed of 

Donation entered into by and between the adopting private entity and the public school 

specifying the terms and conditions of the adoption, including the tasks and responsibilities 

of the contracting parties. 

g) ìNational Secretariatî ñ shall refer to the office composed of representatives of the three 

education agencies, namely the DepEd, CHED and TESDA, which will provide overall 

management and coordination of the program. 

h) ìApplication for tax incentives or tax exemptionî - shall refer to the application for tax 

credit by the adopting private entity referred to under Section 4 of the Act, which means 

application for additional deduction in arriving at the net taxable income.



SEC. 3. Tax Incentives Accruing to the Adopting Private entity ñ A pre-qualified 

adopting private entity, which enters into an Agreement with a public school, shall be entitled 

to the following tax incentives: 

a) Deduction from the gross income of the amount of contribution/donation that were actually, 

directly and exclusively incurred for the Program, subject to limitations, conditions 

and rules set forth in Section 34(H) of the Tax Code, plus an additional amount equivalent 

to fifty percent (50%) of such contribution/donation subject to the following conditions: 

(1) That the deduction shall be availed of in the taxable year in which the expenses have 

been paid or incurred; 

(2) That the taxpayer can substantiate the deduction with sufficient evidence, such as 

official receipts or delivery receipts and other adequate records ñ 

2.1 The amount of expenses being claimed as deduction; 

2.2 The direct connection or relation of the expenses to the adopting private 

entityís participation in the Adopt-a-School Program. The adopting private entity 

shall also provide a list of projects and/or activities undertaken and the cost of 

each undertaking, indicating in particular where and how the assistance has 

been utilized as supported by the Agreement; and 

2.3 Proof or acknowledgment of receipt of the contributed/donated property by 

the recipient public school. 

(3) That the application, together with the approved Agreement endorsed by the National 

Secretariat, shall be filed with the Revenue District Office (RDO) having jurisdiction over 

the place of business of the donor/adopting private entity, copy furnished the RDO having 

jurisdiction over the property, if the contribution/donation is in the form of real property. 

(b) Exemption of the Assistance made by the donor from payment of donorís tax pursuant 

to Sections 101 (A)(2) and (B)(1) of the Tax Code of 1997. 

SEC. 4. Other Tax Consequences of the Assistance to the Public School ñ 

(a) In the case of foreign donation, the VAT and excise tax, if any, on the importation of 

goods shall be assumed by the DepEd, or CHED, or TESDA, as the case may be, being 

the consignee or the importer thereof, except in cases where the importation is exempt 

from VAT under Section 109 of the Tax Code. In this connection, VAT on importation 

payable by the concerned national government agency (namely, DepEd, CHED or TESDA) 

to the National Government arising from the subject foreign donation is deemed automatically 

appropriated and shall be considered as expenditure of the government pursuant to 

the provisions of Section 13 of the Government Appropriation Act (GAA) as determined 

by the Congress on an annual basis. 

(b) In the case of local donation considered as a ìtransaction deemed saleî of goods or 

properties originally intended for sale by the adopting private entity, the same shall be 

subject to VAT on the transfer of the said goods or properties under Section 106(B)(1) of 

the Tax Code. The said donor/adopting private entity, however, is entitled to claim the


available input tax subject to the rules on allocation among taxable sales, zero-rated sales 

and exempt sales. On the other hand, the donee-public school, shall be deemed as the 

final consumer/end-user and therefore, not entitled to any input VAT. 

If the local donation is not considered as a ìtransaction deemed sale,î then the 

transfer of the goods or properties to the public school shall be exempt from VAT. 

SEC. 5. Valuation of the Assistance/Contribution or Donation ñ 

(a) Cash assistance/contribution or donation ñ The amount of assistance/contribution or 

donation shall be based on the actual amount contributed/donated appearing in the official 

receipt issued by the donee. 

(b) Assistance/contribution or donation other than money ñ 

(i) Personal property ñ If the contribution or donation is in the form of personal 

property, the amount of the contribution or donation shall be based on the acquisition 

cost of the said assistance or contribution. However, if the said property 

had already been used, then such valuation shall take into consideration the 

depreciated value of property. 

(ii) Consumable goods ñ If the assistance is in the form of consumable goods, 

the amount of the contribution or donation shall be based on the acquisition cost 

by the donor or the actual cost thereof at the time of the donation, whichever is 

lower. 

(iii) Services ñ If the assistance is in the form of services, the amount of the 

contribution or donation shall be based on the value of the services rendered as 

agreed upon by the donor and the service provider and the public school as fixed 

in the Memorandum of Agreement, or the actual expenses incurred by the donor, 

whichever is lower. 

(iv) Real Property ñ If the assistance is in the form of real property, the amount of 

the contribution or donation shall be the fair market value of property at the time of 

the contribution/donation, as determined pursuant to Section 6(E) of the Tax Code 

or the book value/depreciated value of the property, whichever is lower. Appraisal 

increase or appreciation in the value of the asset recorded in the books of account 

should not be considered in computing the book value of the asset. 

SEC. 6. Procedures for the Availment of Tax Incentives under the Program by the 

Adopting Private Entity ñ In order to avail of the tax incentives provided for under these 

Regulations, the following procedures and requirements should be complied with, viz: 

(a) National Secretariat shall endorse to the RDO of the Bureau of Internal Revenue (BIR) 

having jurisdiction over the place of business of the adopting private entity, copy furnished 

the RDO having jurisdiction over the property if the donation or contribution is in the form 

of real property, the following: 

(i) duly notarized/approved Agreement, 

(ii) duly notarized Deed of Donation,



(iii) Official receipts or any document showing the actual value of the contribution/donation; 

(iv) Certificate of Title and Tax Declaration, if the donation is in the form of real 

property; and 

(v) Other adequate records showing the direct connection or relation of the expenses 

being claimed as deduction/donation to the adopting private entityís participation 

in the Program, as well as showing or proving receipt of the donated 

property. 

(b) Adopting private entity shall submit application for entitlement to the additional 50% special 

deduction from the gross income, and for exemption from donorís tax to the RDO 

having jurisdiction over the place of business of the adopting private entity, copy furnished 

the RDO having jurisdiction over the donated real property. 

SEC. 7. Repealing Clause ñ All revenue rules and regulations, and other revenue 

issuances or parts thereof, which are inconsistent with these Regulations are hereby repealed 

or modified accordingly. 

SEC. 8. Effectivity ñ These Regulations shall take effect fifteen (15) days after publication 

in the Official Gazette or in a newspaper of general circulation, whichever comes first. 








óo0oó 


Amending Further Revenue Regulations No. 3-2003, in relation to 

Revenue Regulations No. 1-2003, thereby Extending Further the Deadline 

for Registration and Other Compliance Requirements During the Transitory 

Period of the Imposition of Value-Added Tax (VAT) on Sale of Services by 

Persons Engaged in the Practice of Profession or Calling and Professional 

Services Rendered by General Professional Partnerships; Services Rendered 

by Actors, Actresses, Talents, Singers and Emcees; Radio and Television 

Broadcasters and Choreographers; Musical, Radio, Movie, Television and 

Stage Directors; and Professional Athletes; as Well as Services Rendered 

by Customs, Real Estate, Stock, Immigration and Commercial Brokers, 

beginning January 1, 2003 and for other Purpose


Section 1. Scope. Pursuant to the provisions of Sections 244 and 108 of the National 

Internal Revenue Code of 1997, in relation to Section 5 of Republic Act No. 8424, as last 

amended by Section 1 of Republic Act No. 9010, these Regulations are hereby promulgated 

to amend the transitory provisions under RR No. 1-2003 as amended by Revenue Regulations 

No. 3-2003 in relation to the imposition of value-added tax on sale of services by persons 

engaged in the practice of profession or calling and professional services rendered by 

general professional partnerships; services rendered by actors, actresses, talents, singers 

and emcees; radio and television broadcasters and choreographers; musical, radio, movie, 

television and stage directors; and professional athletes, as well as services rendered by 

customs, real estate, stock, immigration and commercial brokers. 

Sec. 2. Amendment. Section 3 of Revenue Regulations No. 1-2003, as amended by 

Revenue Regulations No. 3-2003, is hereby further amended to read as follows: 

ìSEC. 3. Transitory Provisions. During the transition, the following guidelines shall 

be followed: 

a. Registration ñ Affected taxpayers are required to register as VAT/Non-VAT taxpayers 

without penalty not later than March 19, 2003. It is to be stressed out, that the VAT 

Declaration/Monthly Percentage Tax Return covering the transactions for January 2003 

should be filed not later than the deadline for filing of the said returns covering the transactions 

in February 2003 (March 20, 2003 for regular/manual VAT/Non-VAT taxfilers and 

the prescribed date under the staggered filing system for those using the Electronic Filing 

and Payment System (EFPS), without any penalty. 

It is emphasized, however, that the sale of service by professionals, etc. beginning 

January 1, 2003 is already subject to the VAT (Output Tax), except those whose gross 

receipts for the preceding year (or expected gross receipts for the current year, for new 

taxpayers) do not exceed P550,000 who shall pay only the 3% percentage tax unless they 

likewise opt to be covered by the VAT system and, therefore, are also subject to VAT. 

Thus, VAT-registrable professionals, etc. (those required to register as VAT-persons but 

have not registered yet) are subject to the VAT beginning January 1, 2003. These newly 

covered taxpayers may, pending registration as VAT-persons and compliance with paragraph 

(b) hereof, issue Provisional or Temporary Receipts to acknowledge receipt of 

payment of service fees from their clients/customers. These Provisional or Temporary 

Receipts shall be immediately replaced by VAT Official Receipts upon the availability 

thereof and, at this point in time, the client/customer may then claim input tax credit. 

b. Unused receipts ñ Taxpayers who change status from NON-VAT to VAT as a 

result of the lapse of the effectivity of RA 9010 should submit on or before March 19, 2003 

an inventory of unused receipts as of December 31, 2002 indicating the number of 

booklets and the corresponding serial numbers. Unused NON-VAT receipts shall be 

allowed for use in transactions subject to VAT provided the phrase ìVAT registered as of 

___________ ì is stamped on all copies thereof. These receipts with the proper stamp 

shall be allowed for use in transactions subject to VAT until June 30, 2003. 

c. Billed but uncollected sale of services ñ Amounts due on sale of services rendered 

on or before December 31, 2002 and becoming liable to VAT starting January 1, 

2003 payments of which are due on or after that date shall be considered accrued as of



December 31, 2002 for the purpose of VAT-exemption and payment of any applicable 

percentage tax, subject to the following conditions: 

1. An information return showing the name/s of the contractee/s, client/s, customer/ 

s, and the amount/s of the contract price outstanding as of December 31, 2002, and 

containing a declaration to pay the applicable percentage tax due, if any, shall be filed not 

later than March 19, 2003; 

2. The seller billed the unpaid amount not later than December 31, 2002 and a copy 

of such billing is attached to the information return required in (1) hereof; 


receivable; 

4. The seller issued or should issue non-VAT official receipts to the buyer for this 

purpose; and 

5. The seller files not later than January 20, 2003 or on before the 20 th day of the 

next month, depending upon the month of collection of the consideration. The regular 

percentage tax return for the payment of the percentage tax on payments received after 

2002 (applicable to brokers only). 

Failure to comply with the above-stated conditions shall automatically subject the 

gross receipts to value added tax. 

d. Transitional input tax credits. For goods (other than capital goods), materials or 

supplies not for sale but purchased for use in business in their present condition which 

are not intended for further processing and are on hand on December 31, 2002, a 

presumptive input tax equivalent to 8% of the value thereof, or the actual value-added tax 

paid on such goods, materials and/or supplies, whichever is higher, shall be allowed. For 

this purpose, an inventory as of December 31, 2002 of such goods, materials and/or 

supplies showing the quantity, description and value should be filed with the RDO not later 

than March 19, 2003. In recognizing presumptive input tax as of December 31, 2002, a 

journal entry should be made in the books debiting the input tax account and crediting the 

aforementioned asset accounts. Provided, however, that this paragraph does not apply to 

brokers. 

In the case of brokers, any input tax outstanding in their books and corroborated by 

their VAT returns as of December 31, 1999 and still unused as of December 31, 2002 

shall be allowed as transitional input tax.î 

Sec. 3. Repealing Clause ñ Any existing regulations, orders or instructions or portions 

thereof that are inconsistent with these regulations are hereby repealed, amended or modified 

accordingly. 

Sec. 4. Effectivity Clause ñ These Regulations shall take effect immediately after 


Adopted: 27 Feb. 2003








--o0o-- 


Amending Certain Provisions of Revenue Regulation No. 18-99 

Implementing Section 5 of Republic Act No. 8424, otherwise known 

as the Tax Reform Act of 1997, and other pertinent provisions of the 

National Internal Revenue Code of 1997 imposing VAT on services of Banks, 

Non-bank Financial Intermediaries and Finance Companies, beginning 

January 1, 2003 pursuant to Section 1 of Republic Act No. 9010 

Section 1. Scope. Pursuant to the provisions of Section 244 in relation to Section 108, 

and Section 106 on certain cases, of the National Internal Revenue Code of 1997, these 

Regulations are hereby promulgated to amend certain provisions of Revenue Regulations 

No. 18-99 governing the imposition of VAT on banks, non-bank financial intermediaries and 

finance companies in accordance with Section 5 of Republic Act No. 8424 which imposition 

was last deferred by Section 1 of Republic Act No. 9010. 

Sec. 2. Definition of Terms ñ Section 2 of Revenue Regulations No. 18-99 is hereby 


ìSECTION 2. Definition of Terms ñ For purposes of these Regulations, the terms 

enumerated hereunder shall have the following meaning: 

2.1 Financial Institution ñ shall refer to banks, non-bank financial intermediaries 

including quasi banks and finance companies. This does not, however, include insurance 

companies. 

2.2 Banks or Banking Institutions ñ shall refer to those entities as defined in Section 

3 of Republic Act No. 8791, as amended, otherwise known as the General Banking 

Law of 2000. The term ìbanksî or ìbanking institutionsî are synonymous and interchangeable 

and specifically include universal banks, commercial banks, thrift banks (savings 

and mortgage banks, stock savings and loan associations, and private development 

banks), cooperative banks, rural banks, Islamic banks and other classifications of 

banks as may be determined by the Monetary Board of the Bangko Sentral ng Pilipinas. 

2.3 Non-bank Financial Intermediaries ñ shall refer to persons or entities whose 

principal functions include the lending, investing or placement of funds or evidences of 

indebtedness or equity deposited with them, acquired by them or otherwise coursed 

through them, either for their own account or for the account of others. This likewise

150 


includes all other entities regularly engaged in the lending of funds or puchasing of 

receivables or other obligations with funds obtained from the public through the issuance 

endorsement or acceptance of debt instruments of any kind for their own account, 

or through the issuance of certificates of assignment or similar instruments with 

recourse, trust certificates, or of repurchase agreements, whether any of these means 

of obtaining funds from the public is done on a regular basis or only occasionally. 

2.4 Quasi-banking Activities ñ shall refer to the borrowing of funds from twenty 

(20) or more personal or corporate lenders at any one time, through the issuance, 

endorsement or acceptance of debt instruments of any kind other than deposits for the 

borrowerís own account, or through the issuance of certificates of assignment or similar 

instruments, with recourse, or of repurchase agreements for purposes of relending 

or purchasing receivables and other similar obligations. Provided, however, that commercial, 

industrial and other non-financial companies, which borrow funds through any 

of these means for the limited purpose of financing their own needs or the needs of their 

agents or dealers, shall not be considered as performing quasi-banking functions. 

2.5 Deposit Substitutes ñ shall refer to an alternative form of obtaining funds from 

the public (the term ìpublicî means borrowing from twenty [20] or more individuals or 

corporate lenders at any one time), other than deposits, through the issuance, endorsement, 

or acceptance of debt instruments for the borrowerís own account, for the purpose 

of relending or purchasing of receivables and other obligations, or financing their 

own needs or the needs of their agent or dealer. These instruments may include, but 

need not be limited to, bankersí acceptances, promissory notes, repurchase agreements, 

including reverse repurchase agreements entered into by and between the Bangko 

Sentral ng Pilipinas (BSP) and any authorized agent bank, certificates of assignment or 

participation and similar instruments with recourse: Provided, however, That debt instruments 

issued for inter-bank call loans with maturity of not more than five (5) days to 

cover deficiency in reserves against deposit liabilities including those between or among 

banks and quasi-banks shall not be considered as deposit substitute debt instruments. 

2.6 Insurance Companies ñ shall refer to entities that undertakes for a consideration 

to indemnify another (insured) against loss, damage or liability arising from an 

unknown or contingent event. 

2.7 Financing Companies ñ shall refer to corporations except banks, investments 

houses, savings and loan associations, insurance companies, cooperatives, and other 

financial institutions organized or operating under other special laws, which are primarily 

organized for the purpose of extending credit facilities to consumers and to industrial, 

commercial, or agricultural enterprises, by direct lending or by discounting or 

factoring commercial papers or accounts receivables, or by buying and selling contracts, 

leases, chattel mortgages, or other evidences of indebtedness, or by financial 

leasing of movable as well as immovable properties (R.A. No. 5980 as amended by 

R.A. No. 8556). 

2.8 Financial Leasing ñ shall refer to the mode of extending credit through a noncancellable 

lease contract under which the lessor purchases or acquires at the instance 

of the lessee, machinery, equipment, motor vehicles, appliances, business and 

office machines, and other movable or immovable property in consideration of the 

periodic payment by the lessee of a fixed amount of money sufficient to amortize at


least seventy percent (70%) of the purchase price or acquisition cost, including any 

incidental expenses and a margin of profit over an obligatory period of not less than two 

(2) years during which the lessee has the right to hold and use the leased property with 

the right to expense the lease rentals paid to the lessor and bears the cost of repairs, 

maintenance, insurance and preservation thereof, but with no obligation or option on his 

part to purchase the leased property from the owner-lessor at the end of the lease 

contract (R.A. No. 5980 as amended by R.A. No. 8556). 

2.9 Interest Income ñ For purposes of these Regulations, the term shall include 

interest and discounts earned on loans, and investment transactions. 

2.10 Gross Receipts ñ For purposes of these Regulations, the term shall refer to 

the compensation for all financial and non-financial services, or combination thereof, 

exclusive of the value added tax, performed by financial institutions within the Philippines, 

which compensation or fees are actually or constructively received during the 

month or quarter, which include: 

(a) Financial intermediation services fee; 

(b) Financial leasing income; 

(c) Rentals on properties, real or personal; 

(d) Royalties; 

(e) Commissions; 

(f) Trust fees; 

(g) Estate planning fees; 

(h) Service fees; 

(i) Other charges or fees received as compensation for services; 

(j) Net trading gains; 

(k) Net foreign exchange gains: 

(l) Gain on sale or redemption of investments; 

(m) Net gain from the sale of properties acquired through foreclosure lodged under 

the account ìReal and Other Properties Owned and Acquiredî(ROPOA), which is 

measured by the difference between the selling price and the cost equivalent to the bid 

price or unpaid loan value, whichever is lower, at the time of foreclosure; and 

(n) All other receipts of income specified in Section 32(A) of the Code not otherwise 

enumerated above, except those derived from sale of goods and properties which 

has a different taxable base and, therefore, covered by a separate provision or subsection 

of these regulations. 

In determining gross receipts, any amount withheld by the payor of the income as 

taxes, i.e., on rentals, interests, etc, shall form part thereof under the doctrine of constructive 

receipt of income. 

2.11 Gross Selling Price ñ The term shall refer to the total amount of money or its 

equivalent which the purchaser pays or is obligated to pay to the seller in consideration 

of the sale, barter or exchange of the goods or properties, excluding the value-added 

tax. The excise tax, if any, on such goods or properties shall form part of the gross 

selling price. The gross selling price is multiplied by the VAT rate of 10% to arrive at the 

output VAT on sale of goods/properties.î

152 


Sec. 3. Computation of Output Tax ñ Section 3 of Revenue Regulations No. 18-99 is 


ìSection 3. Computation of the Output tax ñ 

3.1 On Financial Intermediation Services ñ The output tax on the service rendered 

by financial institutions for financial intermediation shall be computed by multiplying the 

gross receipts from financial intermediation services by 10%. 

3.2 On Financial Leasing ñ 

The VAT payable on financial leasing is computed in the same manner as that for 

financial intermediation services of financial institutions as discussed in Subsection 3.1 


In this case, the input tax on the purchase of equipment held for lease shall not 

qualify as deduction from output tax since the recognized income comprised only of 

interest income (recovery of principal not included). 

3.3 On Net Foreign Exchange (Forex) Gains ñ The output tax on forex gains shall 

be computed by multiplying by 10%, the monthly net forex gains realized, which is the 

difference between the value of the foreign currencies sold and purchased. The net 

forex gains during the month shall be considered as the gross receipts of the financial 

institution. 

3.4 On Net Trading Gains ñ The output tax on the trading of securities, commercial 

papers, and other financial instruments shall be computed by multiplying by 10% 

the net gain realized from the trading of securities, which gain is the spread between the 

yield or selling price from trading of such securities, commercial papers and instruments 

and the cost (carrying cost net of unearned discount) of obtaining the same. The 

net trading gain is the gross receipt of the financial institution from the trading of securities, 

commercial papers and other financial instrument. 

3.5 On ROPOA Sales or Sales of Other Properties Acquired Through Foreclosure 

ñ The output tax on ROPOA sales, as well as other properties acquired through foreclosure 

sale, shall be determined by multiplying by ten percent (10%) the gain, or the 

difference between the amount realized at the time of sale and the cost thereof which is 

equivalent to the bid price or unpaid loan value, whichever is lower, at the time of the 

foreclosure of the property, which gain or difference shall be considered as the gross 

receipts of the financial institution from the aforesaid transactions. 

3.6 On Sale of Goods and Properties ñ With respect to the sale of goods and 

properties by financial institutions, the imposition of ten percent (10%) value added tax 

shall not be based on gross receipts derived therefrom but rather the same shall be 

based on the gross selling price or gross value in money of the goods or properties sold, 

bartered, or exchanged pursuant to Section 106 of the Code. Accordingly, the output tax 

shall be computed by multiplying the invoice amount by the factor 1/11 or the gross 

selling price by the VAT rate of 10%.


3.7 All Other Income ñ With respect to all other income not mentioned above, VAT 

(output tax) shall be computed by applying the factor 1/11 on the total amount received 

therefrom or the VAT rate of 10% on the gross receipts.î 

Sec. 4. Treatment of Output Tax Shifted to the Buyer of Services ñ Section 4 of 

Revenue Regulations No. 18-99 is hereby amended to read as follows: 

ìSection 4. Treatment of the Output Tax Shifted to the Buyer of Services ñ In 

general, the payor of the income/fee who is a VAT-registered person shall be entitled to 

claim the output tax paid by the financial institution as an input tax credit. On the other 

hand, if the payor is not a VAT-registered person, the VAT passed on by the payee shall 

form of his cost. Provided, that a VAT receipt/invoice shall be issued by the payee for all 

the compensation for services received which shall be used as the evidence for the claim 

of input tax. 

ìThe output tax shifted by the financial institutions must be separately billed in the 

invoice/receipt, the provisions of Revenue Regulations No. 8-99 to the contrary notwithstanding.î 

Sec. 5. Allowable Input Taxes ñ Section 5 of Revenue Regulations No. 18-99 is hereby 


ìSection 5. Allowable Input Taxes ñ The financial institution shall be entitled to claim 

as credit against the output tax all input taxes evidenced by a VAT invoice or official 

receipt in accordance with Section 113 of Tax Code. This includes the VAT in importation 

or local purchase of goods and properties and the VAT on purchase of services. Provided, 

that, for purchase of services, the VAT must have been actually paid by the financial 

institution as evidenced by an official receipt. 

Provided, that in the case of financial lease, no input tax shall be allowed on the 

purchase of goods which is the object of the contract of lease since only the interest 

income portion is being recognized or taken into consideration in recording gross receipts. 

Sec. 6. Return and Payment of Value-Added Tax ñ Section 6 of Revenue Regulations 

No. 18-99 is hereby repealed. In place thereof, a new provision relative to the filing of VAT 

return and payment of VAT is hereby added as Section 6 of said Regulations which shall 

read as follows: 

ìSection 6. Return and Payment of Value-added Tax ñ All financial institutions 

shall file the value added tax return and pay the VAT in accordance with Revenue 

Regulations No. 7-95, as amended, on or before the 20 th day following the close of the 

taxable month, for the monthly VAT declaration, or on or before the 25th day following 

the close of the quarter, for the quarterly tax return, subject to the rules on filing of 

returns and payment of taxes under the Electronic Filing and Payment System. The 

monthly VAT Declaration or quarterly VAT return (BIR Form 2550M or 2550Q) shall be 

accompanied by a schedule showing the manner by which value added tax due and 

payable has been computed:

154 


(A) Where output tax (10% of gross receipts or 1/11 of the total amount billed and 

received, whichever is applicable) shall be computed; 

(B) Where input tax shall be the VAT on imported and local purchase of goods and 

properties and the VAT on purchase of services.î 

Sec. 7. Invoicing and Receipt Requirements ñ Section 8 of Revenue Regulations No. 

18-99 is hereby renumbered as Section 7 and amended to read as follows: 

ìSection 7. Invoicing/Receipt Requirements ñ Unless otherwise allowed under 

pertinent provisions of the laws and regulations, financial institutions shall for each transaction 

subject to VAT, issue duly registered receipts (for sale of services) or duly registered 

invoice (for sale of goods) which must show the ñ 

(a) name, TIN (with suffix of the word VAT), business style, if any, and address of 

the financial institution; 

(b) date of transaction; 

(c) name, TIN, business style, if any, and address of the VAT-registered client; 

(d) description of the nature of transaction; 

(e) the invoice value or consideration showing the VAT separately; 

(f) total amount billed or received; and 

(g) such other information as required in Section 237 of the Code. 

ìFor income/fees/charges received by the financial institution, the receipt/invoice 

must show the total amount charged and the VAT-registered payor shall be entitled to an 

input tax for the VAT reflected in the receipt/invoice. 

ìProvided, however, that with respect to net trading gains, net foreign exchange 

gains, and all other small items of income such as miscellaneous fees on returned 

checks, below minimum balances, dormant accounts, ATM withdrawals, etc., the financial 

institution shall be required to issue just one VAT Official Receipt reflecting the 

total transactions/net gains for the month and the corresponding total output tax due 

thereon. The word ìvariousî shall be indicated in the space provided for the name of the 

customer in the invoice/receipt. However, the aforesaid Official Receipt cannot be used 

as basis in claiming input tax credits. 

ìProvided, further, that with respect to financial lease, the treatment shall be 

similar to that for the gross receipts by banks on financial intermediation services. 

Sec. 8. Transitory Provisions ñ The provisions of Section 7 on the transitory provisions 

of Revenue Regulations No. 18-99 is hereby renumbered as Section 8 thereof and replaced 

as follows: 

ìSection 8. Transitory Provisions ñ 

ì8.1. Transitional Input Tax on Beginning Inventories ñ Financial institutions becoming 

liable to VAT under these Regulations shall be entitled to a transitional input tax 

on the inventory of goods (other than capital goods), materials and supplies on hand as 

of December 31, 2002. The transitional input tax shall be 8% of the value of the inventory 

or actual VAT paid, whichever is higher, which amount may be allowed as tax credit


against the output tax of the VAT-registered person. The value allowed for income tax 

purposes on inventories shall be the basis for the computation of the 8% transitional 

input tax. 

In recognizing transitional input tax credit, a journal entry should be made in the 

books by debiting the input tax account and crediting the asset accounts (goods, materials 

and supplies). Provided, that the actual input tax to be claimed as transitional input 

tax credit shall be duly supported with VAT invoices. 

ì8.2. Business Registration ñ All financial institutions shall be liable to the valueadded 

tax on their gross receipts, or on gross selling price on certain type of transaction, 

as herein defined, beginning January 1, 2003, and shall then be entitled to claim 

actual input taxes on their purchases of goods, properties, and services covered by 

VAT invoice or receipt, beginning January 1, 2003 as well as transitional input tax, as 

aforementioned, provided that they are registered as VAT taxpayers, on or before March 

31, 2003, with the appropriate office of the Bureau of Internal Revenue in accordance 

with Section 236 of the Code and its implementing regulations. They shall remain liable 

to the annual registration fee of five hundred pesos (P500.00) for every separate or 

distinct establishment or place of business on or before the 31 st day of January of every 

year, except for new establishment where the registration fee must be paid before 

operating the establishment. 

ìSince 2003 is the transition year (shift from GRT to VAT), financial institutions 

are allowed to register as VAT taxpayers, without penalty, until March 31, 2003. Pending 

registration as VAT taxpayers, these financial institutions may still issue the non- 

VAT Receipts/Invoices to acknowledge receipt of payment from their clients/customers. 

However, these non-VAT receipts/invoices shall immediately be replaced by VAT 

Official Receipts upon availability thereof (after registration as VAT taxpayer) and, it is 

only at this point in time that the client/customer can claim an input tax credit. 

ì8.3. Unused Invoices or Receipts ñ For purposes of these Regulations, all financial 

institutions should submit to the concerned office of the Bureau (Revenue District 

Office/Office under the Large Taxpayers Service) on or before March 31, 2003, an 

inventory of unused invoices or receipts as of December 31, 2002, indicating therein 

the number of booklets and the corresponding serial numbers for records keeping and 

reference purposes. Unused non-VAT invoices/receipts shall be allowed for use in 

transactions subject to VAT provided the phrase ìVAT-registered as of ___________î is 

stamped on all copies thereof. These unused invoices or receipts with the proper stamp 

shall be allowed for use in transactions up to June 30, 2003. 

ìProvided, that all taxpayers covered by these Regulations shall immediately cause 

the printing, registration and issuance of VAT invoices and receipts in conformity with 

Sections 238 and 237 in relation to Section 113 of the Code and their implementing 

regulations after registration as VAT taxpayers and after consumption of unused invoices/receipts 

mentioned in the preceding paragraph or June 30, 2003, whichever 

comes first. 

ì8.4. Filing of Tax Return and Payment of Tax ñ A transition period (shift from GRT 

to VAT) of two (2) months (January 2003 to February 2003) will be given to all taxpayers 

herein mentioned as liable to tax under these Regulations. During this period, the finan-

156 


cial institutions shall still be allowed to remit the gross receipts tax (GRT) pursuant to 

Sections 121 and 122 of the Code instead of the VAT under Section 108 (and Section 

106, if applicable) of the same Code. These payments shall, nonetheless, be allowed 

as tax credit against the VAT payable in the first quarter VAT return that will reflect the 

results of operation from January to March, 2003 and which Return will be filed on or 

before April 25, 2003 unless the taxpayerís VAT filing period is on a fiscal quarter basis, 

in which case the deadline for fiscal quarter return shall apply. 

ìIt is to be emphasized, however, that compliance to all laws, regulations and 

other issuances pertaining to VAT, except as otherwise allowed, shall be strictly followed.î 

Sec. 9. Repealing Clause ñ Any revenue issuances inconsistent herewith are 

considered amended, modified or revoked accordingly. 

Sec. 10. Effectivity Clause ñ These Regulations shall take effect beginning January 1, 

2003, unless otherwise provided herein. 



I. Background 






--o0o-- 

Revenue Memorandum Order No. 4-2003 

Guidelines and Procedures on the Processing of Quarterly Summary 

Lists of Sales and Purchases and of the Imposition of Penalties 

Therefor as Provided under Revenue Regulations 8-2002 

The Bureau of Internal Revenue is reengineering its work processes in order to increase 

revenue collections and to pursue quality audit by making use of available internal and 

external information resources. In order to strengthen and enhance its assessment functions, 

the utilization of information technology has been identified as an effective tool to improve tax 

administration through the development of the Reconciliation of Listings for Enforcement 

(RELIEF) System. 

The RELIEF System was created to support third party information program and voluntary 

assessment program of the Bureau through the cross-referencing of third party information


from the taxpayersí Summary Lists of Sales and Purchases prescribed to be submitted on a 

quarterly basis pursuant to Revenue Regulations Nos. 7-95, as amended by RR 13-97, RR 7- 

99 and RR 8-2002. 

The RELIEF System shall cover all VAT taxpayers above threshold limits set by RR 8- 

2002 to submit Summary Lists of Sales and Purchases in magnetic form based on a prescribed 

electronic format. The consolidation and matching of information with other externally sourced 

data will detect underdeclaration of revenues/overdeclaration of cost and expenses, thus 

resulting to greater tax potential. 

II. Objectives 

This Revenue Memorandum Order is issued to: 

1. Ensure monitoring and immediate processing of data from VAT taxpayers; 

2. Delineate the functions of each office/division/unit in the processing of Summary Lists of 

Sales and Purchases in magnetic form; 

3. Provide timely and accurate reports for audit and other management purposes; 

4. Provide concerned office data for accurate processing of VAT credit/refund; and 

5. Enforce the imposition of administrative sanctions and the filing of criminal cases for noncompliant 

taxpayers. 

III. Definition of Terms 

The following terms shall be used in this Order as follows: 

1. Magnetic Form ñ refers to a 3.5 inch floppy diskette. 

2. ìGoodî diskette ñ refers to a diskette which is free from virus(es) (GD), whose files are 

readable by the system, conform with the prescribed electronic format, validated and 

successfully uploaded to RELIEF system. 

3. ìDefectiveî diskette ñ refers to a diskette which is infected with virus(es) (DV), and/or 

whose files are inaccessible or not readable by the system (DR) and/or whose data files 

have invalid formats (DF) which do not conform with the prescribed electronic format. 

4. Regular buyers/customers ñ refer to buyers/customers engaged in business or exercise 

of profession with whom the taxpayer had transacted at least six (6) transactions in the 

previous year or current year, regardless of amount of sale per transaction. 

5. Casual buyers/customers ñ refer to buyers/customers who are engaged in business or 

exercise of profession with individual purchase/transaction amounting to one hundred 

thousand pesos (P100,000) or more but did not qualify as regular buyers/customers. 

6. Taxable quarter ñ means the quarter that is synchronized to the income tax quarter of the 

taxpayer, i.e., calendar or fiscal quarter.

158 


7. Secure area ñ an area which is free from dust and moist to preserve the life of diskettes 

and must be protected from any unauthorized use or loss of diskettes. 

8. File ñ refers to one transaction type (sales, local purchases, and importation) per month. 

IV. Policies 

1. The Quarterly Summary List of Sales and Purchases (SLSP) shall be received from VAT 

taxpayers in magnetic form. Hence, hard copies of SLSP need not be submitted. VAT 

taxpayers with quarterly sales/receipts exceeding two million five hundred thousand pesos 

(P2,500,000) shall submit quarterly Summary List of Sales while those VAT taxpayers 

with quarterly total purchases exceeding one million pesos (P1,000,000) shall submit 

quarterly Summary List of Purchases. Only the Summary List of Sales will be submitted 

when the VAT taxpayers reaches the threshold amount for sales. On the other hand, only 

Summary List of Purchases will be submitted when the VAT taxpayers reaches the threshold 

for purchases. 

2. Determination of the threshold amount would include taxable (net of VAT), zero-rated and 

exempt transactions. Once the threshold amount is reached for sales or purchases, the 

VAT taxpayer shall be required to submit the summary lists for the next three (3) succeeding 

quarters, regardless of whether or not succeeding taxable quarter sales or purchases 

exceed the threshold amounts. 

3. The Quarterly SLSP shall be submitted to the RDO, LTDO or LTAD having jurisdiction over 

the taxpayer on or before the due date for filing of VAT return which is the twenty-fifth 

(25 th ) of the month following the close of the taxable quarter ñ calendar or fiscal quarter in 

an electronic format using either excel format, taxpayerís own extract program or the data 

entry module developed by the Bureau. If the electronic data is produced using excel 

program or taxpayerís own extract program, the same should be validated using the 

validation module developed by the BIR. 

4. The Quarterly Summary List of Sales must contain the monthly total sales generated from 

regular buyers/customers as well as from casual buyers/customers with individual sales 

amounting to one hundred thousand pesos (P100,000) or more as defined in Section III 

(4) and (5) hereof. 

5. Failure to indicate the TIN of the buyer in the schedule of sales would not have any effect 

on the seller but may be a ground for the audit of the records of the buyer or both the 

buyer and the seller. 

6. The Quarterly SLSP shall contain the consolidated monthly sales/purchases per customer/seller 

which shall be alphabetically arranged while the Quarterly Summary List of 

Importation must be chronologically arranged on a per individual transaction for each 

month of the taxable quarter. The detailed contents of SLSP is provided in Revenue 

Memorandum Circular No. 24-2002. 

7. Only good diskettes upon submission shall be considered filed/submitted. Defective and 

partially defective diskettes submitted before the deadline must be replaced on or before 

the deadline. However, defective and partially defective diskettes submitted on deadline 

shall be considered late. Taxpayers must resubmit/replace defective diskettes within five


(5) working days from the date of return. Failure to submit /replace the SLSP in magnetic 

form is punishable under the pertinent provisions of the Tax Code and regulations, and 

shall trigger an audit. 

8. The number of electronic files transmitted to RDC/ISOS-DC shall be counted based on the 

transaction type per month ñ one transaction type per month is considered one file. 

Transaction types are sales, local purchases, and importation. 

9. An administrative penalty of one thousand pesos (P1,000) for each failure but not to 

exceed the aggregate amount of twenty-five thousand pesos (P25,000) for all such failures 

during a taxable year shall be imposed to VAT taxpayers for neglect to file, keep or 

supply statement, list, or information required on the date prescribed and shall be paid 

upon notice and demand by the CIR. For this purpose, the failure to supply the required 

information for each buyer or seller of goods or services shall constitute a single act or 

omission. 

10. In addition to the imposition of the administrative penalty, willful failure by such person to 

keep any record and to supply the correct information at the time or times as required, 

shall be subject to criminal penalty under the relevant provisions of the Tax Code of 1997, 

upon conviction of the offender. 

11. The imposition of any of the penalties under the Tax Code of 1997 and the compromise of 

the criminal liability on such violations, notwithstanding, shall not in any manner relieve the 

violating taxpayer from the obligation to submit the required documents. 

12. All the required reports shall be submitted electronically through e-mail facility and shall 

likewise be acknowledged using the same facility by the concerned offices. For noncomputerized 

districts, reports shall be transmitted in diskettes. 

13. Unauthorized divulgence or retrieval of RELIEF data and/or other TPI data by any revenue 

official/employee shall be referred to the concerned offices for imposition of administrative 

sanctions and filing of appropriate charges. 

V. Procedures 

A. Revenue District Office/Large Taxpayers District Office/Large Taxpayers Assistance 

Division (LTAD), National Office 

A.1 The Taxpayer Service Section shall: 

1. Receive SLSP diskettes from VAT taxpayers together with duly filled out Diskette Acknowledgment 

Report (ANNEX A-1*) in two copies. In case of replacement diskette, the previously 

filled out Diskette Acknowledgment Report must be re-submitted for easy reference. 

2. Verify timeliness of submission and the completeness of taxpayerís information (e.g., 

RDO Code, TIN, registered name, contact person, ownerís telephone number, month and 

year of the submitted listings, and filenames contained) in the diskette stick-on label. 

Impose the corresponding penalty for late submission of SLSP. 


Quezon City.

160 


3. Assign control number in the Diskette Acknowledgement Report and record the taxpayerís 

information in the Diskette Register (Annex A-2*). Assigning of control number must be 

done in the following manner: 

RDO Code - first three (3) digits 

R - to represent RELIEF 

Year - next two (2) digits 

Month - next two (2) digits 

Day - next two (2) digits 

Serial Code - last five (5) digits 

If RDO Valenzuela received the first SLSP diskette on August 25, 2002, the control number 

would be: 

024-R-02-08-25-00001 

The concerned office has the option to use the excel format or other record book in 

accomplishing the Diskette Register. For those who choose the excel format, the Diskette 

Register must be printed weekly and filed chronologically in one folder. 

4. If unable to check and screen diskette/s upon submission, check appropriate box in 

Diskette Acknowledgment Report, log date, time and signature of responsible officer. 

Stamp ëReceivedí and give one copy to the taxpayer. Inform the taxpayer that if the 

diskette/s is later on found to be defective, a replacement will be needed within five (5) 

working days from receipt of notification. 

5. Forward the diskette together with the Diskette Acknowledgment Report to the person in 

charge of scanning and checking the diskettes. 

6. Scan the diskette/s for any viruses, check/re-check the RELIEF data files whether good 

or defective and indicate its condition (GD, DV, DR, or DF) on the diskette stick-on label. 

Refer to the attached Screening and Validation Job-aids (Annex A-3) to facilitate proper 

checking of data files. Acknowledge receipt of diskette/s from taxpayers by writing the 

same data (GD, DV, DR, or DF) and affixing the date, time and signature of the responsible 

officer in the Diskette Acknowledgment Report to be distributed as follows: 

Original - to the taxpayer 

Duplicate - RDO/LTAD/LTDO file copy 

7. Return defective diskette/s together with a copy of Diskette Acknowledgment Report to the 

taxpayer and request for a replacement to be submitted not later than five (5) working 

days from the date of return. Affix the date and time and have the taxpayer or his representative 

acknowledge receipt of diskette/s by signing on the required field in the Diskette 

Acknowledgment Report. 

8. Transmit electronically all SLSP data received from VAT taxpayers to the RDC/ISOS-DC 

on daily basis. Refer to attached File Transfer Protocol (FTP) Job-aids (Annex A-3) to 


Quezon City.


facilitate electronic transmission of files from RDO to RDC/ISOS-DC and from RDC/ 

ISOS-DC to SOD. If data file was not transmitted electronically, state the date, time and 

reason for unsuccessful transmittal of data. Indicate the status of the data files whether 

transmitted or not in the Diskette Acknowledgment Report and on the stick-on label. Affix 

signature of responsible officer. 

9. Forward to the receiving officer all the checked diskettes together with the accomplished 

Diskette Acknowledgment Report for purposes of updating the Diskette Register. 

10. Record and update the condition and status of diskettes in the Diskette Register. Segregate 

the good diskettes from defective ones. Prepare and forward the transmittal list of 

VAT taxpayers who submitted good diskettes together with the diskettes to the Document 

Processing Section. A separate transmittal list for defective diskettes shall be prepared 

and forwarded together with diskettes to the TSS Chief. 

11. The TSS Chief shall file the defective diskettes according to the assigned control number 

for easy retrieval upon replacement of diskettes. Prepare Letter-Request for replacement 

of Diskette/s (Annex A-4*) and send thru E-mail, fax, registered mail or personal delivery 

to the taxpayers who submitted defective diskettes for replacement. 

12. Monitor compliance of all VAT Taxpayers required to submit SLSP by matching the list 

provided by the Document Processing Section/Large Taxpayers Document Processing 

and Quality Assurance Division (LTDPQAD) with the Diskette Register. Summarize Monthly 

List of Non-compliant VAT Taxpayers (Annex A-5*) at the end of each month for monitoring 

purposes. 

13. Send thru registered mail or thru personal delivery Preliminary Notice (Anex A-6*) to 

taxpayers who failed to submit SLSP/replace defective diskettes and impose penalty for 

late submission. If the taxpayers still failed to comply after five (5) days from the issuance 

of Preliminary Notice, a Final Notice (Annex A-7*) should be sent by registered mail or by 

personal delivery. For the second offense, refer to the appropriate offices for issuance of 

subpoena duces tecum while for the third offense, initiate filing of criminal case against 

the taxpayer. 

14.Prepare and forward to the concerned offices on or before the 15 th day of the second 

month after the end of each calendar quarter the following reports using the data on the 

Diskette Register and the list of VAT taxpayers required to submit SLSP: 

l Quarterly Summary of Diskettes Received/Rejected/Transmitted (Annex A-8*) 

Original ñ RDC 

Duplicate ñ SOD 

Triplicate ñ Regional Office/LTS 

Quadruplicate ñ AITEID 

Quintuplicate ñ file copy 

l Quarterly Report on VAT Taxpayerís Compliance (Annex A-9*) 

Original ñ Regional Office/LTS 

Duplicate ñ AITEID 

Triplicate ñ file copy 


Quezon City.

162 


15. Receive the Quarterly RDC/ISOS-DC Summary of Electronically Received/Transmitted 

Data and Quarterly SOD Summary of Received/Uploaded Data and reconcile with Quarterly 

Summary of Diskettes Received/Rejected/Transmitted. Make the necessary action to 

resolve any discrepancy/ies. 

16. Receive Monthly List of Unsuccessfully Uploaded Data from SOD and re-transmit SLSP 

data to RDC/ISOS-DC within five (5) working days from receipt. 

A.2 The Document Processing Section of the Revenue District Office/Large Taxpayers 

Document Processing and Quality Assurance Division (LTDPQAD) shall: 

1. Prepare a Masterlist of all VAT Taxpayers (Annex A-10*) as of June 30, 2003 and every 

year-end thereafter to be submitted to AITEID not later than the 15 th day after said period. 

2. Prepare list of VAT taxpayers who are required to submit Summary List of Sales and 

Summary List of Purchases as of June 30, 2002 using the VAT Returns data filed for the 

second quarter of 2002. Update the list quarterly by including newly covered VAT taxpayers 

and deleting those who are no longer required to submit SLSP based on the current 

VAT return filed. 

3. Provide a copy of the list/updated list to the TSS of RDO/LTDO/LTAD and AITEID on or 

before the 15 th day of the second month after the end of the taxable quarter for monitoring 

purposes. 

4. Receive from the TSS the Transmittal List of VAT taxpayers who submitted good diskettes 

together with the Diskette Acknowledgment Report and the diskettes for safekeeping. 

5. Arrange good diskettes alphabetically and keep the diskettes together with the Diskette 

Acknowledgment Report in a secured area for storage after the data have been electronically 

transmitted to the RDC/ISOS-DC. 

B. The Regional Office/Large Taxpayers Service shall: 

1. Receive the following reports: 

l Quarterly Summary of Diskettes Received/Rejected/Transmitted 

l Quarterly RDC/ISOS-DC Summary of Electronically Received and Transmitted Data 

l Quarterly SOD Summary of Electronically Received and Uploaded Data 

l Quarterly Report on VAT Taxpayersí Compliance 

2. Monitor RDOís/LTDOís reporting compliance and prepare the following consolidated reports 

for submission to AITEID on the 20 th day of the second month after the end of each 

calendar quarter: 

l Regional/LTS Quarterly Summary of Diskettes Received/Rejected/Transmitted (Annex 

B*) 


Quezon City.


Original ñ AITEID 


Triplicate ñ RDC/ISOS-DC 

Quadruplicate ñ file copy 

l Regional/LTS Quarterly Report on VAT Taxpayersí Compliance (Annex B-1*) 

Original ñ AITEID 

Duplicate - file copy 

C. The Revenue Data Center (RDC)/ISOS-DC shall: 

1. Receive electronically the Quarterly Summary Lists of Sales and Purchases data files 

from the RDO/LTAD/LTDO. 

2. Create and maintain an automatic back-up file of all the SLSP data on a local PC for 

downloading to excel upon request or as needed by the RDO/LTDO/LTAID. The data shall 

have a retention period of three (3) years minimum to a maximum of ten (10) years. 

3. Receive the Regional/LTS Quarterly Summary of Diskettes Received/Rejected/Transmitted. 

Prepare the Quarterly RDC/ISOS-DC Summary of Electronically Received and Transmitted 

Data (Annex C*) on or before the 20 th day of the second month following the end of 

the calendar quarter, distributed as follows: 

Original ñ RDO/LTDO/LTAD 


Triplicate ñ AITEID 

Quadruplicate ñ Regional Office/LTS 


4. Reconcile the number of files received based on the prepared Quarterly RDC/ISOS-DC 

reports with the number of files electronically transmitted by the RDO/LTDO/LTAD using 

the data on the submitted Regional/LTS Quarterly Summary of Diskettes Received. Prepare 

the RDC Exception Report for any discrepancy noted. 

D. The Systems Operations Division (SOD), National Office shall: 

1. Receive the SLSP data electronically transmitted from RDO/LTDO/LTAD thru RDC/ISOS- 

DC. 

2. Upload on a daily basis SLSP data to Data Warehouse. 

3. Identify and prepare Monthly List of Unsuccessfully Uploaded Data (Annex D*). Request 

RDO for re-transmittal of taxpayerís data to RDC. 

4. Receive the Regional Quarterly Summary of Diskettes Received/Rejected/Transmitted and 

the Quarterly RDC/ISOS-DC Summary of Electronically Received and Transmitted Data. 

Prepare Quarterly SOD Summary of Electronically Received and Uploaded Data (Annex 

D-1*) on or before the 20 th day of the second month after the end of each calendar 

quarter, distributed as follows: 


Quezon City.

164 


Original ñ RDO/LTDO/LTAS 

Duplicate ñ RDC 

Triplicate ñ Regional Office/LTS 

Quadruplicate ñ AITEID 


5. Reconcile the number of files received based on the prepared Quarterly SOD reports with 

the number of files electronically transmitted using the data on the submitted Quarterly 

RDC report. Prepare SOD Exception Report for any discrepancy noted. 

E. The Audit Information, Tax Exemption and Incentives Division (AITEID) shall: 

1. Receive the following reports to monitor compliance and refer to the concerned offices 

any discrepancy for resolution. 

l List of VAT-Registered Taxpayers as of June 30, 2002 

l Regional/LTS Quarterly Report on Taxpayersí Compliance 

l Regional Quarterly Summary of Diskettes Received/Rejected/Transmitted 

l Quarterly RDC/ISOS-DC Summary of Electronically Received and Transmitted 

Data 

l Quarterly SOD Summary of Electronically Received and Uploaded Data 

2. Monitor and evaluate overall performance by the RDs/ACIR/RDOs Division Chiefs as to 

the level of compliance on the submission of the required reports. 

3. Submit to MANCOM, thru the DCIR-OG, not later than the 30 th day of the second month 

following the deadline for the submission of the SLSP, a consolidated quarterly report of 

compliance results submitted by the RDO/LTDO/LTAD. 

VI. Repealing Clause 

This Order supersedes all revenue issuances or portions thereof inconsistent herewith. 

VII. Effectivity 






--o0o-- 

Revenue Memorandum Order No. 6-2003 

Prescribing the Guidelines and Procedures in the Establishment of 

Current Net Retail Prices of New Brands of Cigarettes and Alcohol 

Products Pursuant to Revenue Regulations No. 9-2003


I. Objectives 

This Order is issued to: 

1. Provide uniform guidelines and procedures for establishing the current net retail prices of 

new brands of cigarettes, fermented liquors, wines and distilled spirits. 

2. Delineate the duties and responsibilities of all concerned revenue officials and personnel 

who are responsible in the determination of the current net retail prices of the aforementioned 

excisable products. 

3. Prescribe uniform reporting requirements for the effective determination of such current 

net retail prices as well as the creation of updated database containing relevant information 

on such excisable products. 

II. Policies and Guidelines 

1. The conduct of survey covered by this Order, for purposes of determining the current 

retail prices of new brands of cigarettes and alcohol products introduced in the market on 

or after January 1, 1997, shall be undertaken in the following instances: 

a. For validation of the suggested net retail price of brands registered and introduced in 

the market after the prescribed three-month period; and 

b. For reclassification of new brands of said excisable products that were introduced in 

the market after January 1, 1997. 

The new brands of excisable products shall include locally manufactured and imported 

cigarettes, fermented liquors, wines and distilled spirits, except the following: 

a. Those brands falling under the highest tax classification/bracket; 

b. Those brands that are currently taxed based exclusively on the volume of removals 

without any consideration on the selling prices thereof (e.g. cigars, compounded liquors, 

etc.; 

c. Those brands that are locally registered and manufactured exclusively for export. However, 

in case these brands are sold locally and found in the supermarkets/retail outlets 

where the survey shall be conducted, the same shall, nevertheless, be included in the 

survey, subject to the issuance of an appropriate assessment and imposition of applicable 

penalties and sanctions; 

2. A master list of all registered brands for locally manufactured and imported cigarettes, 

fermented liquors, wines and distilled spirits (Annexes ìA-1î, ìA-2î, ìA-3î, and ìA-4î)* as 

prepared by the Large Taxpayers Assistance Division II (LTAD II), National Office shall be 

used as reference document for the conduct of the survey. A separate Survey Form 

(Annex ìBî*) per establishment shall be accomplished by the members of the survey 

team. This Survey Form shall contain the business name, TIN, and address of the 

establishment, the different new brands of excisable products to be surveyed, the retail 

prices thereof, the date when the survey was conducted, the names and signatures of the 

*Text Available at Office of the National Administrative Register, U.P. Law Complex, Diliman 

Quezon City.

166 


members of the survey team, and the name and signature of the owner/manager or 

authorized representative, as well as the name and signature of the Assistant Commissioner, 

Large Taxpayers Service (ACIR, LTS)/Regional Director attesting to the accuracy 

of the information reflected in such form. 

In case where there are brands that are being sold in the establishment but are not 

included in the Survey Form as well as in the master list of registered brands, such brands 

shall be included among the products to be surveyed. 

3. The current net retail price of new brands of locally manufactured and imported cigarettes, 

fermented liquors, wines and distilled spirits shall be established by any or combination 

of the following survey methods: 

a. Through actual price survey in major supermarkets/retail outlets to be conducted by the 

revenue officers of the Large Taxpayers Service and/or Regional Offices or any equivalent 

office of the Bureau of Internal Revenue having jurisdiction over excise taxpayers. 

b. Through submission of a price list duly authenticated by the store owner or operator of 

the supermarkets/retail outlets carrying such items/products; 

c. Through an information submitted by an informer and duly authenticated/validated by 

the store owner/operator of the supermarket/retail outlet that issued the source-document; 

d. Through direct purchase of such items from the supermarket/retail outlet for which a 


and 

e. Through duly authenticated photographs clearly showing the items and their corresponding 

selling prices being displayed on the shelves of the supermarket/retail outlet. 

The camera to be used for this purpose should have built-in day-date features to indicate 

the exact date and time when such pictures were taken. 

In case a survey covering these new brands of cigarettes and alcohol products has been 

conducted by any other government office, the results of the said survey may be used as 

reference in the determination of the current net retail prices of such new brands. 

4. The determination of the current retail prices of new brands of the aforesaid excisable 

products shall be initiated as follows: 

a. In case of newly registered brand where the taxpayer has submitted the suggested 

retail price thereof the Chief, Large Taxpayers Assistance Division II (LTAD II), in charge 

of the registration of new brands nationwide, shall submit a list of brands of cigarettes and 

said alcohol products to the Commissioner, thru the Assistant Commissioner, Large Taxpayers 

Service (ACIR, LTS), within five (5) days immediately after the lapse of the third 

month following the introduction of the new brand and/or variants thereof in the market for 

purposes of determining the current retail prices thereof and validating the accuracy of 

the suggested retail prices submitted by the taxpayers.


For Revenue Region Nos. 4, 5, 6, 7, 8 and 9, the ACIR. LTS shall be responsible for 

identifying the major supermarkets/retail outlets where the excisable products to be surveyed 

are being sold. However, for all other revenue regions, the ACIR, LTS may request 

assistance from any concerned Revenue Regional Director having jurisdiction over the 

establishments where the newly registered brands are being sold. 

b. After the lapse of the prescribed two-year period or as the Commissioner may otherwise 

direct, the appropriate tax reclassification of these brands based on the current net 

retail prices thereof shall be determined by a survey to be conducted upon a written 

directive by the Commissioner. 

For this purpose, a memorandum order to the Assistant Commissioner, Large Taxpayers 

Service, Heads, Excise Tax Areas, and Regional Directors of all Revenue Regions, except 

Revenue Region Nos. 4, 5, 6, 7, 8 and 9, shall be issued by the Commissioner for the 

submission of the list of major supermarkets/retail outlets where the above excisable products 

are being sold, as well as the list of selected revenue officers who shall be designated 

to conduct the said activity(ies). 

5. The implementation of selected activity(ies) in order to determine the current retail prices 

of new brands of the said excisable products shall be made through the issuance by the 

Commissioner of Mission Orders (Annex ìCî*) and letters to the owners/operators of 

supermarkets (Annex ìDî*). For this purpose, the conduct of the selected activity(ies) 

shall be undertaken by the following: 

5.1 Authorized revenue officers from the Large Taxpayers Service for Revenue Region 

Nos. 4 (Pampanga) up to 9 (San Pablo); and 

5.2 Authorized revenue officers representing both the Excise Tax Areas (EXTAs) and the 

concerned Revenue District Offices having jurisdiction over the physical location of the 

major supermarkets/retail outlets for all Revenue Regions outside Revenue Region Nos. 4 

to 9. 

6. The results of the survey conducted in Revenue Region Nos. 4 to 9 shall be submitted 

directly to the Chief, LT Assistance Division II (LTAD II), National Office for consolidation. 

On the other hand, the results of the survey conducted in Revenue Regions other than 

Revenue Region Nos. 4 to 9, shall be submitted to the Office of the Regional Director for 

regional consolidation. The consolidated regional survey, together with the accomplished 

survey forms shall be transmitted to the Chief, LTAD II for national consolidation within 

three (3) days from date of actual receipt from the survey teams. The LTAD II shall be 

responsible for the evaluation and analysis of the submitted survey forms and the preparation 

of the recommendation for the updating/revision of the tax classification of each 

brand of cigarettes and alcohol products. The said recommendation, duly validated by the 

ACIR, LTS, shall be submitted to the Commissioner for final review within ten (10) days 

from the date of actual receipt of complete reports from all the surveying offices. 

7. Upon final review by the Commissioner of the revised tax classification of the different new 

brands of cigarettes and alcohol products, the appropriate revenue regulations shall be 

prepared and submitted for approval by the Secretary of Finance. 


Quezon City.

168 


8. A brand registration database shall be maintained by the LTAD II and the same shall be 

periodically updated for all the information gathered affecting each and every registered 

brand of alcohol and tobacco products. The results of the survey undertaken pursuant to 

this Order shall always be incorporated in the said database. 

III. Procedures 

Revenue Officer(s) of Surveying Office 

1. Serve the Mission Order (Annex ìAî) to the store manager or any authorized officer of the 

supermarket or retail outlet authorizing the concerned revenue officers to conduct the 

survey. The Mission Order shall be distributed as follows: 

Original ñ to the surveyed establishment 

Duplicate ñ receiving copy of the surveying office 

The receiving copy of the Mission Order must bear the full name, signature and designation 

of the authorized representative of the establishment together with the date and time 

of receipt thereof. 

2. Perform the following activities to determine the real current net retail prices of the different 

new brands of cigarettes and alcohol products: 

2.1 By Actual Price Survey 

i. Refer to the list brands of such excisable products introduced in the preceding 

three-month period or to the master list of locally manufactured and imported 

brands of cigarettes and alcohol products, as the case maybe, to serve as guide 

in locating the items in the supermarket or retail outlet. 

ii. Fill up all applicable information required in the Survey Form. Indicate the 

corresponding retail price of the brands, as shown on the tag price or price label 

of the products under survey, on the column provided in the Survey Form. In 

case the product(s) listed under the said Survey Form is/are not being sold in 

such supermarket/retail outlet, mark ìxî in the corresponding column for retail 

price. On the other hand, in case there are products that are being sold in such 

supermarket but are not listed under the said Survey Form, the complete brand 

description of such product, together with the retail prices thereof, shall be 

included in the Survey Form. In the event that the brand description on the displayed 

item differs with that listed in the Survey Form, make the necessary correction 

or indicate the complete brand description of the product in the Survey 

Form. 

iii. Request the manager or any authorized officer of the supermarket/retail outlet 

to validate the Survey Form by having him/her affix his/her signature after all of 

the products have been surveyed. 

2.2 By Submission of a Price List


a. Secure authenticated copy of the price list of all the different brands of cigarettes 

and alcohol products being sold in such supermarket/retail outlet. 

In case the store manager fails to present the desired authenticated copy of the 

price list on the date of service of the Mission Order, require the submission 

thereof not later two days after date of service of the said Mission Order. In the 

event that the store manager/authorized representative refused to cooperate in 

the submission of the said price list, submit a written report thereon to the ACIR, 

LTS/Regional Director, as the case maybe, within twenty four (24) hours, for their 

appropriate action. 

b. Compare the complete of the description of the brands of cigarettes and alcohol 

products appearing in the price list with that reflected in the Survey Form. In 

case of discrepancy, verify the full description of the brand in question from the 

item actually displayed in the establishment and indicate the correct and full 

description of such brand in the Survey Form. 

c. Require the store manager or authorized representative to validate the authenticity 

of the corrected description of such brand. 

d. Fill up all applicable information required in the Survey Form. Indicate the 

corresponding retail price of the brands, as shown on the tag price or price label 



such supermarket/retail outlet, mark ìXî in the corresponding column for retail 

price. On the other hand, in case there are products that are being sold in such 


description of such product, together with the retail prices thereof, shall be included 

in the Survey Form. In the event that the brand description on the displayed 



Form. 

2.3 By Validation of Submitted Information by an Informer 

a. Request the store manager or any authorized officer of the supermarket or 

retail outlet to authenticate the document containing such information either by 

affixing his signature under the phrase ìCERTIFIED TRUE AND CORRECTî 

stamped or printed on the face of the document or by issuing a certification to 

that effect. 

b. Submit a written report to the ACIR, LTS/Regional Director, as the case maybe, 

in case the store manager or any authorized officer of the supermarket or retail 

outlet refuses to authenticate the document within twenty-four hours (24) from the 

time of service of the Mission Order. 

2.4 By Direct Purchase of Such Items From the Supermarket/Retail Outlet 

a. Secure the funds from the appropriate Office.

170 


b. Proceed to the designated supermarket or retail outlet and purchase the products 

to be surveyed based on the list of brands on hand. Secure a Sales Invoice 

or an Official Receipt which clearly indicates the complete brand description of 

the product(s) and the corresponding retail price(s) thereof. 

c. Fill up all applicable information required in the Survey Form. Indicate the 

corresponding retail price of the brands, as shown on the tag price label of the 

products under survey, on the column provided in the Survey Form. In case the 

product(s) listed under the said Survey Form is/are not being sold in such supermarket/retail 

outlet, mark ìxî in the corresponding column for retail price. On the 

other hand, in case there are products that are being sold in such supermarket 

but are not listed under the said Survey Form, the complete brand description of 

such product together with the retail prices thereof, shall be included in the Survey 

Form. In the event that the brand description on the displayed item differs 

with that listed in the Survey Form, make the necessary correction or indicate the 

complete brand description of the product in the Survey Form. 

d. Submit the Sales Invoices/Official Receipts and surrender the purchased items 

to the Assistant Commissioner/Regional Directors, as the case maybe. 

e. Submit a liquidation report on the purchased item(s) and return the cash balance. 

In case of cash purchases in excess of the funds provided, request for 

cash reimbursement for cash advances made. 

2.5 By Taking Photograph(s) of the Products 

a. Furnish the store manager or any authorized officer of the supermarket or 

retail outlet with a copy of the list of brands that are to be photographed. However, 

in case there are items that are being sold in such supermarket or retail outlet 

which are not included in the list, the said manager or authorized officer shall be 

duly informed that the said items are also to be photographed. 

b. Take the pictures of the displayed products. However, make sure that the retail 

prices thereof are also clearly indicated on the rack and the same are included in 

the photograph. 

c. Request the said manager or authorized officer to validate the authenticity of 

the photographs, after the films are processed/developed, by affixing his/her 

signature at the back of the pictures/photographs. In case the store manager or 

duly authorized officer of the supermarket or retail outlet refuses to authenticate 

the photograph(s), submit a written report to the ACIR, LTS/Regional Director, as 

the case maybe, within twenty-four (24) hours from the time of his/her refusal. 

d. Fill up all applicable information required in the Survey Form. Indicate the 

corresponding retail prices of the brands, as shown on the tag price or price label 



such supermarket/retail outlet, mark ìxî in the corresponding column for retail 

price. On the other hand, in case there are products that are being sold in such



description of such product, together with the retail prices thereof, shall be included 

in the Survey Form. In the event that the brand description on the displayed 



Form. 

3. Submit a memorandum report, together with the prescribed attachments and/evidences, 

to the ACIR, LTS/Regional Director detailing the results of the survey conducted within two 

(2) days after the completion of the physical survey. 

Office of the Regional Director 

1. Submit to the ACIR, LTS, a list of major supermarkets/retail outlets within the territorial 

jurisdiction of the revenue region where the survey will be conducted to be used as basis 

in the issuance of Mission Orders. Ensure that the minimum number of establishments to 

be surveyed as prescribed under existing revenue laws and regulations, is complied with. 

In addition, the names and designation of revenue officers selected to conduct the survey 

shall be clearly indicated opposite the names of the establishments to be surveyed. 

2. Receive all memorandum reports, together with the prescribed attachments and/evidences, 

from the survey teams. 

3. Issue the approved Mission Orders, and fund allocation, as the case maybe, to the selected 

personnel who will conduct the survey within its territorial jurisdiction. 

4. Conduct the survey in accordance with the procedures prescribed by this Order. 

5. Act immediately, using sound management discretion, on the reports submitted by members 

of the survey team regarding non-cooperation/refusal by establishments where the 

survey are being conducted. 

6. Verify the correctness in the information reflected in the accomplished Survey Forms. 

7. Affix signature on the Survey Forms to attest that the survey was actually conducted on 

such establishments and the accuracy of the information reflected in the Survey Forms. 

8. Consolidate the results of all the surveys conducted within the revenue region by preparing 

a Summary of the Retail Price Determination (Annex ìEî*). 

a. On the basis of the Survey Forms, fill up all the necessary information in the 

herein prescribed form; and 

b. Compute the average retail prices per brand of the surveyed products in the 

entire revenue region. 


Quezon City

172 


9. Transmit to the Chief, LTAD II, the regional consolidated reports on the results of the 

survey within the period prescribed under this Order. 

Large Taxpayers Assistance Division II 

1. Perform the following preparatory procedures on the identification of brands to be surveyed, 

supermarkets/retail outlets where the survey shall be conducted, and the personnel 

selected to conduct the survey. 

a. On Validating the new brands introduced in the market after the three (3) month period 

i. Submit a list of such new brands to the ACIR, LTS within five (5) days after the 

lapse of the third month following the introduction thereof in the market containing 

the complete description of each brand, suggested net retail price thereof and the 

corresponding tax rate. 

ii. Submit to the ACIR, LTS, a list containing at least twenty (20) major supermarkets/retail 

outlets within Metro Manila (for brands marketed nationally) and/or five 

(5) major supermarkets/retail outlets in the region (for brands marketed outside 

Metro Manila) where the survey will be conducted to be used as basis in the 

issuance of Mission Orders. Ensure that the minimum number of establishments 

to be surveyed as prescribed under existing revenue laws and regulations, is 

complied with. In addition, the names and designations of revenue officers selected 

to conduct the survey shall be clearly indicated opposite the names of the 

establishments to be surveyed. 

b. On the tax reclassification of new brands 

i. Submit a master list of registered brands covered by the survey pursuant to the 

provisions of Item II.2. of this Order containing the complete description of each 

brand, existing net retail price and the corresponding tax rate thereof. 

ii. Submit to the ACIR, LTS, a list of major supermarkets/retail outlets within the 

territorial jurisdiction of the concerned revenue regions where the survey will be 

conducted to be used as a basis in the issuance of Mission Orders. Ensure that 

the minimum number of establishments to be surveyed, as prescribed under 

existing revenue laws and regulations, is complied with. In addition, the names 

and designations of revenue officers selected to conduct the survey shall be 

clearly indicated opposite the names of the establishments to be surveyed. 

2. Prepare and submit to the LTS, a budget proposal for the cost and expenses that are to be 

incurred in the conduct of the survey taking into consideration the suggested retail prices 

of the cigarettes and alcohol products to be purchased as well as the traveling expenses 

and other incidental expenses of the survey teams under the LTS and the concerned 

revenue regions. 

3. Prepare the Mission Orders for approval and signature by the Commissioner. 

4. Receive the approved Mission Orders from the Commissioner and the fund allocation from 

the Financial and Administrative Services, as the case maybe, for release to the selected 

personnel who shall conduct the survey.


5. Release the approved Mission Orders and the fund allocation, as the case maybe, to the 

selected personnel who shall conduct the survey within its territorial jurisdiction. 

6. Conduct the survey at the designated supermarkets/retail outlets adopting any or combination 

of the different methods, in accordance with the above-prescribed procedures. 

7. Receive all memorandum reports, together with the prescribed attachments and/evidences, 

from the teams that conducted the survey in Revenue Region Nos. 4 to 9. 

8. Consolidate the reports of the survey teams on Revenue Region Nos. 4 to 9 by preparing 

the Summary of the Retail Price Determination 

a. On the basis of the Survey Forms, fill up the columns provided for the supermarkets/outlets, 

brands and retail prices; and 

b. Compute the average retail prices per brand of the surveyed products in the 

entire revenue region. 

9. Receive regional consolidated reports from the respective regions, together with the prescribed 

attachments and evidences. 

10. Evaluate and summarize the consolidated reports of all revenue regions and prepare a 

national consolidated report. Prepare a Comparative Summary of the Suggested Net 

Retail Prices and Current Retail Prices of Brands (Annex ìFî*). 

a. Compute the value added tax by multiplying the current retail price of each 

brand (the average result of the above computation) by 1/11; 

b. Add the resulting value-added tax to the excise tax rate initially declared and 

paid by the manufacturer on the basis of the suggested/current net retail price of 

each brand. 

c. Deduct the sum of value-added tax and excise tax rate from the surveyed retail 

price to get the net retail price of each brand; 

d. Determine the appropriate excise tax rate on the computed current net price 

for each surveyed brand; 

e. Compare the existing excise tax rate applied and paid by the taxpayer/importer 

and suggested/current net retail price against the newly determined excise tax 

rate of each brand. The higher excise tax rate shall be recommended as the new 

tax classification for each brand. 

11. Submit a memorandum report together with the Comparative Summary of the Suggested 

Net Retail Prices and Current Retail Prices of Brands, for review and favorable indorsement 

by the Assistant Commissioner, Large Taxpayers Service, to the Commissioner and 

Secretary of Finance. 


Quezon City.

174 


12. Prepare notices to the concerned taxpayers for approval by the Commissioner or the 

ACIR/LTS, as the case maybe, informing them of the survey results. This notice shall 

include the official current net retail prices of the surveyed brands, their corresponding 

revised tax rates/tax classification, and the date of effectivity thereof. 

13. Release the approved notices to the concerned taxpayers. 

14. Update the brand registration database being maintained for this purpose. 

Finance Division CER/Finance and Administrative Service (NO) 

1. Receive and review the budget proposal on the cost and expenses to be incurred in the 

conduct of the survey. 

2. Prepare the fund allocation on the said proposed budget. 

3. Release the fund to the appropriate Offices which shall conduct the survey. 

Large Taxpayers/Services 

1. Act immediately, using sound management discretion, on the reports submitted by members 

of the survey team regarding non-cooperation/refusal by establishments where the 

survey are being conducted. 

2. Verify the correctness of the information reflected in the accomplished Survey Forms. 

3. Affix signature on the Survey Forms to attest that the survey was actually conducted on 

establishments falling under its jurisdiction and the accuracy of the information reflected 

in the Survey Forms. 

4. Review and evaluate the recommendation report of the Chief, LTADII on the consolidated 

results of all surveys conducted nationwide and perform the following. 

a. Approve recommendation on the current net retail price of new brands that 

were registered and introduced in the market after the prescribed three-month 

period. 

b. Indorse the recommendation on the current net retail price and revised tax 

reclassification of new brands to the Office of the DCIR-Operations/CIR for review 

and approval. 

5. Review and indorse to the Office of the DCIR-Operations/Commissioner of Internal Revenue, 

for approval, the notices to concerned taxpayers on the results of the survey. 

6. Review and indorse to Office of the DCIR-Operations/CIR, for approval, proposed revenue 

regulations on the revised tax classifications of the surveyed new brands of cigarette 

and alcohol products. 

Office of the Deputy Commissioner for Operation/Commissioner of Internal Revenue


1. Receive, review and approve Mission Orders designating the selected revenue officers 

who shall conduct the survey. 

2. Receive, review and approve notices to concerned taxpayers of the results of the survey. 

3. Receive and review proposed revenue regulations on the revised tax classifications of the 

surveyed new brands of cigarettes and alcohol products. 

4. Indorse and transmit to the Department of Finance the proposed revenue regulations on 

the revised tax classifications of the surveyed new brands of cigarettes, and alcohol 

products. 


All issuances and/or portions thereof inconsistent herewith are hereby repealed and 

amended accordingly. 

V. Penalty Clause 

Strict compliance herewith is enjoined. Any violation of the provisions of this Order 

shall be subject to disciplinary action and shall be dealt with accordingly. 

VI. Effectivity 



CEBU PORT AUTHORITY 




CPA Memorandum Circular No. 01-03 

Amendment of the Policy on Free Storage Period for Domestic Cargoes 

Pursuant to the approved Board Resolution No. 051-2002 of the Cebu Port Commission 

re Revision of the Free Storage Period (FSP) for Domestic Cargoes, hereunder are the 

new prescribed periods: 

I - Breakbulk/Bulk Cargoes

176 


a) Incoming - One (1) Calendar Day after the day the cargo is 

discharged from the carrying vessel. 

b) Outgoing - Two (2) Calendar Days prior to the day that the 

carrying vessel is scheduled to arrived. 

c) Shut-out - Two (2) Calendar Days after vessels departure. 

II. Containers 

a) In-Loaded - One (1) Calendar Day after the day the container is 

discharged. 

b) In-Empty - One (1) Calendar Day from day of discharge. 

c) Out-Loaded - Two (2) Calendar Days prior to the day that the 

carrying vessel is scheduled to arrive. 

d) Out-Empty - Two (2) Calendar Days prior to the day that the 

carrying vessel is scheduled to arrive. 

e) Stripped Containers - One (1) Calendar Day after stripping. 

f) Shut -Out - Two (2) Calendar Days after vesselís departure. 

g) Loaded Containers - Two (2) Calendar Days prior to the day that the 

coming from outside carrying vessel is scheduled to arrive. 

the Port Areas 

This Circular shall take effect fifteen (15) days after publication. 

For guidance and strict compliance. 


(SGD.) MARIANO C. J. MARTINEZ 

General Manager 

CAREER EXECUTIVE SERVICE BOARD 


Resolution No. 471 

Amendment to Section 4, Article II of the Revised 

Rules on Career Executive Service (CES) Eligibility


WHEREAS, Presidential Decree No. 1 dated September 24, 1972, created the Career 

Executive Service Board (CESB) to serve as the governing body of the Career Executive 

Service (CES) and mandated it to promulgate rules, standards and procedures on selection, 

classification, compensation and career development of members of the Career Executive 

Service; 

WHEREAS, paragraph 5 (a) of the same law explicity provides that ìa person who 

meets such management experience and other requirements and passes such examinations, 

as may be prescribed by the Board, shall be included in the register of career executive 

eligibles;î 

WHEREAS, in accordance with the provisions of the aforementioned law, the Board 

passed CESB Res. No. 459, s. 2002 and a corresponding circular (CESB Cir. No. 1, s. 

2003) laying down the new rules and procedures in the Career Executive Service (CES) 

Eligibility; 

WHEREAS, Section 4 Article II of the aforequoted policy expressly provides that 

ìfor purposes of assignment to CES positions or appointment to CES ranks, all other government 

examinations administered by agencies mandated by law to conduct government examinations 

shall not be equivalent to the Career Executive Service Eligibility Examination 

conducted by the Board;î 

WHEREAS, it is deemed necessary to amend the said provision to clarify that its intent 

was to convey that rank could only be attained via the CES eligibility process and through no 

other government examinations. 

NOW, THEREFORE, foregoing premises considered, the Board RESOLVES, as it is 

hereby RESOLVED, that Section 4, Article II of the Revised Rules on Career Executive 

Service (CES) Eligibility (CESB Resolution 459, s. 2002 dated October 8, 2002) is hereby 


ìSection 4. CES Eligibility an Exclusive Requirement for Appointment to 

CES Ranks. Only a CES Eligible, upon conferment of CES Eligibility by the 

Board, and assignment to a CES position by the President or the appropriate 

appointing authority, shall be appointed to a CES rank by the President upon the 

recommendation of the Board. For this purpose, no other government examinations 

could substitute the CES eligibility process given by the Board for rank 

appointment.î 

RESOLVED FURTHER, that this resolution shall take effect fifteen (15) days after its 

publication in the Official Gazette or in a newspaper of general circulation in the Philippines. 


(SGD.) KARINA CONSTANTINO-DAVID 

Chair 

(SGD.) RAMON F. NIEVA 

Vice-Chair

178 


(SGD.) HENEDINA R. ABAD (SGD.) ELISA C. ALEJO 

Member Member 

(SGD.) MA. CONCEPCION C. ALFILER (SGD.) GODOFREDO C. DE GUZMAN 

Member Member 

Attested by: 

(SGD.) MA. THERESA C. NICOLAS 

Acting Board Secretary 

DANGEROUS DRUGS BOARD 


Dangerous Drugs Board Regulation No. 01 

Guidelines on the Custody and Disposition of Seized Dangerous Drugs, 

Controlled Precursors and Essential Chemicals, and Laboratory Equipment 

Pursuant to Section 21 Article II of the IRR of RA 9165 in relation to Section 81 (b) 

Article IX of RA 9165, the following guidelines are hereby promulgated: 

SECTION 1. Definition of Terms - As used hereunder, unless the context otherwise 

requires - 

a. îBoardî means Dangerous Drugs Board; 

b. ìChain of custodyî means the duly recorded authorized movements and custody of seized 

drugs or controlled chemicals or plants sources of dangerous drugs or laboratory equipment 

of each stage, from the time of seizure/confiscation to receipt in the forensic laboratory to 

safekeeping to presentation in court and destruction. Such record of movements and custody 

of seized item shall include the identity and signature of the person who held temporary 

custody of the seized item, the dates and times when such transfers of custody were made 

in the course of safekeeping and use in court as evidence, and the final disposition; 

c. ìConfirmatory testî means an analytical test using a device, tool or equipment with a 

different chemical or physical principle that is more specific which will validate and confirm 

the result of the screening test of field test; 

d. ìCorrosive chemicalî means a chemical destroys or damages living tissue by direct contact 

or destroy its own container or other material and be released into the environment. It 

generally has pH below 2 of above 12.5. Examples of acidic corrosives include hydrochloric 

acid and sulfuric acid.


e. ìControlled chemicalsî means controlled precursors and essential chemicals as defined in 

Article I Sec. 3 (g) RA 9165 or other names and namely: acetic anhydride or AA or acetic 

oxide or acetyl oxide; acetone or dimethyl ketone or 2-propanone or pyroacetic ether; Nacetylanthranilic 

acid or ortho-acetamidobenzoic acid or 2- acetamidobenzoic acid; anthranilic 

acid or Vitamin L1 or ortho-aminobenzoic acid; ephedrine; ergometrine or ergonovine 

or dextrolysergic acid or levo-2- propanone; ergotamine; ethyl ether or ethyl oxide or 

diethyl oxide or ethoxyethane or sulfuric ether or diethyl ether, hydrochloric acid or muriatic 

acid or hydrogen chloride; isosafrole; lysergic acid; 3-4-methylenedioxyphenyl-2propanone 

or 3,4 methylenedixophenylacetone or 3,4-methylenedixbenzyl methyl ketone 

or piperonylmethylketone or 3,4 -MDP2P or PMK; methyl ethyl ketone or BMK or 2-butanone 

or ethylmethylketone or methyl acetone; phenylpropanolamine or d,1-norephedrine or 

medriatin; phenylacetic acid or benzene acetic acid or alpha toluic acid; phenylacetone or 

phenyl-2-propanone or P2p or BMK or benzyl methyl ketone or methyl benzyl ketone; 

piperidine or hexahydrophyridine or hexane or pentamethyleneimine; piperonal or heliotropin 

or piperonylaldehyde; potassium permanganate or permanganic acid potassium salt or 

chameleon mineral; pseudoephedrine; safrole or allylcathechol or methylene ether, sulfuric 

acid or oil or vitroil or hydrogen sulfate. 

f. ìFlammable chemicalî a chemical that ignites easily and burns rapidly in air. It generally 

has a flash point below 60 deg. C. Examples of flammable chemicals are ethyl ether, 

acetone and toluene. 

g. ìDangerous Drugsî means dangerous drugs as defined in Article 1, Sec. 3 (j) RA 9165. 

Such drugs include, but not limited to, heroin, morphine, opium, cocaine or cocaine 

hydrocholoride, marijuana, marijuana resin, marijuana resin oil, methamphetamine hydrochloride 

or ìshabuî methylenedioxymethamphetamine (MDMA), or ìecstasyî 

paramethoxyamphetamine (PMA), trimethoxyamphetamine (TMA), lysergic diethylamine (LSD) 

and gamma hydroxybutyrate (GHB); 

h. ìDENRî means the Department of Environment and Natural Resources. 

i. ìDrug profilingî refers to the systematic characterization of seized drug samples by physical 

and chemical means. It is a valuable tool used to support intelligence-gathering and 

operational work by drug law enforcement authorities; 

j. ìHazardous chemicalî means one that poses a danger to human health or to the environment, 

if improperly handled; 

k. ìLaboratory equipmentî means the paraphernalia, apparatus, materials or appliances 

when used, intended for use or designed for use in the manufacture of any dangerous drug 

and/or controlled chemical, such as reaction vessel, preparative/purifying equipment, fermentors, 

separatory funnel, heating mantle, gas generator or their substitute; 

l. ìMSDSî means Material Safety Data Sheet. It provides all necessary information with 

regard to proper storage and safe handling procedures, first aid procedures, proper leak, 

spill, and disposal techniques, protective equipment, and other safety procedures used to 

limit potential exposure to toxic or hazardous materials and other information such as hazardous 

ingredients, physical and chemical characteristics, physical hazards and health hazards;

180 


m. ìPDEAî means Philippine Drug Enforcement Agency; 

n. ìReactive chemicalî means one that is sensitive to either friction or shock or it reacts in 

the presence of air, water, light or heat. Examples of reactive chemical are ethyl ether or 

diethyl ether, acetic anhydride and potassium permanganate; 

o. ìToxic chemicalî means a chemical that can cause serious illness or death from exposure 

by inhalation, ingestion or absorption through the skin. Examples of toxic chemicals are Nacetylanthranilic 

acid, anthranilic acid, ephedrine, pseudoephedrine, acetone, phenylpropanolamine, 

ergometrine, ergotamine, hydrochloric acid, isosafrole, methyl ethyl ketone, 

phenylacetic acid, piperidrine, piperonal and safrole. 

p. ìThermal destructionî means the action or process of destroying seized or surrendered 

dangerous drugs or controlled chemicals by fire or heat or incineration. 

SECTION 2. Seizure or confiscation of dangerous drugs or controlled chemicals or 

laboratory equipment - 

a. The apprehending team having initial custody and control of dangerous drugs or controlled 

chemical or plant sources of dangerous drugs or laboratory equipment shall immediately, 

after the seizure and confiscation, physically inventory and photograph the same in 

the presence of: 

i. the person from whom such items were confiscated and/or seized or his/her 

representative or counsel; 

ii. a representative from the media; 

iii. a representative from the Department of Justice; and 

iv. any elected public official; 

who shall be required to sign copies of the inventory report covering the drugs/equipment 

and who shall be given a copy thereof: Provided that the physical inventory and photograph 

shall be conducted at the place where the search warrant is served; or at the nearest police 

station or at the nearest office of the apprehending officer/team, whichever is practicable, in 

case of seizure without warrant; Provided further that non-compliance with these requirement 

under justifiable grounds, as long as the integrity and the evidentiary value of the seized 

items are properly preserved by the apprehending officer/team, shall not render void and 

invalid such seizure of and custody over said items. 

b. The drugs or controlled chemicals or laboratory equipment shall be properly marked for 

identification, weighed when possible or counted, sealed, packed and labeled by the apprehending 

officer/team. 

c. Where any substance is found in packages or containers of similar size and/or weight 

and bearing identical markings, and field color tests of the contents of a representative 

number of them yields similar results for each, the seizing officer shall cause all such packages 

or containers to be classified, serially numbered and separated into lots ready for 

weighing, counting, sampling, sealing and labeling.


d. Where it is physically possible to count and weigh the seizure as a complete entity, the 

seizing officer shall cause it to be counted and weighed. Where it is not physically possible 

to count or weigh the seizure as a complete entity, the seizing officer shall cause its count or 

gross weight or net weight, as the case maybe, to be estimated. 

SECTION 3. Turnover of seized drugs or controlled chemical or laboratory equipment 

and submission of report. 

a. Within twenty-four (24) hours upon confiscation/seizure of dangerous drugs, or plant 

sources of dangerous drugs or controlled chemicals or laboratory equipment, the same shall 

be submitted to the PDEA Forensic Laboratory for a qualitative and quantitative examination. 

b. Within the same period, and in conformity with prescribed operational reporting procedures, 

the seizing officer/team shall also prepare a report of the confiscation/seizure, which 

include particulars of: 

i. the time, place and date of seizure; 

ii. the particulars of the person(s) arrested; 

iii. the identity of the seizing officer and all persons present; 

iv. the circumstances in which seizure took place; 

v. a description of the vehicle, vessel, place or person searched and the location 

where the substance or equipment was found; 

vi. a description of packaging, seals and other identifying features; 

vii. a description of quantity, volume and units and the measurement method 

employed; 

viii. a description of the substance or equipment found; 

ix. a description of any preliminary identification test used and results (e.g. test 

kit) 

x. all subsequent movements of the substance or chain of custody; and 

xi. any other prescribed matter by PDEA. 

SECTION 4. Laboratory analysis and/or identification of equipment - 

a. Within twenty-four (24) hours after receipt of the seized dangerous drugs or controlled 

chemicals, the PDEA forensic laboratory examiner shall, after counting and/or weighing any 

significant quantity of seized substance or items, take samples for scientific analysis, consisting 

of the following quantities: 

i. powder/granules/solid form - not more than five grams per package/bag; 

ii. tablet/capsule/ampoule - not more than three (3) tablets; 

iii. liquid solution - not more than fifty (50) ml; 

iv. dried leaves - not more than ten (10) grams; 

v. plants - not more than two (2) plants. 

b. Within the same period, the forensic examiner shall issue a certification of the forensic 

laboratory examination results, identifying the substance without regard to its purity, and/or 

the identification of laboratory equipment, as the case may be. When the volume of the 

subject items do not allow the completion of testing within twenty-four (24) hours, a partial 

examination report shall be provisionally issued stating therein the quantities still to be exam-

182 


ined by the forensic laboratory. The final certification shall be issued on the completed 

forensic laboratory examination on the same, within the next twentyfour (24) hours. 

c. The certificate or report of chemistry analysis shall state the details in relation to a dangerous 

drug or controlled chemical, as to: 

1. when and from whom it was received; 

2. what, if any identifying labels or other things accompanied it; 

3. a description of it, and its weight; 

4. what container it was in, as the case maybe; 

5. if it, or any portion of it, was analyzed: 

i. the name and method of analysis; 

ii. the result of analysis, including as to its identity without regard to its purity 

for the initial report; and pure drug or chemical content; for the record 

in conformity with Section 21 (b) of IRR of RA 9165 and Section 3a of 

this Guidelines; and 

6. how it was dealt with after handling by the examiner, including details of: 

i. quantity retained; 

ii. the name of the designated PDEA drug or controlled chemical custodian, to 

whom any retained quantity was given for safekeeping 

iii. measures taken to secure any retained drug or chemical. 

d. Any sample taken shall be signed or otherwise marked for identification by the forensic 

laboratory examiner and evidence custodian present, as the case may be, when it was 

taken; 

e. Where there is operational necessity to identify the specific links between two or more 

samples, origin of seized drug, drug distribution patterns, and methods used for clandestine 

drug manufacture, particularly with regard to methamphetamine hydrochloride or ìshabuî, 

samples that may be taken for such examination shall not be more than ten grams of samples 

from each package/bag selected. Where a written request is made by a foreign counterpart 

agency to PDEA for drug samples for the purpose of drug profiling, PDEA shall ask for leave 

of court to transfer such samples to the requesting party. Such transfer shall be done through 

import permit/authorization issued by the competent authority of the requesting party and an 

export permit granted by PDEA. 

f. In all instances of taking samples, the following manner of sampling procedures of multiple 

packages/bags should be observed: 

i. if there is less than or equal to ten (10) packages/bags, all should be sampled; 

ii. if there is more than ten (10) packages/bags and less than or equal to one 

hundred (100) packages/bags, randomly select ten (10) packages/bags; 

iii. if there is more than one hundred (100) packages/bags, randomly select a 

number of packages/bags equal to the square root of the total number of packages 

rounded to the next higher integer.


SECTION 5. Custody and safekeeping - 

a. Designated dangerous drugs custodian and controlled chemical custodian shall have 

respective control over safekeeping of substances in the storage vaults/cabinets/areas; 

b. Store controlled chemicals separately from dangerous drugs. Both storage facilities must 

be adequately protected. 

c. Store dangerous drug evidence in plastic heated envelopes in the shelves in the evidence 

vaults or heavy-duty steel cabinets. 

d. Store bulk marijuana outside the laboratories in separate storage facilities under the 

control of PDEA. 

e. Read and be guided by chemical labels and MSDS for proper storage and safe handling 

procedures, first aid procedures, proper leak, spill, and disposal techniques, protective equipment, 

and other safety procedures. 

f. Prior to storing chemicals, ensure that it is properly labeled. 

g. The chemical label should include a minimum of the following: 

i. The chemical name of the material; 

ii. The date received; 

iii. Hazardous properties such as flammability, reactivity, corrosiveness, toxicity, 

etc. 

iv. Additional safety information or precautions such as use of protective equipment, 

etc.; and 

v. Additional optional information may include fire fighting equipment or first aid 

measures. 

h. Controlled chemical custodian shall be required to: 

i. Date of receipt of all chemicals. 

ii. Store chemicals in accordance with their compatibility, based on the following: 

Chemical Group Names Do Not Store With Other Chemical Group Names 

Ketones (acetone, MEK) Inorganic acids, cuastics, amines and 

alkanolamines, aldehydes, ammonia, halogens. 

Ethers Inorganic acids, monomers, polymerizable ester, 

halogens 

Acid Anhydrides Inorganic acids, caustics, amines and 

alkanolamines, alcohols, glycols, glycol ethers, al 

dehydes, monomers, ploymerizable esthers, 

alkaylene oxides, cyannohydrins, Nitriles, 

ammonia.

184 


iii. Keep container closed. Maintain container integrity and do not pressurize, 

cut, heat or weld containers. Do not reuse empty containers without commercial 

cleaning and reconditioning. 

iv. Store chemicals in a well-ventilated area. Do not store chemicals near heat or 

sunlight or near substances which might initiate a reaction. 

v. Store all hazardous chemicals below eye level. Store acids near floor level. 

vi. Separate acids from flammables and combustibles. Flammable chemicals should 

be stored in flammable storage cabinets and/or storage rooms. Bulk quantities of 

flammable and combustible liquids in thirty (30) or fifty-five (55) gallon drums 

should be stored in storage areas equipped with explosion-proof electrical wiring. 

Storage cabinets should be vented. 

vii. Check stored chemicals for deterioration and broken containers and take 

necessary measures. 

i. Store laboratory equipment in separate storage area. 

j. The controlled custodian and dangerous drug custodian shall maintain: 

i. Record of chain of custody of evidence; 

ii. Log book of authorized persons who entered or exited the storage area; 

iii. Log book of officers who signed in and/or out evidence from storage area/ 

vault/cabinet for authorized purpose; and 

iv. Duly detail in storage area. 

SECTION 6. Early disposal of seized dangerous drugs and controlled chemicals - 

a. After the filing of the criminal case, the Court shall, within seventy-two hours, conduct an 

ocular inspection of the confiscated, seized, and/or surrendered dangerous drugs, plants 

sources of dangerous drugs, and controlled chemicals, including the instruments/paraphernalia 

and/or laboratory equipment. 

b. Within twenty-four hours after the Court inspection, the Court through the PDEA shall 

proceed with the destruction or burning or disposal of subject items. 

c. Prior to its destruction, representative samples shall be taken and duly weighed and 

recorded by the forensic laboratory, which conducted the examination of the seized drugs or 

controlled chemicals for presentation as evidence in court. Maximum quantities of samples to 

be retained are as follows: 

1. Controlled chemicals 

i. not more than 2.5 liters for liquid chemicals 

ii. not more than 10 grams for non-liquid chemicals 

iii. where the chemicals is in its original container, samples to be retained shall 

not be more than one container, e.g. glass bottle or can or polyethylene container 

or barrel or drum. 

2. Dangerous Drugs 

i. not more than fifteen (15) grams each of heroin or morphine or opium or 

cocaine or other dangerous drugs such as, but not limited to, MDMA or LSD or 

PMA or GHB or TMA or marijuana resin or marijuana resin oil.


ii. not more than fifty-five (55) grams or methamphetamine or amphetamine. 

iii. not more than 510 grams of marijuana leaves. 

iv. not more than ten (10) plants of opium poppy, coca bush, ephedra or marijuana. 

v. not more than (fifteen) 15 grams of other dangerous drugs. 

d. Where the amount of seized drugs is equal to or less than the prescribed amount for 

retention above, all the seized items shall be preserved as evidence in court until the court 

terminates the case. 

e. In all cases involving controlled chemicals, the PDEA officer in charge of disposal of the 

controlled chemical should also refer to the MDSD of the chemical for further guidance on 

safe handling and disposal. 

f. Controlled chemicals and dangerous drugs shall be disposed off by means of the following 

methods: 

i. Thermal destruction method in accordance with applicable laws. The PDEA 

may engage the professional services of third parties with thermal facilities covered 

by valid and subsisting permits and clearances issued by appropriate government 

agencies; or 

ii. Other lawful appropriate methods as may be authorized by the Board, in consultation 

with DENR. 

g. Plants sources of dangerous drugs such as marijuana plant shall be destroyed by burning 

on the site of eradication activity and in open field. Thereafter, the burnt marijuana plant shall 

be buried underground. 

h. Witnesses may be allowed to observe the procedures for the conduct of destruction or 

disposal of seized dangerous drugs or controlled chemicals. Witnesses shall wear ìdust 

maskî. During the start of marijuana plant destruction, witnesses should stay at a distance of 

no less than fifty (50) meters from the burn site and away from wind direction. In case of 

destruction of dangerous drugs or controlled chemicals in a thermal facility, witnesses should 

stay no less than fifteen (15) meters away from the facility when the burning starts. In this 

regard, the PDEA officer supervising the destruction will make the judgment call. 

i. PDEA shall maintain a watch detail until the destruction process is completed. 

j. Destruction or disposal or burning of seized dangerous drugs, plant sources of dangerous 

drugs or controlled chemicals shall be done in public and witnessed by the following: 

i. the accused or the person from whom subject items were confiscated, or his/ 

her representative or counsel or a member of the public attorneyís office appointed 

by the Secretary of Justice; 

ii. a representative from the media; 

iii. a representative from DOJ; 

iv. civil society groups; and 

v. any elected public official.

186 


k. The alleged offender or his/her representative or counsel shall be allowed to personally 

observe all the above proceedings. In case said offender refuses or fails to appoint a representative 

after due notice in writing to the accused or his/her counsel within seventy-two (72) 

hours before the actual burning or destruction of the evidence in question, the Secretary of 

Justice shall appoint a member of the public attorneyís office to represent the former. 

l. The Board, through the Director General of PDEA or Regional Director of PDEA, as the 

case may be, shall issue a sworn certification as to the fact of destruction or burning of the 

subject items, which together with the representative sample(s) in the custody of PDEA, shall 

be submitted to the court having jurisdiction over the case. 

m. The cost of disposition or destruction of seized drug or controlled chemical shall be 

borne by the offender. 

n. After the promulgation and judgment in the criminal case wherein the representative 

samples were presented as evidence in court, the trial prosecutor shall inform the Board of 

the final termination of the case and, in turn, shall request the court for leave to turn over the 

said representative samples to the PDEA for proper disposition and destruction within (24) 

hours after receipt of same. 

o. In cases of seizures where no person is apprehended and no criminal case is filed, the 

PDEA may order the immediate destruction or burning or disposal of seized dangerous 

drugs or controlled chemicals: Provided, that appropriate inventory of drugs in the presence 

of witnesses, forensic laboratory examination and prescribed reports have been carried out. 

Such destruction shall be made in the presence of prescribed witnesses. The Board through 

the Director General of PDEA or Regional Director of PDEA, as the case may be, shall issue 

a sworn certification as to the fact of destruction or burning. 

SECTION 7. Drug Evidence Tracking and Inventory - 

a. A database system shall be maintained by PDEA to track evidence through the criminal 

justice and laboratory system from receipt to destruction or disposal. 

b. PDEA forensic laboratories shall conduct routine annual inventories of the evidence stored 

in the PDEA evidence vault or steel cabinet or storage area. Similar inventories shall be 

performed each time a laboratory official, or any individual who has access to the vault or 

cabinet or storage area, retires or leaves the job. 

SECTION 8. Disposal of seized drugs or controlled chemicals or laboratory equipment 

including paraphernalia or instruments for scientific, medical and training purpose. 

a. Upon request by agencies concerned to the PDEA, seized drugs or controlled chemicals 

or laboratory equipment, including paraphernalia no longer needed as evidence to be presented 

in court, may properly and lawfully be used for medical or scientific purposes, or in 

small amounts for the training of personnel responsible for carrying out the functions under 

RA 9165. 

b. A Committee composed of representatives from the Department of Health, the Bureau of 

Food and Drugs, DDB Secretariat and PDEA, with the representative from the Department 

of Health and Team Leader, shall determine whether the seized drugs or controlled chemical


or laboratory equipment in the custody of PDEA is still suitable for medical or scientific or 

training purpose or lawful commerce. Such determination shall include such factors as 

expiry date of the drug or date of acquisition of the chemical, urgent need for the drug or 

chemical and such drug or chemical is the only one readily available. After such determination 

of fitness for consumption or use, the drug or chemical shall be requisitioned by and 

delivered to the Department of Health or agency concerned for proper disposition. The 

agency concerned shall comply with the recording requirement of IRR of RA 9165. 

c. In case of seized controlled chemicals found fit for pharmaceutical or industrial or scientific 

use, said chemicals shall be sold in public auction to licensed holders or donated to 

government agencies in need of the controlled chemicals. 

d. Disposal of drugs or chemicals or laboratory equipment, including paraphernalia or instrument 

needed for medical, scientific or training purposes, shall be subject to license/ 

permit requirement, as the case may be, of the PDEA. 

SECTION 9. Transitory Provision - 

In the meantime that the PDEA has no forensic laboratories and/or evidence vaults/ 

heavy duty steel cabinets/storage rooms, as well as the necessary personnel of its own in 

any area of its jurisdiction, the existing National Bureau of Investigation (NBI) and Philippine 

National Police (PNP) forensic laboratories shall continue to examine or conduct screening 

and confirmatory tests on the seized/surrendered evidence whether these be dangerous 

drugs, plant sources of dangerous drugs, controlled chemicals, laboratory equipment, including 

paraphernalia and instruments; and the NBI and the PNP shall continue to have 

custody of such evidence for use in court and until disposed of, burned or destroyed in 

accordance with the foregoing guidelines: Provided, that pending appointment/designation 

of the full complement of the representatives from the media, DOJ, or elected public official, 

the inventory of said evidence shall continue to be conducted by the arresting NBI and PNP 

operatives, under existing procedures, unless otherwise directed in writing by the DOH or 

PDEA, as the case may be. 

SECTION 10. These guidelines shall take effect fifteen (15) days after publication in a 

newspaper of general circulation. 


(SGD.) EDILBERTO DE JESUS (SGD.) MA. MERCEDITAS N. GUTIERREZ 

(Secretary of Education) (Undersecretary, Representing the 

Ex-Officio Member Secretary of Justice) 

Ex-Officio Member 

(SGD.) ANTONIO S. LOPEZ (SGD.) ERNESTO R. BITONIO 

(Undersecretary, Representing the (Acting Undersecretary, Representing 

Secretary of National Defense) the Secretary of Labor and Employment 

Ex-Officio Member Ex-Officio Member 

(SGD.) LOURDES G. BALANON (SGD.) FRANKLIN EBDALIN 

(Undersecretary, Representing the (Undersecretary, Representing the 

Secretary of Social Welfare Secretary of Foreign Affairs) 

and Development)

188 


(SGD.) ESTER A. GARCIA (SGD.) MARIUS P. CORPUS 

(Chair, Commission on Higher Education (Undersecretary, Representing the 

Ex-Officio Member Secretary of Interior and Local Government 

Ex-Officio Member) 

(SGD.) ANTONIO C. SANTOS (SGD.) ANSELMO S. AVENIDO, JR. 

(Undersecretary Representing the Secretary (Director-General, Philippine Drug 

of National Defense) Enforcement Agency) 


(SGD.) JAIME M. VIBAR (SGD.) MIGUEL V. PEREZ-RUBIO 

(Representing the President, Integrated Bar) (President, Katotohanan Foundation-NGO 

Regular Member Regular Member 

(SGD.) EDGAR C. GALVANTE (SGD.) BERNARDO T. LASTIMOSO 

Undersecretary Undersecretary 

Permanent Member Permanent Member 


(SGD.) JOSE D. LINA, JR. 

(DILG Secretary) 

OIC-Chairman 

Attested: 

(SGD.) MIGUEL G. CORONEL 

Undersecretary 

Executive Director and Board Secretary 

--o0o-- 

Dangerous Drugs Board Regulation No. 2, s. 2002 

Conduct of Controlled Delivery Operations 

Pursuant to Sections 81 (b) and 81 (s) of Article IX, the Policy and Guidelines for the 

conduct of controlled delivery operations are hereby promulgated: 

Article I 

Definition of Terms 

SECTION 1. Definitions - As used in this Regulation, the following terms shall mean: 

a. Board - Dangerous Drugs Board; 

b. Controlled Delivery - The investigative technique of allowing an unlawful or suspect consignment 

of any dangerous drug and/or controlled precursor and essential chemical, equipment 

or paraphernalia, or property believed to be derived directly or indirectly from any 

offense, to pass into, through or out of the country under supervision of an authorized


officer, with a view to gathering evidence to identify any person involved in any dangerous 

drug-related offense or to facilitate prosecution of that offense; 

c. Controlled Precursor and Essential Chemicals - Include those listed in Tables I and II of 

the 1988 UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 

as enumerated in the attached annex of, and an integral part of RA 9165; 

d. Dangerous Drugs - Include those listed in the Schedules annexed to the 1961 UN Convention 

on Narcotic Drugs, as amended by the 1972 Protocol, and in the Schedules annexed to 

the 1971 UN Convention on Psychotropic Substances as enumerated in the attached annex 

of, and an integral part of RA 9165; 

e. Illegal Trafficking - The illegal cultivation, culture, delivery, administration, dispensation, 

manufacture, sale, trading, transportation, distribution, importation, exportation, and possession 

of any dangerous drug and/or controlled precursor and essential chemical; 

f. Laboratory Equipment - The paraphernalia, apparatus, materials or appliances when used, 

intended for use, or designed for use in the manufacture of any dangerous drug and/or 

controlled precursor and essential chemical, such as reaction vessel, preparative/purifying 

equipment, fermentors, separatory funnel, flask, heating mantle, gas generator, or their 

substitute; 

g. LEO/s - Law Enforcement Officer/s; 

h. PDEA - Philippine Drug Enforcement Agency 

Article II 

Objectives, Requisites, and Scope of Authorization for Control Delivery Operations 

SECTION 2. Objectives of Controlled Delivery - In general, the purpose of using 

controlled delivery is to delay seizing the dangerous drugs or controlled precursors and 

essential chemicals or substances substituted for them or the property derived from an 

offense and to suspend detaining the courier(s) in order to: 

a. Identify, arrest, and convict offenders; 

b. Disrupt and dismantle criminal organizations engaged in smuggling drugs or other contraband; 

c. Broaden the scope of investigation, identify additional and higher level offenders and 

obtain further evidence; 

d. Establish evidentiary proof that the suspects employed by these organizations to transport 

drugs and other contraband were knowingly in possession of illegal substances; 

e. Identify the offender(s) assets for consideration in asset forfeiture proceedings. 

SECTION 3. Authority to Approve Controlled Delivery, Requisites, and Scope of 

Authorization -

190 


a. Prior authorization is required for the conduct of controlled delivery operations in the 

Philippines; 

b. The Director General of PDEA may approve a request in writing by PDEA units, or a 

domestic or foreign counterpart enforcement agency for controlled delivery to take place in 

transit or in any way involving the Philippines for a specific purpose and specified period. 

c. The Director General of PDEA may require the following information from the requesting 

party: 

i. The reason or justification for the operation; 

ii. Type and quantity of the drug being transported; 

iii. The planned point of entry and - if applicable - exit (transit) in the Phillippine 

territory; 

iv. The means of transport to be used and the intended route; 

v. The suspects (identity, nationality, whereabouts, accomplices, home address, 

etc.); 

vi. The name of the organization, which provided the information and responsible 

for the operation in the requesting country and means of contacting that agency; 

vii. Details of law enforcement agencies taking part in the operation (police, customs, 

coast guards, etc); 

viii. Detail of special techniques to be used (undercovered agents, informers, 

species/surveillance equipment, etc.); 

ix. Other information as may be required from time to time. 

d. The Director General may refuse to allow a controlled delivery operation to be carried out 

for some or all of the following reasons: 

i. Inadequate information concerning the consignment or the transporter; 

ii. The other transit countries do not give their consent; 

iii. Risk of losing the suspects and the drugs; 

iv. Lack of resources; 

v. Final destination is unknown or uncertain; 

vi. No certainty of prosecution being brought; 

vii. Lack of material time to act on the request due to short notice; 

viii. Scale of the traffic do not justify the cost of operation; 

ix. Quantity of dangerous drugs involved in the shipment is small and does not 

meet prosecutorial or the receiving jurisdictionís threshold levels: Provided that a 

controlled delivery is necessary to develop a more significant investigation based 

on any one of the following: 

- Prior criminal history associated with recipient of parcel. 

- Multiple, similar prior shipments to the same person or location. 

- An agreement by all parties that a controlled delivery is necessary. 

x. Others as may be prescribed from time to time. 

SECTION 4. Management Concerns: Planning and Co-ordination - The PDEA, as 

lead agency, and other Law Enforcement Agencies concerned should: 

a. weigh the costs/benefits before committing to a controlled delivery operation; 

b. establish a realistic degree of manpower involvement, support equipment and funds allocation 

at the onset of the operation;


c. make an Operation Plan and briefing sheet detailing each law enforcement agent or 

officerís assignment; 

d. enter into an inter-agency agreement/understanding on the conduct of joint and/or coordinated 

investigations including controlled delivery operations. 

The PDEA shall promulgate the Standard Operating Procedures for the operational 

Conduct of controlled delivery operations. Such SOP should provide operational guide to 

planning and management of controlled delivery operations, including, but not limited to, the 

requirements for personnel, equipment and coordination as well as initiation of controlled 

delivery operations, organization for controlled delivery, conduct of investigation, evidence 

handling, action to be taken when dangerous drugs or controlled precursor and essential 

chemicals subject of controlled delivery is lost, prescribed reporting formats. 

SECTION 5. Participation of Foreign Law Enforcement Agencies - In the conduct of 

controlled delivery operations, the Director General of PDEA; 

a. may allow the foreign law enforcement agencies to take part under the following conditions: 

i. prior authorization has been requested and obtained from Director General of 

PDEA; 

ii. the foreign officers agree to act under the authority of the Director General of 

PDEA; 

b. may accept technical resources such as, but not limited to, video and audio tracking and 

monitoring devices, subject to authorization of their use by proper jurisdiction. 

SECTION 6. Changes in Operational Plan and Newly Developed Information - If a 

controlled delivery does not proceed on schedule due to unexpected delay, loss of the drugs 

or other contraband cargo, change in location or route of delivery, or change in intended 

recipient, the responsible supervisory PDEA officer will relay this information and make 

appropriate recommendations to the Director General of PDEA and his counterpart(s) in the 

transited or receiving jurisdictions, as soon as possible. This notification process also applies 

to newly developed information unknown at the initiation of the operation. 

Article III 

Evidence Handling 

SECTION 8. Evidence Handling - The following should be considered in the light of 

the type of controlled delivery, the potential risks to officer safety, and the dictates of operational 

integrity: 

a. Identify, process, and secure all evidence relating to the seizure, as practical prior to 

conducting the controlled delivery; 

b. Photograph, videotape, photocopy the evidence both upon discovery and after removal 

from the place of concealment; 

c. Mark the evidence and the container for future identification, if practicable;

192 


d. Field test any narcotic evidence; 

e. Obtain laboratory analysis for the case file after completion of a controlled delivery. 

f. Whenever practical, remove all but the prescribed amount that can be retained pursuant 

Board Regulation No. 1, s. 2002 and replace with inert substance to prevent destruction of 

evidence - and in accordance with prosecutorial guidelines, law and policy; 

g. For prosecutorial considerations, co-ordinate all decisions regarding the amount of contraband 

utilized in a controlled delivery with the appropriate prosecutional authority; 

h. In the case of contraband discovered in the course of inspection or other law enforcement 

activity, which is allowed to proceed to its intended destination - while under the surveillance 

of law enforcement officers or agents, disable any potential counter-surveillance devices or 

weapons to prevent any potential use by the violator; 

i. Where tracking device is available and allowed to be used by proper jurisdiction, install the 

tracking device on or inside the evidence; 

j. Ensure that special measures are undertaken to assure connection with the suspects at the 

time the controlled delivery is terminated; 

k. In case of a controlled delivery of large amounts of currency, utilize currency/monetary 

instrument procedures for accountability purposes; 

l. Obtain background information on any corporations involved and personal information on 

the suspected driver; 

m. When available and needed, arrange for aerial surveillance. 

SECTION 9. Accountability for Lost Contraband - If contraband is lost during enforcement 

operations, the following steps must be taken: 

a. Immediately notify the Director General of PDEA and Heads of appropriate Law Enforcement 

Agency. 

b. Within 24 hours or as soon as practicable, the PDEA as lead agency shall conduct joint 

investigation with the other Law Enforcement Agency concerned and make appropriate 

recommendations. The Director General of PDEA shall inform the Board in writing about the 

loss and the action taken thereof. 

SECTION 10. Completion of Controlled Delivery Operations - When the operation is 

completed and resulted in the seizure of dangerous drugs or controlled precursor and essential 

chemicals or laboratory equipment, arrests of offenders and subsequent filing of 

case in the proper jurisdiction, the PDEA officer in charge of the operation shall ensure that 

the relevant provisions of DDB Regulations No. 1-2002: ìGuidelines on Custody and Disposition 

of Seized Dangerous Drugs, Controlled Precursors and Essential Chemicals and Laboratory 

Equipmentî, pertaining to inventory, reporting and laboratory analysis are complied 

with as a matter of course. Further, the Director General of PDEA shall render a report of the 

completed controlled delivery operation to the Board.


Article IV 

Effectivity 

SECTION 10. This set of guidelines shall take effect fifteen (15) days after its publication 

in a newspaper of general circulation. 


(SGD.) JAIME M. VIBAR (SGD.) MIGUEL A. PEREZ-RUBIO 

(Representing the President, Integrated President, Katotohanan Foundation-NGO 

Bar of the Philippines) Regular Member 

Regular Member 

(SGD.) MARIA MERCEDITAS N. GUTIERREZ (SGD.) ANTONIO S. LOPEZ 

Undersecretary, Representing the Undersecretary, Representing the 

Secretary of Justice Secretary of Health 


(SGD.) MARIUS P. CORPUS (SGD.) LOURDES G. BALANON 

Undersecretary, Representing the Department Undersecretary, Representing the 

of Interior and Local Government Secretary of Social Welfare and Development 


(SGD.) FRANKLIN M. EBDALIN (SGD.) Dir. THELMA G. SANTOS 

Undersecretary the Secretary of (Representing the Secretary of Education) 

Foreign Affairs Ex-Officio Member 

Ex-Officio Member 

(SGD.) Dir. ISABEL INLAYO (SGD.) ANSELMO S. AVENIDO, JR. 

(Representing the Chair, Commission Director-General, Philippine Drug 

on Higher Education) Enforcement Agency 


(SGD.) MARIELOU A. CHUA (SGD.) PSSUPT. ANGELITO L. GERANGCO 

(Representing the Chair, National Youth (Representing the Chief, Philippine National 

Commission Police) 

Ex-Officio Member Permanent Consultant 

(SGD.) BERNARDO T. LASTIMOSO (SGD.) EDGAR C. GALVANTE 

(Undersecretary, Permanent Member, Undersecretary, Permanent Member, 

Dangerous Drugs Board) Dangerous Drugs Board 



Chairman, Dangerous Drugs Board 

Attested: 

(SGD.) MIGUEL G. CORONEL 


Executive Director and Board Secretary, DDB

194 


DEPARTMENT OF AGRARIAN REFORM 


DAR Administrative Order No. 01, s. 2003 

2003 Rules Governing Issuance of Notice of Coverage and 

Acquisition of Agricultural Lands Under RA 6657 

Prefatory Statement 

The Notice of Coverage (NOC) commences the compulsory acquisition of private 

agricultural lands coverable under the Comprehensive Agrarian Reform Program (CARP). 

Along the various phases of the CARP proceedings, the process stalls because of Land 

Owner (LO) resistance, most of whom invoke the ground of lack of notice or non-observance 

of due process in attacking the proceedings. This Order aims to plug common loopholes in 

the coverage process to safeguard and ensure completion of the acquisition process. 

1. Commencement 

Procedure 

1.1 Commencement by the Municipal Agrarian Reform Officer (MARO). After determining 

that a landholding is coverable under the CARP, and upon accomplishment of the Pre- 

Ocular Inspection Report, the MARO shall prepare the NOC (CARP Form No. 5-A). 

1.2 Commencement by a Party. Any person may commence the proceedings herein by 

filing a petition for coverage before the Department of Agrarian Reform (DAR) Regional 

Office (DARRO) or DAR Provincical Office (DARPO) of the region or province where 

the subject landholding is located. Upon receipt of a petition for coverage, the DARRO 

or DARPO shall transmit the case folder to the MARO of the municipality where the 

subject landholding is located. From then on, all rules herein pertaining to service of a 

copy of the NOC to the LO shall likewise apply to service of a copy of the petition for 

coverage to the LO. 

2. The MARO shall post copies of the NOC for at least seven (7) days in the bulletin boards 

of the barangay hall and municipality/city hall where the property is located. The Barangay 

Agrarian Reform Committee (BARC) Chairperson and proper official of the municipal/city 

government shall issue the corresponding Certification of Posting Compliance. 

3. Service of the NOC 

3.1 The MARO of the place where the subject landholding is located shall issue and order 

the service of the NOC to the LO in accordance with these rules. 

3.2 If the subject landholding and LOís residence are not in the same municipality or city, 

the MARO shall endorse the NOC to the MARO exercising jurisdiction over the place 

where the LO resides. The endorsee MARO shall then personally serve the NOC to the 

LO.


3.3 In case of co-ownership, the MARO shall issue the NOC and personally serve copies 

thereof to each and every LO. If any or all co-landowners reside outside the municipality 

or city where the subject landholding is located but within the Philippines, the MARO 

shall endorse copies of the NOC to the MARO/s exercising jurisdiction over the place/s 

where each of the co-landowners reside. Thereupon, the endorsee MARO/s shall personally 

serve copies of the NOC to each of the respective co-landowners. 

3.4 If the LOís residence is outside the Philippines or unknown, the MARO of the place 

where the subject landholding is located arrange for a service by publication. 

4. Receipt of service of the NOC 

4.1 General Rule. The LO shall receive service of the NOC. 

4.2 Service upon minors or incompetents. When the LO is a minor, insane or otherwise an 

incompetent, service shall be made upon him personally and on his legal guardian if he 

has one, or if none, upon his guardian ad litem whose appointment shall be applied for 

by the DAR. In the case of a minor, service may also be made on his father and/or 

mother. 

4.3 Service upon entity without juridical personality. When the LOs are persons associated 

in an entity without juridical personality are sued under the name by which they are 

generally or commonly known, service may be effected upon all the LOs by serving 

upon any one of them, or upon the person in charge of the office or place of business 

maintained in such name. Such service shall not bind individually any person whose 

connection with the entity has, upon due notice, been severed before the action was 

brought. 

4.4 Service upon domestic private juridical entity. When the LO is a corporation, partnership 

or association organized under the laws of the Philippines with a juridical personality, 

service may be made on the president, managing partner, general manager, 

corporate secretary, treasurer, or in-house counsel. 

4.5 Service upon LO whose identity or whereabouts is unknown. In any action where the 

LO is designated as an unknown owner, or the like, or whenever his whereabouts are 

unknown and cannot be ascertained by diligent inquiry, service may be effected upon 

him by publication in a newspaper of general circulation in such places and for such 

time as the DAR may order. 

4.6 Extraterritorial service. When the LO does not reside and is not found in the Philippines, 

or when the LO ordinarily resides within the Philippines but is temporarily out, 

service may be made by publication in a newspaper of general circulation in such 

places and for such time as the DAR may order. 

5. Modes of service: 

5.1 Personal service ñ The MARO shall personally serve a copy of the NOC to the LO in 

person or tender the same if the LO refuses to receive the NOC for whatever reason. 

5.2 Substituted service ñ If service of the NOC directly to the LO is not practicable within a 

reasonable time, service may be made by leaving copies of the NOC at the LOís:

196 


5.2.1 residence with some person of suitable age and discretion then residing 

therein; or 

5.2.2 office or regular place of business with some competent person in charge thereof. 

5.3 Service by publication ñ If personal or substituted service is not practicable, service 

may be made by registered mail to the last known address of the LO and by publication 

in a newspaper of general circulation in such places and for such time as the DAR may 

order. The publication need not state the entire contents of the NOC but only the following 

essential particulars: 

5.3.1 Complete name/s of the LO/all LOs; 

5.3.2 Address or location of the subject landholding (barangay, municipality/city, 

province) 

5.3.3 The number of the Original or Transfer Certificate of Title (OCT or TCT) or 

latest Tax Declaration (TD) covering the subject landholding; 

5.3.4 A declaration that the Republic of the Philippine shall cover the subject landholding 

under the CARP; 

5.3.5 Case or reference number; 

5.3.6 A reasonable period of not less than sixty (60) days from publication date within 

which the LO must file a response to the NOC, with a warning that failure to do 

so within the period shall mean waiver of the right/privilege to: apply for exemption/exclusion 

or retention, nominate child/ren as beneficiary/ies, or submit evidence 

for determining just compensation; and 

5.3.7 Address of the office/s holding custody of the case records, or copies thereof, 

which shall be public documents available to the general public for photocopying 

during reasonable office hours, upon payment of reasonable reproduction costs 

and certification fees. 

6. Proof of service: 

6.1 Personal or substituted service. The proof of service of the NOC shall: 

6.1.1 be made in writing by the server; 

6.1.2 set forth the manner, place, and date of service; 

6.1.3 specify any papers which have been served with the process and the name of 

the person who received the same; and 

6.1.4 be sworn to when made by a person other than the MARO. 

6.2 Proof of service by publication. If the service has been made by publication, service 

may be proved by the affidavit of the printer, his foreman or principal clerk, or of the 

editor, business or advertising manager, to which affidavit a copy of the publication 

shall be attached, and by an affidavit showing the deposit of a copy of the NOC and 

order for publication in the post office, postage prepaid, directed to the LO by registered 

mail to his last known address. 

7. Voluntary appearance. The LOís voluntary appearance in the action shall be equivalent 

to service of NOC. 

8. Upon receipt of the Memorandum of Valuation from the Land Bank of the Philippines 

(LBP) and Claim Folder Profile and Valuation Summary (MOV-CFPVS), the Provincial


Agrarian Reform Officer (PARO) sends a Notice of Land Valuation & Acquisition (NLVA) 

to the LO in accordance with the same service procedures herein, attaching a copy of 

the MOV-CFPVS, and requiring the LO to submit documents required for payment of 

claims using CARP Form No. 10. 

9. The PARO shall furnish a copy of the NLVA to the Register of Deeds (ROD) with a 

request for its annotation at the back of the corresponding title covered by the MOV- 

CFPVS. The ROD secures the title from the CARP Volume, if already segregated from 

the regular volume, and proceeds to annotate the NLVA subject of the request of PARO. 

Repealing Clause 

This Order amends DAR Administrative Order No. 2, Series of 1996 and Administrative 

Order No. 1, Series of 1998, and all other orders or circulars inconsistent herewith. 

Effectivity 

This Order shall take effect ten (10) days after its publication in two (2) national 

newspapers of general circulation, pursuant to Section 49 of RA 6657. 



(SGD.) HERNANI A. BRAGANZA 

Secretary 

óo0oó 

DAR Administrative Order No. 02, s. 2003 

2003 Rules and Procedures Governing Landowner Retention Rights 

Pursuant to Presidential Decree (PD) No. 27, Section 6 of Republic Act (RA) No. 

6657, and in view of the Supreme Courtís ruling in Association of Small Landowners in the 

Philippines Incorporated versus Secretary of Agrarian Reform (G.R. No. 78742 [14 July 

1989]), the rules and procedures governing the exercise of retention rights under PD 27 and 

RA 6657 by landowners are hereby revised as follows: 

Article I 

Preliminary Provisions 

Section 1. Coverage. These rules and procedures shall apply to all applications for 

retention under PD 27 and RA 6657. 

Section 2. Statement of Policies. The exercise of retention right by landowners shall 

be governed by the following policies: 

2.1 The landowner has the right to choose the area to be retained by him which shall be 

compact and contiguous, and which shall be least prejudicial to the entire landholding 

and the majority of the farmers therein.

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2.2 The landowner shall exercise the right to retain by signifying his intention to retain 

within sixty (60) days from receipt of notice of coverage. Failure to do so within the 

period shall constitute a waiver of the right to retain any area. 

2.3 Upon manifestation of the landownerís intention to retain, he shall indicate the exact 

location thereof within thirty (30) days from manifestation date. Failure to do so shall 

authorize the Municipal Agrarian Reform Officer (MARO) to choose said retention area. 

2.4 The landowner has the obligation to cultivate the land directly or thru labor administration 

and thereby make the area he retains productive. 

2.5 In all cases, all rights previously acquired by the tenant farmers under PD 27 and the 

security of tenure of the farmers or farmworkers on the land prior to the approval of RA 

6657 shall be respected. Furthermore, actual tenant farmers in the landholdings shall 

not be ejected or removed therefrom. 

2.6 The sale, disposition, lease or transfer of private lands by the original landowner in 

violation of RA 6657 shall be null and void. Transactions executed prior to RA 6657 shall 

be valid only when registered with the Register of Deeds within a period of three (3) 

months after 15 June 1988 in accordance with Section 6 of RA 6657. 

Article II 

Exercise of Retention Right 

Section 3. Who May Apply for Retention 

3.1 Any person, natural, or juridical, who owns agricultural lands with an aggregate area of 

more than five (5) hectares may apply for retention area. However, a landowner who 

exercised his right of retention under PD 27 may no longer exercise the same right 

under RA 6657. Should he opt to retain five (5) hectares in his other agricultural lands, 

the seven (7) hectares previously retained by him shall be immediately placed under 

CARP coverage. 

3.2 A landowner who owns five (5) hectares or less, of land which are not yet subject of 

coverage based on the schedule of implementation provided in Section 7 of RA 6657, 

may also file an application for retention and a Certification of Retention shall be issued 

in his favor. 

3.3 The right of retention of a deceased landowner may be exercised by his heirs provided 

that the heirs must first show proof that the decedent landowner had manifested during 

his lifetime his intention to exercise his right of retention prior to August 23 1990 (finality 

of the Supreme Court ruling in the case of Association of Small Landowners in the 

Philippines, Incorporated versus The Honorable Secretary of Agrarian Reform). 

Section 4. Period to Exercise Right of Retention Under RA 6657 

4.1 The landowner may exercise his right of retention at any time before receipt of notice of 

coverage.


4.2 Under the Compulsory Acquisition (CA) scheme, the landowner shall exercise his right 

of retention within sixty (60) days from receipt of notice of coverage. 

4.3 Under the Voluntary Offer to Sell (VOS) and the Voluntary Land Transfer (VLT)/Direct 

Payment Scheme (DPS), the landowner shall exercise his right of retention simultaneously 

at the time of offer for sale or transfer. 

Section 5. Where to File Application. Any duly completed application for retention 

may be filed with the office of the Regional Director or the Provincial Agrarian Reform 

Officer (PARO). The receiving office shall forward the application to the MARO with jurisdiction 

over the landholding after assigning a docket number. 

Section 6. Waiver of the Right of Retention. The landowner waives his right to retain 

by committing any of the following act or omission: 

6.1 Failure to manifest an intention to exercise his right to retain within sixty (60) calendar 

days from receipt of notice of CARP coverage. 

6.2 Failure to state such intention upon offer to sell or application under the VLT/DPS 

scheme. 

6.3 Execution of any document stating that he expressly waives his right to retain. The 

MARO and/or PARO and/or Regional Director shall attest to the due execution of such 

document. 

6.4 Execution of a Landowner Tenant Production Agreement and Farmerís Undertaking 

(LTPA-FU) or Application to Purchase and Farmerís Undertaking (APFU) covering 

subject property. 

6.5 Entering into a VLT/DPS or VOS but failing to manifest an intention to exercise his right 

to retain upon filing of the application for VLT/DPS or VOS. 

6.6 Execution and submission of any document indicating that he is consenting to the 

CARP coverage of his entire landholding. 

6.7 Performing any act constituting estoppel by laches which is the failure or neglect for an 

unreasonable length of time to do that which he may have done earlier by exercising 

due diligence, warranting a presumption that he abandoned his right or declined to 

assert it. 

Article III 

Award of Retention Area 

Section 7. Criteria/Requirements for Award of Retention. The following are the 

criteria in the grant of retention area to landowners: 

7.1 The land is private agricultural land; 

7.2 The area chose for retention shall be compact and contiguous and shall be least prejudicial 

to the entire landholding and the majority of the farmers therein;

200 


7.3 The landowner must execute an affidavit as to the aggregate area of his landholding in 

the entire Philippines; and 

7.4 The landowner must submit a list of his children who are fifteen (15) years old or over 

as of 15 June 1988 and who have been actually cultivating or directly managing the 

farm since 15 June 1988 for identification as preferred beneficiaries, as well as evidence 

of such. 

7.5 The landowner must execute an affidavit stating the names of all farmers, agricultural 

lessees and share tenants, regular farmworkers, seasonal farmworkers, other 

farmworkers, actual tillers or occupants, and/or other persons directly working on the 

land; if there are no such persons, a sworn statement attesting to such fact. 

Section 8. Retention Area. The area allowed to be retained by the landowner shall be 

as follows: 

8.1 Landowners covered by PD 27 are entitled to retain seven (7) hectares, except those 

whose entire tenanted rice and corn lands are subject of acquisition and distribution 

under Operation Land Transfer (OLT). An owner of tenanted rice and corn lands may 

not retain those lands under the following cases: 

8.1.1 If he, as of 21 October 1972, owned more than twenty-four (24) hectares of 

tenanted rice and corn lands; or 

8.1.2 By virtue of Letter of Instruction (LOI) No. 474, if he, as of 21 October 1972, 

owned less than twenty-four (24) hectares of tenanted rice and corn lands but 

additionally owned the following: 

8.1.2.1 other agricultural lands of more than seven (7) hectares, whether 

tenanted or not, whether cultivated or not, and regardless of the income 

derived therefrom; or 

8.1.2.2 lands used for residential, commercial, industrial or other urban 

purposes from which he derives adequate income to support himself 

and his family. 

8.2 Landowners affected by PD 27 who filed their applications for retention before 27 

August 1985, the deadline set by the DAR AO No. 1, Series of 1985, may retain not 

more than seven (7) hectares of their landholdings regardless of whether or not they 

complied with LOI 41, 45, and 52. 

8.3 Also entitled to such seven (7) hectare retention area under PD 27 are landowners who 

filed their application after 27 August 1985 but complied with LOI 41, 45, and 52, which 

provide for the submission of sworn statements containing the following information: 

8.3.1 List of agricultural lands owned by him throughout the country, indicating therein 

the area and location of each parcel; 

8.3.2 Principal crops to which each parcel of land is devoted. For those areas devoted 

primarily to rice and/or corn, the landowners shall indicate: 

8.3.2.1 the portions actually cultivated by tenants; 

8.3.2.2 the names of such tenants; and 

8.3.2.3 the area tilled by each tenant as of 21 October 1972;


8.3.3 The average gross harvest of each tenant (on a parcel of rice/corn land) during 

the three (3) crop years immediately preceding 21 October 1972; and 

8.3.4 Liens and/or encumbrances, if any, the amounts thereof, and the names and 

addresses of the parties who have liens and/or encumbrances over such 

properties as of 21 October 1972. 

8.4 Landowners who filed their applications after the 27 August 1985 deadline and did not 

comply with LOI 41, 45, and 52 shall be entitled only to a maximum of five (5) hectares 

as retention area. 

8.5 Landowners who failed to apply for retention under PD 27, and who did not comply with 

the 27 August 1985 deadline, shall be allowed to retain a maximum of five (5) hectares 

as retention area. 

8.5.1 If he, as of 21 October 1972, owned more than twenty-four (24) hectares of 

tenanted rice and corn lands; or 

8.5.2 By virtue of Letter of Instruction (LOI) No. 474, if he, as of 21 October 1972, 

owned less than twenty-four (24) hectares of tenanted rice and corn lands but 

additionally owned the following: 

8.5.2.1 other agricultural lands of more than seven (7) hectares, whether 

tenanted or not, whether cultivated or not, and regardless of the 

income derived therefrom; or 

8.5.2.2 lands used for residential, commercial, industrial or other urban 

purposes from which he derives adequate income to support 

himself and his family. 

8.6 A landowner whose landholdings are covered under CARP may retain an area of not 

more than five (5) hectares thereof. In addition, each of his children, whether legitimate, 

illegitimate, or legally adopted, may be awarded an area of not more than three 

(3) hectares as preferred beneficiary, provided that the child is at least fifteen (15) 

years old as of 15 June 1988 and that he is actually tilling the land or directly managing 

the farmholding from 15 June 1988 up to the filing of the application for retention and/or 

the time of the acquisition of the landholding under CARP. 

8.7 The original homestead grantees or their direct compulsory heirs who still own the 

original homestead at the time of the approval of RA 6657 may retain the same area as 

long as they continue to cultivate the said homestead. 

8.8 For marriages covered by the New Civil Code, in the absence of the agreement for the 

judicial separation of property, spouses who own only conjugal properties may retain a 

total of not more than five (5) hectares of such properties. However, if either or both of 

them are landowners in their respective rights (capital and/or paraphernal), they may 

retain not more than five (5) hectares of their respective landholdings. In no case, 

however, shall the total retention of such couple exceed ten (10) hectares. 

8.9 For marriages covered by the Family Code, which took effect on 3 August 1988, a 

husband owning capital property and/or a wife owning a paraphernal property may 

retain not more than five (5) hectares each, provided they executed a judicial separation 

of properties prior to entering into such marriage. In the absence of such an

202 


agreement, all properties (capital, paraphernal and conjugal) shall be considered to be 

held in absolute community, i.e., the ownership relationship is one, and, therefore, only 

a total of five (5) hectares may be retained. 

Article IV 

Effects of the Exercise of Retention Right 

Section 9. When Retained Area is Tenanted. 

9.1 In case the area selected by the landowner or awarded for retention by the DAR is 

tenanted, the tenant shall have the option to choose whether to remain therein as lessee 

or be a beneficiary in the same or another agricultural land with similar or comparable 

features. 

9.2 In case the tenant declines to enter into leasehold and there is no available land to 

transfer, or if there is, the tenant refuses the same, he may choose to be paid disturbance 

compensation by the landowner in such amount as may be agreed between the 

parties taking into consideration the improvements made on the land. However, in no 

case shall the agreed amount be less than five (5) times the average gross harvest on 

their landholding during the last five (5) preceding calendar years pursuant to Section 

36 of RA 3844, as amended by Section 7 of RA 6389. If the parties fail to agree on the 

amount of disturbance compensation, either party may file a petition for fixing disturbance 

compensation with the appropriate Provincial Agrarian Adjudicator (PARAD). In 

the latter case, the petitioner must show proof that earnest efforts were exerted by the 

parties to fix the amount of disturbance compensation, which efforts proved unsuccessful, 

before the same was filed with the PARAD. The tenant shall not be dispossessed 

or ejected from the landholding, unless disturbance compensation is paid and 

proof thereof is submitted to the MARO. 

9.3 The tenant must exercise his option within one (1) year from the time the landowner 

manifests his choice of the area, he shall be considered a leaseholder and shall lose 

his right to be an Agrarian Reform Beneficiary (ARB) under CARP. In this case, the 

required lease agreement shall be executed in accordance with relevant issuances on 

the matter. 

9.4 In case the tenant chooses to remain in the retained area, he shall be considered a 

leaseholder and shall lose his right to be an Agrarian Reform Beneficiary (ARB) under 

CARP. In this case, the required lease agreement shall be executed in accordance with 

relevant issuances on the matter. 

9.5 The provisions on preemption and redemption under RA 3844, as amended, shall apply 

to the lessee. 

Article V 

Operating Procedures 

Section 10. Responsibilities of the MARO. In the processing of applications for 

retention, the MARO shall have the following responsibilities:


10.1 Determine whether or not the original homestead grantees or their direct compulsory 

heirs still own and actually cultivate the homestead land, when applicable. 

10.2 Conduct field verification and investigation, together with the landowner or his authorized 

representative, to determine the following: 

10.2.1 Landholding of the landowner in relation to his application for retention; 

10.2.2 Qualifications of the applicant and their children as their compulsory heirs; 

10.2.3 Tenants, farmworkers and/or actual occupants within subject landholding; and 

10.2.4 Other factors relevant to the application for retention. 

10.3 Notify all tenants, farmworkers and/or actual occupants of the schedule of all conferences/dialogues 

regarding said application for retention. 

10.4 Identify and facilitate the necessary land transfer for tenants opting to be beneficiaries 

in another landholding of the same landowner with similar or comparable features. 

10.5 Identify the tenants opting to be leaseholders and facilitate the execution of the corresponding 

leasehold contracts. 

10.6 Preside over the negotiations between the tenant/beneficiaries in the determination of 

disturbance compensation should the tenants/beneficiaries opt to accept the same 

from the landowner. 

10.7 Prepare a sketch plan of the area to be retained by the landowner in coordination with 

the Department of Environment and Natural Resources (DENR). 

10.8 Prepare a Retention Folder indicating therein his findings and recommendations and 

submit the same to the PARO. 

10.9 Identify prime agricultural areas owned by landowners who waived their right to choose 

which area to retain or those who waived their right to exercise the right of retention 

using the following factors: 

10.9.1 Commodity produced; 

10.9.2 Terrain; 

10.9.3 Infrastructure available; and 

10.9.4 Soil fertility 

10.10 Notify the landowner, through personal service with proof of receipt or by registered 

mail with return card, the portion selected as his retention area upon failure of the 

landowner to exercise his right of retention within the period specified in these Rules. 

Section 11. Responsibilities of the PARO. The PARO, on the other hand, shall have 

the following responsibilities: 

11.1 Review and evaluate the report and recommendations submitted by the MARO. 

11.2 If the Retention Folder is in order, forward the same, together with his findings and 

recommendations, to the Regional Director for appropriate action. Otherwise, return

204 


the same to the MARO for appropriate action. The PARO may conduct his own field 

investigation and conferences/dialogues. 

11.3 Upon receipt of the Retention Folder and the Order of Approval from the Regional 

Director, the PARO shall segregate the appropriate retained area in coordination with 

the DENR. The DENR shall furnish the Regional Director four (4) copies for distribution 

to the PARO, MARO, Register of Deeds, landowner and other concerned parties. 

11.4 Conduct the final survey of the area and draft a Certificate of Retention. 

11.5 On the basis of the ownerís duplicate copy of title, approved segregation plan, and 

technical description, request the Register of Deeds to prepare two (2) separate titles: 

(1) Landownerís title for the landholding covered by compulsory acquisition, voluntary 

offer to sell or voluntary land transfer/direct payment scheme, as the case may 

be; and 

(2) Landownerís title for the retained area; 

and request the Register of Deeds to prepare another title in the name of the Republic 

of the Philippines for lands covered by CA and VOS. 

Section 12. Responsibilities of the Regional Director. The Regional Director shall 

have the following responsibilities: 

12.1 Review and evaluate the documents submitted by the PARO. If the documents are in 

order, issue an Order of Approval attaching the sketch plan of the retained area. The 

Order of Approval shall specify that the retained area is subject to a final survey to be 

conducted by the PARO. Otherwise, issue an Order of Denial; and 

12.2 Forward the Order of Approval or Denial, as the case may be to the PARO for distribution 

to the concerned parties. 

12.3 Forward copies of all orders of approvals or denials to the BLAD for the purpose of 

creating a database on all lands subject of retention and landowners who already exercised 

retention rights. The Bureau of Land Acquisition and Distribution (BLAD) shall 

also periodically monitor if any person had applied for or been granted retention more 

than once in any other region in the Philippines based on its records. 

12.4 Issue a Certificate of Retention. 

Section 13. Decision of the Regional Director. The decision of the Regional Director 

approving or disapproving the application for retention shall become final after fifteen (15) 

days from receipt of the decision, unless duly appealed to the DAR Secretary pursuant to 

the Rules of Procedure for Agrarian Law Implementation (ALI) Cases. 

Article VI 

Final Provisions 

Section 14. Transitory Provision. All pending applications for retention shall be 

processed in accordance with the procedures provided herein. Within ninety (90) days from


effectivity of this Order, all Regional Offices shall submit an inventory of all past and present 

pending cases involving retention in accordance with the format to be prepared by the BLAD 

within fifteen (15) days from the date of this Order. 

Section 15. Repealing Clause. This Order modifies or repeals DAR Administrative 

Order No. 11, Series of 1990, Administrative Order No. 4, Series of 1991, Administrative 

Order No. 5, Series of 2000, and all other administrative issuances inconsistent herewith. 

Section 16. Separability Clause. In the event that any of the provisions of this Order 

is declared unconstitutional or illegal, the validity of the other provisions shall not be affected 

by said declaration. 

Section 17. Effectivity. This Order shall take effect ten (10) days after its publication 

in two (2) national newspapers of general circulation. 




Secretary 

óo0oó 

Administrative Order No. 03, s. 2003 

2003 Rules for Agrarian Law Implementation Cases 

Pursuant to Sections 49 and 50 of Republic Act (RA) No. 6657, or the ìComprehensive 

Agrarian Reform Law of 1988î (CARL), and in order to foster a just, inexpensive and 

expeditious determination of agrarian cases, the following are the Department of Agrarian 

Reform (DAR) rules governing the adjudication of cases involving Agrarian Law Implementation 

(ALI): 

RULE I 


SECTION 1. Title. These Rules shall be known as the ì2003 Rules of Procedure ALI 

Cases.î 

SECTION 2. ALI Cases. These Rules shall govern all cases arising from or involving: 

2.1 Classification and identification of landholdings for coverage under the agrarian reform 

program and the initial issuance of Certificate of Land Ownership Awards (CLOAs) and 

Emancipation Patents, including protests or oppositions thereto and petitions for lifting 

of such coverage; 

2.2 Classification, identification, inclusion, exclusion, qualification or disqualification of potential/actual 

farmer-beneficiaries;

206 


2.3 Subdivision surveys of land under the Comprehensive Agrarian Reform Program (CARP); 

2.4 Recall, or cancellation of provisional lease rentals, Certificates of Land Transfers (CLTs) 

and CARP Beneficiary Certificates (CBCs) in cases outside the purview of Presidential 

Decree (PD) No. 816, including the issuance, recall or cancellation of Emancipation 

Patents (EPs) or Certificates of Land Ownership Awards (CLOAs) not yet registered 

with the Register of Deeds; 

2.5 Exercise of the right of retention by landowner; 

2.6 Application for exemption under Section 10 of RA 6657; 

2.7 Application for exemption pursuant to Department of Justice (DOJ) Opinion No. 44 

(1990); 

2.8 Exclusion from CARP coverage of agricultural land used for livestock, swine, and poultry 

raising; 

2.9 Cases of exemption/exclusion of fishpond and prawn farms from the coverage of CARP 

pursuant to RA 7881; 

2.10 Issuance of Certificate of Exemption for land subject of Voluntary Offer to Sell (VOS) 

and Compulsory Acquisition (CA) found unsuitable for agricultural purposes; 

2.11 Application for conversion of agricultural lands to residential, commercial, industrial or 

other non-agricultural uses and purposes including protests or oppositions thereto; 

2.12 Determination of the rights of agrarian reform beneficiaries to homelots; 

2.13 Disposition of excess area of the tenantís/farmer-beneficiaryís landholdings; 

2.14 Increase in area of tillage of a tenant/farmer-beneficiary; 

2.15 Conflict of claims in landed estates administered by DAR and its predecessors; and 

2.16 Such other agrarian cases, disputes, matters or concerns referred to it by the Secretary 

of the DAR. 

SECTION 3. DARAB Cases. These Rules shall not apply to cases falling within the 

exclusive original jurisdiction of the Department of Agrarian Reform Adjudication Board 

(DARAB) and its Regional or Provincial Agrarian Reform Adjudicators (RARAD or PARAD) 

which include: 

3.1 The rights and obligations of persons, whether natural or juridical, engaged in the 

management, cultivation and use of all agricultural lands covered by RA 6657 and other 

related agrarian laws; 

3.2 The preliminary administrative determination of reasonable and just compensation of 

lands acquired under PD 27 and the CARP;


3.3 The annulment or cancellation of lease contracts or deeds of sale or their amendments 

involving lands under the administration and disposition of the DAR or Land Bank of the 

Philippines (LBP); 

3.4 Those cases involving ejectment and dispossession of tenants and/or leaseholders; 

3.5 Those cases involving the sale, alienation, pre-emption and redemption of agricultural 

lands under the coverage of the CARL or other agrarian laws; 

3.6 Those involving the correction, partition, cancellation, secondary and subsequent issuances 

of CLOAs and EPs which are registered with the Land Registration Authority; 

3.7 Those cases involving the review of leasehold rentals; 

3.8 Those cases involving the collection of amortizations on payments for lands awarded 

under PD 27 (as amended), RA 3844 (as amended), and RA 6657 (as amended) and 

other related laws, decrees, orders, instructions, rules and regulations, as well as payment 

for residential, commercial, and industrial lots within the settlement and resettlement 

areas under the administration and disposition of the DAR; 

3.9 Those cases involving the annulment or rescission of lease contracts and deeds of 

sale, and the cancellation or amendment of titles pertaining to agricultural lands under 

the administration and disposition of the DAR and LBP; as well as EPs issued under PD 

266, Homestead Patents, Free Patents, and miscellaneous sales patents to settlers in 

settlement and re-settlement areas under the administration and disposition of the DAR; 

3.10 Those cases involving boundary disputes over lands under the administration and disposition 

of the DAR and the LBP, which are transferred, distributed, and/or sold to 

tenant-beneficiaries and are covered by the deeds of sale, patents, and certificates of 

title; 

3.11 Those cases involving the determination of title to agricultural lands where this issue is 

raised in an agrarian dispute by any of the parties or a third person in connection with 

the possession thereof for the purpose of preserving the tenure of the agricultural 

lessee or actual tenant-farmer or farmer-beneficiaries and effecting the ouster of the 

interloper or intruder in one and the same proceeding; 

3.12 Those cases previously falling under the original and exclusive jurisdiction of the defunct 

Court of Agrarian Relations under Section 12 of PD 946 except those cases 

falling under the proper courts or other quasi-judicial bodies; and 



SECTION 4. Construction. In accordance with Section 50 of RA 6657, the DAR shall 

not be bound by technical rules of procedure and evidence but shall proceed to hear and 

decide all cases, disputes or controversies in a most expeditious manner, employing all 

reasonable means to ascertain the facts of every case in accordance with justice, equity and 

the merits of the case. In case of doubt, the deciding authority shall liberally construe or 

interpret these Rules in favor of carrying out the objectives of agrarian reform, to promote a

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just, expeditious, and inexpensive determination of agrarian cases. All references in these 

Rules in the masculine gender form (he/him/his) shall equally apply to the feminine gender 

form (she/her/hers) or group form (it/its/their). 

SECTION 5. Prejudicial Issue. When an ALI case raises a prejudicial issue, such 

issue being a DARAB case under Section 3 hereof, the Secretary/Regional Director shall 

suspend the case pending resolution of the prejudicial question. Conversely, when a case 

pending before the DARAB or its Adjudicators raises a prejudicial issue, such issue being 

an ALI case under Section 2 hereof and falling within the exclusive jurisdiction of the Secretary/ 

Regional Director, the Adjudicating Authority shall suspend the case pending the resolution 

of the prejudicial question in the proper forum. 

SECTION 6. Referral of Cases. When a party erroneously files a case under Section 

2 hereof before the DARAB, the receiving official shall refer the case to the proper DAR 

office for appropriate action within five (5) working days after determination that said case is 

within the jurisdiction of the Secretary. Likewise, when a party erroneously files a case 

under Section 3 hereof before any office other than the DARAB or its adjudicators, the 

receiving official shall, within five (5) working days, refer the case to the DARAB or its 

adjudicators. 

RULE II 

Jurisdiction Over ALI Cases 

SECTION 7. General Jurisdiction. The Regional Director shall exercise primary 

jurisdiction over all agrarian law implementation cases except when a separate special rule 

vests primary jurisdiction in a different DAR office. 

SECTION 8. Jurisdiction Over Protests or Petitions to Lift Coverage. The Regional 

Director shall exercise primary jurisdiction over protests against CARP coverage or petitions 

to lift notice of coverage. If the ground for the protest or petition to lift CARP coverage is 

exemption or exclusion of the subject land from CARP coverage, the Regional Director shall 

either resolve the same if he has jurisdiction, or refer the matter to the Secretary if jurisdiction 

over the case belongs to the latter. 

SECTION 9. Jurisdiction Over Land Use Conversions and Exemptions/Exclusions 

From CARP Coverage. Separate special rules governing applications for land use conversion 

and exemption/exclusion from CARP coverage shall delineate the jurisdiction of the 

recommending and approving authorities thereunder. 

SECTION 10. Appellate Jurisdiction. The Secretary shall exercise appellate jurisdiction 

over all ALI cases, and may delegate the resolution of appeals to any Undersecretary. 

SECTION 11. Jurisdiction Over Flashpoint Cases. Any certification declaring a 

case as ìflashpointî in accordance with the criteria and procedure in DAR Memorandum 

Circular (MC) No. 13 (1997) shall not divest any authority from the DAR official for resolving 

the case. A flashpoint certification merely serves to accord utmost priority to the resolution of 

the case subject thereof. 

RULE III 

Procedure


SECTION 12. Applicability. The procedures herein shall generally apply to all ALI 

cases except for specific situations such as applications for land conversion and exemption/ 

exclusion from CARP coverage which shall be governed by the special procedures therefor. 

SECTION 13. Commencement of an Action. 

13.1 Without or prior to issuance of notice of CARP coverage ñ When the land in question 

has never been the subject of a notice of coverage, an ALI case involving said land 

shall commence upon filing of the initiatory pleading or application before the Regional 

Director or Provincial Agrarian Reform Officer (PARO). 

13.1.1 Commencement at the DAR Regional Office (DARRO) ñ The DARRO shall 

docket the case and transmit the case folder to the PARO within five (5) working days 

from filing, with notice to all parties. Upon receipt, the PARO shall, within five (5) working 

days and with notice to all parties, transmit the case folder to the MARO who shall 

conduct the necessary mediation/conciliation proceedings. 

13.1.2 Commencement at the DAR Provincial Office (DARPO) ñ The PARO shall 

docket the case and submit a case brief to the Regional Director within five (5) working 

days, with notice to all parties. Within the same five (5) working-days period and with 

notice to all parties, the PARO shall transmit the case folder to the MARO who shall 

conduct the necessary mediation/conciliation proceedings. 

13.2 After issuance of notice of coverage ñ Commencement shall be at the DAR Municipal 

Office (DARMO). When the applicant/petitioner commences the case at any other 

DAR office, the receiving office shall transmit the case folder to the DARMO or proper 

DAR office in accordance with the pertinent order and/or circular governing the subject 

matter. Only the real-party-in-interest may file a protest/opposition or petition to lift 

CARP coverage and may only do so within sixty (60) calendar days from receipt of the 

notice of coverage; a protesting party who receives the notice of coverage by newspaper 

publication shall file his protest/opposition/petition within sixty (60) calendar days 

from publication date; failure to file the same within the period shall merit outright dismissal 

of the case. 

SECTION 14. Forum Shopping. 

14.1 The applicant/petitioner shall certify under oath in the application or initiatory pleading, 

or its integral annex, a sworn certification that: 

14.1.1 He has not theretofore commenced any other action or proceeding involving 

the same land or issue in any court, tribunal, or quasi-judicial agency; 

14.1.2 To the best of his knowledge, no such action or proceeding is pending in any 

court, tribunal, or quasi-judicial agency; 

14.1.3 If there is any action or proceeding which is either pending or may have been 

terminated, he shall state the status thereof; and 

14.1.4 If he thereafter learns that a similar action or proceeding has been filed or is 

pending before any court, tribunal, or quasi-judicial agency, he undertakes to report 

that fact within five (5) days therefrom to the DAR office where the ALI case is pending.

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14.2 Failure to file a certification of non-forum shopping and/or subsequent discovery of 

commission of forum shopping shall be grounds for summary dismissal of the ALI 

case. Dismissal for failure to file certification of non-forum-shopping shall be without 

prejudice to re-filing of the case. Dismissal on the ground of subsequent discovery of 

commission of forum-shopping shall be with prejudice and the applicant/petitioner shall 

be liable for costs, except in the following cases; 

14.2.1 When he thereafter learns that a similar action or proceeding has been filed 

or is pending before any court, tribunal, quasi-judicial agency, and he reported that 

fact within five (5) days therefrom to the DAR office where the ALI case is pending; 

14.2.2 The applicant/petitioner is a pauper litigant; and 

14.2.3 Where these Rules allow cross-referral between DARAB and ALI cases. 

SECTION 15. Pauper Litigant. A party who is a farmer, agricultural lessee, share 

tenant, farm worker, actual tiller, occupant, collective or cooperative of the foregoing 

beneficiaries, or amortizing owner-cultivator, shall allege such fact in a sworn statement and 

shall thereafter benefit from the privileges for pauper litigants without need of further proof. 

He shall continue to enjoy such privileges in all levels of the proceedings until finality of the 

case. 

SECTION 16. Intervention. No intervention shall be given due course unless the 

intervenor shows proof that he has a substantial right or interest in the case which he cannot 

adequately protect in another case. This notwithstanding, potential farmer beneficiaries have 

a substantial right, interest, and legal personality to intervene. No intervenor shall, however, 

be allowed to file any motion to postpone/extend/reset or any pleading which may in any way 

delay the case which he seeks to intervene in. 

SECTION 17. Effect on Process of Coverage. The commencement of an ALI case, 

including applications for land use conversion/exemption/exclusion, affects the land acquisition 

and distribution process as follows: 

17.1 Application or Petition Filed Before Issuance of Notice of CARP Coverage ó The 

notice of coverage shall be held in abeyance until final resolution of the case. 

17.2 Application or Petition Filed Within Sixty (60) Calendar Days from Issuance of Notice 

of CARP Coverage ó The proper DAR office shall continue processing the claimfolder 

but not transmit the same to the Land Bank of the Philippines (LBP) for further processing, 

notwithstanding the pendency of the application. The Regional Director or PARO 

may suspend the claimfolderís processing if the MARO submits a report that the case is 

meritorious on the basis of the MAROís personal verification of the allegations therein; 

otherwise, the PARO shall process the claimfolder but not transmit the same to the LBP 

for further processing. 

17.3 Application or Petition Filed Where Claimfolder is Pending with LBP ó If the application/petition 

or protest was filed while the claimfolder is pending with the LBP, or where 

the claimfolder has been forwarded by the PARO notwithstanding such application/ 

petition or protest, the LBP shall continue processing the land compensation claim,


except that the Certification of Deposit (COD) shall be issued to the PARO until the 

application/petition or protest is finally resolved. 

SECTION 18. Procedure. 

18.1 Commencement. Except for applications for land use conversion and exemption/exclusion 

from CARP coverage which shall follow separate special rules, an ALI case shall 

commence with the filing of the proper application or initiatory pleading at the DARMO/ 

DARPO/DARRO. In all instances, the MARO shall notify all tenants, leaseholders, 

farmworkers, and occupants of the subject land of the initiation of the case. Proof of 

notice to all the persons above-mentioned shall form part of the records of the case. 

18.2 After notifying all parties, the MARO and Barangay Agrarian Reform Committee (BARC) 

shall exert exhaustive efforts at mediation and conciliation to persuade the parties to 

arrive at an amicable settlement or compromise. 

18.3 The issue of whether or not the land is subject to coverage under PD 27 or RA 6657 

shall not be the subject of compromise. 

18.4 If mediation/conciliation fails, the MARO shall, within five (5) working days from termination 

thereof, transmit the case folder to the PARO with a written report explaining the 

reasons for the mediation/conciliationís failure, furnishing all the parties with a copy of 

the written report. 

18.5 Investigation. The PARO, or any Investigating Officer or Committee which he or the 

Regional Director may designate, shall conduct investigations and perform whatever is 

necessary to achieve a just, expeditious, and inexpensive disposition of the case. 

18.6 Record of Proceedings. The proceedings shall be recorded by a stenographer. In the 

absence of an available stenographer, the Investigating Officer shall make a written 

summary of the proceedings, including the substance of the evidence presented which 

shall be attested to by the parties or their counsel and shall form part of the records of 

the case. Should any party or counsel refuse to sign, the reason for such refusal shall 

be noted therein. 

18.7 Ocular Inspection 

18.7.1 After giving all parties reasonable notice of the ocular inspection schedule, 

ocular inspection shall proceed with or without the presence of any party who refuses 

to cooperate. 

18.7.2 The ocular inspection team shall prepare an initial report which all attending 

parties and BARC representatives shall sign. If anyone refuses to sign, the ocular 

inspection team shall indicate the reason for such refusal in the initial report. 

18.8 Position Papers. The Investigating Officer may require the parties to simultaneously 

submit their respective position papers and replies thereto. Within thirty (30) days from 

due date of the last pleading (unless special rules provide for a different period), the 

Investigating Officer shall sign and submit his recommendation to the appropriate authority.

212 


18.9 Draft Decision. At any time before the ALI case is decided, any party may submit a 

hard copy of a draft decision together with a diskette containing such draft written in 

any popular word processing program, furnishing a copy thereof to all parties. 

18.10 Decision. Pursuant to Section 51 of RA 6657, which provides that ìany case or 

controversy before it shall be decided within thirty (30) days after it is submitted for 

resolutionî, the appropriate authority shall promulgate its decision within thirty (30) 

days from receipt of the Investigating Officerís recommendation. 

SECTION 19. Power to Summon Witnesses and Compel Submission of 

Documentary Evidence. The PARO and the RD shall have the power to summon witnesses, 

administer oaths, take testimony, require submission of reports, and compel production of 

books and documents. 

SECTION 20. Cease and Desist Order. In cases where any party may suffer grave 

or irreparable damage, or where the doing or continuance of certain acts will render the 

case moot and academic, or where there is a need to maintain peace and order and prevent 

injury or loss of life or property, the Secretary (or whoever the Secretary may designate) 

may, motu proprio or at the instance of any party, issue a Cease and Desist Order (CDO) to 

prevent grave and irreparable damage while awaiting resolution of the case. The Regional 

Director may exercise the same authority for matters that are strictly within the confines of 

his territorial jurisdiction. In this regard, the issuing authority may request the assistance of 

law enforcement agencies to implement the (CDO). 

SECTION 21. Prohibition Against Restraining Order or Preliminary Injunction. 

21.1 Pursuant to Section 55 of RA 6657, no court in the Philippines shall have jurisdiction to 

issue any restraining order or writ of preliminary injunction against the Presidential 

Agrarian Reform Council (PARC) or any of its duly authorized or designated agencies, 

or the DAR, in any case, dispute or controversy arising from, necessary to, or in 

connection with the application, implementation, enforcement or interpretation of RA 

6657 and other pertinent laws on agrarian reform. Likewise, pursuant to Section 68 of 

RA 6657, no injunction, restraining order, prohibition or mandamus shall be issued by 

the lower courts against the DAR, Department of Agriculture, the Department of Environment 

and Natural Resources, and the Department of Justice in their implementation 

of the Program. 

21.2 The DARAB or its Adjudicators shall have no authority to issue any restraining order or 

preliminary injunction against any Regional Director or DAR official carrying out the 

implementation of agrarian laws, except when the DAR Secretary refers the case to the 

DARAB. 

SECTION 22. Furnishing a Copy of the Decision. The deciding authority shall furnish 

a copy of the decision, not only to the partiesí counsel/s or representative/s, but also directly 

to the parties themselves as well as to the PARO, MARO, BARC, and all other DAR officials 

who took part in the case or who may take part in its execution or implementation. 

SECTION 23. Motion for Reconsideration. A party may file only one (1) motion for 

reconsideration of the decision of the Regional Director, and may do so only within a nonextendible 

period of fifteen (15) calendar days from receipt of the decision, furnishing a


copy of the motion to all other parties. The filing of the motion interrupts the running of the 

reglementary period within which to appeal. The Regional Director shall rule on the motion 

within thirty (30) days from its filing date. 

23.1 If the motion for reconsideration is denied, the movant may perfect an appeal before 

the Secretary within only the remainder of said non-extendible period of fifteen (15) 

days but not less than five (5) calendar days. 

23.2 If the motion for reconsideration is granted, resulting in the reversal of the original 

decision, the losing party may perfect an appeal before the Secretary within a full but 

non-extendible period of fifteen (15) calendar days from receipt of the new decision. 

SECTION 24. Motion for Reconsideration of the Decision or Order of the Secretary. 

In cases where the Secretary exercises exclusive original jurisdiction, a party may file only 

one (1) motion for reconsideration of the decision of the Secretary, and may do so only 

within a non-extendible period of fifteen (15) calendar days from receipt of the decision, 

furnishing a copy of the motion to all other parties. The filing of the motion interrupts the 

running of the reglementary period within which to appeal. 

24.1 If the motion for reconsideration is denied, the movant may perfect an appeal before 

the Office of the President within only the remainder of said non-extendible period of 

fifteen (15) calendar days but not less than five (5) calendar days. 

24.2 If the motion for reconsideration is granted, resulting in the reversal of the original 

decision, the losing party may perfect an appeal before the Office of the President 

within a full but non-extendible period of fifteen (15) calendar days from receipt of the 

new decision. 

RULE IV 

Appeals to the Secretary 

SECTION 25. Grounds. No appeal shall be given due course unless the decision of 

the Regional Director is final, disposing of the case on the merits, and only on the following 

grounds: 

25.1 Serious errors in the findings of the fact or conclusion of law which may cause grave or 

irreparable damage or injury to the appellant; and 

25.2 Coercion, fraud, or clear graft and corruption in the issuance of a decision 

SECTION 26. Caption. The caption of all appeals, in addition to the standard lines 

indicating the hierarchy of authority (first line: ìRepublic of the Philippinesî; second line: 

ìDepartment of Agrarian Reformî; third line: ìOffice of the Secretaryî), shall likewise specifically 

address appeals to the ìBureau of Agrarian Legal Assistanceî or ìBALAî, and refer to the 

appealing party as the ìappellantî and the adverse party the ìappelleeî. The BALA shall 

assign a new docket number to each appeal which shall appear above the old docket number 

(enclosing the old docket number inside a parenthesis). 

SECTION 27. When to Appeal. Appeals may be taken within fifteen (15) days from 

receipt of the adverse decision pursuant to Section 51 of RA 6657 which provides that ìany



order, ruling or decision shall be final after the lapse of fifteen (15) days from receipt of a 

copy thereof.î 

SECTION 28. Where to Appeal. Appeals from the decision of the Regional Director 

shall be made by filing in the same regional office which issued the adverse decision, a 

notice of appeal with proof of payment of the requisite appeal fee. Official cashiers of any 

DAR office may receive payment of the requisite appeal fee. Non-perfection of the appeal 

within the reglementary period merits dismissal of the appeal. 

SECTION 29. Appeal Pleadings. The appellant shall submit an appeal brief with the 

BALA within ten (10) days from perfection of the appeal, furnishing a copy thereof to the 

adverse party and the Regional Director. The appellee may submit a comment (not motion to 

dismiss) within ten (10) days from receipt of the appeal brief, furnishing a copy thereof to the 

appellant and the Regional Director. Within fifteen (15) days from filing of the appelleeís 

comment, the BALA director shall issue a preliminary order stating either that: 

29.1 The pleadings on record are sufficient for deciding the appeal and henceforth the 

deciding authority shall promulgate its decision; or 

29.2 The pleadings on record are insufficient for a proper determination of the issues raised 

and so the parties shall simultaneously file their respective appeal memorandum within 

ten (10) days from receipt of the order to do so; or 

29.3 The pleadings on record need further clarification and the conduct of a clarificatory 

hearing is necessary. Ten (10) days after the termination of the said hearing thereof, 

the BALA Director may order the parties to simultaneously file their respective appeal 

memorandum. 

At any time before the ALI case is decided, any party may submit a hard copy of a 

draft decision with a diskette containing such draft written in any popular word-processing 

program, furnishing a copy thereof to all parties. 

Upon submission of sufficient pleadings, the BALA Director shall submit 

recommendations to the deciding authority. 

SECTION 30. Record Transmittal. Upon receipt of the notice of appeal the DARRO 

of origin shall arrange each document therein in chronological order according to date of 

receipt (the first-received document in the first page, so on and so forth, until the lastreceived 

document in the last page); inscribe a page number (by hand or with a paginating 

device) on each page and every page; and thereafter the responsible officer at the DARRO 

shall affix his initials on each and every page. When for special reasons a particular document 

in the records requires that it be free from any form of marking, the pagination and affixing of 

initials shall be made only upon photocopies thereof; the originals shall be in separate envelopes 

while photocopies thereof shall form part of the main rollo folder. The DARRO shall prepare a 

table of contents, which shall be ahead of the first page of the records, and attach a photocopy 

of the appeal fee receipt in front of the table of contents. Within ten (10) days from perfection 

of the appeal, the DARRO shall transmit the records and all its accompanying envelopes to 

the BALA. To enforce compliance with this Section, the BALA Director may, after due 

investigation, recommend disciplinary action against the erring DARRO official, including 

the Regional Director when necessary.


SECTION 31. Appeal Withdrawal. An appeal may be withdrawn by filing with the 

BALA a motion to withdraw at any time prior to the promulgation of the appellate decision, 

except when the withdrawal is prejudicial to public interest. The withdrawal may take effect 

only after the Secretary issues an order approving the motion to withdraw. 

RULE V 

Appeals from the Secretary 

SECTION 32. Motion for Reconsideration. A party may file only one (1) motion for 

reconsideration of the decision of the Secretary or deciding authority, and may do so only 

within a non-extendible period of fifteen (15) calendar days from receipt of the Secretaryís 

decision, furnishing a copy of the motion to all other parties. The filing of the motion interrupts 

the running of the reglementary period within which to appeal. Upon receipt of the resolution 

on the motion for reconsideration, the losing party may elevate the matter to the Office of the 

President (OP). 

SECTION 33. Appeal. Appeals from the decision of the Secretary may be taken to the 

OP within fifteen (15) days from receipt thereof. The filing of an appeal within the proper 

period stays execution of the subject decision, unless the OP orders immediate execution of 

the DAR decision upon such terms and conditions that are just and reasonable, pursuant to 

Section 4 of OP Administrative Order (AO) No. 18 dated 12 February 1987, or the applicable 

rule. 

SECTION 34. Judicial Review. In cases where the appellant opts to elevate his appeal 

directly to a judicial forum, the governing procedure shall be the pertinent provisions of the 

Rules of Court, until and unless the judicial forum dismisses the appeal for failure to exhaust 

administrative remedies. 

RULE VI 

Finality and Execution 

SECTION 35. Finality. Final orders/decisions/resolutions shall become final and 

executory after all parties have received an official copy thereof; after the lapse of fifteen 

(15) calendar days from the date of receipt by the last recipient of an official copy thereof, 

and there is no motion for reconsideration nor appeal therefrom. 

SECTION 36. Execution. Execution shall issue automatically as a matter of course 

upon finality of the case. The Regional Director shall prepare the necessary certificate of 

finality within five (5) days from date of finality of a case. For cases appealed to the Secretary 

that attained finality thereat, the BALA Director shall prepare the necessary certificate of 

finality within five (5) days from the date of finality. Upon completion of the certificate of 

finality, the Regional Director or deciding authority may, upon motion or motu proprio, issue 

a writ of execution ordering the MARO or appropriate DAR official to enforce the final order/ 

decision/resolution. For this purpose, the MARO or appropriate DAR official may seek 

assistance from law enforcement agencies. 

RULE VII 


SECTION 37. Case Records are Public Documents. Subject to the provisions of 

DAR Memorandum Circular No. 25, series of 1995, records of a case are public documents

216 


and all parties, their representatives, and the general public may request to copy the same or 

any portion thereof except for the documents stated in said Memorandum Circular from its 

official custodian during reasonable office hours, upon payment of reasonable reproduction 

costs and certification fees. 

SECTION 38. Repealing Clause. This Order modifies or repeals DAR-AO-6-2000 and 

all other issuances or portions thereof that are inconsistent herewith. 

SECTION 39. Separability Clause. Any judicial pronouncement declaring as 

unconstitutional any provision of this Order shall not affect the validity of the other provisions 

herein. 

SECTION 40. Effectivity Clause. This Order shall take effect ten (10) days after its 

publication in two (2) national newspapers of general circulation, pursuant to Section 49 of 

RA 6657. 




Secretary 

óo0oó 


2003 Rules on Exemption of Lands from CARP Coverage Under 

Section 3 (c) of Republic Act No. 6657 and Department of Justice (DOJ) 

Opinion No. 44, Series of 1990 

I. Prefatory Statement 

Republic Act (RA) 6657 or the Comprehensive Agrarian Reform Law (CARL), Section 

3, Paragraph (c) defines ìagricultural landî as referring to ìland devoted to agricultural 

activity as defined in this Act and not classified as mineral, forest, residential, commercial or 

industrial land.î 

Department of Justice Opinion No. 44, Series of 1990 (or ìDOJ Opinion 44-1990î for 

brevity) and in the case of Natalia Realty versus Department of Agrarian Reform (12 

August 1993, 225 SCRA 278) opines that with respect to the conversion of agricultural lands 

covered by RA 6657 to non-agricultural uses, the authority of the Department of Agrarian 

Reform (DAR) to approve such conversion may be exercised from the date of its effectivity, 

on 15 June 1988. Thus, all lands that are already classified as commercial, industrial or 

residential before 15 June 1988 no longer need any conversion clearance. 

However, the reclassification of lands to non-agricultural uses shall not operate to divest 

tenant-farmers of their rights over lands covered by Presidential Decree (PD) No. 27, which 

have been vested prior to 15 June 1988.


In order to implement the intent and purpose of the provisions of the aforecited laws, 

these guidelines are hereby issued. 

II. Requirements 

The applicant shall submit in quadruplicate the following documents in four (4) separate 

bound folders (one [1] original set and three [3] photocopy sets) with table of contents and 

page numbers of all documents, sequentially numbered, except for maps which the applicant 

shall likewise submit in quadruplicate but in four separate envelopes with proper label of the 

contents of each envelop. The arrangement thereof shall follow the sequence of the enumeration 

below, with the requirement referred to in Section 2.1 hereof being the first document after 

the table of contents. All references in the masculine form (he/him/his) shall interchangeably 

mean the feminine form (she/her/hers) or group form (it/itís/their). 

2.1 Official receipt showing proof of payment of filing and inspection fees. 

2.2 Sworn Application for CARP Exemption or Exclusion, duly accomplished, and subscribed 

and sworn to before a notary public or any person authorized to administer 

oaths. 

2.2.1 Special Power of Attorney (SPA) if the applicant is not the registered owner nor 

one of the co-owners of the property; 

2.2.2 Notarized secretaryís certificate of a corporate or cooperative board resolution 

authorizing the applicantís representative to file the Sworn Application for CARP Exemption 

if the applicant is a corporation or cooperative or some other juridical entity. 

The applicant shall also submit its latest notarized General Information Sheet (GIS) 

which must comply with the pertinent requirements of the Securities and Exchange 

Commission. 

2.3 True copy of the Original Certificate of Title (OCT) or Transfer Certificate of Title (TCT) 

of the subject land, certified by the Register of Deeds not earlier than thirty (30) days 

prior to application filing date. 

In case of untitled land, the following shall be required in lieu of a title: 

2.3.1 Certification from the DENR Community Environment and Natural Resources 

Officer (CENRO) that the landholding has been classified as alienable and disposable; 

and 

2.3.2 Certification from the DENR CENRO (for administrative confirmation of imperfect 

title) or the Clerk of Court (for judicial confirmation of imperfect title) that the titling 

process/proceedings has commenced and there are no adverse claimants; 

2.4 Land classification certification: 

2.4.1 Certification from the Housing and Land Use Regulatory Board (HLURB) Regional 

Officer on the actual zoning or classification of the subject land in the approved 

comprehensive land use plan, citing the municipal or city zoning ordinance number,

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resolution number, and date of its approval by the HLURB or its corresponding board 

resolution number. 

2.4.2 For lands classified as mineral: certification issued by the DENR Mines and 

Geosciences Bureau or the proper DENR office attesting that the subject land is classified 

as mineral and covered by a mining permit issued by said Bureau or the proper 

Local Government Unit (LGU) in case of small scale mines. 

2.4.3 For lands classified as forest: certification issued by the DENR Forestry Sector 

or the proper DENR office attesting that the subject land is classified as within the forest 

zone. 

2.5 Certification of the National Irrigation Administration (NIA) that the area is not irrigated 

nor scheduled for irrigation rehabilitation nor irrigable with firm funding commitment. 

2.6 Certification of the Municipal Agrarian Reform Officer (MARO) attesting compliance 

with the public notice requirement in Part III hereof and its corresponding report in 7.6 


2.7 Photographs, size 5R (Five [5] inches by seven [7] inches), using color film, and taken 

on the subject land under sunlight. The applicant shall attach the pictures to a paper 

background, and the photographer who took said pictures shall sign on said paper 

background to certify the authenticity of the pictures. On each background paper shall 

be written a short description of each picture. The pictures shall consist of: 

2.7.1 At least four (4) photographs taken from the center of the landholding: one (1) 

facing north, one (1) facing east, one (1) facing south, and one (1) facing west; 

2.7.2 At least one (1) photograph per corner, taken from each corner of the 

landholdingís borders; 

2.7.3 At least two (2) photographs each for all distinct man-made structures existing 

on the land, taken from opposite angles; 

2.7.4 At least two (2) photographs each of the front view of the billboard(s) required in 

Part III hereof. The applicant shall set aside the second copy of said billboard photographs 

for submission to the MARO; and 

2.7.5 Sufficient number of photographs of the most conspicuous landmarks on the 

ingress and egress routes leading to and from the subject landholding, for the purpose 

of assisting the ocular inspection team in locating the site. 

2.8 Proof of receipt of payment of disturbance compensation or a valid agreement to pay 

or waive payment of disturbance compensation. 

2.9 Affidavit/Undertaking in a single document of the applicant stating: 

2.9.1 The number and names of the farmers, agricultural lessees, share tenants, 

farmworkers, actual tillers, and/or occupants in the landholding; if there are no such 

persons, a statement attesting to such fact;


2.9.2 That the applicant has erected the billboard(s) required in Part III hereof; and 

undertakes not to remove, deface or destroy the same; and that he shall repair or 

replace the same when damaged, until after the approving authority disposes of the 

application with finality; 

2.9.3 That he has not committed any act of forum shopping as defined in the rules 

governing Agrarian Law Implementation (ALI) cases; and 

2.9.4 That when there is a dispute on the fixing of disturbance compensation pending 

before the Provincial Agrarian Reform Adjudicator (PARAD) or Regional Agrarian Reform 

Adjudicator (RARAD) or DAR Adjudication Board (DARAB), the applicant shall 

abide with the decision of the Adjudicating Authority on the fixing of disturbance compensation. 

2.10 Lot plan prepared by a duly-licensed geodetic engineer indicating the lots being applied 

for and their technical descriptions. 

2.11 Vicinity or directional map to assist the ocular inspection team in locating the subject 

land. The directional map need not be drawn to scale but must show the orientation of 

the subject land in relation to adjoining lands; existing infrastructures and improvements 

thereon including any house or tillage by any occupant therein; owners of adjacent 

properties; the nearest barangay, municipal, city, and/or provincial feeder road; and 

other popular landmarks within a one (1) kilometer radius. 

III. Public Notice 

The applicant shall post in a conspicuous place within the subject property a public 

notice contained in a billboard made of strong materials such as weather-resistant plywood, 

galvanized iron, tin, panaflex, or other similar durable material, measuring 1.22 meters by 

2.44 meters (4 feet by 8 feet). There shall be installed at least one (1) billboard for every 

twenty (20) hectares. The billboard shall be written in the local dialect and shall display the 

following information: 

3.1 Announcement that the applicant is applying for exemption; 

3.2 Complete name(s) of the landowner(s) and applicant(s); 

3.3 Total area and exact location of the exemption proposal; 

3.4 Date of filing of the application for exemption; 

3.5 Date of posting of billboard; 

3.6 Deadline for filing protest; 

3.7 Address of DAR offices where resident oppositors may conveniently file their protests; 

3.8 Address of the approving authority;

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3.9 Date of ocular inspection, which shall be left blank, and which the applicant shall fill up 

after the MARO determines its exact date, but not later than seven (7) days before 

ocular inspection day; and 

3.10 Date of approval or denial of the application, which shall be left blank, and which the 

MARO or applicant or any party-in-interest shall fill up after approval or denial of the 

application. 

IV. Disturbance Compensation 

4.1 The applicant shall pay disturbance compensation, in cash or in kind or combination of 

cash and kind, to the farmers, agricultural lessees, share tenants, farmworkers, and 

actual tillers (as defined and following the order of priority in Section 22 of RA 6657) 

found in the subject landholding, in such amount and under such terms which the 

parties may mutually agree upon among themselves. 

4.2 The amount of disturbance compensation shall not be less than five (5) times the average 

of gross harvests on the subject landholding during the last five (5) preceding 

calendar years, pursuant to Section 36 of RA 3844, as amended by Section 7 of RA 

6389. 

4.3 Compensation in kind may consist of some or all or mixture of housing, homelots, 

employment, and/or other benefits. The DAR shall approve the terms of any agreement 

for the payment of disturbance compensation and monitor compliance therewith. 

4.4. Whenever there is a dispute on the fixing of disturbance compensation or entitlement to 

disturbance compensation, the Regional Director shall refer the matter to the Adjudicator 

who shall be bound to take cognizance of and resolve the case despite the nonfinality 

of the issue on whether or not the subject land is exempt from CARP. 

4.5 The Approving Authority may grant a conditional exemption order, despite non-payment 

of disturbance compensation or while awaiting determination of entitlement thereto, 

subject however to the condition that the applicant and/or landowner shall post a bond in 

an amount to be determined by the Adjudicator. Notwithstanding the posting of such 

bond, the property applied for exemption shall not be developed for non-agricultural 

purposes and the farmers, agricultural lessees, share tenants, farmworkers, and actual 

tillers thereof cannot be ejected therefrom until the finality of the exemption order. 

V. Approving Authorities 

5.1 For properties with an area less than or equal to five (5) hectares, the approving authority 

shall be the Regional Director, acting upon the recommendation of the Regional 

Center of Land Use Policy Planning and Implementation (RCLUPPI). 

5.2 For properties with an area larger than five (5) hectares, the approving authority shall 

be the Secretary, acting upon the recommendation of the Center for Land Use Policy 

Planning and Implementation ñ 2 (CLUPPI-2). 

5.3 When an applicant owns (or represents the owner of) two (2) or more parcels of land 

within the same barangay or within two (2) or more barangays that are adjacent to each


other, and the sum of the areas of said parcels of land exceeds five (5) hectares, the 

approving authority for an application involving any of said parcels of land shall be the 

Secretary, acting upon the recommendation of the CLUPPI-2. 

5.4 When the applicant or any oppositor challenges the jurisdiction of the approving authority 

on the ground of error in computation of jurisdictional area, and a higher authority 

takes cognizance of the dispute, the Approving Authority herein shall hold in abeyance 

the processing of the present application until said higher authority determines 

with finality the correct jurisdictional area. 

VI. Inspection Cost 

6.1 For applications involving lands with an area less than or equal to five (5) hectares: 

6.1.1 Ten thousand (P10,000.00) pesos if the subject landholding is within the same 

island as that of the Office of the Regional Director; or 

6.1.2 Fifteen thousand (P15,000.00) pesos if the subject landholding is not within the 

same island as that of the office of the Regional Director. 

6.2 For applications involving lands with an area larger than five (5) hectares: 

6.2.1 Ten thousand (P10,000.00) pesos of the subject landholding is within the main 

island of Luzon (except Bicol peninsula); 

6.2.2 Fifteen thousand (P15,000.00) pesos of the subject landholding is within Regions 

I to IV of Luzon but is not located within the main island of Luzon; 

6.2.3 Fifteen thousand (P15,000.00) pesos if the subject landholding is in Bicol Peninsula 

or Visayas group of islands; or 

6.2.4 Twenty thousand (P20,000.00) pesos if the subject landholding is in the Mindanao 

group of islands. 

VII. Procedure 

7.1 The applicant shall first secure an Application Form from the RCLUPPI or CLUPPI-2. 

7.2 The applicant shall: 

7.2.1 Fill-up the application form with all the necessary data; 

7.2.2 Indicate whether or not the application is for a housing project under Executive 

Order (EO) No. 45, Series of 2001 (EO-45-2001); 

7.2.3 Acknowledge the accomplished application form before a notary public; 

7.2.4 Attach the Title(s) required under either 2.3 or 2.4 hereof; 

7.2.5 Attach the vicinity or directional map required under 2.11 hereof;

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7.2.6 Reproduce the above documents into four (4) sets (one [1] original set and 

three [3] photocopy sets). At least one (1) photocopy set shall be forwarded to the 

MARO. 

7.3 Following the instructions that accompany the Application Form, the applicant shall 

install the public notice billboard(s) required under Part III hereof. 

7.4 Immediately thereafter, the applicant shall reproduce the application form into at least 

six (6) clear photocopy sets and place them in six (6) separate folders (plus a seventh 

folder for the original set), the distribution of which shall be as follows: 

7.4.1 The original copy for the RCLUPPI/CLUPPI-2; 

7.4.2 Three (3) photocopies for the RCLUPPI/CLUPPI-2; and 

7.4.3 Two (2) photocopies which the applicant shall furnish to the MARO as advance 

copies. 

7.5 Within five (5) days from receipt of the folders containing the documents in Section 7.4 

hereof, the MARO shall keep one folder for himself and transmit the other folder to the 

PARO. 

7.6 MARO certification ñ Within ten (10) days from receipt of the above folder, the MARO 

shall: check the status of CARP coverage on the subject land; inspect the billboard; 

check presence of farmers, agricultural lessees, share tenants, farm workers, actual 

tillers, or occupants; post notices of the application in a conspicuous place in the 

municipality and a conspicuous place/s in the barangay/s covering the subject land (or 

in the barangay where a larger portion of the subject land is situated when said land 

overlaps into another barangay); prepare a single-document MARO certification reporting 

the result of all the foregoing tasks; and make available to the applicant the original copy 

of said MARO certification. 

7.7 MARO inaction ñ If the MARO fails to act upon the request for said certification within 

ten (10) days from receipt of the request, the applicant shall notify the RCLUPPI/ 

CLUPPI-2 of such failure by personally filing an affidavit reporting such inaction. The 

RCLUPPI/CLUPPI-2 shall investigate the reason for the non-issuance and take the 

steps necessary for the judicious resolution of the pending application for exemption. 

Simultaneously, the disciplining authority of the DAR shall, after proper investigation, 

impose upon the erring MARO the proper administrative sanction(s). 

7.8 At this juncture, the applicant has four (4) folders left after furnishing two (2) advance 

copies for the MARO and PARO. The applicant shall place in said four (4) folders all the 

applicable documentary requirements set forth in Part II hereof, all the originals being 

in one (1) folder, and the photocopies thereof being in the three (3) other folders. These 

four (4) folders shall be the initiatory pleading of the application for exemption. 

7.9 Filing Date ñ The applicant shall submit to the RCLUPPI/CLUPPI-2 the four (4) folders 

containing all the applicable requirements set forth in Part II hereof. The RCLUPPI/ 

CLUPPI-2 shall then review the completeness of the application. If found complete, the 

applicant shall pay the inspection cost in accordance with Part IV hereof, after which


the RCLUPPI/CLUPPI-2 may accept the application. Acceptance date of the folders 

shall be the ìFiling Dateî of the application. 

7.10 The distribution of the four (4) folders shall be as follows: The RCLUPPI/CLUPPI-2 shall 

keep a folder containing the originals and a folder containing the photocopies. At the 

same time, the RCLUPPI/CLUPPI-2 Secretariat shall transmit the remaining two (2) 

folders to the PARO and MARO respectively. Immediate transmittal of said folders is 

important because the PARO shall utilize the information therein when acting upon any 

protest against the application, or when issuing any comment that he may wish to 

submit to the RCLUPPI/CLUPPI-2 in connection with the application. 

7.11 Within five (5) days from Filing Date, the RCLUPPI/CLUPPI-2 shall issue to the applicant 

a Notice of Conduct of Ocular Inspection, indicating the date thereof. The ocular 

inspection shall be held not earlier than ten (10) days nor later than fifteen (15) days 

from issuance date of the Notice of Conduct of Ocular Inspection. The RCLUPPI/ 

CLUPPI-2 shall inform the MARO of the date of ocular inspection through the speediest 

means of communication with instructions to ensure dissemination of the Notice to all 

farmers, agricultural lessees, share tenants, farmworkers, actual tillers, or occupants in 

the subject landholding. 

7.12 The applicant shall transmit said Notice to the MARO and indicate the ocular inspection 

date on the billboard(s) at least five (5) days before conduct of ocular inspection. On or 

before ocular inspection date, the applicant shall submit to the RCLUPPI/CLUPPI-2 a 

proof that the MARO received a copy of said Notice. 

7.13 The RCLUPPI/CLUPPI-2 shall then conduct ocular inspection, and if possible, hold a 

dialogue with the farmers, agricultural lessees, share tenants, farmworkers, actual tillers, 

and/or occupants found in the subject landholding. Notwithstanding the finding of the 

NIA on the irrigation status of the subject land, the ocular inspection team shall make its 

own determination on the irrigation status. Where irrigation is absent in the subject land 

but present in adjoining or neighboring lands, the RCLUPPI/CLUPPI-2 shall determine 

whether or not the subject land is a servient estate of an easement of irrigation waterway 

such that irrigation water crosses thru a portion of the subject land en route to or 

from the adjoining or neighboring lands. If in the affirmative, any grant of exemption 

herein shall in no way give the applicant (or any of his successor-in-interest) any right 

to block or otherwise impeded the free flow of water thru said easement. 

7.14 The RCLUPPI/CLUPPI-2 ocular inspection team shall, within five (5) days from conduct 

of ocular inspection, accomplish an Investigation Report which shall include the 

result of its dialogue. 

7.15 The RCLUPPI/CLUPPI-2 shall deliberate on the merits of the application and may call 

the applicant and/or oppositor(s), if any, for clarificatory questioning to judiciously 

resolve any dispute arising from the application. The RCLUPPI shall invite the PARO to 

participate in the deliberations. Upon his discretion, the PARO may submit a written 

comment to the RCLUPPI/CLUPPI-2. 

7.16 RCLUPPI/CLUPPI-2 recommendation ñ Within thirty (30) days from issuance of the 

MARO certification or filing of affidavit of MARO inaction, but not later than forty (40) 

days from Filing Date, the RCLUPPI/CLUPPI-2 shall forward its recommendation, together 

with the records, to the approving authority.

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7.17 The filing of any protest shall interrupt the running period for processing applications 

for exemption and shall lift the deadline for approving or disapproving the application. 

Upon receipt of a protest, the RCLUPPI/CLUPPI-2 shall order the filing of a comment, 

reply, rejoinder, and such other pleadings that may aid in a judicious resolution of the 

protest issues, and thereafter, schedule hearings where the parties may present their 

respective evidence. After conclusion of the hearings, the RCLUPPI/CLUPPI-2 shall 

submit its recommendation to the approving authority which shall resolve the protest 

simultaneously with the application. 

7.18 Protests against applications involving housing projects shall likewise interrupt the running 

period and lift the deadline for approving or disapproving the application. In line 

with Section 4 (c) of EO-45-2001, the RCLUPPI/CLUPPI-2 shall make a preliminary 

determination on whether or not the protest stands in valid grounds. When the protest is 

prima facie meritorious, the RCLUPPI/CLUPPI-2 shall order the filing of a comment, 

reply, rejoinder, and such other pleadings that may aid in a judicious resolution of the 

protest issues, and thereafter, schedule hearings where the parties may present their 

respective evidence. After conclusion of the hearings, the RCLUPPI/CLUPPI-2 shall 

submit its recommendation to the approving authority which shall resolve the protest 

simultaneously with the application. 

VIII. Effect on Pre-Existing CARP Coverage 

When the filing of an application for exemption clearance is in response to a notice of 

CARP coverage, the DAR shall deny due course to the application if it was filed after sixty 

(60) days from the date the landowner received a notice of CARP coverage. 

IX. Protests 

9.1 Who may file ñ Any person may file a written protest against the application within thirty 

(30) days from posting of the requisite billboard(s), or within fifteen (15) days from 

conduct of ocular inspection, whichever is later. 

9.2 Where to file ñ Protests against applications for exemption may be filed in the office of 

the PARO or RCLUPPI having jurisdiction over the applied property, or at the CLUPPI- 

2. 

9.3 Grounds: 

9.3.1 The subject landholding is classified as within the agricultural zone based on the 

Zoning Ordinance or Comprehensive Land Use Plan (CLUP) of the LGU approved by 

the HLURB prior to 15 June 1988. A protest based on this ground shall not be given due 

course unless the oppositor invoking said ground submits the necessary certification 

from the HLURB Regional Office or the proper government agency. 

9.3.2 The subject property has been covered by Operation Land Transfer (OLT) under 

PD 27. 

9.4 The RCLUPPI/CLUPPI-2 shall make a preliminary determination on whether or not the 

protest stands on valid grounds. When the protest is prima facie meritorious, the


RCLUPPI/CLUPPI-2 shall order the filing of a comment, reply, rejoinder, and such 

other pleadings that may aid in a judicious resolution of the protest issues, and thereafter 

schedule hearings where the parties may present their respective evidence. After 

conclusion of the hearings, the RCLUPPI/CLUPPI-2 shall submit its recommendation to 

the approving authority which shall resolve the protest simultaneously with the application. 

9.5 An oppositor who files a protest before the PARO shall do so by personal service, not 

by mail. Upon receipt of a protest by personal service, the PARO shall, before the end 

of the next working day, communicate with the RCLUPPI/CLUPPI-2 by telephone or 

text message, to inform the members thereof of such protest, and send a corresponding 

telegram and/or radiogram which shall serve as written proof of compliance with the 

protest notification requirement herein. Within five (5) working days from receipt of the 

protest, the PARO shall transmit, by courier or speed delivery, to the RCLUPPI/CLUPPI- 

2 the original copy of the protest itself, and keep a photocopy thereof in his custody. 

Failure of the PARO to comply with the directive under this Section shall subject him to 

the appropriate disciplinary action. 

X. Provisional Remedies 

In cases where grave and irreparable damage will result to the parties or where the 

doing and continuance of certain acts will render the case moot and academic, or where 

there is a need to maintain peace and order and prevent loss to life or property, the Secretary 

or Regional Director may, motu proprio or at the instance of any party, issue a Cease and 

Desist Order (CDO) pending the resolution of the case. In this regard, the issuing authority 

may request the assistance of law enforcement agencies to implement the CDO. 

XI. Motion for Reconsideration and Appeal 

This Order shall adopt the provisions of the ALI rules on motion for reconsideration and 

appeal. 

XII. Finality of the Order 

The Exemption Clearance or its denial shall become final and executory after all parties 

receive a copy of the Order, and after the lapse of fifteen (15) calendar days from date of 

receipt by the last recipient of an official copy of the Order, and no motion for reconsideration 

or appeal therefrom has been filed. The Head of the Legal Division of the Regional Office or 

the BALA Director shall issue the appropriate Certificate of Finality. 

XIII. Revocation or Withdrawal of Exemption Clearances 

Any person may file a petition to revoke, or the landowner may file a petition to withdraw, 

the Exemption Clearance, when there is a serious violation of agrarian laws or DAR rules, or 

on any other substantial ground which the Secretary may deem proper, within ninety (90) 

days from discovery of the fact(s) constituting the ground(s) for cancellation or withdrawal, 

but not more than one (1) year from issuance of the Exemption Clearance. 

XIV. Sanctions

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The DAR may impose against its own officials or employees the following sanctions, in 

accordance with RA 6713 or the Code of Conduct and Ethical Standards for Public Officials 

and Employees, and the Uniform Rules on Administrative Cases in the Civil Service (effective 

26 September 1999), specifically Rule IV, Section 52, sub-section ìCî, numbers ì13î to ì15î 

thereof, to wit: 

ì13. Failure to act promptly on letters and request within fifteen (15) days from 

receipt, except as otherwise provided in the rules implementing the Code of Conduct 

and Ethical Standards of Public Officials and Employees.î 

ì14. Failure to process documents and complete action on document and papers 

within a reasonable time from preparation thereof, except as otherwise provided 

in the rules implementing the Code of Conduct and Ethical Standards of 

Public Officials and Employees.î 

ì15. Failure to attend to anyone who wants to avail himself of the services of the 

office, or act promptly and expeditiously on public transactionsî 

ì1 st Offense Reprimandî 

ì2 nd Offense Suspension 1-30 daysî 

ì3 rd Offense Dismissalî 

XV. Transitory Provision 

The rules and procedures herein shall apply to cases pertaining to the Lungsod Silangan 

Townsite, provided that the requirements in Memorandum Circular No. 25, Series of 1997, as 

amended, shall continue to govern. 

XVI. Repealing Clause and Effectivity 

This Order amends or repeals all issuances inconsistent herewith and shall take effect 

ten (10) days after its publication in two (2) national newspapers of general circulation, in 

line with Section 49 of RA 6657. 



Secretary 

DAR ADJUDICATION BOARD (DARAB) 


The Department of Agrarian Reform Adjudication Board (DARAB) 

2003 RULES OF PROCEDURE


Pursuant to the provisions of Sections 49 and 50 of Republic Act No. 6657 as amended 

and Section 34 of Executive Order No. 129-A in relation to Section 13 thereof, the following 

rules governing the conduct of proceedings before the Department of Agrarian Reform 

Adjudication Board (DARAB) and its Adjudicators, are hereby adopted and promulgated. 

RULE I 

General Provisions 

SECTION 1. Title. These Rules shall be known as the Department of Agrarian Reform 

Adjudication Board (DARAB) 2003 Rules of Procedure. 

SECTION 2. Construction. These Rules shall be liberally construed to carry out the 

objectives of agrarian reform program and to promote just, expeditious and inexpensive 

adjudication and settlement of agrarian cases, disputes or controversies. 

All references in these Rules to the Members of the Board or the Adjudicators in the 

masculine (he, him, or his) shall be construed to also mean the feminine form (she, her, or 

hers). 

SECTION 3. Technical Rules Not Applicable. The Board and its Regional and Provincial 

Adjudicators shall not be bound by technical rules of procedure and evidence and shall 

proceed to hear and decide all agrarian cases, disputes or controversies in a most expeditious 

manner, employing all reasonable means to ascertain the facts of every case in accordance 

with justice and equity. 

3.1 If and when a case comes up for adjudication wherein there is no applicable provision 

under these rules, the procedural law and jurisprudence generally applicable to agrarian 

disputes shall be applied; 

3.2 In the absence of any applicable procedural law and jurisprudence generally applicable 

to agrarian disputes and in the interest of expeditious agrarian justice and whenever 

practicable, the Adjudication Board (Board), and its Regional Agrarian Reform Adjudicators 

(RARADs) and Provincial Agrarian Reform Adjudicators (PARADs) hereinafter 

referred to as the Adjudicators, shall have the authority to adopt any appropriate measure 

or procedure in any given situation or matter not covered by these Rules. 

SECTION 4. Official Seal. The Board shall design and adopt a seal to be imprinted in 

all its resolutions, orders, decisions and other documents as an indication of their official 

character. The seal of the DARAB shall depict its official function as the dispenser of agrarian 

justice. It shall be consistent with the basic design and symbolism of the Department of 

Agrarian Reform (DAR) logo. 

RULE II 

Jurisdiction of the Board and its Adjudicators 

SECTION 1. Primary And Exclusive Original Jurisdiction. The Adjudicator shall 

have primary and exclusive original jurisdiction to determine and adjudicate the following 

cases: 

1.1 The rights and obligations of persons, whether natural or juridical, engaged in the 

management, cultivation, and use of all agricultural lands covered by Republic Act (RA)

228 


No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL), and 

other related agrarian laws; 

1.2 The preliminary administrative determination of reasonable and just compensation of 

lands acquired under Presidential Decree (PD) No. 27 and the Comprehensive Agrarian 

Reform Program (CARP); 

1.3 The annulment or cancellation of lease contracts or deeds of sale or their amendments 

involving lands under the administration and disposition of the DAR or Land Bank of the 

Philippines (LBP); 

1.4 Those cases involving the ejectment and dispossession of tenants and/or leaseholders; 

1.5 Those cases involving the sale, alienation, pre-emption and redemption of agricultural 

lands under the coverage of the CARL or other agrarian laws; 

1.6 Those involving the correction, partition, cancellation, secondary and subsequent issuances 

of Certificates of Land Ownership Awards (CLOAs) and Emancipation Patents 

(EPs) which are registered with the Land Registration Authority; 

1.7 Those cases involving the review of leasehold rentals; 

1.8 Those cases involving the collection of amortizations on payments for lands awarded 

under PD No. 27, as amended, RA No. 3844, as amended, and RA No. 6657, as 

amended, and other related laws, decrees, orders, instructions, rules, and regulations, 

as well as payment for residential, commercial, and industrial lots within the settlement 

and resettlement areas under the administration and disposition of the DAR; 

1.9 Those cases involving the annulment or rescission of lease contracts and deeds of 

sale, and the cancellation or amendment of titles pertaining to agricultural lands under 

the administration and disposition of the DAR and LBP; as well as EPs issued under PD 

266, Homestead Patents, Free Patents, and miscellaneous sales patents to settlers in 

settlement and re-settlement areas under the administration and disposition of the DAR; 

1.10 Those cases involving boundary disputes over lands under the administration and disposition 

of the DAR and the LBP, which are transferred, distributed, and/or sold to 

tenant-beneficiaries and are covered by deeds of sale, patents, and certificates of title; 

1.11 Those cases involving the determination of title to agricultural lands where this issue is 

raised in an agrarian dispute by any of the parties or a third person in connection with 

the possession thereof for the purpose of preserving the tenure of the agricultural 

lessee or actual tenant-farmer or farmer-beneficiaries and effecting the ouster of the 

interloper or intruder in one and the same proceeding; and 

1.12 Those cases previously falling under the original and exclusive jurisdiction of the defunct 

Court of Agrarian Relations under Section 10 of PD No. 946 except those cases 

falling under the proper courts or other quasi-judicial bodies; 



SECTION 2. Appellate Jurisdiction of the Board. The Board shall have exclusive 

appellate jurisdiction to review, reverse, modify, alter, or affirm resolutions, orders, and 

decisions of its Adjudicators. 

No order of the Adjudicators on any issue, question, matter, or incident raised before 

them shall be elevated to the Board until the hearing shall have been terminated and the case 

decided on the merits. 

SECTION 3. Agrarian Law Implementation Cases. The Adjudicator or the Board 

shall have no jurisdiction over matters involving the administrative implementation of RA No.


6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL) of 1988 and 

other agrarian laws as enunciated by pertinent rules and administrative orders, which shall 

be under the exclusive prerogative of and cognizable by the Office of the Secretary of the 

DAR in accordance with his issuances, to wit: 

3.1 Classification and identification of landholdings for coverage under the agrarian reform 

program and the initial issuance of CLOAs and EPs, including protests or oppositions 

thereto and petitions for lifting of such coverage; 

3.2 Classification, identification, inclusion, exclusion, qualification, or disqualification of 

potential/actual farmer-beneficiaries; 

3.3 Subdivision surveys of land under CARP; 

3.4 Recall, or cancellation of provisional lease rentals, Certificates of Land Transfers (CLTs) 

and CARP Beneficiary Certificates (CBCs) in cases outside the purview of Presidential 

Decree (PD) No. 816, including the issuance, recall, or cancellation of EPs or CLOAs 

not yet registered with the Register of Deeds; 

3.5 Exercise of the right of retention by the landowner; 

3.6 Application for exemption from coverage under Section 10 of RA 6657; 

3.7 Application for exemption pursuant to Department of Justice (DOJ) Opinion No. 44 

(1990); 

3.8 Exclusion from CARP coverage of agricultural land used for livestock, swine, and poultry 

raising; 

3.9 Cases of exemption/exclusion of fish pond and prawn farms from the coverage of 

CARP pursuant to RA 7881; 

3.10 Issuance of Certificate of Exemption for land subject of Voluntary Offer to Sell (VOS) 

and Compulsory Acquisition (CA) found unsuitable for agricultural purposes; 

3.11 Application for conversion of agricultural land to residential, commercial, industrial, or 

other non-agricultural uses and purposes including protests or oppositions thereto; 

3.12 Determination of the rights of agrarian reform beneficiaries to homelots; 

3.13 Disposition of excess area of the tenantís/farmer-beneficiaryís landholdings; 

3.14 Increase in area of tillage of a tenant/farmer-beneficiary; 

3.15 Conflict of claims in landed estates administered by DAR and its predecessors; or 



SECTION 4. Role of the RARAD. The RARAD shall be the Executive Adjudicator in 

his Region directly responsible to the Board. As such, he shall: 

4.1 Exercise direct supervision over the PARAD which shall include, among others, the 

monitoring of cases in his Region; 

4.2 Receive, hear, and adjudicate agrarian disputes and land cases within the Region; 

He shall also hear the following cases: 

4.2.1 Those cases that cannot be handled by the PARAD on account of inhibition or 

disqualification; 

4.2.2 Those matters of such complexity and sensivity that decision thereof would 

constitute an important precedent affecting regional interest as may be 

determined by the Board; and

230 


4.2.3 Preliminary determination of just compensation; and 

4.2.4 Such other cases which the Board may assign. 

4.3 Hear application for the issuance of a writ of preliminary injunction and/or temporary 

restraining order as may be directed by the Board. 

SECTION 5. Referral to Office of the Secretary (OSEC). In the event that a case 

filed before the Adjudicator shall necessitate the determination of a prejudicial issue involving 

an agrarian law implementation case, the Adjudicator shall suspend the case and, for purposes 

of expediency, refer the same to the Office of the Secretary or his authorized representative 

in the locality. 

Prejudicial issue is defined as one that arises in a case the resolution of which is a 

logical antecedent of the issue involved therein, and the jurisdiction over which pertains to 

the Office of the Secretary. 

The prejudicial issue must be determinative of the case before the Board or the Adjudicator 

but the jurisdiction to try and resolve the question is lodged with the Office of the Secretary. 

SECTION 6. Powers. The Members of the Board and the Adjudicators are empowered 

to summon witnesses, administer oaths, take testimony, require submission of reports, compel 

production of books and documents and answers to interrogatories, and to issue subpoena 

duces tecum, writs of possession, writs of execution, and other writs to enforce its orders 

and decisions through their Sheriffs or duly deputized officers. 

For this purpose, whenever necessary, they shall direct the Philippine National Police, 

the Armed Forces of the Philippines or any of their component units, or other law enforcement 

agencies to assist in the enforcement and execution of their decisions, orders, writs and 

other processes. 

RULE III 

Mediation or Conciliation at Barangay Level 

SECTION 1. BARC Certification. The Board or its Adjudicators shall not take cognizance 

of any agrarian case, dispute or controversy, unless a certification from the Barangay 

Agrarian Reform Committee (BARC) of the barangay where the land involved is located is 

presented, to the effect that the dispute has been submitted to it for mediation or conciliation 

without any success of settlement, except that the said certification is not necessary in the 

following cases: 

1.1 preliminary determination of just compensation for land acquisition; 

1.2 where the issue pertains to whether or not the parcel of land shall be the subject of 

coverage under the Comprehensive Agrarian Reform Program (CARP); 

1.3 where the Secretary of the DAR directly refers the matter to the Board or Adjudicator; 

or 

1.4 upon certification of the Municipal Agrarian Reform Officer (MARO) and the DAR Technologist 

of the non-existence of the BARC or the inability of the BARC to convene. 

SECTION 2. Referral to BARC. If the filing of the complaint or petition is not 

accompanied by the required BARC Certification the same shall be referred to the BARC or


DAR Technologist of the barangay where the land is located, as stated in the complaint, 

through the MARO of the area, directing: 

2.1 The BARC to conduct mediation/conciliation proceedings, by requiring the parties to 

submit their supporting documents and to return the matter to the Adjudicator with a 

report of the result of the proceedings, together with the complete records submitted 

before it, within thirty (30) days from receipt of the complaint or petition; or 

2.2 The DAR Technologist in case of non-existence of the BARC or its inability to convene 

for that purpose, to refer the matter back to the Adjudicator within five (5) days from 

receipt thereof with a certification of non-existence or inability of the BARC to convene. 

SECTION 3. Report of Settlement at BARC to Adjudicator. If the case is referred 

by the Board or Adjudicator and the same is settled at the BARC level, the results thereof 

shall be contained in a report to be submitted to the Board or the Adjudicator who referred 

the matter, within seven (7) days from the termination of the proceedings before the BARC, 

which report shall be the basis for the dismissal of the case before the Board or the Adjudicator. 

SECTION 4. Land or Parties in Two (2) Barangays. Where the land in dispute 

straddles two or more barangays or the parties involved reside in different barangays, the 

BARC of the barangay where the larger portion of the property lies, shall have the authority 

to conduct the mediation or conciliation proceedings under these Rules, unless for convenience 

and accessibility and upon agreement of parties such proceedings should be held in 

another barangay within the Municipality or adjacent Municipality where the land in dispute is 

located. 

SECTION 5. Certification of Non-Settlement. If the BARC is unable to settle the 

dispute within thirty (30) days, it shall return the case to the Adjudicator of origin with a 

certification of non-settlement, furnishing a copy thereof to the parties. 

SECTION 6. Special Rules on Mediation and Conciliation. The mediation and conciliation 

proceedings at the BARC or the PARO level, as the case may be, shall be conducted 

in accordance with the uniform rules adopted and promulgated by the DAR. 

RULE IV 

Commencement of Action, Venue, and Cause of Action 

SECTION 1. Complaint or Petition. An action before the Adjudicator shall be initiated 

by filing a sworn complaint or verified petition with the Adjudicator in the Province where the 

land involved is located. 

Upon the filing of the complaint or petition, the hour, day, month, and year when it was 

filed shall be stamped thereon. 

The complaint shall include the affidavit(s) of witnesses and documentary evidence, if 

any. The complaint or petition shall be duly signed by the complainant or petitioner, or his 

counsel, or by one who can show a special power of attorney to represent the complainant 

or petitioner.

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It shall state the area of the land involved and the Barangay where the land is located, 

or if the land is located in two (2) or more barangays, the barangay where the larger portion 

of the land is located. 

It shall also state the name and residence of the complainant or petitioner and that of 

the defendant or respondent, the facts constituting the cause of action, and the relief being 

sought. 

Two (2) copies of the complaint or petition, and its annexes or attachments, and as 

many copies required to be served upon each of the defendants or respondents, shall be 

filed. 

SECTION 2. Certification and Verification on Related Cases. 

2.1 The complainant or petitioner shall certify under oath, in the complaint or in a sworn 

certification annexed thereto and simultaneously filed therewith, that: 

2.1.1 he has not commenced any other action or filed any claim involving the same 

land or issue in any court, tribunal or quasi-judicial agency; 

2.1.2 to the best of his knowledge, no such other action or claim is pending therein; 

2.1.3 he has no knowledge of any controversy or proceeding involving the status of 

said parcel of land or the rights of person/s over its possession and entitlement 

to fruits or as beneficiary, the determination of which is filed before any 

tribunal, court, the DAR or any other agency; 

2.1.4 should there be any same or similar action or proceeding involving the prop 

erty, which is either pending or may have been terminated, he shall report such 

fact within five (5) days from knowledge thereof to the Adjudicator with whom 

the complaint or initiatory pleading was filed; 

2.2 In the event that the complaint or petition does not bear the Certification, the Adjudicator 

shall issue an order directing complainant or petitioner to comply with such requirement 

within ten (10) days from receipt of the Order. 

2.3 Failure to file certification and verification of related cases within the aforementioned 

ten (10) days period and/or subsequent discovery of commission of forum-shopping 

may be grounds for summary dismissal. Dismissal for failure to file certification and 

verification shall be without prejudice to re-filing. 

SECTION 3. Amendment of Complaint or Petition. The complaint or petition may be 

amended at any time before a responsive pleading is served or, in case of a reply, at any 

time within five (5) days after it is served. 

After the responsive pleadings have been served, amendments may be allowed only 

upon motion filed with the Adjudicator, together with the amended petition or complaint sought 

to be admitted, appropriately indicating such amendments thereto and furnishing copies 

thereof to the adverse party. 

SECTION 4. Venue. 

4.1 All actions shall be brought before the Adjudicator of the province where the land 

involved is located;


4.2 If the land is located or found in two or more provinces, the action shall be brought 

before the Adjudicator concerned where the larger portion of the land lies, unless for 

convenience, accessibility, and upon agreement of the parties and upon approval of 

the RARAD, the venue shall be with the Adjudicator of the other province; 

4.3 However, upon motion of either of the parties and for compelling reasons, the hearing 

of the case may be changed or transferred to another place within or outside the 

Region by order of the RARAD or the Board. 

SECTION 5. One Suit for a Single Cause of Action. A party may not institute more 

than one suit for a single cause of action. 

SECTION 6. Splitting a Single Cause of Action. If two or more suits are instituted on 

the basis of a single cause of action, the filing of one or a judgment upon the merits in any 

one is available as a ground for the dismissal of the others. 

SECTION 7. Joinder of Causes of Action. A complainant or petitioner having more 

than one cause of action against the same defendant or respondent arising out of the same 

questioned relationship shall join all of them in one complaint or petition. 

RULE V 

Parties and Caption 

SECTION 1. Parties in Interest. Every agrarian case must be initiated and defended 

in the name of the real party in interest. All parties having an interest in the matter shall be 

joined as complainant or petitioner. All persons who claim an interest in the dispute or subject 

matter thereof adverse to the complainant or petitioner, or who are necessary to a complete 

determination or settlement of the issues involved therein shall be joined as defendants or 

respondents. 

If an additional respondent is impleaded in a later pleading, the action is commenced 

with regard to him on the date of the filing of such pleading. 

The heirs of the deceased may be allowed to substitute the deceased without requiring 

the appointment of an executor or administrator. 

The Adjudicator shall forthwith order said legal representative or representatives to 

appear and substitute the deceased within a period of ten (10) days from notice. 

SECTION 2. Pauper Litigant. Unless proven otherwise by the adverse party, an agricultural 

lessee, share tenant, actual tiller, amortizing owner-cultivator, farmworker, a member 

of any farmersí organization, association, or a farmersí cooperative, as alleged and applied 

for in a sworn complaint or motion, shall be entitled to the rights and privileges of a pauper 

litigant under these Rules without further proof thereof. He shall continue to enjoy such status 

as a pauper litigant in all the levels of adjudication until the case is terminated. 

SECTION 3. Association or Corporation as Plaintiffs or Defendants. When two or 

more persons, associated in any business, transact such business under a common name, 

whether it comprises the name of such persons or not, the associates may sue or be sued 

by such common name.

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Persons associated in business that are sued under a common name, must all be 

named individually in the answer filed by them or in their behalf, stating their business 

address. 

SECTION 4. Alternative Defendants. Where the complainant or the plaintiff is uncertain 

against who of several persons he is entitled to relief, he may join any or all of them as 

defendants in the alternative, although a right to relief against one may be inconsistent with a 

right to relief against the other. 

SECTION 5. Unknown Identity or Name of Defendants. Whenever the identity or 

name of a defendant is unknown, he may be sued as the unknown party using such designation 

as the case may require. When his identity or true name is discovered, the pleading 

must be amended accordingly. 

SECTION 6. Entity Without Juridical Personality as Defendants. When two or 

more persons not organized as an entity with juridical personality enter into a transaction, 

they may be sued under the name by which they are generally or commonly known. 

In the answer of such defendant, the names and addresses of the persons composing 

said entity must all be revealed. 

RULE VI 

Service of Pleadings 

SECTION 1. Service of Pleadings, Notices, and Resolutions. 

1.1 The party filing the pleading subsequent to the complaint shall serve the opposing party 

with a copy thereof in the manner provided for in these Rules and proof of such service 

shall be filed with the records of the case; and 

1.2 Summons, notices, and copies of resolutions, orders shall be served personally as far 

as practicable, or by registered mail upon the party himself, his counsel, or his duly 

authorized representative. However, notice to the counsel is notice to the party himself 

whether he is a complainant or petitioner, or a defendant or respondent. 

SECTION 2. Service Upon Associations. When persons associated in business are 

sued under a common name, service may be effected upon all the defendants by serving 

upon any one of them, or upon the person in charge of the office or place of business 

maintained in its common name. But such service shall not bind individually any person 

whose connection with the association has, upon due notice, been severed before the action 

is brought. 

SECTION 3. Service Upon Private Domestic Juridical Entities. If the defendant is a 

corporation, partnership, association or cooperative organized and registered under Philippine 

laws with a juridical personality, service may be made on the president, managing 

partner, general manager, corporate or board secretary, treasurer or in-house counsel. 

SECTION 4. Service Upon Public Corporation. When the respondent is the Republic 

of the Philippines, service may be effected on the Solicitor General. In case of a province,


city or municipality or other public corporations, service may be effected on its chief executive 

or on such other officer as the law or the Board or its Adjudicator may direct. 

SECTION 5. Return of Service. The Sheriff or other designated officer who personally 

served the summons, notice, order or decision shall submit his return within five (5) days 

from the date of his service thereof, stating therein the name of the person served and the 

date of receipt of the same or if no service was effected, the serving officer shall state the 

reason therefor. 

SECTION 6. Proof of Completeness of Service. The return is a prima facie proof of 

the facts indicated therein. 

Service by registered mail is completed upon receipt by the addressee, his counsel, or 

by the duly authorized representative or agent. 

SECTION 7. Substituted Service. If service of pleadings, motions, notices, and resolutions, 

orders and other papers cannot be made under the preceding sections, the office 

and place of residence of the party or his counsel being unknown, service may be made by 

delivering the copy to the Clerk of the Adjudicator or the Board, with proof of failure of both 

personal service and service by mail. The service is complete at the time of such delivery. 

RULE VII 

Summons, Answer, and Submission of Evidence 

SECTION 1. Issuance of Summons, Time to Answer, and Submission of Evidence. 

If the complaint or petition is filed together with the BARC Certification and the 

affidavit(s) of witnesses, with the Adjudicator, as required in Rule III of these Rules, or upon 

the return of the complaint referred to the BARC in accordance with said Rule III, the 

corresponding summons and notice of hearing shall be issued attaching therewith a copy of 

such complaint, petition, affidavit, and documentary evidence, if any. 

The summons and notice of hearing shall direct the defendant or respondent to file an 

answer to the complaint or petition or submit counter-affidavits and other documentary evidence, 

if any, within a non-extendible period of fifteen (15) days from receipt thereof, furnishing 

a copy to the petitioner/s or the complainant/s. The summons shall specify the date, 

time and place of the hearing and shall order the parties and their witnesses to appear at the 

scheduled date of hearing. 

If the defendant or respondent cannot be served within a reasonable time as provided 

in the preceding paragraph, service may be effected: 

1.1 by leaving copies of the summons at the defendantís or respondentís residence with 

some person of suitable age and discretion residing therein; or 

1.2 by leaving the copies at defendantís or respondentís office or regular place of business 

with some competent person in charge thereof. 

The provisions on service of summons as provided in the Rules of Court shall have 

suppletory effect. However, if publication is effected pursuant to the above rule, only the 

notice of summons and notice of hearing shall be published and not the entire complaint or 

petition.

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The summons and all other notices to be issued by the Adjudicator shall be written in 

English and in Filipino. 

SECTION 2. By Whom Served. The summons and notice of hearing with the attached 

copy of the complaint, petition, affidavit and documentary evidence, if any, may be personally 

served by any DAR employee, including the Municipal Agrarian Reform Officer (MARO) 

or any other personnel authorized by the Adjudicator issuing the summons or by registered 

mail to the defendant or respondent within two (2) days from the filing or return thereof, as 

the case may be. 

SECTION 3. Answer Required. The defendant or respondent must file a sworn answer 

to the complaint or petition by responding with admissions or specific denials of each 

and every allegation in the complaint or petition, or if this cannot be done, by averring lack of 

sufficient knowledge thereof, which will be deemed as a specific denial. 

A mere general denial will not be deemed as an answer. 

The defendant or respondent may incorporate in his answer a motion to dismiss on the 

ground of prescription, lack of jurisdiction, failure to state a cause of action, improper venue 

or when there is another action pending between the same parties for the same cause or 

where the cause of action is barred by a prior judgment. 

An answer must be accompanied by the affidavit(s) of respondentís witnesses. The 

answer may include a counterclaim or cross-claim for damages, attorneyís fees, or litigation 

expenses. 

SECTION 4. Time to Answer Non-Extendible. The fifteen (15) day-reglementary 

period within which the defendant or respondent is required to answer shall not be extended. 

SECTION 5. Amendment of Answer. The defendant or respondent may amend his 

answer upon motion filed with the Adjudicator, together with the amended answer sought to 

be admitted, notifying the complainant or petitioner of the motion with the amended answer 

attached thereto, and giving the latter the opportunity to be heard thereon. 

If the motion is granted, a new copy of the entire answer incorporating and appropriately 

indicating the amendment thereon shall be filed with the Adjudicator, furnishing a copy 

thereof to the complainant or petitioner. 

The amended answer supersedes the original answer. 

SECTION 6. Answer to Amended Complaint or Petition. The defendant or respondent 

shall file his answer to the amended complaint or petition within fifteen (15) days from 

receipt thereof, furnishing a copy to the petitioner or complainant. 

If no new answer is filed, the answer previously filed shall serve as the answer to the 

amended complaint or petition. 

SECTION 7. No Default Upon Failure to Answer. When the respondent fails to file 

an answer, no declaration of default shall be made nor judgment by default rendered.


The complainant or petitioner must proceed to prove his case and defendant or respondent 

shall be allowed to participate in subsequent proceedings and such defendant or 

respondent may request by motion that he be furnished copies of orders, pleadings and 

other processes. 

SECTION 8. Order Upon Receipt of Answer or Lapse of Reglementary Period. 

Within five (5) days from receipt of the answer or from the lapse of the fifteen (15) days, 

reglementary period to file answer, without any answer having been filed, as the case may 

be, the Adjudicator shall issue an Order setting the date of the initial preliminary conference 

which must be held within forty-five (45) days from the date of such Order. 

The Order shall likewise contain a warning that failure to submit affidavits upon the 

termination of the initial preliminary conference shall mean that no additional affidavits may 

be filed by the parties. 

However, even after the initial preliminary conference has been terminated, affidavits 

may still be filed by the parties in cases where a party desires to present additional witnesses, 

with leave of the Adjudicator. 

SECTION 9. Affidavits. The affidavits required to be submitted under this Rule shall 

state only facts of direct personal knowledge of the affiants and shall show their competence 

to testify to the matters stated therein. 

A violation of this requirement may subject the party or the counsel who submits the 

same to disciplinary action, and shall be cause to expunge the inadmissible affidavit or 

portion thereof from the record. 

All affidavits required to be submitted under this Rule shall be sworn to before the 

presiding Adjudicator, or in his absence, any other Adjudicator or any other person authorized 

to administer oaths under the Revised Administrative Code. 

SECTION 10. Reply. A reply may be filed within five (5) days from service of the 

pleading responded to. 

RULE VIII 

Appearances 

SECTION 1. Appearance. A lawyer appearing for a party is presumed to be properly 

authorized for that purpose. A non-lawyer may appear before the Board or any of its Adjudicators, 

if: 

1.1 He represents himself as a party to the case; 

1.2 He represents a farmerís organization or its members, provided that he shall present 

proof of authority from the organization or its members or such authority duly signed by 

the Chief Executive Officer of the organization; 

1.3 He is a law student who has successfully completed his third year of the regular fouryear 

prescribed law curriculum and is enrolled in a recognized law schoolís clinical 

legal education program approved by the Supreme Court. His appearance pursuant to 

this Rule shall be under the direct supervision and control of a member of the Integrated 

Bar of the Philippines duly-accredited by the law school. Any and all pleadings, mo-

238 


tions, memoranda or other papers to be filed must be signed by the supervising attorney 

for and in behalf of the legal aid clinic. 

1.4 He is a DAR employee duly authorized by the appropriate Head of Office in accordance 

with the internal regulations of the Department of Agrarian Reform. For this 

purpose, the DAR employee must have the prescribed authorization form before he 

may be allowed to appear before the Board or any of its Adjudicators. 

Provided, that when there are two or more representatives for any individual or group, 

such individual or group should choose only one representative. 

SECTION 2. Manner of Appearance. Appearances may be oral or in writing. The 

complete business address of the counsel or representative shall be made of record and the 

adverse party or his counsel shall be properly notified. Any change in the address of counsel 

or representative shall be filed with the Adjudicator with notice to the adverse party and 

counsel. 

SECTION 3. Assignment of DAR Lawyer or Legal Officer. A party appearing without 

counsel or represented by a non-lawyer may be assigned a counsel de oficio from among 

the qualified DAR employees designated by the appropriate Head of Office or a member of 

the bar who is willing to act as such counsel de oficio. 

SECTION 4. Authority to Bind Party. Attorneys and other representatives of parties 

cannot, without a special power of attorney, enter into a compromise agreement with the 

opposing party when a full or partial discharge of a clientís interest is made. 

RULE IX 

Preliminary Conference 

SECTION 1. When Conducted. After the last pleading shall have been served and 

filed, or upon receipt of the BARC certification of non-settlement in instances when the case 

was referred to the BARC for mediation/conciliation, the Adjudicator shall set the case for a 

preliminary conference. 

tor: 

SECTION 2. Nature and Purpose. During the preliminary conference, the Adjudica- 

2.1 shall consider the possibility of an amicable settlement or of a submission to alternative 

modes of dispute resolution; 

2.2 may resolve and dispose of preliminary incidents related to the case; and 

2.3 take up other matters as may simplify and aid in the prompt disposition of the case. 

SECTION 3. Notice of Preliminary Conference. The notice of the preliminary conference 

shall be served upon the representative or counsel of record or the party himself, if he 

has no representative or counsel of record. 

SECTION 4. Appearance of Parties. It shall be the duty of parties and their counsel to 

appear at the preliminary conference. 

The counsel or his representative cannot, without a written authority or express consent 

of his client, enter into an amicable settlement, submit to alternative modes of dispute resolution, 

or enter into stipulations or admissions of facts or of documents.


SECTION 5. Effect of Failure to Appear. If either or both parties fail to appear for 

preliminary conference, despite proper notice, the conference shall be deemed terminated 

and the Adjudicator shall render a decision on the basis of the evidence on record. 

SECTION 6. Proceedings During the Initial Preliminary Conference. The Adjudicator 

shall, during the initial preliminary conference, endeavor to have the parties reach an 

amicable settlement of the case. 

In the event that the parties are able to agree on an amicable settlement of the case, 

they shall execute a compromise agreement, which shall be subject to the approval of the 

Adjudicator, in accordance with Section 8 of Rule X hereof. 

During the initial preliminary conference, the parties shall be given an opportunity to 

file any supplemental affidavits or documents in support of their case. 

However, in the event that the Adjudicator denies the compromise agreement or the 

parties are not able to reach an amicable settlement of the case, the Adjudicator shall set a 

second preliminary conference which shall be held within fifteen (15) days after the issuance 

of the Order setting that date. Upon termination of the initial preliminary conference, 

the parties and their counsels shall be advised to evaluate the affidavits submitted and to be 

ready to manifest during the secondary preliminary conference the names of the affiants 

they wish to be subjected to clarificatory questioning and the names of persons they wish to 

be summoned to appear. 

SECTION 7. Proceedings During the Second Preliminary Conference. During the 

second preliminary conference, the Adjudicator shall determine: 

7.1.1 whether any of the parties intends to propound clarificatory questions on any of the 

affiants/witnesses; 

7.1.2 whether there is a need to issue the appropriate subpoena upon any witness who 

refuses to execute an affidavit; and 

7.1.3 the dates of subsequent hearings for the purpose of examining the witnesses. 

Considering the summary nature of the proceedings, the Adjudicator, during the second 

preliminary conference, shall set the number and dates for hearing taking into account 

the factual issues which are controverted after an evaluation of the affidavits and evaluation 

of the purpose for which witnesses are summoned to appear. 

In the event that a witness refuses to execute an affidavit, the party presenting such 

witness shall, during the second preliminary conference, file a motion for the issuance of the 

appropriate subpoena directing the person to appear during the hearing. 

SECTION 8. Record of Preliminary Conference. The proceedings in the conference 

shall be recorded. Upon termination of the same, the Adjudicator shall issue an order, which 

shall embody the matters taken up therein, and the date set for the initial hearing of the case, 

if any. 

The aforementioned order shall control the subsequent proceedings of the case, subject 

to such modifications, which may be made to prevent manifest injustice.

240 


RULE X 

Proceedings Before the Adjudicators 

SECTION 1. Nature of Proceedings. The proceedings before the Adjudicator shall be 

non-litigious in nature. 

Subject to the essential requirements of due process, the technicalities of law and 

procedures and the rules governing the admissibility and sufficiency of evidence obtained in 

the courts of law shall not apply. 

The Adjudicator shall employ reasonable means to ascertain the facts of the controversy 

including a thorough examination or re-examination of witnesses and the conduct of 

ocular inspection of the premises in question, if necessary. 

SECTION 2. Role of the Adjudicator in the Proceedings. The Adjudicator shall 

personally conduct the hearing. He shall take full control of the proceedings. He may examine 

the parties and witnesses freely with respect to the matters at issue, and shall limit the 

right of the parties or their counsels to ask questions only for the purpose of clarifying the 

points of law at issue or of facts involved in the case. He shall also limit the presentation of 

evidence by the contending parties only to matters relevant and material to the issues and 

necessary for a just, expeditious and inexpensive disposition of the case. 

SECTION 3. Orders or Resolutions During the Hearing of the Case. The order or 

resolution of the Adjudicator on any issue, question, matter, or incident raised before him 

shall be valid and effective until the hearing of the same shall have been terminated and 

resolved on the merits. 

SECTION 4. Hearing. If the parties fail to arrive at an amicable settlement, in whole or 

in part, and the Adjudicator or the counsel for either or both parties have clarificatory questions, 

the Adjudicator may, motu proprio or upon motion of either or both the parties, proceed 

to hear the case. 

No witness shall be allowed to testify unless his affidavit was previously submitted to the 

Adjudicator during the initial preliminary conference except as provided for in the last paragraph 

of Section 8, Rule VII hereof. 

At the hearing, the affidavits submitted by the parties shall constitute the direct testimonies 

of the witnesses who executed the same. Witnesses who testified may be subjected to 

clarificatory questioning provided that a witness summoned to appear in accordance with 

Section 7, Rule IX hereof may be subjected to such clarificatory questioning even without 

submitting his affidavit. 

Upon the admission of the documentary and testimonial evidence of the parties, and 

the filing of the partiesí respective verified position papers as provided for in this Rule, the 

case or incident shall be deemed submitted for decision or resolution. 

SECTION 5. Verified Position Papers. In case the parties fail to arrive at an amicable 

settlement of the case, and the Adjudicator or counsels for either or both of the parties do not 

have any further clarificatory questions, no hearing shall be conducted by the Adjudicator. 

However, in any case, whether a hearing is conducted or not, the parties shall be required to 

simultaneously submit their respective verified position papers within a period of ten (10)


days from receipt of an Order to that effect. At the option of the parties, copies of the draft 

decision stored or saved in a diskette in a word-processing format which is generally acceptable, 

may be filed with the Adjudicator. 

If after the verified position papers have been filed, there appears a need to conduct a 

clarificatory hearing, the Adjudicator may proceed to conduct the same. 

Upon filing of the verified position papers by both parties, or after the clarificatory 

hearing shall have been concluded by the Adjudicator, as the case may be, the case shall be 

deemed submitted for decision or resolution. 

No additional affidavits or documents shall be allowed to be filed along with the verified 

position paper, except in case of newly-discovered evidence. 

SECTION 6. Record of Proceedings. The proceedings before the Adjudicator shall 

be recorded by a stenographer. In the absence of an available stenographer, the Adjudicator 

shall make a written summary of the proceedings, including the substance of the evidence 

presented which shall be attested by the parties or their counsel and shall form part of the 

records of the case. Should any party or counsel refuse to sign, the reason for such refusal 

shall be noted therein. 

SECTION 7. Doubts to be Resolved in Favor of the Beneficiary. Any reasonable 

doubt in the interpretation of these Rules, as well as in the interpretation of contracts and 

stipulations between the contending parties, shall be resolved in favor of the beneficiary, 

potential beneficiary, tenant farmer, farm-worker, agricultural lessee, farmersí cooperative, 

association or organization. 

SECTION 8. Settlement. At any stage of the proceedings, the Adjudicator or the 

Board, as the case may be, shall exert all efforts and take positive steps for the amicable 

settlement of the case. 

Should the parties arrive at any settlement as to the whole or part of the dispute, the 

same shall be reduced into writing in a language or dialect known to, and spoken by the 

parties and signed by them before the Adjudicator or the Board. 

If a compromise agreement is entered into by the parties in a manner other than as 

specified above, the Adjudicator or the Board shall set the case for a hearing for the purpose 

of determining the authenticity and due execution thereof before approving it. 

The settlement shall be approved after the Adjudicator or the Board is satisfied that it 

was voluntarily entered into by the parties and the same is not contrary to relevant laws, 

rules, and regulations, and after having explained to them the terms and consequences 

thereof. 

The order or decision approving the Compromise Agreement shall have the effect of a 

judgment on the case, which shall immediately be final and executory. 

In all cases where the beneficiaries, tenant farmers, or farm-workers are not assisted 

by private counsel, the Adjudicator or the Board shall coordinate with the proper office of the 

DAR to ensure that said parties are assisted by a Lawyer or Legal Officer in arriving at a 

settlement.

242 


SECTION 9. Period to Render the Decision. The Adjudicator shall render the decision 

on the merits of the case within thirty (30) days after the filing of the verified position papers 

or after the lapse of the period to file a verified position paper without the same having been 

filed or after the clarificatory hearing shall have been concluded by the Adjudicator. 

SECTION 10. Award and Damages. The Adjudicator or the Board, in appropriate 

cases, may award actual, compensatory, exemplary, and moral damages and attorneyís 

fees. The attorneyís fees to be awarded should be reasonable. 

SECTION 11. Finality of Judgment. Unless appealed, the decision, order or resolution 

disposing of the case on the merits shall be final after the lapse of fifteen (15) days from 

receipt of a copy thereof by the counsel or representative on record, or by the party himself 

whether or not he is appearing on his own behalf, whichever is later. In all cases, the parties 

themselves shall be furnished with a copy of the final decision, order or resolution. 

SECTION 12. Motion for Reconsideration. Within fifteen (15) days from receipt of 

notice of the order, resolution or decision of the Board or Adjudicator, a party may move for 

reconsideration of such order, resolution, or decision on the grounds that: 

12.1 the findings of fact in the said decision, order or resolution are not supported by 

substantial evidence, or 

12.2 the conclusions stated therein are contrary to law and jurisprudence. 

The motion for reconsideration shall be filed together with proof of service of a copy 

thereof upon the adverse party. 

Only one (1) Motion for Reconsideration shall be allowed for each party. 

The filing of a Motion for Reconsideration shall interrupt the period to perfect an appeal. 

If the motion is denied, the aggrieved party shall have the remaining period within which to 

perfect his appeal. Said period shall not be less than five (5) days in any event, reckoned 

from the receipt of the notice of denial. 

RULE XI 

Motions in General 

SECTION 1. Motion Defined. Every application for relief, other than by principal 

pleadings. 

SECTION 2. Form. All motions shall be in writing, except those made in the course of 

a hearing or trial. 

SECTION 3. Contents. A motion shall state the relief sought and the grounds upon 

which it is based and, if necessary, shall be accompanied by supporting affidavits and 

documents. 

SECTION 4. Notice. A copy of the motion together with copies of supporting affidavits 

or documents shall be served by the movant upon all parties concerned, at least three (3) 

days before the hearing thereof.


The Adjudicator or the Board may, however, hear a motion on shorter notice upon good 

cause, especially on matters, which may be disposed of motu proprio. 

SECTION 5. Proof of Service. No motion shall be acted upon by the Adjudicator or by 

the Board without proof of service thereof except when he/it is satisfied that the rights of the 

adverse party are not affected. 

SECTION 6. Expeditious Resolution of Motions. All motions shall be resolved within 

a reasonable period from its submission for resolution. The same shall be considered submitted 

for resolution upon the filing of the last pleading supporting or opposing the motion. 

Any motion for reconsideration of an interlocutory order shall be filed within fifteen (15) days 

from receipt thereof. 

SECTION 7. Non-Allowable Motions. The following motions shall not be allowed: 

7.1 Motion to declare defendant or respondent in default or for a default judgment; 

7.2 All other motions filed before an answer, except Motions to Dismiss on the ground of 

prescription, lack of jurisdiction or failure to state a cause of action, improper venue or 

when there is another action pending between the same parties for the same cause or 

where the cause of action is barred by a prior judgment; 

7.3 Motion for extension of time to file an appeal, motion for reconsideration or memorandum. 

RULE XII 

Intervention 

SECTION 1. Who May Intervene. A person who has a legal interest on the matter in 

litigation, or in the success of either of the parties or an interest against both, or has a 

substantial right or interest in the subject matter of the case before the Adjudicator or Board, 

may be allowed to intervene in the action by filing a pleading-in-intervention. 

SECTION 2. Time to Intervene. A person desiring to intervene may, before judgment 

by the Adjudicator or the Board, file a motion for leave to intervene attaching the pleading-inintervention 

with notice upon all the parties to the action. 

In allowing or disallowing a motion for leave to intervene, the Adjudicator or the Board 

shall consider if the intervention will unduly delay or prejudice the adjudication of the rights of 

the original parties or if the intervenorís right may be fully protected in a separate proceeding. 

SECTION 3. Answer-in-Intervention. The answer-in-intervention shall be filed within 

fifteen (15) days from notice of the order allowing the intervention, unless a different period 

is fixed by the Adjudicator or the Board. 

RULE XIII 

Decisions/Resolutions/Final Orders 

SECTION 1. Decisions/Resolutions/Final Orders. The decisions/resolutions/final 

orders of the Adjudicator shall be in writing, prepared and signed by him and filed with the

244 


Regional or Provincial Clerk of the Adjudicator. It shall clearly and completely state the 

findings of fact and specify the evidence and the law or jurisprudence upon which the 

decision is based. 

The decisions/resolutions/final orders of the Board shall be in writing, prepared by the 

Member to whom it is assigned, signed by the Members of the Board and filed with the 

Executive Director of the Board Secretariat. 

SECTION 2. Promulgation. After the judgment/resolution/final order is signed by the 

Adjudicator or Members of the Board, the same shall be filed with the Regional or Provincial 

Clerk of the Adjudicator or of the Board, respectively, who shall indicate thereon the date of 

promulgation thereof. 

SECTION 3. Notice of Decision/Resolution/Final Orders. Upon promulgation of the 

decision/resolution/final order, the Regional or Provincial Clerk of the Adjudicator or of the 

Board, as the case may be, shall immediately cause copies thereof to be served upon the 

parties or their counsel as well as the DAR and other government officials who may take part 

in the execution or implementation of such decision/resolution/final order. 

In the event that a copy of the decision cannot be served upon the parties and or their 

counsel as well as the DAR and other government officials for whatever reason, a notice of 

the decision/resolution/final order shall be served upon the latter in the manner provided for 

in Section 2, Rule VII hereof. If such manner of service fails, the notice of the decision shall 

be served by publication in a newspaper of general circulation. For this purpose, the Board 

shall schedule, at least once a year, the publication of said notice falling under this section. 

However, at the option of the prevailing party, the publication of the notice of decision falling 

under this section may be undertaken ahead of the schedule fixed by the Board, provided 

that all expenses of publication shall be shouldered by the prevailing party. All notices to be 

published under this Rule shall contain the DARAB Case Number and the names of all the 

parties in the case. 

All the Adjudicators shall submit to the Board a periodic quarterly report of all decisions 

rendered, for the purpose of including the same in the annual publication of the notice of 

decisions. 

All notices of decision/resolution/final order shall be written in English and in Filipino. 

SECTION 4. Entry of Decisions/Resolutions/Final Orders. If no appeal or motion 

for reconsideration is filed within the time provided in these rules, the decision/resolution/ 

final order of the Board or Adjudicator shall be entered in the Book of Entries of Decisions by 

the Clerk of the Board and the Regional or Provincial Clerk of the Adjudicator, respectively. 

The date of finality of the decision/resolution/final order shall be deemed to be the date of its 

entry. 

The record of entry shall contain the dispositive portion of the decision/resolution/final 

orders and shall be signed by the Clerk of the Adjudicator or of the Board, as the case may 

be, with a certification that such decision/resolution/final order has become final and executory. 

RULE XIV


Appeals 

SECTION 1. Appeal to the Board. An appeal may be taken to the Board from a 

resolution, decision or final order of the Adjudicator that completely disposes of the case by 

either or both of the parties within a period of fifteen (15) days from receipt of the resolution/ 

decision/final order appealed from or of the denial of the movantís motion for reconsideration 

in accordance with Section 12, Rule IX by: 

1.1 filing a Notice of Appeal with the Adjudicator who rendered the decisions or final order 

appealed from; 

1.2 furnishing copies of said Notice of Appeal to all parties and the Board; and 

1.3 paying an appeal fee of Seven Hundred Pesos (PhP700.00) to the DAR Cashier where 

the Office of the Adjudicator is situated or through postal money order, payable to the 

DAR Cashier where the Office of the Adjudicator is situated, at the option of the appellant. 

A pauper litigant shall be exempt from the payment of the appeal fee. 

Proof of service of Notice of Appeal to the affected parties and to the Board and 

payment of appeal fee shall be filed, within the reglementary period, with the Adjudicator a 

quo and shall form part of the records of the case. 

Non-compliance with the foregoing shall be a ground for dismissal of the appeal. 

SECTION 2. Grounds. The aggrieved party may appeal to the Board from a final 

order, resolution or decision of the Adjudicator on any of the following grounds: 

2.1 That errors in the findings of fact or conclusions of law were committed which, if not 

corrected, would cause grave and irreparable damage or injury to the appellant; or 

2.2 That the order, resolution or decision was obtained through fraud or coercion. 

SECTION 3. Notice of Appeal. The Notice of Appeal shall: 

3.1 be filed with the Adjudicator concerned in three (3) legible copies with proof of service 

to the affected parties and the Board, and payment of appeal fee unless appellant is a 

pauper litigant as provided for in Rule V hereof; 

3.2 indicate the parties to the appeal; 

3.3 specify the judgment or final order appealed from; 

3.4 state the material dates showing the timeliness of the appeal; and 

3.5 be filed with a certification as provided for in Section 2, Rule IV. 

SECTION 4. Perfection of Appeal. An appeal is deemed perfected upon compliance 

with Section 1 of this Rule. 

A pauper litigantís appeal is deemed perfected upon the filing of the Notice of Appeal in 

accordance with said Section 1 of this Rule. 

SECTION 5. Motions After Filing of Notice of Appeal. A motion, after the filing of the 

Notice of Appeal and before the elevation of the case records to the Board, shall be filed with 

the Board, attaching thereto a certified copy of the decision of the Adjudicator, the Notice of 

Appeal and proof of payment of appeal fee. A copy of the motion shall be furnished to the

246 


Adjudicator and the opposing parties. 

The Board may act on the motion regardless of whether or not the case records have 

been elevated or transmitted to it. 

SECTION 6. Transmittal of Appeal and Records. The Adjudicator concerned shall, 

after the lapse of the reglementary period for perfecting an appeal and proof of payment of 

appeal fee, transmit the appeal to the Board, together with the complete records of the case, 

furnishing the parties with copies of the letter of transmittal to the Board. 

The records of the case shall contain, among others, a table of contents, all original 

pleadings filed, documentary exhibits, transcripts or written summaries of the hearings, notices, 

orders or decisions of the Adjudicator and proofs of service thereof, which shall all be 

numbered consecutively and initialed by the Adjudicator or the authorized Clerk of the Board 

on each and every page thereof. 

If the records of the case are not received by the Board Secretariat within thirty (30) 

days from receipt of a copy of the notice of appeal by the Board in accordance with this 

Rule, the Board, motu proprio or upon motion of the appellant, shall issue an order for the 

transmittal of such records. 

SECTION 7. Docketing of Cases. Upon the receipt of the records of the case on 

appeal together with proof of payment of the appeal fee, the Executive Director of the Board 

Secretariat shall docket the case and notify the parties thereof. 

SECTION 8. Caption. In all cases appealed to the Board, the title shall remain as it 

was before the Adjudicator but the party appealing shall be further called the ìappellantî and 

the adverse party the ìappelleeî, and the case shall be assigned a docket number. 

SECTION 9. Appeal Memorandum. Within five (5) days from receipt of notice of 

appeal, the Adjudicator shall issue an order either: 

9.1 Stating that the appeal was not perfected in accordance with the rules; or 

9.2 Stating that the appeal had been perfected and therefore the appellant is required to file 

an appeal memorandum with the Board within ten (10) days from receipt of such order, 

furnishing a copy thereof to the appellee and his counsel who may reply thereto if he so 

desires, within the same period of time from receipt of copy thereof. 

At the option of the parties, they may also file a draft decision with the Board together 

with a copy thereof stored or saved in a diskette in a word-processing format which is 

generally acceptable. 

After the filing of their respective appeal memoranda with the Board or the lapse of the 

period within which to file the same, the case shall be deemed submitted for resolution. In 

case no appeal memorandum has been filed within the reglementary period, the Board may 

proceed to render judgment thereon based on the records of the case. 

SECTION 10. Frivolous or Dilatory Appeal. To discourage frivolous or dilatory appeals, 

the Board shall fix and impose reasonable penalties, including, but not limited to, fine


or censure upon erring parties. 

SECTION 11. Withdrawal of Appeal. An appeal may be withdrawn at any time prior to 

the promulgation of the resolution, order or decision, except when public interest is prejudiced 

thereby. Upon approval of the withdrawal of an appeal, the case shall stand as if no 

appeal had ever been taken. 

SECTION 12. When Appeal is Submitted for Decision. The appeal shall be deemed 

submitted for decision upon the filing of the last pleading or memorandum as may be required 

or permitted to be filed by the Board, or upon the expiration of the period for its filing. 

SECTION 13. Period to Decide Appeal. The Board shall render its decision on appeal 

before it, as much as possible, within thirty (30) days after its submission. 

SECTION 14. Finality of Decisions/Resolutions. Decisions/resolutions/orders of the 

Board shall become final after the lapse of fifteen (15) days from receipt of a copy thereof by 

the counsel or representative on record, or by the party himself whether or not he is appearing 

on his own behalf, whichever is later, unless an appeal or motion for reconsideration 

thereof is filed within such period. In all cases, the parties themselves shall be furnished with 

a copy of the decision/resolution/order. 

If a copy of the decision cannot be served personally or by mail and publication is 

effected in accordance with Section 3, Rule 13 hereof, said decision shall become final after 

the lapse of sixty (60) days from the date of publication. 

Only one motion for reconsideration by either party shall be allowed and entertained. 

RULE XV 

Judicial Review 

SECTION 1. Appeal to the Court of Appeals. Any decision, order, resolution, award 

or ruling of the Board on any agrarian dispute or on any matter pertaining to the application, 

implementation, enforcement, interpretation of agrarian reform laws or rules and regulations 

promulgated thereunder, may be brought on appeal within fifteen (15) days from receipt of a 

copy thereof, to the Court of Appeals in accordance with the Rules of Court. 

SECTION 2. Findings of Fact; Final and Conclusive. The findings of fact of the 

Board, if based on substantial evidence, shall be final and conclusive upon the courts pursuant 

to Section 54, Republic Act No. 6657. 

SECTION 3. No Restraining Order or Preliminary Injunction. No court in the Philippines 

shall have jurisdiction to issue any restraining order or writ of preliminary injunction 

against the Board or its Adjudicators in any case, dispute or controversy arising from, 

necessary to, or in connection with the application, implementation, enforcement or interpretation 

of the Comprehensive Agrarian Reform Law and other pertinent laws on agrarian 

reform and regulations promulgated thereunder pursuant to Section 55, of Republic Act No. 

6657. 

RULE XVI 

Relief from Decision/Resolution/Final Order

248 


SECTION 1. Petition for Relief from Decision/Resolution/Final Order. When a 

decision/resolution/final order is rendered by the Adjudicator against any party, through 

fraud, accident, mistake and excusable negligence and such party has no other adequate 

remedy available to him in the ordinary course of law, he may file a petition for relief with said 

Adjudicator, praying that the decision/resolution/final order be set aside. 

SECTION 2. Form and Time of Filing Petition. A petition for relief must be verified 

and a copy thereof together with its annexes and supporting affidavits, if any, must be 

furnished to the adverse party or parties and filed within sixty (60) days from the time the 

fraud, accident, mistake or excusable negligence was discovered and within six (6) months 

after the decision/resolution/final order was rendered. 

The petition must be accompanied by affidavits and supporting documents showing the 

fraud, accident, mistake or excusable negligence relied upon, whichever is applicable as 

well as the proof of service of the petition on the other party or parties. Without such proof of 

service the petition shall not be entertained. 

SECTION 3. Answer. Should the petition be sufficient in form and substance, the 

Adjudicator shall issue an order directing the party or parties to file their answer thereto 

within fifteen (15) days from receipt of said order. The order shall also set the date for the 

hearing of the petition. 

SECTION 4. Procedure. If after due hearing, the petition is found to be meritorious, 

the Adjudicator shall set aside the questioned decision/resolution/final order and he shall 

then proceed to hear the principal case. 

When an appeal from the denial of the petition for relief is granted, the Board shall give 

due course to the appeal, as if a timely and proper appeal has been made from the questioned 

decision/resolution/final order. 

RULE XVII 

Preliminary Injunction/Supervision of Harvest 

SECTION 1. Preliminary Injunction, When Granted. A writ of preliminary injunction, 

restraining order or a status quo order may be granted by the Board or any two (2) of its 

Members or the Adjudicator, when it is established on the basis of allegations in the sworn 

complaint or motion, which shall be duly supported by affidavits of merit, that the acts being 

complained of, if not enjoined, would cause some grave and irreparable damage or injury to 

any of the parties in interest so as to render ineffectual the decision in favor of such party. 

Should the Board or the Adjudicator believe that it is necessary to post a bond, it shall fix the 

reasonable amount of the bond to be filed by the party applying for the injunction in favor of 

the party who might suffer thereby, if it is finally determined that the complainant or petitioner 

is not entitled thereto. Upon the filing and approval of such bond, a writ of injunction may be 

issued. 

The Board or the Adjudicator may also require the performance of a particular act or 

acts, subject to the rules herein provided, in which case, it shall be known as a preliminary 

mandatory injunction. 

SECTION 2. No Injunction to Restrain Tilling or Harvesting. In cases where the 

tenurial status of a person is at issue, the Board or its Adjudicator shall not issue any order


restraining the actual tiller from cultivating the land, or harvesting the standing crops nor 

issue an order or impounding the harvest, if any, without providing him with at least fifty 

percent (50%) of the net harvest. 

In case where one or more persons claim rights adverse to the tiller on the landholding 

in question, any order for supervision of the harvest shall provide at least twenty-five percent 

(25%) of the net harvest for the actual tiller. 

SECTION 3. Temporary Restraining Order. A temporary restraining order issued 

ex-parte, shall be valid only for twenty (20) days from the date the same is received by the 

respondent. During this period, the parties shall be required to present evidence to substantiate 

their respective positions on whether or not a preliminary injunction shall be granted. 

The period of twenty (20) days may be extended upon motion of the proper party on valid 

grounds for another twenty (20) days from the expiration of the original period, or motu 

proprio by the Board. Thereafter, no motion for further extension of the temporary restraining 

order shall be allowed. After due notice and hearing, and before the lapse of the temporary 

restraining order, the issue of preliminary injunction or status quo should be resolved. 

SECTION 4. Supervision of Harvest. An order for the supervision of harvest may 

also be granted by the Board or any two (2) of its Members or the Adjudicator, when it is 

established on the basis of the allegations in the sworn complaint or motion, which shall be 

duly supported by affidavits of merit, that one or more persons are claiming rights adverse to 

the tiller on the landholding in question or there is a dispute as to the sharing in the net 

harvest of the landholding. 

RULE XVIII 

Direct and Indirect Contempt 

SECTION 1. Direct Contempt. The Board or any of its Members or its Adjudicator 

may summarily pass judgment on acts of direct contempt committed in the presence of, or 

so near the Chairman or any Member of the Board or its Adjudicator, as to obstruct or 

interrupt the proceedings before the same, including disrespect towards the Members of the 

Board or its Adjudicator, offensive behavior towards others, or refusal to be sworn or to 

answer as a witness, or to subscribe to an affidavit or deposition when lawfully required to do 

so. If the offense is committed against the Board or any of its Members or its Adjudicator, the 

same shall be punished by a fine not exceeding Two Hundred Pesos (P200.00), or imprisonment 

of not exceeding ten (10) days or both. 

The judgment of the Board or any of its Members or Adjudicator on direct contempt is 

immediately executory and not appealable. 

SECTION 2. Indirect Contempt. The Board or any of its Members or its Adjudicator 

may also cite and punish any person for indirect contempt on any of the grounds and in the 

manner prescribed under Rule 71 of the Revised Rules of Court. 

SECTION 3. Appeal from Indirect Contempt. Any person adjudged guilty of indirect 

contempt by the Adjudicator, may, within a period of five (5) days from notice of the judgment, 

appeal the same to the Board, and the execution of said judgment shall be suspended 

pending the resolution of the appeal upon the filing by the said person of a bond on condition 

that he will abide by, and perform the judgment should the appeal be decided against him.

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RULE XIX 

Preliminary Determination of Just Compensation 

SECTION 1. Principal Role of Adjudicator. The principal role of the Adjudicator in the 

summary administrative proceedings for the preliminary determination of just compensation 

is to inquire whether the Land Bank of the Philippines (LBP) and the Department of Agrarian 

Reform (DAR) in their land valuation computations have complied with the administrative 

orders and other issuances of the Secretary of the DAR and the LBP. 

SECTION 2. By Whom Conducted. The preliminary proceedings of land valuation for 

the purpose of the determination of just compensation for its acquisition shall be conducted: 

2.1 by the PARAD when the initial land valuation of the Land Bank of the Philippines (LBP) 

does not exceed Five Million Pesos (Php5,000,000.00); and 

2.2 by the RARAD when the said valuation exceeds Five Million Pesos (PhP5,000,000.00). 

Notwithstanding the foregoing, the Chairman of the Adjudication Board, in his discretion, 

may designate the PARAD to conduct preliminary proceedings of land valuation even in 

excess of Five Million Pesos (PhP5,000,000.00), if in his judgment, the RARADís case load 

becomes unmanageable and/or too voluminous. 

The aforesaid amounts are subject to amendment by the Secretary of the DAR through 

administrative issuances. 

SECTION 3. Order for Submission of Evidence, Position Papers, and Notice of 

Hearing. Upon receipt of the Claim Folder (CF) containing all the pertinent documents, the 

Adjudicator shall issue an order: 

3.1 to the landowner, the LBP, the DAR officials concerned, the farmer-beneficiaries and 

other interested parties, that they may examine the claim folder in the Adjudicatorís 

possession and to submit evidence, pertinent documents, and their respective position 

papers and affidavits within thirty (30) days from receipt of the order; and 

3.2 notifying said parties of the date set for hearing on the matter. 

Thereafter, the Adjudicator shall proceed to make an administrative determination of 

just compensation following the procedure in ordinary cases. 

The Order shall be served in the same manner as the service of summons as provided 

for in Rule VII hereof. 

SECTION 4. Failure to Comply with Above Order. If the parties fail to submit the 

required documents and their position papers, and/or to appear on the date set for hearing, 

despite proper notice, the matter shall be deemed submitted for resolution. 

SECTION 5. Appeal. A party who disagrees with the resolution of the Adjudicator may 

bring the matter to the Board by filing with the Adjudicator concerned a Notice of Appeal 

within fifteen (15) days from receipt of the resolution. The filing of a Motion for Reconsideration 

of said resolution shall interrupt the period herein fixed. If the motion is denied, the 

aggrieved party may file the appeal within the remaining period, but in no case shall it be less 

than five (5) days.


The Adjudicator, upon receipt of the Notice of Appeal shall transmit said notice and the 

records of the case to the Board within fifteen (15) days from receipt of such notice. 

Upon receipt of the Notice of Appeal and the records of the case transmitted by the 

Adjudicator, the Board may order the parties to submit their respective memoranda. The 

petition shall be resolved by the Board within thirty (30) days, as much as possible, from 

receipt of the memoranda or from the lapse of the period within which to file the same. 

At the option of the parties, a draft decision stored or saved in a diskette in a word 

processing format which is generally acceptable may also be filed with the Board. 

In no case shall a writ of execution be issued by the Adjudicator of resolutions or 

orders timely contested before the Board. 

SECTION 6. When Resolution Deemed Final. Failure on the part of the aggrieved 

party to contest the resolution of the Adjudicator within the aforecited reglementary period 

provided shall be deemed a concurrence by such party with the land valuation, hence said 

valuation shall become final and executory. 

SECTION 7. Filing of Original Action with the Special Agrarian Court for Final 

Determination. The party who disagrees with the decision of the Board may contest the 

same by filing an original action with the Special Agrarian Court (SAC) having jurisdiction 

over the subject property within fifteen (15) days from his receipt of the Boardís decision. 

Immediately upon filing with the SAC, the party shall file a Notice of Filing of Original 

Action with the Board, together with a certified true copy of the petition filed with the SAC. 

Failure to file a Notice of Filing of Original Action or to submit a certified true copy of 

the petition shall render the decision of the Board final and executory. Upon receipt of the 

Notice of Filing of Original Action or certified true copy of the petition filed with the SAC, no 

writ of execution shall be issued by the Board. 

SECTION 8. Notice of Resolution. A copy of the resolution of the Board or Adjudicator 

shall be sent to the landowner, the Land Bank of the Philippines, the potential farmer 

beneficiaries, other interested parties, and their counsels. 

SECTION 9. Return of Claim Folder. The Board or Adjudicator shall, within three (3) 

days from return of the notice of the resolution pursuant to the preceding section, transmit 

the Claim Folder (CF), together with the complete records thereof to the office of origin or 

the Regional Agrarian Reform Officer (RARO) concerned, copy furnished the LBP. 

SECTION 10. Execution of Judgments for Just Compensation Which Have Become 

Final and Executory. The Sheriff shall enforce a writ of execution of a final judgment 

for compensation by demanding for the payment of the amount stated in the writ of execution 

in cash and bonds against the Agrarian Reform Fund in the custody of the LBP in accordance 

with RA 6657, and the LBP shall pay the same in accordance with the final judgment 

and the writ of execution within five (5) days from the time the landowner accordingly executes 

and submits to the LBP the corresponding deed/s of transfer in favor of the government 

and surrenders the muniments of title to the property in accordance with Section 16(c) 

of RA 6657.

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RULE XX 

Execution 

SECTION 1. Execution Upon Final Order or Decision. Execution shall issue upon 

an order, resolution or decision that finally disposes of the action or proceeding. Such 

execution shall issue as a matter of course and upon the expiration of the period to appeal 

therefrom if no appeal has been duly perfected. 

The Board or Adjudicator concerned may, upon certification by the proper officer that 

a resolution, order or decision has been served to the counsel or representative on record 

and to the party himself, and has become final and executory, and, upon motion or motu 

proprio, issue a writ of execution ordering the DAR Sheriff or any DAR officer to enforce the 

same. In appropriate cases, the Board or any of its Members or its Adjudicator shall deputize 

and direct the Philippine National Police, Armed Forces of the Philippines or any of their 

component units or other law enforcement agencies in the enforcement of any final order, 

resolution or decision. 

SECTION 2. Execution Pending Appeal. Any motion for execution of the decision of 

the Adjudicator pending appeal shall be filed before the Board which may grant the same 

upon meritorious grounds, upon the posting of a sufficient bond in the amount conditioned 

for the payment of damages which the aggrieved party may suffer, in the event that the final 

order or decision is reversed on appeal, provided that the bond requirement shall not apply if 

the movant is a farmer-beneficiary/pauper litigant. 

SECTION 3. Execution When Issued; Exception. On motion of the prevailing party 

or motu proprio, the Board or the Adjudicator shall order execution of an order or decision 

that has already become final and executory. 

Appeal shall not stay the execution of a decision or order except when the ejectment of 

a tenant farmer, agricultural lessee or tiller, settler, or amortizing owner-cultivator is directed. 

When the decision is based on an amicable settlement or compromise agreement, the 

same shall be immediately executory. 

SECTION 4. Execution by Motion or by Independent Action. A final and executory 

judgment may be executed on motion within five (5) years from the date of its entry. After the 

lapse of such time, and before it is barred by the statute of limitations, a judgment may be 

enforced by action. 

SECTION 5. Execution in Case of Death of Party. Where a party dies after the entry 

of the judgment or order, execution thereon may issue, or one already issued may be 

enforced in the following manner: 

5.1 In case of the death of the judgment obligee, upon application of his executor or administrator, 

or successor in interest; 

5.2 In case of the death of the judgment obligor, against his executor or administrator or 

successor in interest; 

5.3 In case of the death of the judgment obligor after execution is actually levied upon any 

of his property, the same may be sold for the satisfaction thereof, in the manner pro-


vided for by the Rules of Court and the officer making the sale shall account for any 

surplus in his hands to the corresponding executors or administrator. 

Provided, however, that if the judgment is for payment of rental in arrearages claimed 

against the tenant-farmer, agricultural lessee or tiller or settler or amortizing owner-cultivator, 

execution shall be levied upon the produce of the landholding. 

SECTION 6. Issuance, Form, and Contents of a Writ of Execution. The writ of 

execution must be issued by the Board or its Adjudicator which granted the motion. It must 

intelligently refer to such judgment or order attaching a certified copy of the judgment or 

order to the writ of execution and requiring the sheriff or any proper officer to whom it is 

directed to enforce the writ according to its terms, upon the party against whom the same is 

rendered, or upon any other person required thereby, or by law, to obey the same, and such 

party or person may be punished for contempt, if he disobeys such judgment. 

SECTION 7. Judgment for Specified Acts Vesting Title. If a judgment directs a party 

to execute a conveyance of land, or to deliver deeds or other documents, or to perform any 

other specific act, and the party fails to comply within the time specified, the Board or the 

Adjudicator may direct the act to be done by some other person appointed by the said Board 

or Adjudicator at the cost of the disobedient party and the act when so done shall have like 

effects as if done by such disobedient party. 

SECTION 8. Return of Writ of Execution. The writ of execution shall be returned to 

the Board or Adjudicator issuing it immediately after the judgment has been satisfied in part 

or in full. If the judgment cannot be satisfied in part or in full within thirty (30) days after his 

receipt of the writ, the officer shall report to the Board or Adjudicator, as the case may be, 

and state the reason therefor. Such writ shall continue in effect during the period within 

which the judgment may be enforced by motion. The officer shall make a report every thirty 

(30) days on the proceedings taken thereon until the judgment is satisfied in full, or its 

effectivity expires. The return or periodic reports shall set forth the whole proceedings taken, 

and shall be filed with the Board Secretariat or Clerk of the Adjudicator, as the case may be, 

to be preserved with the other papers in the case. A certified copy of the record of an 

execution in the execution book kept by the Board Secretariat or Clerk or of the officerís 

return thereon, shall be evidence of the contents of the originals whenever they, or any part 

thereof, have been lost or destroyed. 

SECTION 9. Property Exempt from Execution. Except as otherwise expressly provided 

by law, the following properties, and no other, shall be exempt from execution: 

9.1 the judgment obligorís family home as provided by law or, the homestead in which he 

resides, and land necessarily used in connection therewith, unless the family home or 

homestead is the subject matter of the dispute; 

9.2 tools and implements necessarily used by him in his trade or employment; 

9.3 beasts of burden necessarily used by him in his ordinary occupation; 

9.4 his necessary clothing and articles for ordinary personal use, excluding jewelry; 

9.5 household furniture and utensils necessary for housekeeping, and used for that purpose 

by the judgment obligor and his family, such as the judgment obligor may select, 

of a value not exceeding One Hundred Thousand Pesos (PhP100,000.00); 

9.6 provisions for individual or family use sufficient for four months;

254 


9.7 the professional libraries of attorneys, judges, physicians, pharmacists, dentists, engineers, 

surveyors, clergymen, teachers, and other professionals, not exceeding Three 

Hundred Thousand Pesos (Php300,000.00) in value; 

9.8 one (1) fishing boat and accessories not exceeding the total value of One Hundred 

Thousand Pesos (PhP100,000.00), owned by any fishermen by the lawful use of which 

he earns a livelihood; 

9.9 so much of the earnings of the judgment obligor for his personal services within the four 

(4) months preceding the levy as are necessary for the support of his family; 

9.10 lettered gravestones; 

9.11 all moneys, benefits, privileges, or annuities accruing or in any manner growing out of 

any life insurance; 

9.12 the right to receive legal support, or money or property obtained as such support, or 

any pension or gratuity from the government; and 

9.13 properties especially exempt by law. 

But no article or species of property mentioned in this section shall be exempt from 

execution issued upon a judgment involving said property, upon judgment recovered for its 

price or upon a judgment of foreclosure of a mortgage thereon. 

SECTION 10. How Execution for the Delivery or Restitution of Property Enforced. 

The officer must enforce an execution for the delivery or restitution of property by 

ousting therefrom the person against whom the judgment is rendered and placing the judgment 

obligee in possession of such property, and by levying upon so much of the property of 

the judgment obligor as will satisfy the amount of the judgment and costs included in the writ 

of execution. 

SECTION 11. Removal of Improvements on Property Subject of Execution. When 

the property subject of the execution contains improvements constructed or planted by the 

judgment obligor or his agent, the officer shall not destroy, demolish or remove said improvements 

except upon order of the Board or the Adjudicator issued upon petition of the judgment 

obligee after due hearing and after the former has failed to remove the same within the time 

fixed by the Board or Adjudicator. 

SECTION 12. Effect of Judgment or Final Order. The effect of a judgment or final 

order rendered by the Board or Adjudicator having jurisdiction to pronounce the judgment or 

order, may be as follows: 

12.1 In case of judgment or order against a specific thing or property, the judgment or order 

is conclusive upon the title or right to the thing or property; 

12.2 In other cases, the judgment or order is, with respect to the matter directly adjudged or 

as to any other matter that could have been raised in relation thereto, conclusive between 

the parties and their successors in interest by title subsequent to the commencement 

of the action, litigating for the same thing and under the same title and in the same 

capacity; and 

12.3 In any other litigation between the same parties or their successors in interest, that only 

is deemed to have been adjudged in a former judgment which appears upon its face to 

have been so adjudged, or which was actually and necessarily included therein or 

necessary thereto. 

RULE XXI 

Board Regulations


SECTION 1. Internal Business. The Members of the Board, sitting en banc, shall 

make appropriate orders or rules to govern the assignment of cases among its Members, 

and other matters relating to the business of the Board. 

Such Orders or Rules, as may be so adopted by the Board, shall continue in force until 

repealed, amended or modified altered by it. 

SECTION 2. Assignment of Cases. All cases brought to or filed with the Board shall 

be raffled among the Members thereof for hearing and/or decision, in accordance with the 

orders and/or internal rules that the Board may adopt. 

All motions, pleadings and other matters filed after the case has already been assigned 

to a Member of the Board, shall immediately be referred to the said Member for appropriate 

action thereon and consolidation with the records file thereof. 

SECTION 3. En Banc Meeting. The Board shall sit en banc in the performance of its 

policy and rule making power and in the exercise of its administrative and adjudicatory 

functions. 

A majority of the actual Members of the Board shall constitute a quorum for its sessions 

en banc. 

The affirmative votes of the majority of the Members shall be necessary to promulgate 

policies and rules of the Board. 

SECTION 4. Presiding Officer. The Secretary of the Department of Agrarian Reform, 

or in his absence, the designated Member of the Board, shall act as the Chairman and shall 

preside over its deliberations. 

SECTION 5. Hearing and Pronouncement of a Decision/Resolution/Final Order. 

The participation of the Members of the Board in the deliberation, and the concurrence and 

signature of a majority of its Members, shall be required for the pronouncement of a decision/resolution/final 

order determining the merits of a case on appeal before it. 

However, the concurrence of only two (2) members shall be necessary in the issuance 

of interlocutory orders. 

RULE XXII 

The Board Secretariat 

SECTION 1. The Board Secretariat. There shall be a Board Secretariat, which shall 

be headed by the Executive Director who shall, among others, serve and function as the 

Clerk of the Board. 

SECTION 2. Filing of Pleadings and Documents. Pleadings, documents and all 

matters brought to the Board shall be filed with the Secretariat, which will keep a complete file 

thereof and be responsible therefor. 

In cases where the matter, question or controversy brought before the Board is raffled 

to a Member thereof, the original records shall be referred to such member, with a complete

256 


copy of the records kept on file with the Secretariat. Thereafter, all pleadings, documents 

and papers related thereto shall be filed with the Secretariat, which shall forward the same to 

the Member concerned, with copies furnished the Secretariat. 

SECTION 3. Custody of the Seal and Books of the Board. The Secretariat shall 

have custody of the seal of the Board together with all the records of all the proceedings of 

the Board including the exhibits, documentary evidence, case folders and the files of the 

same. 

SECTION 4. Access to the Board Records. All official records of the Board shall be 

open to the public during normal officer hours subject to the payment of the required fees 

except those that are classified as confidential which cannot be divulged without violating the 

rights of the parties concerned or prejudicing public interest. 

SECTION 5. Calendar, General Docket, and Other Books of the Board. The 

Secretariat shall prepare a calendar and entry of the proceedings of the Board in a Minute 

Book. The designated officer of the Secretariat shall take charge of the service of the orders, 

decisions, subpoenas, and other processes issued by the Board and certify the date and 

hour of promulgation of any order as well as the names of all parties who are notified thereof. 

The Secretariat shall keep a general docket for the said Board, duly numbered and 

containing entries of all the original and appealed cases before it. 

The Secretariat shall keep a compilation of copies of all resolutions, orders and decisions 

issued by the Board in the order of their dates of promulgation. 

SECTION 6. Releasing of Communications, Issuances and Other Matters. All 

communications and/or issuances pertaining to the Board and other matters before the 

Board shall be released only thru the Secretariat which shall keep a record and/or file a copy 

thereof and be responsible therefor. 

SECTION 7. Issuance of Certified True Copies. Upon written request, the Secretariat 

shall issue to any party a certified true copy, under the seal of the Board, of any document, 

record, resolution, order, or decision, or entry under its custody, subject to the payment of 

the required fees and limitations imposed in Section 4 hereof. 

RULE XXIII 

Other Fees, Charges, and Cost 

SECTION 1. Payment of Fees. Upon the filing of the pleading or other application 

which initiates an action or proceeding, the fees prescribed therefor shall be paid in full. 

SECTION 2. Filing Fees. A filing fee of Seven Hundred Fifty Pesos (P750.00) plus a 

legal research fee of Twenty Pesos (P20.00) shall be charged for any petition or complaint 

filed with the Adjudicator or the Board, as an original action. 

The pauper litigant as stated in Section 2 of Rule V of these Rules is exempt from the 

payment of the herein filing fees. 

SECTION 3. Legal Fees. The following legal fees shall be charged and collected:


3.1 For furnishing certified transcript of the records or additional copies of any record, 

decision, ruling or entry of which any party is entitled to demand and receive a copy, 

Seven Pesos (P7.00) per page; 

3.2 For every certificate not on process, Ten Pesos (P10.00) per page; and 

3.3 For every search of any record of more than one year outstanding and reading the 

same, Fifteen Pesos (P15.00). 

SECTION 4. Where Fees to be Paid. The fees herein shall be paid by the party 

concerned to the Department of Agrarian Reform (DAR) Cashier or its counterpart offices, 

at the time of filing or request. If the fees are not paid, the Board or Adjudicator may refuse 

to take the action thereon until they are paid except as otherwise provided herein. For this 

purpose, the Department of Agrarian Reform (DAR) Cashier or its counterpart offices shall 

segregate all fees collected from its general fund and shall also maintain a separate Book of 

Account, for all transactions covered hereunder. 

SECTION 5. Sheriffs, and Other Persons Serving Processes. 

5.1 For serving summons and copy of complaint, Thirty Pesos (P30.00); 

5.2 For serving subpoenas, Twenty-Four Pesos (P24.00) for each witness to be served; 

5.3 For serving a temporary restraining order, or writ of injunction, preliminary or final, 

Sixty Pesos (P60.00); 

5.4 For filing bonds or other instruments of indemnity or security in provisional remedies, 

Twenty-Four Pesos (P24.00) for each bond or instrument; 

5.5 For executing a writ or process to place a party in possession of real estate, One 

Hundred Twenty Pesos (P120.00); 

5.6 For advertising sale, excluding the cost of publication, Sixty Pesos (P60.00); 

5.7 For taking inventory of goods levied upon when the inventory is ordered by the Board 

or its Adjudicator, One Hundred Twenty Pesos (P120.00) per day of actual inventory 

work; 

5.8 For levying on execution personal or real property, Sixty Pesos (P60.00); and 

5.9 For money collected by him by order, execution, attachment, or any other process, the 

following sums to wit: 

5.9.1 On the first Four Thousand Pesos (P4,000.00), four per centum (4%); and 

5.9.2 On all sums in excess of Four Thousand Pesos (P4,000.00), two per centum 

(2%). 

In addition to the fees herein above fixed, the party requesting for the issuance of any 

process whether preliminary, incidental, or final, shall pay the sheriffís expenses in serving 

or executing the process, or safeguarding the property levied upon, attached or seized, 

including actual travel expenses by the regular means of transportation, guardsí fees, warehousing 

and similar charges, in an amount estimated by the Sheriff, subject to the approval 

of the Board or Adjudicator. Upon approval of said estimated expenses, the interested party 

shall deposit such amount with the Clerk-of-the-Board and ex-oficio Sheriff, who shall disburse 

the same to the Sheriff assigned to effect the process. Any unspent amount shall be 

refunded to the party making the deposit. A full report shall be submitted by the Sheriff 

assigned with his return and the Sheriffís expenses shall be taxed as cost against the losing 

party.

258 


SECTION 6. Stenographers. Stenographers shall give certified transcripts of notes 

taken by them to any party requesting the same upon payment of Seven Pesos (P7.00) for 

each page of not less than two hundred fifty (250) words. 

SECTION 7. Witness Fees. Witnesses in any action in the Board or Adjudicator shall 

be entitled to Thirty-Five Pesos (P35.00) per day and actual travel expenses by the regular 

means of transportation. 

A witness shall be allowed such compensation for his attendance in more than one 

case or more than one side of the same case at the same time, but may elect in which of the 

several cases or on which side of the case, if the witness is summoned by both sides, to 

claim his attendance. A person who is compelled by the Board to attend its hearings shall not 

be paid as a witness. 

SECTION 8. Costs. Cost may be allowed to the prevailing party but the Board or the 

Adjudicator, as the case may be, shall have the power, for special reasons, to adjudge that 

either party shall pay the costs of an action, or that the same be divided as may be equitable. 

No costs shall be allowed against the Republic of the Philippines unless otherwise provided 

by law. 

SECTION 9. Costs in Actions or Proceedings. In any action or proceeding before 

the Board or Adjudicator, the prevailing party may recover the following costs: 

9.1 For his own attendance, and that of his attorney, down to and including final judgment, 

One Hundred Twenty Pesos (P120.00); 

9.2 All lawful fees charged against him by the Board or Adjudicator, in entering and docketing 

the action and recording the proceedings and judgment therein and for the issuance 

of all proceedings; 

9.3 If testimony is received by the Board or Adjudicator not taken from another tribunal or a 

court of justice and transmitted thereto, the prevailing party shall be allowed the same 

cost for witness fees, depositions, processes and service thereof; and 

9.4 The legal fees of the Board or Adjudicator in an action may also be adjudged against 

the defeated party, or apportioned as justice requires. 

SECTION 10. Dismissal of Action or Appeal. If an action or an appeal is dismissed 

for want of jurisdiction or otherwise, the Board or Adjudicator, nevertheless, shall have the 

power to render judgment for costs, as justice may require. 

SECTION 11. Attorneyís Fees as Costs. Attorneyís Fees may be charged as costs 

against the adverse party in accordance with Article 2208 of the New Civil Code. 

SECTION 12. Costs When Witness Fails to Appear. If a witness fails to appear at 

the time and place specified in the subpoena issued by the Board or the Adjudicator, the 

costs for the arrest of the witness shall be paid by the witness if the Board or Adjudicator 

shall determine that his failure to answer the subpoena was willful or without just excuse. 

SECTION 13. Government Exempt. The Republic of the Philippines, its national agencies 

and instrumentalities, are exempt from paying the legal fees provided in this rule. Local 

governments and government-owned or controlled corporations, with or without independent 

charters, are not exempt from paying such fees.


RULE XXIV 

Miscellaneous Provisions 

SECTION 1. Transitory Provisions. These Rules shall govern all cases filed on or 

after its effectivity. All cases pending with the Board and the Adjudicators, prior to the date of 

effectivity of these Rules, shall be governed by the DARAB Rules prevailing at the time of 

their filing. 

SECTION 2. Separability of Provisions. If, for any reason, any portion or provision 

of these Rules is declared unconstitutional or invalid by the Supreme Court, no other provision 

of these Rules shall be affected thereby. 

SECTION 3. Repealing Clause. The Revised DARAB Rules of 1994 and all DAR 

Administrative Orders, Circulars and DAR Adjudication Board Resolutions promulgated and 

issued prior to the effectivity of these Rules, that are inconsistent herewith are hereby repealed 

and/or modified accordingly. 

SECTION 4. Effectivity. These Rules shall take effect fifteen (15) days from their 

publication in two (2) newspapers of general circulation. 


The DAR ADJUDICATION BOARD: 


Secretary 

Chairman 

(SGD.) VIRGILIO R. DELOS REYES (SGD.) EFREN C. MONCUPA 

Undersecretary Undersecretary 

Vice-Chairman Member 

(SGD.) LORENZO R. REYES (SGD.) AUGUSTO P. QUIJANO 

Assistant Secretary Assistant Secretary 

Member Member 

(SGD.) IANELA G. JUSI-BARRANTES (SGD.) ROEL ERIC C. GARCIA 

Assistant Secretary Assistant Secretary 

Member Member 

DEPARTMENT OF AGRICULTURE 


Administrative Order No. 31, s. 2002 

Supplemental Guidelines on the Importation and 

Utilization of Buffalo Meat from India

260 







Secretary 

--o0o-- 


Foot-and-Mouth Disease Control and Eradication 

Measures in Slaughterhouses 

WHEREAS, Foot-and-Mouth Disease has in the past hit the country in epidemic 

proportions to the detriment of the livestock industry in particular and the economy in general; 

WHEREAS, the National Government, under the leadership of the Department of 

Agriculture, embarked on a National Program for the Eradication of FMD and its initial 

success led to the OIE declaration of the whole Mindanao, Visayas and the islands of 

Masbate and Palawan as FMD-free zones; 

WHEREAS, there is a need to sustain the gains achieved so far and for all sectors to 

support the effort to finally make the whole country FMD-free; 

WHEREAS, an epidemiological study indicated that high percentage of FMD incidence 

were recorded in slaughterhouses and its immediate vicinity; 

WHEREAS, there is a need to ensure that the appropriate control measures towards 

the full eradication of FMD are instituted in slaughterhouses; 

NOW, THEREFORE, I LUIS P. LORENZO, JR. Secretary of Agriculture, do hereby 

issue this Order; 

SECTION 1. ìAll-In, All-Outî Policy 

a. All animals brought to the slaughterhouse are considered for the sole purpose of slaughtering. 

At no time shall holding pens be used for stocking purposes and/or holding area for 

live sales. 

b. All animals brought to the slaughterhouse must be covered by the permits/documents as 

required by the controlling authority (National Meat Inspection Commission for ÀAAí and 

ÀAí slaughterhouses and LGU for class A and non-accredited facilities). Owners are 

under obligation to provide the controlling authority with the necessary information about 

their animals for the purpose of traceability.


c. All animals brought in the slaughterhouse shall be slaughtered within the day of its arrival. 

NO SLAUGHTERED ANIMAL SHALL BE KEPT IN THE LAIRAGE FOR MORE THAN 24 

HOURS. 

SECTION 2. Cleaning and Disinfection - 

a. The schedule of daily operation of slaughterhouses shall be set as to ensure the proper 

cleaning and disinfection of the slaughter facility, equipment, lairage and surroundings. The 

following schedule shall be set by slaughterhouse management and shall be posted for the 

information of all. 

Arrival and acceptance of animals for slaughter: __________________________ 

Slaughter time : __________________________ 

Cleaning and Disinfection : __________________________ 

Rest Period : __________________________ 

b. It is the responsibility of slaughterhouse operator to have a cleaning and disinfection 

program. Meat Control Officers and Meat Inspectors shall ensure that said program is religiously 

followed. 

c. Slaughterhouse operators shall provide ample supply of disinfectants and cleaning paraphernalia. 

Foot baths must be strategically positioned and all personnel shall be required to 

pass through them upon entering and leaving the establishment at all times. 

d. All vehicles must pass through the wheel bath upon entering the slaughterhouse premises 

at all times. They must be properly cleaned and disinfected before leaving the premises. 

e. In case an incidence of FMD is noted in animals kept in the lairage, the slaughterhouse 

shall be immediately closed for operation. It shall remain closed until after the management, 

under the supervision of the Regional FMD Task Force, shall have instituted thorough cleaning 

and disinfection of the whole slaughterhouse facility, equipment, lairage and surroundings. 

The affected pen and those immediately adjacent to it shall be kept vacant for two (2) 

weeks. 

SECTION 3. Reporting - 

a. All regulatory officers (Meat Inspectors/Meat Control Officers), whether employed by the 

national or local government, shall include a notation on the required monthly slaughter 

report to be submitted to the next level of authority (i.e., Regional Director for NMIC, Municipal/City 

Veterinarian or Municipal Agricultural Officer for Municipal Meat Inspectors) as to 

the FMD situation in their area of responsibility. A negative monitoring report is equally 

important in monitoring the disease. 

b. Should an incidence of FMD be noted, the government regulatory officers assigned 

thereat must submit an FMD Investigation Report which includes an FMD Sample Submission 

Form and FMD Condemnation Report Form to his immediate technical superior (see 

3.a above) within 24 hours when case was first noted. 

c. NMIC Regional Director shall immediately conduct investigation of reported FMD case in 

slaughterhouses. NMIC shall immediately inform National FMD Task Force of results its 

investigation.

262 


SECTION 4. Penalties - 

a. CSC Book V of EO 292 Chapter 7 Sec. 51 Preventive Suspension - The proper disciplining 

authority (NMIC Executive Director or Local Chief Executives) may preventively 

suspend any subordinate officer or employee under his authority pending an investigation in 

neglect of performance of duty, or if there are reasons to believe that the respondent is guilty 

of charges which would warrant his removal from the service. 

b. Refusal of slaughterhouse operator/owner to cooperate in the implementation of this regulation 

shall be deemed as grounds for revocation of the accreditation of the establishment 

and/or revocation of the permit to operate the said establishment. 

SECTION 5. Effectivity - This Order shall take effect (15) days after publication in a 

newspaper of general circulation, and its filing with the UP Law Center. 




Secretary 

--o0o-- 


Amending Administrative Order No. 14, s. 1998, 

ìRevised Guidelines for the Feeder Cattle Importation by Private Sectorî * 

Adopted: 13 Jan. 2003. 


U.P. Law Complex, Diliman Quezon City) 



Secretary 

--o0o-- 


Rules and Regulations on the Transport of Animals by Sea 

Pursuant to the provisions of Republic Act 8485, otherwise known as ìThe Animal 

Welfare Act of 1998î, the following rules and regulations are hereby promulgated for the 

information, guidance and compliance of all concerned.


SECTION 1. Basic Policy - This Code takes into consideration the five basic freedoms 

of animals, which are: 

* Freedom from thirst, hunger and malnutrition 

* Freedom from physical discomfort and pain 

* Freedom from injury and disease 

* Freedom to conform to essential behavioral patterns; and 

* Freedom from fear and distress. 

SECTION 2. Objective - To promote, ensure and protect the welfare of animals while 

they are being loaded and unloaded in the ports and transported by sea. In realizing this 

objective, it is recognized that there are certain limitations during transport that may restrict 

the enjoyment of the five basic freedoms of animals, provided that such procedures adopted 

for transportation are not contrary to law. 

SECTION 3. Scope - This Order shall apply to: 

a. Private or public passenger-cargo or pure cargo vessels and vehicles authorized or used 

to transport animals while within Philippine territory. 

b. Companies or persons involved in transporting animals. 

SECTION 4. Definition of Terms - 

a. Animal - shall refer to any livestock, poultry or other member of the animal kingdom, 

terrestrial or aquatic whether wild or domesticated. 

b. Animal Health Division - shall refer to the Division of the Bureau of Animal Industry of the 

Department of Agriculture tasked to prevent, control, contain and eradicate communicable 

animal diseases, and regulate the flow of animals and animal products into, out of and within 

Philippine territiory. 

c. Animal Welfare Division - shall refer to the Division of the Bureau of Animal Industry of 

the Department of Agriculture tasked to implement Republic Act 8485. 

d. BAI - shall refer to the Bureau of Animal Industry of the Department of Agriculture. 

e. Animal Container Van - shall refer to a slatted container van made of metal, such as flat 

iron sheets, angular and round bars, black iron pipes and the like, which is used for the 

carriage of cattle, hogs, and other animals, whether self-propelled or pulled by tractor head. 

f. Livestock - refers to documented animals, whether terrestrial or aquatic. 

g. Protected Areas and Wildlife Bureau (PAWB) - refers to the Bureau in the Department of 

Environment and Natural Resources that formulates and recommends policies and programs 

for the establishment and management of an integrated protected area system and the 

conservation of biological diversity. 

h. Quarantine means the isolation and observation of animals within a period. It also means 

the restriction placed on a vessel having disease aboard or coming from unhealthful points. 

During this period, the flag ìQî called Quarantine Flat or Yelllow Jack shall be exhibited.

264 


i. Quaratine Station refers to a designated place where animals are kept for isolation or 

observation. 

j. Shipper for purposes of this Administrative Order shall refer to one who transports animals 

from the point of origin to the point of destination by any form or means of transportation. 

k. Shipperís Representative or Stock Attendant or Convoy may be used interchangeably 

and shall refer to the person/s duly authorized by the shipper to represent him and to 

transact business in his behalf and who is given the responsibility to attend to the needs of 

the animals while in transit. 

l. Skipper or Master shall refer to the person who has command of the ship. 

m. Vessel shall refer to any ship, boat, barge, specialized carrier, or other water craft or 

artificial contrivance capable of floating in water designed to be used or capable of being 

used as a means of water transportation utilizing its own motive power or that of another, with 

the ability to carry animals on deck or in its vessel hold without the use of any container van, 

or by carrying such animals using container vans which are loaded on and unloaded from 

the vessel using vessel cranes or through vessel ramps. 

n. Veterinary Quarantine Office (VQO) refers to a licensed veterinarian employed by or 

appointed as such and included in the regular plantilla of personnel in the BAI of the DA. 

SECTION 5. Basic Premises and Considerations - 

5.1 Weather conditions can lengthen the time of stay of animals on board the vessel as well 

as in the holding area. 

5.2 The responsibility of the owner of the animals, shipmaster and other persons-in-charge 

of overseeing the welfare and protection of the animals are emphasized. 

5.3 Good handling and transport management is important to the welfare of the animals 

carried at sea. 

SECTION 6. Requirements Before Transport - 

6.1 Before transporting the animals by sea, the shipper shall secure all required document/s 

from the Bureau of Animal Industry (BAI) - Animal Health Division and Animal Welfare 

Division, and in the case of wildlife, from the Protected Areas and Wildlife Bureau of the 

DENR and in the case of aquatic animals from the Bureau of Fisheries and Aquatic Resources 

(BFAR) or any other specific animals to appropriate agencies concerned. In no 

case shall the animals be transported without the valid documents required by BAI and other 

government agencies concerned. 

6.2 The shipper shall assign a representative or caretaker who shall be on board the vessel to 

take care of the animals while they are in transit. 

6.3 Prior coordination shall be undertaken by the shipper with the concerned shipping company 

or ship operator regarding the requirements of loading and unloading the animals from 

the vessel, their accommodations during the voyage, including the provision of food and


water, the area where the animals are kept ensuring that this is well ventilated, and discomfort 

to the animals is minimized. 

6.4 To ensure the safety and welfare of the animals, the following shall be observed: 

a. Vehicles shall be maintained in good condition. 

b. Dimensions of the container vans shall be according to Appendix 1. 

c. Stocking density of the container vans or vehicles shall be appropriate. 

d. Absence of any protruding objects and any injurious materials inside and outside the 

van or vehicle. 

e. Apply routine sanitary measures. 

6.5 The dimensions of animal container van is found in Appendix 1. 

SECTION 7. Delineation of Responsibilities - 

7.1 The Shipper shall: 

7.1.1 Be responsible for the training of its representative or caretaker to ensure 

that animals are properly protected and taken cared of during their loading on 

and unloading from the vessel and while en route. 

7.1.2 See to it that the dimensions of the vehicle shall be in accordance with 

Appendix 1. 

7.1.3 Provide the required boxes, cages, crates in the dimensions specified in 

Appendix I. 

7.1.4 Secure the required documents, permits and clearances before the animals 

are transported. 

7.1.5 Have a contingency plan in place in case any delay occurs in the transport 

of animals by sea. The plan shall include access to corrals or holding pens for 

animals during the emergency, which shall be equipped with unloading facilities, 

as well as watering and feeding arrangements. 

7.1.6 Contract only those vans or vehicles approved by the local veterinary officers 

in accordance with Appendix 1. 

7.1.7 Secure permits from the DA-BAI or DA-Regional Offices, and in the case 

of wild animals, additional permits shall be secured from the DENR-PAWB. 

7.1.8 Ensure that animals are not transported in case of extreme weather conditions. 

7.1.9 Provide implements and equipments needed to ensure the comfort and 

safety of the animals while traveling by sea. 

7.2 The shipperís representative shall:

266 


7.2.1 Provide food and drinking water for the animals for the entire voyage. The 

total food storage should be at least 20% more than the estimated feed consumption 

for the length of time of the voyage. 

7.2.2 Ensure that the livestock carried in pens are inspected at least thirty (30) 

minutes before the start of the voyage. 

7.2.3 Conduct inspection from time to time while in transit. Inspection of large 

animals and hogs shall be done at least thrice a day or as often as necessary. 

During rough weather, inspection shall be carried out as soon as weather conditions 

allow. 

7.2.4 Give immediate assistance to downers, injured or distressed animals. 

7.2.5 Provide or ensure that the source of lighting shall be available in order to 

carry out inspection at night or in enclosed decks. 

7.3 The Ship Master or Captain shall: 

7.3.1 Ensure that the animals on board are treated humanely, in accordance with 

RA. 8485. 

7.3.2 Have the option to refuse boarding of animals that are sick and unmanageable. 

7.3.3. Ensure that the area where the animals are placed on board, regardless of 

whether the animals are carried as loose heads or in animal container vans, is 

reasonably ventilated and safe, and any discomfort to the animals is minimized. 

7.3.4 Ensure that the animals on board shall not be kept near or adjacent to 

hazardous chemicals or substances including toxic fumes and engine exhaust. 

7.3.5 Ensure that during the disembarkation of downers, injured or distressed 

animals, the ship master shall seek the assistance of the following: vesselís crew, 

DA-BAI personnel, veterinarian, animal welfare organizations, inspectors, PPA 

Port police, or responsible veterinary officer on land in the ports. 

7.4 The Veterinary Quarantine Officer or Provincial/City Office assigned at the ports shall: 

7.4.1 Ensure that the animals on board are treated humanely, in accordance with 

R.A. 8485. 

7.4.2 Ensure that the animals to be shipped out are healthy and fit to travel. 

7.4.3 Disallow the boarding of sick and/or disabled animals and undertake appropriate 

measures to address the problems, as he deems necesarry. 

7.4.4 Brief the livestock shippers as the need arises. 

7.4.5 Ensure that appropriate ramps are available for large animals, cattle and 

carabaos.


7.4.6. Ensure that the livestock vans, crates and cages used to transport livestock 

have proper floorings. They shall have no holes or missing planks. 

SECTION 8. Loading/Unloading Requirements - 

8.1 The driver of the vehicle carrying animals shall take extra precautions when loading the 

said vehicle on the vessel through the vessel ramp. He shall ensure that the cattle or carabaos 

do not rear up above the vehicleís height while being loaded on the vessel. 

8.2 The shipping company shall ensure that appropriate ramps or chutes are provided for 

the animals that will be boarded on foot. 

8.3 Upon arrival at the port of destination, the animals if practicable, shall be immediately 

unloaded. 

8.4 In case there are animals that are unable to walk because of injury or exhaustion, 

appropriate measures shall be taken by the shipperís representative. They shall inform the 

City/Provincial Veterinary Officer of the proper action to be taken in this situation. Thereafter, 

the City/Provincial Veterinary Officer shall submit a report to the Animal Welfare Division 

that the requirements of the law have been complied with. 

8.5 Dogs, cats and other pets, poultry, birds and wild animals kept in a box, wood, plastic/ 

metal cages or crates shall be stored in an area mutually acceptable to the shipping company 

and the quarantine officer. 

SECTION 9. Issuances of Other Government Agencies - The BAI shall coordinate 

with other government agencies having direct supervision, regulation and control over sea 

transport in the Philippines to ensure that rules and regulations to be issued by such government 

agencies shall be in accord with the intent and spirit of RA 8485. 

SECTION 10. Penal Provisions - Violation of any of the provisions of these Rules and 

Regulations shall be penalized in accordance with R.A. 8485. 

SECTION 11. Separability Clause - In case any provision of these Rules and Regulations 

is declared contrary to law or unconstitutional, other provisions which are not affected 

shall continue to be in force and effect. 

SECTION 12. Repealing Clause - All Administrative Orders, Rules and Regulations 

and other administrative issuances or parts thereof issued by the Department of Agriculture 

inconsistent with the provisions of this regulation are hereby repealed or modified accordingly. 

SECTION 13. Effectivity - These Rules and Regulations shall take effect fifteen (15) 

days after its publication in a newspaper of general circulation. 


(SGD.) HON. LUIS P. LORENZO, JR. 

Secretary

268 

1. Cattle Vans 


Types of Animal Container Vans 

A. Dimension of Single Floor 

Cattle Van: 20 ft. x 8.0 ft.x 8.5F (6.10 x 2.44 m x 2.59 m) 

Area: 160 ft 2 ( 14.87 m 2 ) 

Volume: 1,360 ft 3 (38.54m 3 ) 

B. Space alloted to following species 

b.1 Cattle and Carabaos 

(Ave. weight 450 kgs each) : 9 heads 

Area : 17.77 ft. 2 head (1.65 m 2 /head) 

Volume : 151 ft 3 /head (4.27 m 3 /head) 

b.2 Culled boars, sows and senior breeder pigs 

(Ave. weight 230 kgs. each) : 15 heads 

Area : 10.66 ft 2 /head (0.99 m 2 /head) 

Volume : 90.33 ft 3 /head (2.56 m 3 /head) 

Appendix 1 

N.B Same area or space can be allotted per head when aforementioned species are 

herded (tied or contained) as loose cargo in an open space in an enclosure pen or at open 

deck. 

2. Hog Vans 

A. Dimension of Hog Van 

with three (3) floors/storeys : 20 ft x 8 ft x 9 ft (6.09 m x 2.44 m x 2.74 m) 

a.1 Area : 160 ft. 2 x 3 floors = 480 ft 2 

14.85 m 2 x 3 floors = 44.62 m 2 

a.2 Volume : 1,440 ft 3 (40.80 m 3 ) 

B. Space allotted to following species 

b.1 Weanling Pigs 

(Ave. weight 14 kgs. each) : 120 heads 

Area : 4 ft 2 /head (0.371 m 2 /head) 

b.2 Fattened Pigs 


Area : 6 ft 2 /head (0.557 m 2 /head) 

b.3 Goats 


Area : 3.2 ft 2 /head (0.297 m 2 /head)


N.B. Most culled boars, sows and senior breeder pigs weighing an average of 230 kgs. 

and stands over 3 ft. In contrast hog vans clearance between its 3 floors only 2.80 ft., thus 

use of cattle vans in view of its high clearance, is preferred. Space allotment for said species 

when loaded as loose cargo or any form of container such as crates, box, cages, coops, 

cartons, etc. is similar to space allotments for those kept or moved in vans. 

3. Containers for containing or moving other than aforecited species which are mostly food 

animals are crates, cartons, boxes, coops, aerated tubs, tanks and Styrofoam, that vary on 

strength and shape. They are used by domesticated, wild, terrestrial or aquatic animals such 

as horses, ostrich, lions, pets (dogs and cats) chicken and day old chicks, birds, reptiles, 

whales, dolphins, lobsters, tilapia, aquarium fishes, etc. For details of requirement in transporting 

them, please get in touch with the Animal Health Division or Animal Welfare Division 

- Bureau of Animal Industry or the seaports Veterinary Quarantine office near your residence. 


--o0o-- 


Amendments to Administrative Order No. 6, series 2002 

To further align the countryís import rules and regulations to the World Trade Organization 

(WTO) Sanitary and Phytosanitary (SPS) Agreement, the following amendments AO 6 

series 2002 are hereby prescribed: 

1. Section 1 is amended to read as follows: 

ìOnly pet food duly registered and produced by manufacturing plants accredited 

by BAI shall be allowed for importation. Manufacturing plants that currently export 

pet food to Philippines and comply with the provisions of A.O 6 series 2002 and 

this Order are considered accredited subject to future re-evaluation. The BAI 

shall issue guidelines for the accreditation of new manufacturing plants.î 

2. Section 2-b is amended to read as follows: 

ìThe mammalian protein used is derived from animals born and bred in the country 

which is free from BSE or the mammalian protein has been imported from a 

country which is free from BSE and derived from animals born and bred in that 

BSE free country.î 

3. Section 2-c is amended to read as follows: 

ìThe product has undergone a manufacturing process that destroys the Foot and 

Mouth Disease virus in accordance with the OIE International Animal Health Code. 

All existing Orders, rules and regulation inconsistent herewith are hereby revoked, 

repealed and/or amended accordingly.

270 





Secretary 

--o0o-- 

Memorandum Order No. 4, s. 2003 

Moratorium on the Importation of Broiler Parent Stocks for the Year 2003 

WHEREAS, the Department of Agriculture through the Bureau of Animal Industryís 

Task Force on Meat Price and Volume Watch had conducted a consultative meeting with the 

Broiler and Layer Industry as represented by the Philippine Association of Broiler Integrators 

(PABI), the United Broiler Raiserís Association (UBRA) and the National Federation of 

Egg Producers of the Philippines (NFEPP) on January 28, 2003 at the Philippine Animal 

Health Center (PAHC) Conference Room, Bureau of Animal Industry; 

WHEREAS, after thorough deliberations and evaluations, the Bureau of Animal Industry 

and the Broiler Industry agreed that there will be surplus of grown broilers in the whole 

year of 2003 due to the influx of the importation of Parent Stocks in 2001 and 2002; 

WHEREAS, there is a need to regulate importation of Broiler Grand Parent Stocks 

and for a moratorium on the importation of Parent Stocks in 2003; 

NOW, THEREFORE, I, LUIS P. LORENZO, JR., Secretary of Agriculture, by the 

powers vested in me by law, do hereby institute an emergency measure regulating the 

importation of Broiler Grand Parent Stocks and suspending the importation of Broiler Parent 

Stocks into the Philippines. 

This Administrative Order shall take effect immediately and shall remain in force until 

revoked. 




Secretary 

--o0o-- 


Adoption of the Philippine Agricultural Engineering 

Standards Volume II series of 2001 (PAES Vol. II)







Secretary 

--o0o-- 


Amending Administrative Order No. 14, s. 1998, 

ìRevised Guidelines for the Feeder Cattle Importation by Private Sectorî 







Secretary 

--o0o-- 

Administrative Order No. 07, Series of 2003 

Implementing Rules and Regulations of the 

ìPhilippine Plant Variety Protection Act of 2002î 

(Text available at Office of the National Administrative Register, 




Secretary of Agriculture & 

Chair, National Seed Industry Council 

óo0oó 

Memorandum Order No. 7, Series of 2003 

Postponing the Implementation of MO 7, Series of 2002

272 


In view of comments and observations made by different stakeholders, the implementation 

of MO 7, requiring the HACCP Audit of Meat and Milk Exporting plants, is postponed until 

further notice. 




Secretary 

óo0oó 

Memorandum Order No. 10, Series of 2003 

Temporary Ban on the Importation of Domestic and Wild Birds and 

Their Products Including Poultry Meat, Day-Old Chicks, Eggs and 

Semen Originating from the Netherlands 

WHEREAS, the Ministry of Agriculture, Nature Management and Fisheries, based on a 

report submitted to the Office International des Epizooties (OIE) last 03 March 2003, has 

confirmed an outbreak of highly pathogenic avian influenza (HPAI); 

WHEREAS, the Philippines imports poultry and poultry products from Netherlands; 

WHEREAS, there is a need to prevent the entry of pathogenic virus causing avian flu to 

protect the health of the local poultry population; 

NOW, THEREFORE, I, LUIS P. LORENZO, JR., Secretary of Agriculture, by the powers 

vested in me by law, do hereby institute the following emergency measures: 

Banning the importation of domestic and wild birds and their products, including dayold 

chicks, eggs and semen from the Netherlands; 

Immediate suspension of the processing, evaluation and issuance of Veterinary Quarantine 

Clearance/International Veterinary Certificate Import Permit for applications relevant 

to the importation of the above-stated commodities from the Netherlands by the Bureau of 

Animal Industry; 

Stoppage and confiscation of all shipments of poultry and poultry products into the 

country originating from the Netherlands by all DA Veterinary Quarantine Officers/Inspectors 

at all major sea/air ports. 

This ORDER shall take effect immediately. 



Secretary 

Recommending Approval:



(SGD.) JOSE Q. MOLINA, DVM, MVS 

Director, Bureau of Animal Industry 

óo0oó 

Memorandum Order No. 11, s. 2003 

Lifting the Temporary Ban on the Importation of Feeds, Meat, Meat Products 

and By-Products, Milk, Milk Products, Eggs and Processed Foods Containing 

the Same from Germany and The Netherlands 

WHEREAS, the governments of Germany and The Netherlands have instituted measures 

to contain the contamination of the abovementioned commodities with dioxin; 

WHEREAS, the government of Germany has conducted risk assessment and found 

the dioxin level in the affected commodities are below the permitted level; 

WHEREAS, the government of The Netherlands has already blocked the farms identified 

to have received the feed ingredients contaminated with dioxin imported from Germany; 

WHEREAS, the Philippine government is confident on the measures undertaken by the 

Netherlands and Germany to ensure that no contaminated products were exported; 

WHEREAS, the Philippines imports meat and meat products and powdered milk from 

Germany and The Netherlands; 

NOW, THEREFORE, I, LUIS P. LORENZO, JR., Secretary of Agriculture, by the powers 

vested in me by law, do hereby revoke DA Memorandum Order No. 9, series of 2003, 

otherwise, known as ìTemporary Banning on the Importation of Feeds, Meat, Meat Products 

and By-products, Milk, Milk Products, Eggs and Processed Food containing the same from 

Germany and the Netherlands.î All products that are being held at the port due to the implementation 

of DA MO 9, series of 2003 may be released subject to the existing veterinary 

quarantine rules and regulations. 

This ORDER shall take effect immediately. 

Adopted: 14 March 2003 


Secretary

274 


DEPARTMENT OF BUDGET AND MANAGEMENT 


This Circular is issued to: 

Budget Circular No. 2002-4 

Grant of Extra Cash Gift for 2002 

1.0 

Purpose 

1.1 provide the rules and regulations on the grant of Extra Cash Gift for 2002 as approved by 

the President; and 

1.2 supersede Budget Circular No. 2002-3, dated November 8, 2002. 

2.0 

Coverage 

The benefit herein authorized shall apply to all government personnel, whether elected 

or appointed in a permanent, temporary or casual status, including contractual personnel 

whose employment is in the nature of a regular employee, who are in the service as of 

October 31, 2002, in agencies covered by or following Republic Act (R.A.) No. 6758, the 

Salary Standardization Law. 

In the case of entities exempt from R.A. No. 6758, Section 8.0 of this Circular shall 

apply. 

3.0 

Rules and Regulations 

3.1 Government officials and employees who have rendered at least a total or an aggregate 

of four (4) months of service in 2002 and are still in the service as of October 31, 2002 shall 

be entitled to the Extra Cash Gift of not more than FIVE THOUSAND PESOS (P5,000) each. 

3.2 Those who have rendered less than four (4) months of service from January 1, 2002 to 

October 31, 2002 and still in the service as of October 31, 2002 shall be entitled to the Extra 

Cash Gift but pro-rated as follows: 

Length of Service Percentage 

3 months but less than 4 months 40% 

2 months but less than 3 months 30% 

1 month but less than 2 months 20% 

less than 1 month 10%


3.3 Payment shall be made not later than December 15, 2002. 

3.4 The grant of Extra Cash by LGUs shall be optional. 

4.0 

Funding Source 

4.1 Funds to pay this benefit shall be charged against available savings in allotment/cash 

allocation of the department/agency. 

4.1.1 Savings in allotment shall refer to such portions or balances of the agencyís 

released budget free of any obligation or encumbrance and which are no longer 

intended for specific purpose/s, such as: 

4.1.1.1 after completion of the work/activity for which the appropriation is authorized; 

4.1.1.2 arising from unpaid compensation and related costs pertaining to vacant 

positions; or 

4.1.1.3 as a result of improved systems and procedures, cost saving measures 

and efficiency where the agency was able to meet and deliver the required 

or planned targets, programs and services approved in the annual budget at a 

lesser cost. 

4.1.2 Savings in cash allocation shall refer to the free portion of the Notice of 

Cash Allocation after all agency requirements up to the end of the year have been 

satisfied. 

4.2 In case of deficiency in allotment and/or cash allocation, agencies shall immediately 

submit to the DBM office concerned, the fund status as of November 30, 2002, through the 

following reports: 

4.2.1 Statement of Allotment, Obligations and Balances 

4.2.2 Summary List of MDS Checks Issued and Cancelled, and 

4.2.3 Status of Cash in Banks (Savings, Current and Time Deposit Accounts) 

4.3 In the case of GOCCs, GFIs, and LGUs, the funds necessary to implement this Circular 

shall be charged against their respective funds; provided, that said amount shall be within 

their approved annual corporate/local budgets. 

4.4 GOCCs, GFIs and LGUs which do not have adequate or sufficient funds, may partially 

implement the benefit, provided that the partial implementation shall be uniform for all positions. 

5.0 

Budgeting Rules 

5.1 Heads of agencies are reminded to observe the priorities in the use of savings as 

provided under Section 55 of the General Provisions of R.A. No. 9162, the 2002 General 

Appropriations Act (GAA).

276 


5.2 Department Secretaries are authorized to pool the available savings in allotments/cash 

allocation of their bureaus/offices, including regional offices and attached agencies (except 

GOCCs and GFIs). 

5.2.1 All heads of bureaus/regional offices/attached agencies shall submit to the 

Department Secretary concerned the computed savings in allotment/cash allocation 

for the year. 

5.2.2 The Department Secretary may authorize the transfer of excess savings in 

allotment of bureaus/regional offices/attached agencies to bureaus/regional offices/attached 

agencies with deficient savings in allotment in accordance with 

existing budgeting and accounting rules and regulations. 

5.2.3 Likewise, the Department Secretary shall determine the amounts of available 

cash allocation to be transferred from MDS Sub-Account of one bureau/ 

regional office/attached agency to another. Said transfer shall be coordinated 

with the DBM Central/Regional Office so that the necessary arrangements can 

be made with the MDS-Government Servicing Banks concerned. 

6.0 

Additional Requirements/Conditions 

6.1 No program or service shall be sacrificed as a result of the grant/payment of the benefit 

authorized herein. 

6.2 The implementing rules and regulations issued by the Public Sector Labor-Management 

Council (PSLMC) for Executive Order No. 180, dated June 1, 1987, particularly Section 3, 

Rule VIII thereof, on the non-negotiability of benefits which require appropriation of funds, 

shall be strictly observed in the grant of the herein and other benefits. 

7.0 

Prior Payments of Similar Benefits 

Payments made by heads of departments/agencies/GOCCs/GFIs/LGUs for additional 

incentives, bonuses, cash gifts or other allowances of similar nature outside of that authorized 

under R.A. No. 6686, as amended, shall be considered advance compliance with the 

provisions of this Circular. Thus, departments/agencies/GOCCs/GFIs/LGUs that have already 

made such payments can no longer pay the extra cash gift, provided that payments 

made in excess of the maximum rate prescribed shall be refunded accordingly; and the 

payments made for less than the maximum amount may be adjusted/upgraded by granting 

the difference thereof, subject to their financial capability. 

8.0 

Entities Exempted From or Not Following the Salary Standardization Law (SSL) 

Memorandum Order No. 20 issued by the President on June 25, 2001, to rationalize 

compensation in SSL exempt entities, provides that any increase in compensation not in 

accordance with the SSL shall be subject to the approval of the President. Consistent 

therewith, the benefit provided herein may be granted to their officials and employees sub-


ject to the same conditions provided in this Circular at the same rate specified herein, 

provided that, there shall be no grant of other additional incentives, bonuses, cash gifts or 

similar benefits outside of those authorized herein and under R.A. No. 6686, as amended. 

9.0 

Responsibility of the Head of Agency 

The head of department/agency concerned shall be held personally liable for any 

payment of benefit not in accordance with the provisions of this Circular without prejudice, 

however, to the refund thereof by the employee concerned. 

10.0 

Reporting Requirement 

The head of department/agency shall submit to the DBM not later than January 31, 

2003, a report on the implementation of the benefit by accomplishing the attached form 

(Annex A* hereof). 

11.0 

Saving Clause 

Cases not covered by this Circular shall be referred to the Department of Budget and 

Management for resolution. 

This Circular takes effect immediately. 



12.0 

Effectivity 

(SGD.) EMILIA T. BONCODIN 

Secretary 

--o0o-- 

Circular Letter No. 2002-20 

Alleged Draft Resolution of LGUs for the Purchase of Assorted Medicines 

from the Philippine International Trading Corporation (PITC) 

Chargeable Against the CY 2001 LGSEF 




* Text Available at Office of the National Administrative Register, U.P. Law Complex, 

Diliman, Quezon City)

278 




Secretary 

--o0o-- 

Circular Letter No. 2002-21 

Clarifying the Grant of Extra Christmas Bonus 

Under Budget Circular No. 2001-2 

1.0 This Circular Letter is issued to clarify that Budget Circular No. 2001-2, dated November 

12, 2001 and Budget Circular No. 2001-2A, dated December 5, 2001 on the grant of Extra 

Christmas Bonus are applicable only for 2001. 

2.0 For 2002, the grant of additional bonus on top of the year-end benefit authorized under 

RA 6686, as amended by RA 8441, is covered by Budget Circular No. 2002-4, dated November 

28, 2002. 

3.0 Grants of Extra Christmas Bonus under Budget Circular No. 2001-2 in 2002 shall not be 

allowed. 

4.0 Please be guided accordingly. 


Dated Filed: 13 January 2003 


Secretary 

--o0o-- 

Local Budget Circular No. 76-A 

Clarifying Local Budget Circular No. 76 dated November 5, 2002 

on the Cash Gift of Barangay Officials 

1.0 

Purpose 

This Circular is being issued to clarify Item 4.2 of Local Budget Circular (LBC) No. 76 

dated November 5, 2002. 

2.0 

Clarification 

The pro-rated cash gift of Barangay Officials as provided for under Section 4.2 of LBC 

No. 76 is still subject to the condition that they shall still be in the service as of October 31 of 

the same year as provided under Section 3 of the same Circular.




3.0 


Secretary 

DEPARTMENT OF EDUCATION 


Rules and Regulations of Republic Act No. 9155 

(Governance of Basic Education Act of 2001) 

Pursuant to Section 14 of Republic Act No. 9155, otherwise known as ì 

Governance of Basic Education Act of 2001,î hereinafter referred to as the ìActî, the following 

Rules and Regulations are hereby promulgated: 

Rule I. 

The Department of Education (DepEd) 

SECTION 1.1 Mandate - The Department of Education shall protect and promote the 

right of all citizens to quality basic education and shall take appropriate steps to make such 

education accessible to all. 

The Department of Education shall establish, maintain, and support a complete, adequate, 

and integrated system of basic education relevant to the needs of the people and 

society. It shall establish and maintain a system of free and compulsory public education in 

the elementary level and free public education in high school level. 

All educational institutions 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. 

The Department of Education shall take into account regional and sectoral needs and 

conditions and shall encourage local planning in the development of educational policies and 

programs. 

SECTION 1.2 Principles - Implementation of the Act and the application of these Rules 

shall be guided by the following principles:

280 


i. The Department of Education must serve the students and the teachers, its primary 

constituents; 

ii. The principals, school administrators and teachers-in-charge (hereinafter collectively referred 

to as school heads) must exercise instructional leadership and sound administrative 

management of the school; 

iii. The school is the heart of the formal education system and the seat of learning; 

iv. The parents and the community shall be encouraged for active involvement in the education 

of the child. The participation, coordination between and among the schools, the local 

school boards, the Parent Teachers Associations (PTAs) must be maximized; 

v. Volunteerism from among all sectors shall be emphasized and encouraged to ensure 

sustainable growth and development in education. 

SECTION 1.3 Purposes and Objectives - The purposes and objectives of the Act and 

these Rules are: 

i. To provide the framework for the governance of basic education which shall set the general 

directions for educational policies and standards and establish authority, accountability and 

responsibility for achieving higher learning outcomes; 

ii. To define the roles and responsibilities of, and to provide resources to the regions, schools 

division and schools which shall implement educational programs, projects and services in 

communities they serve; 

iii. To make schools and learning centers the most important vehicle for the teaching and 

learning of national values and for developing Filipino learners, love of country and pride in 

its rich heritage; 

iv. To ensure that schools and learning centers receive the kind of focused attention they 

deserve and the kind of educational programs, projects and services they need taking into 

account the interests of all the members of the community; 

v. To enable the schools and learning centers to reflect the values of the community by 

allowing teachers and other staff the flexibility to serve the needs of all learners; 

vi. To encourage local initiatives for the improvement of schools and learning centers and to 

provide the means by which these standards may be achieved and sustained; and 

vii. To establish schools and learning centers, and other school facilities where schoolchildren 

are able to learn a range of core competencies prescribed for elementary and high 

school programs or where the out-of-school youth and adult learners are provided alternative 

learning programs and receive accreditation for at least the equivalent of an elementary or a 

high school education. 

SECTION 1.4 Definition of Terms - For purposes of this Act, the terms and phrases 

used shall mean or be understood as follows:


a. Quality Education - is the appropriateness, relevance and excellence of the education 

given to meet the needs and aspirations of an individual and society. 

b. Basic Education - is the education intended to meet basic learning needs which lays the 

foundation on which subsequent learning can be based. It encompasses early childhood, 

elementary and high school education as well as alternative learning systems for out-ofschool 

youth and adult learners and includes education for those with special needs. 

c. Early Childhood - refers to the level of education that intends to prepare 5 - 6 years old 

children (one year before Grade One) for formal schooling and at the same time narrow 

down adjustment and learning gaps. This level focuses on the physical, social, moral and 

intellectual development through socialization and communication processes. 

d. Elementary Education - shall refer to the first stage of free and compulsory, formal 

education primarily concerned with providing basic education and usually corresponding to 

six or seven grades. Elementary education can likewise be attained through alternative learning 

system. 

e. Secondary Education - shall refer to the stage of free formal education following the 

elementary level concerned primarily with continuing basic education usually corresponding 

to four years of high school. Secondary education can likewise be attained through alternative 

learning system. 

f. Special Needs Education - shall refer to the education of children and youth with special 

needs corresponding to elementary and secondary education that require modifications of 

school practices, curricula, programs, special services and facilities. These include children 

and youth who are gifted/talented, fast learners and those with disabilities. 

g. Formal Education - is the systematic and deliberate process of hierarchically structured 

and sequential learning corresponding to the general concept of elementary and secondary 

level of schooling including education for those with special needs. At the end of each level, 

the learner needs a certification in order to enter or advance to the next grade/year level. 

h. Non-Formal Education - is any organized, systematic educational activity carried outside 

the framework of the formal system to provide selected types of learning to a segment of 

the population. 

i. Informal Education - is a lifelong process of learning by which every person acquires and 

accumulates knowledge, skills, attitudes and insights from daily experiences at home, at 

work, at play and from life itself. 

j. Alternative Learning System - is a parallel learning system to provide a viable alternative 

to the existing formal educational instruction. It encompasses both the non-formal and informal 

sources of knowledge and skills. 

k. Teacher - refers to a person engaged in teaching in the elementary and secondary levels, 

whether on full-time or part-time basis including industrial arts and vocational teachers and 

all other persons performing supervisory, managerial and/or administrative functions in all 

schools and education offices at the district, division, regional and central levels and qualified 

to practice teaching under RA 7836 and/or those performing functions in support of

282 


education such as standards setting, policy and programs formulation, research and sector 

monitoring and evaluation. 

l. Learning Facilitator - This term is being used in the existing Alternative and Equivalency 

Progam (A & E) program. For purposes of consistency and proper reference there is a 

need to include the definition of a teacher in the formal system since being a learning 

facilitator is only one of their roles. 

m. Learner - is any individual seeking basic literacy skills and functional life skills or support 

services for the improvement of the quality of his/her life. 

n. Adult Learners - are learners aged 25 years and above who are illiterates or neoliterates 

who either have had no access to formal education and have reverted to illiteracy. 

o. Out-of-School Youth - are school age children who are unable to avail of the educational 

opportunities of the formal school system or who have dropped out of formal elementary or 

secondary education. 

p. School Heads - are persons responsible for the administrative and instructional supervision 

of the school or cluster of schools. 

q. Non-Teaching Personnel - refers to employees who are not actually involved in classroom 

teaching but indirectly and indispensably assisting in the delivery of services to educational 

constituencies and clientele, such as but not limited to the Administrative Officers, 

Accountant, Personnel Officers, Supply Officers, Records Officers, and other support staff 

of the central, regional, division, and school levels. 

r. Operating Officers - refers to the Department of Education key officials in the central, 

region and/or schools division offices including school heads and administrators who are 

directly involved in the implementation, evaluation and monitoring of plans, programs and 

projects of the Department. 

s. School - is an educational institution, private and public undertaking educational operation 

with a specific age-group of pupils or students pursuing defined studies at defined 

levels, receiving instruction from teachers, usually located in a building or a group of buildings 

in a particular physical or cyber site. 

t. Cluster of Schools - is a group of schools which are geographically contiguous and 

brought together to improve the learning outcomes. 

u. Integrated Schools - is a school that offers a complete basic education in one school site 

has unified instructional programs and under one (1) school head. 

v. Field Offices - refer to the regional, division, school levels and learning centers. 

w. School Sports - any sporting school activity which involves the students and school 

teachers/personnel as part of the school curriculum, focusing on physical fitness and sports 

development programs such as the training of school athletes, teachers, coaches and 

officiating officials, and are engaged in intra-mural and extra-mural activities.


SECTION 1.5. Shared Governance - i) Shared governance as a principle recognizes 

that every unit in the education bureaucracy has a particular role, task, and responsibility 

inherent in the office and for which it is principally accountable for outcomes. 

ii) Democratic consultation shall be observed in the decision-making process involving 

shared goals at appropriate levels. Whenever and wherever appropriate and feasible, the 

students, as the object and subject of instruction, shall be consulted on matters that affect 

their welfare and instructional needs. Operations shall be the responsibility of the operating 

officer concerned. Feedback mechanisms shall be established to ensure coordination and 

open communication, among the central office, the regional, division offices and school 

campuses. 

iii) The principle of accountability and transparency shall be operationalized in the 

performance of functions and responsibilities at all levels. 

iv) The communication channels of field offices shall strengthen and facilitate flow of 

information and expand linkages with other government agencies, local government units 

(LGUs) and non-government organizations (NGOs) for effective governance. 

Rule II. The Secretary 

SECTION 2.1 Powers, Duties and Functions - The Secretary of the Department of 

Education shall exercise overall authority and supervision over the operations of the Department. 

In addition to his/her powers, the Secretary of the Department of Education, hereinafter 

referred to as the ìSecretaryî, shall have the authority, accountability and responsibility 

for the following: 

1) Formulating national educational policies; 

2) Formulating a national basic education plan; 

3) Promulgating national educational standards; 

4) Monitoring and assessing national learning outcomes; 

5) Undertaking national educational researches and studies; 

6) Enhancing the employment status, professional competence, welfare, working conditions 

of all personnel and executing provisions on legal services of the Department. 

7) Enhancing the total development of learners through local and national programs 

and/or projects; and 

8) Exercising disciplinary authority subject to civil service laws, rules and regulations 

and procedure. 

The Secretary of Education shall be assisted by not more than four (4) undersecretaries 

and not more than four (4) assistant secretaries and directors of bureaus, services, centers 

whose assignments, duties and responsibilities shall be governed by law. There shall be at 

least one undersecretary and one assistant secretary who shall be career executive service 

officers chosen from among the staff of the Department. The powers, duties and functions of 

the undersecretary and the assistant secretary as provided under Chapter 2, Book IV of the 

Administrative Code of 1987 are herein restated and adopted, for providing services to the 

Department.

284 


Rule III. Regional Director 

SECTION 3.1 The Regional Director - There shall be as many regional offices as may 

be provided by law. Each regional office shall have a director, an assistant director and 

office staff for programs promotion and support, planning, administrative, legal and fiscal 

services. 

SECTION 3.2 Authority, Accountability and Responsibility of the Regional Director - 

Consistent with the national educational policies, plans and standards, the regional director 

shall have authority, accountability and responsibility for the following: 

1) Defining a regional educational policy framework which reflects the values, needs 

and expectations of the communities they serve; 

2) Developing a regional basic education plan; 

3) Developing regional educational standards with a view towards benchmarking for 

international competitiveness; 

4) Monitoring, evaluating and assessing regional learning outcomes; 

5) Undertaking research projects and developing and managing regionwide projects 

which may be funded through official development assistance and/or funding agencies; 

6) Ensuring strict compliance with prescribed national criteria for the recruitment, 

selection and training of all staff in the region and divisions; 

7) Formulating in coordination with the regional development council, the budget, including 

utilization of fiscal resources, based on the identified priorities in the implementation 

of the regional educational plan which shall take into account the educational plans of the 

divisions and districts/schools; 

8) Determining the organizational structure of the divisions and districts and approving 

the proposed staffing pattern of all employees in the divisions and districts; 

9) Hiring, placing and evaluating all employees in the regional office, except for the 

position of assistant director; 

10) Evaluating all schools division superintendents and assistant division superintendent 

in the region; 

11) Planning and managing the effective and efficient use of all personnel, physical 

and fiscal resources of the regional office, development and establishment of procedures in 

monitoring and supervision of divisions/schools physical and fiscal resources, including 

professional staff development; 

12) Managing the database and management information system of the region; 

13) Approving the establishment of public and private elementary and secondary schools 

and learning centers, subject to the set of standards and guidelines formulated by the Secretary 

of Education for this purpose;


14) Performing oversight functions in the implementation of laws, policies, programs, 

rules and regulations within the responsibility of the Department of Education in the region; 

and 

15) Performing such other functions as may be assigned by the Secretary. 

SECTION 3.3 Appointing and Disciplinary Authority of the Regional Directors - The 

regional director shall exercise appointing authority over all the employees in the regional 

office, except the assistant regional director subject to the civil service laws, rules and regulations, 

and the policies and guidelines to be issued by the Secretary of Education on the 

matter. 

The regional director likewise shall have disciplinary authority over the aforesaid personnel. 

Such exercises of disciplinary authority shall be subject to the civil service laws, rules 

and regulations, and procedure, and guidelines to be issued by the Secretary of Education. 

Rule IV. The Schools Division Superintendent 

SECTION 4.1 The Schools Division Superintendent - A division shall consist of a 

province or city which shall have a schools division superintendent. There shall be at least 

one assistant schools division superintendent and office staff for programs promotion, planning, 

administrative, fiscal, legal, ancillary and other support services. 

SECTION 4.2 Authority, Accountability and Responsibility of the Schools Division 

Superintendent - Consistent with the national educational policies, plans and standards, the 

schools division superintendents shall have authority, accountability and responsibility for 


1) Developing and implementing division education development plans; 

2) Planning and managing the effective and efficient performance of all personnel, 

physical and fiscal resources of the division, including professional staff development; 

3) Hiring, placing and evaluating all division supervisors and schools district supervisors 

as well as all employees in the division, both teaching and non-teaching personnel, 

including school heads, except for the assistant division superintendents; 

4) Monitoring the utilization of funds provided by the national government and the local 

government units to the schools and learning centers; 

5) Ensuring compliance of quality standards for basic education programs and for this 

purpose strengthening the role of division supervisors as subject area specialists; 

6) Promoting awareness of and adherence by all schools and learning centers for 

accreditation standards prescribed by the Secretary of Education; 

7) Supervising the operations of all public and private elementary, secondary and 

integrated schools, and learning centers; and

286 


8) Performing such other functions as may be assigned by the Secretary and/or 

Regional Director. 

SECTION 4.3 Appointing and Disciplinary Authority of the Schools Division Superintendent 

- The schools division superintendent shall appoint the division supervisors and 

school district supervisors as well as all employees in the division, both teaching and nonteaching 

personnel, including school heads, except for the assistant schools division superintendent, 

subject to the civil service laws, rules and regulations, and the policies and guidelines 

to be issued by the Secretary of Education for the purpose. 

The schools division superintendent shall have disciplinary authority only over the non- 

-teaching personnel under his jurisdiction. 

Such exercise of disciplinary authority by the schools division superintendent over the 

non-teaching personnel shall be subject to the civil service laws, rules and regulations, and 

procedures and guidelines to be issued by the Secretary of Education relative to this matter. 

The Regional Director shall continue exercising disciplinary authority over the teaching 

personnel insofar as the latter are covered by specific and exclusive disciplinary provisions 

under the Magna Carta for Public School Teachers (R.A. No. 4670). 

Rule V. The Schools District Supervisor 

SECTION 5.1 The Schools District Supervisor - A school district shall have a school 

district supervisor and office staff for program promotion. 

The schools district supervisor shall primarily perform staff functions and shall not 

exercise administrative supervision over school principals, unless specifically authorized by 

the proper authorities. The main focus of his/her functions shall be instructional and curricula 

supervision aimed at raising academic standards at the school level. 

The schools district supervisor shall be specifically responsible for: 

1) Providing professional and instructional advice and support to the school heads and 

teachers/facilitators of schools and learning centers in the district or cluster thereof; 

2) Curricula supervision; and 

3) Performing such other functions as may be assigned by the Secretary, Regional 

Directors and Schools Division Superintendents where they belong. 

The schools district supervisor being mentioned in this Section shall refer to a public 

schools district supervisor. 

SECTION 5.2 The School District - A school district already existing at the time of the 

passage of this Act shall be maintained. However, an additional school district may be established 

by the regional director based on criteria set by the Secretary and on the recommendation 

of the schools division superintendent. For this purpose, the Secretary of Education 

shall set standards and formulate criteria as basis of the Regional Director in the establishment 

of an additional school district.


Rule VI. The School Head 

SECTION 6.1 The School Head - There shall be a school head for all public elementary 

schools and public high schools or a cluster thereof. 

The establishment of integrated schools from existing public elementary and public 

high school shall be encouraged, subject to the guidelines that will be issued for the purpose 

by the Secretary of Education. 

The school head, who may be assisted by an assistant school head, shall be both an 

instructional leader and administrative manager. The school head shall form a team with the 

school teachers/learning facilitators for delivery of quality educational programs, projects 

and services. A core of non-teaching staff shall handle the schoolís administrative, fiscal and 

auxilliary services. 

SECTION 6.2 Authority, Accountability and Responsibility of the School Head - Consistent 

with the law, national educational policies, plans and standards, the school heads shall 

have authority, accountability and responsibility for the following: 

1) Setting the mission, vision, goals and objectives of the school; 

2) Creating an environment within the school that is conducive to teaching and learning; 

3) Implementing, monitoring and assessing the school curriculum and being accountable for 

higher learning outcomes; 

4) Developing the school education program and school improvement plan; 

5) Offering educational programs, projects and services which provide equitable opportunities 

for all learners in the community; 

6) Introducing new and innovative modes of instruction to achieve higher learning outcomes; 

7) Administering and managing all personnel, physical and fiscal resources of the school; 

8) Recommending the staffing complement of the school based on its needs; 

9) Encouraging and enhancing staff development; 

10) Establishing school and community networks and encouraging the active participation of 

teacher organizations, non-academic personnel of public schools, and parent-teacherscommunity 

associations; 

11) Accepting donations, gifts, bequests and grants in accordance with existing laws and 

policy of the Department for the purpose of upgrading teachers/learning facilitatorsí competencies, 

improving and expanding school facilities and providing instructional materials and 

equipment. Such donations or grants must be reported to the division superintendents; and 

12) Performing such other functions as may be assigned by the Secretary, Regional Director 

and Schools Divisions Superintendents where they belong.

288 


Rule VII. Organizational Support 

SECTION 7.1. Organizational Structure and Staffing Pattern - The existing organizational 

structure or set-up of the Department of Education for programs promotion and support, 

planning, administrative, fiscal, legal, ancilliary and other support services shall be 

maintained at the national, regional, division and school level. 

However, in order to ensure their consistency with the mandate of the Department of 

Education pursuant to this Act, the national education policies, plans and standards, the 

Secretary of Education shall direct the conduct of review and evaluation of the present 

organizational structure and staffing pattern at all levels. 

The result of the evaluation and findings may be the basis of the Secretary of Education 

to recommend changes and modifications in the present organizational structure and 

staffing pattern with the appropriate authorities, subject to pertinent provisions of laws, rules 

and regulations on the matter. 

SECTION 7.2 Review and Rationalization of the Organizational Structure and Staffing 

Pattern - For an efficient and effective management of the school in the region, the 

Secretary shall task the Regional Director to: 

a. Review and rationalize the existing organizational structure and staffing pattern of the 

different organizational units in the regional office, division office, district office and school 

for recommendation on their possible modification or change to the Secretary of Education 

and the Department of Budget and Management (DBM) within a reasonable period of time 

which must be not later than sixty (60) days from the effectivity of this implementing rules 

and regulations; 

b. Study on the specific delineation of roles and responsibilities between and among district/ 

division/regional supervisors. The result of said study shall be submitted within a reasonable 

period of time to the Department of Budget and Management as the basis for a possible 

change in their position titles, classification, and salary grades. 

Rule VIII. Equitable, Direct and Immediate Release of Resources to the Field Offices 

SECTION 8.1 Equitable, Direct and Immediate Release of Resources to the Field 

Offices - In line with the decentralization of fiscal management to the level of field offices, 

the Secretary of Education is tasked to: 

a.Rationalize the allocation and distribution of the resources provided by the national government 

for the field offices. In this regard, the Secretary of Education shall formulate an 

allocation system, using among other factors, the uniqueness of the working conditions of 

the teaching service in the locality, to equitably distribute resources to the field offices. 

b. Establish and develop a procedure to directly and immediately release to the regional and 

field offices (elementary school, secondary school and schools division) all appropriations 

and resources intended for them by the national government which may include but are not 

limited to personnel services, maintenance and other operating expenses (MOOE), desks, 

textbooks and repair and maintenance of school buildings.


c. Establish and develop a reporting system on the utilization of funds by the aforesaid field 

offices to the Department of Education, Central Office and the Department of Budget and 

Management. 

For this purpose, the Secretary of Education shall create a task force to work and 

coordinate closely with the Department of Budget and Management for the promulgation of 

joint guidelines on the allocation, distribution and utilization of such resources. 

The task force shall be given sixty (60) days upon the effectivity of this implementing 

rules and regulations to submit the final draft of the joint guidelines to the Secretaries of 

Education and Department of Budget and Management for their approval. 

Rule IX. Adoption of Personnel Policies, Rules and Regulations 

to Suit the Requirement and Uniqueness of the Teaching Service 

SECTION 9.1 Personnel Policies, Rules and Regulations for the Teaching Service - 

The Secretary of Education shall ensure the adoption, promugation and implementation of 

personnel policies, rules and regulations that will best meet the requirement, and the uniqueness 

of the working conditions of the teaching service in the locality. 

Towards this end, he/she is mandated to: 

a. Review and evaluate the existing personnel policies, rules and regulations issued and 

implemented by the Department of Education affecting recruitment, selection, hiring, appointment, 

promotion, deployment, dismissal and retirement. 

b. Based on the result of the evaluation and findings, in coordination and in consultation with 

the Civil Service Commission and other government agencies concerned, adopt and promulgate 

personnel policies, rules and regulations regarding the abovementioned areas that will 

serve best the interest of the teaching service. 

Rule X. Issuance of the Rules and Regulations That Will Govern the Utilization of 

Resources of the Field Offices 

SECTION 10.1 Support and Assistance of the Commission on Audit - The Secretary 

of Education shall seek the support and assistance of the chairman of the Commission on 

Audit (COA) in order that the aforesaid Commission may issue audit rules and regulations 

that will grant greater flexibility to the field offices on the utilization and disposition of their 

available resources in the discharge of their mandate and functions as well as the liquidation 

of advances, recording and reporting thereof. 

The Secretary of Education shall recommend to the Commission on Audit (COA) the 

necessary audit rules and regulations that will govern the utilization of all available resources 

taking into account the following: 

a. Different characteristics and distinct features of the field offices. 

b. Organizational set-up in the field office. 

c. Nature of the operations of the schools and learning centers.

290 


Rule XI. Recruitment, Selection and Appointment 

SECTION 11.1 Recruitment, Selection and Appointment of Officials and Employees 

in the Department of Education - Selection of the officials and employees for appointment in 

the Department of Education shall be anchored on the principles of merit, competence, 

fitness and equality and shall be open to all qualified candidates/applicants regardless of 

gender, civil status, religion, ethnicity or political affiliation. Likewise, in no case shall discrimination 

be made against applicants who are differently abled persons. 

The approved Merit Selection Plan shall be used as one of the basis for the approval of 

appointments. 

SECTION 11.2 Selection and Promotions Board for Third Level Positions - The Secretary 

of Education shall create a Selection and Promotions Board for the third level positions, 

which shall formulate and implement a system of promotion for regional directors, 

assistant regional directors, bureau/center/service directors, schools division superintendents 

and assistant schools division superintendents. 

No appointment to the positions of regional directors, assistant regional directors, bureau/service/center 

directors and schools division superintendents shall be made unless the 

appointee is a career service executive officer. 

Appointees to the positions of assistant schools division superintendent shall either be 

a Superintendent eligible or a Career Executive Service Officer (CESO). All of these officers 

preferably shall have risen from the ranks. For the purpose of this rule, the term ìCareer 

Executive Service Officerî shall include Career Executive Service Eligible (CESE). 

SECTION 11.3 Selection and Promotions Board for First and Second Level Positions 

at the Central and Regional Offices - There must be a Selection and Promotions 

Board for the first and second level positions to be created at the Central and Regional 

Offices, the composition of which shall be governed by the pertinent provisions of the civil 

service laws, rules and regulations, and policies and guidelines to be issued by the Secretary 

of Education. 

Whenever necessary the Secretary of Education may create a task force to review 

and evaluate regularly existing policies and guidelines on the following: 

a. Composition and membership of the Selection and Promotions Board at the central and 

regional levels; 

b. Selection and appointment of personnel at the central and regional levels; and 

c. On other matters relative to selection and appointment of personnel. 

The said task force shall recommend to the Secretary of Education within a reasonable 

period of time which shall not be more than sixty (60) days from the effectivity of this 

implementing rules and regulations, the necessary changes and revision of policies, procedures, 

and issuances pertaining to the above matters.


SECTION 11.4 Schools Division Selection/Promotions Board - There must also be 

created a Division Selection/Promotionís Board at the provincial and city levels, the composition 

and membership of which shall be governed by the pertinent provisions of the civil 

service laws, rules and regulations, and policies and guidelines to be issued by the Secretary 

of Education. The aforesaid board shall formulate and implement a system of promotion 

for the teaching and non-teaching staff at the division, district and school levels. Whenever 

necessary, the Secretary may direct the creation of a task force which shall compose of 

staff in the division office to review and recommend to him the following: 

a. Composition and membership of the Selection and Promotions Board at the division and 

school levels; and 

b. The policies and guidelines to be issued covering selection and appointment of personnel 

at the division, district and school levels; 

c. The policies and guidelines to be promulgated covering the promotion of personnel at the 

Division District, and School levels, including the criteria to be adopted on the promotion of 

school heads which shall be based mainly on the educational qualifications, merit and performance 

of the candidates. The existing number of teachers and students in the school 

shall not be considered as one of the criteria in the promotion of school heads; and 

d. A study shall also be undertaken on the existing qualification standards, salary grades and 

benefits of the school heads, result of which shall be used as basis of the Secretary of 

Education in recommending their possible modification with the appropriate authorities. 

Such qualification standards, salary grade allocation and benefits to be adopted for the 

school heads in the public elementary, secondary and integrated schools shall be uniformed. 

Rule XII 

Alternative Learning System 

SECTION 12.1 Operationalization of Alternative Learning System - To effectively 

operationalize the alternative learning system in the elementary, secondary and special 

needs education, the Secretary shall come up with guidelines whenever necessary. 

Rule XIII 

Culture and Arts 

SECTION 13.1 Culture and Arts - The Komisyon ng Wikang Pilipino, National Historical 

Institute, Records Management and Archives Office and the National Library shall no 

longer be with the Department of Education. In view of the foregoing, the aforesaid agencies 

shall now be administratively attached to the National Commission for Culture and the Arts 

(NCCA). However, the program for school arts and culture shall remain part of the school 

curriculum. 

Rule 14.1 Abolition of the Bureau of Physical Education and School Sports 

(BPESS) 

SECTION 14.1 Transfer of Detailed Personnel, All Functions, Programs and Activities 

Related to Sports Competition - In view of the abolition of the Bureau of Physical

292 


Education and School Sports, the Secretary of Education shall immediately transfer to the 

Philippine Sports Commission (PSC) the following: 

a. Personnel of the BPESS who are presently detailed with the PSC without loss of rank, 

including the plantilla position they occupy. 

b. All functions, programs and activities of the Department of Education related to sports 

competition. 

The Secretary of Education shall assign a Department of Education official who shall 

oversee the smooth and immediate transfer of personnel, records, documents, functions, 

programs and activities to PSC. A Memorandum of Agreement (MOA) shall be prepared and 

executed by the Department of Education and Philippine Sports Commission relative to the 

term and conditions of such transfer. 

SECTION 14.2 Programs for School Sports and Physical Fitness - The program for 

school sports and physical fitness shall not be transferred to PSC but shall remain part of the 

basic education curriculum. 

SECTION 14.3 Retention of Other BPESS Personnel - BPESS personnel who are 

presently assigned at the different organizational units of the Department of Education at the 

national, regional and division level shall be retained. In this connection, the Secretary of 

Education may require the review and evaluation of their present duties and responsibilities 

and assignment for a possible modification, conversion and reclassification of their position 

commensurate to their present duties, responsibilities and assignment without loss of rank 

and reduction in pay. 

Rule XV 


SECTION 15.1 Separability Clause - If for any reason, any portion or provision of 

these Rules shall be declared illegal or unconstitutional, other parts or provisions hereof 

which are not affected thereby shall continue to be in full force and effect. 

SECTION 15.2 Repealing Clause - All rules and regulations, part or parts thereof, 

issued by the Department of Education which are inconsistent with the provisions of these 

Rules are hereby repealed or modified accordingly. 

SECTION 15.3 Effectivity - These Rules shall take effect immediately after the required 

publication. 



(SGD.) EDILBERTO C. DE JESUS 

Secretary 

--o0o--



DepEd Order No. 56, s. 2002 

Registration Fee for Walk-In Examination in the PEPT * 




(SGD.) JUAN MIGUEL M. LUZ 


--o0o-- 

DepEd Order No. 59, s. 2002 

Rules and Regulations on the Operation of Private Preschools 

1. The recognition of the importance of preschool education in the development of children 

has brought about the establishment of a large number of preschool programs in the Philippines. 

2. To safeguard and ensure the rights of Filipino children to quality education within reasonable 

cost, it is imperative that guidelines on the operation of preschools, which include but 

are not limited to the tuition fees and other fees be enforced. Further, the requirements in the 

prior increase in tuition fees per DECS Order No. 12, s. 1997 have not been fully observed 

to the detriment of both parents and pupils. 

3. In view thereof, effective this school year 2002-2003, the Department of Education shall 

reiterate and assert its authority as stipulated in Education Act of 1982 to regulate the 

operation of preschools in the country. 

- DECS Order No. 107, s. 1989 re Guidelines on the Organization and Operation 

of Preschools, specifically on the physical environment requirement will be strictly 

enforced. 

- Application for permit of new schools must include information on the initial/ 

basic tuition fees and miscellaneous fees to be charged. 

- Schools that have been operating for 2 years or more without permit should stop 

their operation. 

- Regional Offices shall publish in leading newspapers the list of registered preschools 

on or before April of each shool year.

294 


- Established schools must update the Division/Regional offices on their existing 

tuition and miscellaneous fees yearly. 

- Schools should submit to the Regional Offices accomplished application form 

for the tuition fee increase together with minutes of meeting with parents and 

agreements made. 

- Regional Directors are also empowered to recommend limits on the tuition fees 

increase based on existing laws and guidelines subject to the control and supervision 

of the Secretary. 

- Regional Offices should form a fact-finding committee which includes supervisors 

and legal officers to conduct a dialogue/investigation on any schoolís violation 

of the Departmentís policy on exorbitant tuition and other fees charged. The 

committee must also recommend to the Secretary closure of preschools which 

violate the rules on the establishment of schools. 

- Regional Offices are required to designate a private school supervisor who will 

closely supervise and monitor preschools with or without permit. 

- Report on the monitoring and supervision must be submitted to the Bureau of 

Elementary Education, this Department. 

4. Immediate dissemination and implementation of this Order is required. 





Secretary 

--o0o-- 

DepEd Order No. 4, s. 2003 

Overpayment of Retiring Teachers* 





Secretary 

--o0o--


DepEd Memorandum No. 46, s. 2003 

Temporary Lifting of the Moratorium On New Loans 

for Teachers and DepEd Non-Teaching Personnel 

1. In consultation with a number of teacher associations and recognizing the need of teachers 

to pay for end-of-year tuition, dues and other related expenses including graduation, the 

Department is temporarily lifting the moratorium on new loans that can be accommodated 

through the automatic payroll deduction system (APDS). The Department will allow accredited 

lending institutions to enter into new loans with teachers for a limited two-week period 

from 15-28 February 2003. Such new loans will be accommodated in the APDS without 

prejudice to the review and re-accreditation program now under way. 

2. The period of 15-28 February 2003 is firmly established as the time when teachers need 

to pay their tuition requirements and other related school expenses. Hence, the accommodation. 

The moratorium, however, will automatically resume on March 1 up through the end of 

the re-accreditation period (which will be announced formally and in writing to each lending 

institution) 

3. In keeping with the re-accreditation guidelines, lending institutions are to submit the new 

promissory notes and proper ìAuthorities to Deductî to the Office of the Undersecretary, 

Finance and Administration by March 4, 2003. 

4. In addition, please note the following clarifications for everyoneís guidance: 

a. During the period of review and re-accreditation, salary deductions will continue 

on current teacher loans and these will be remitted monthly to the lending 

institutions. 

b. The above review and re-accreditation program (and the moratorium) is limited 

to new salary loans only. Insurance premia and other mutual assistance programs 

of teacher and other organizations will be the subject of a separate review 

and re-accreditation program in the near future. Until such time, there is no 

moratorium on new insurance and MAS packages for teachers. This can continue 

as in the past. 

5. Immediate and wide dissemination of this Memorandum is desired. 

Adopted: 14 Feb. 2003 


Secretary

296 


DEPARTMENT OF ENERGY 


Memorandum Circular No. 2002-12-001 

Implementing the Clean Air Act Gasoline Specification for 2003 

Pursuant to the provisions of Republic Act No. 8749, otherwise known as the Philippine 

Clean Air Act (CAA) for 1999, particularly the mandated reformulation of gasoline under 

Section 26 (a) thereof which requires that beginning January 1, 2003 the aromatics and 

benzene content in gasoline should be reduced to 35% and 2% (by volume), respectively, 

the Department of Energy (DOE) hereby adopts the following guidelines implementing the 

same: 

1. These guidelines shall apply to all persons, whether natural or juridical, engaged in the 

manufacture, importation, storage, distribution, supply, marketing and/or selling of gasoline 

including, without limitation, oil companies, refineries, importers, blenders, bulk marketers, 

suppliers and retailers. 

2. Beginning January 1, 2003, only gasoline fuel containing a maximum aromatics and 

benzene content of 35% and 2% (by volume), respectively, may be manufactured, imported, 

sold, offered for sale, dispensed, transported or introduced into commerce in the Philippines. 

3. Upon the effectivity of this Memorandum Circular, all persons engaged in the importation 

of gasoline and/or gasoline blending components shall submit to the DOE, as part of the 

reportorial requirements under Section 7 (b) of DOE Memorandum Circular No. 98-03-004 

implementing Republic Act No. 8479, a Certificate of Quality (COQ) showing aromatics and 

benzene content, along with all the other properties listed in the Philippine National Standard 

for gasoline, with the corresponding values resulting from the prescribed test methods. 

4. The DOE shall monitor all activities being undertaken and the quality of gasoline being sold 

by all persons at their refineries, bulk plants, terminals, depots, tank trucks and gasoline 

stations/retail outlets nationwide to ensure the effective implementation of the new gasoline 

specifications required under the CAA. To monitor aromatics and benzene, the DOE shall, 

among others, conduct the random sampling and testing of gasoline secured from these oil 

facilities. 

5. All persons covered by this Memorandum Circular are required to provide the prescribed 

sampling bottles (Annex) at the aforesaid facilities for use in retaining duplicate gasoline 

samples taken in the course of inspection made by the DOE. 

6. Failure to comply with the provisions of this Memorandum Circular shall subject the violator 

to the corresponding sanctions imposed by appropriate laws, DOE rules and regulations and 

the CAA.


This Memorandum Circular shall take effect upon publication in any newspaper of 




(SGD.) VINCENT S. PEREZ 

Secretary 

--o0o-- 

Department Circular No. DC-2003-01-001 

Guidelines Implementing the Minimum Inventory Requirements 

of Oil Companies and Bulk Suppliers as Provided 

Under Executive Order No. 134 

Pursuant to Executive Order No. 134 issued by the President of the Republic of the 

Philippines on 14 October 2002, Republic Act No. 7638, otherwise known as an ìAct-Creating 

the Department of Energyî and Republic Act No. 8479, otherwise known as the Downstream 

Oil Industry Deregulation Act of 1998î , the Department of Energy hereby adopts the 

following guidelines to implement the minimum inventory requirement of all Oil Companies 

and Bulk Suppliers operating in the country, to ensure a continuous, adequate and stable 

supply of Petroleum Crude Oil and Products in cases where domestic and international 

events threaten or restrict the supply of Petroleum Crude Oil and Products to the Philippines 

such as, but not limited to, terrorist attacks, armed conflict in the Middle East and in other 

regions from which the Philippines draws or transits its supply of Petroleum Crude Oil and 

Products, and other similar events. 

Article I - General Provisions 

SECTION 1. Title - These guidelines shall be known as the ìImplementing Guidelines 

for the Minimum Inventory Requirements of Petroleum of Oil Companies and Bulk Suppliersî 

and shall be hereafter referred to as the ìGuidelinesî 

SECTION 2. Scope and Coverage - These Guidelines shall apply to all Oil Companies 

and Bulk Suppliers engaged in any activity of the Downstream Oil Industry in the Philippines. 

SECTION 3. Definition of Terms - For purposes of these Guidelines the following 

terms shall have the following meanings: 

a. Bureau refers to the Energy Industry Administration Bureau of the Department of Energy 

or its successor; 

b. Bulk plant/terminal/depot refers to an intermediate distribution facility where delivery of 

Petroleum Products to and from the facility is undertaken by tank trucks, tankers/barges, 

pipes and other modes of transport in large quantities;

298 


c. Bulk/Sales/Supply refers to cargoes which are transported through tank trucks, tankers/ 

barges, pipes and other modes of transport in large quantities; 

d. Bulk Supplier refers to any Person engaged in the sale of Petroleum Products in bulk 

sourced through direct importation; 

e. BPS means the Bureau of Product Standards of the Department of Trade and Industry; 

f. Crude Oil refers to oil in its natural state before the same has been refined or otherwise 

treated, and excludes water, bottoms, sediments and foreign susbtances; 

g. Days Supply refers to the equivalent number of days of in-country stocks of Petroleum 

Crude Oil and Products based on the average daily sales or liftings for the past six (6) 

months; 

h. DOE refers to the Department of Energy of the Republic of the Philippines; 

i. Downstream Oil Industry refers to the business of importing, exporting, re-exporting, 

shipping, transporting, processing, refining, storing, distributing, marketing and/or selling of 

Crude Oil, gasoline, diesel, Liquefied Petroleum Gas (LPG), kerosene and other Petroleum 

Products; 

j. Liquefied Petroleum Gas or LPG refers to commercial propane gas or commercial butane 

gas or a mixture of the said two gases, with properties confoming to the specifications set by 

the BPS; 

k. Minimum Inventory Level refers to the minimum level of supply of Petroleum Crude Oil 

and Products to be stored by Oil Companies and Bulk Suppliers in their respective bulk 

plants, terminals or depots and stocks in-transit within the country; 

l. Oil Company refers to any Person who refines/manufactures/processes and/or import/ 

exports and stores, distributes and sells Petroleum Products; 

m. Person refers to any person, whether natural or juridical, who is engaged in any or a 

combination of activities in the Downstream Oil Industry; 

n. Petroleum refers to the naturally occurring mixture of compounds of hydrogen and carbon 

with a small proportion of impurities and shall include any mineral oil, petroleum gas, 

hydrogen gas, bitumen, asphalt, mineral wax and all other similar or naturally-associated 

substances, with the exception of coal, peat, bituminous shale and/or other stratified mineral 

fuel deposits; 

o. Petroleum Products refers to products formed in the course of refining crude petroleum 

through distillation, cracking, solvent refining and chemical treatment coming out as primary 

stocks from the refinery such as, but not limited to: LPG, naphtha, gasolines, solvents, 

kerosene, aviation fuels, diesel oils, fuel oils, waxes and petrolatums, asphalts, bitumens, 

coke and refinery sludges, or such refinery petroleum fractions which have not undergone 

any process or treatment as to produce separate chemically-defined compounds in a pure 

or commercially pure state and to which various substances may have been added to render


them suitable for particular uses; Provided, that the resultant product contains not less than 

fifty percent (50%) by weight of such Petroleum Products; 

p. Refiner refers to any Person who locally refines Petroleum through distillation, conversion 

and treatment thereof. 

Article II - Minimum Inventory Requirements 

SECTION 4. Application of Minimum Inventory Requirements - In cases where domestic 

and international events may threaten or restrict the supply of Petroleum Crude Oil 

and Products to the Philippines such as, but not limited to terrorist attacks, armed conflict in 

the Middle East and in other regions from which the Philippines draws or transits its Petroleum 

Crude Oil and Products supply, and other similar events, the Secretary of Energy shall 

require Oil Companies and Bulk Suppliers to maintain a minimum inventory of Petroleum 

Crude Oil and Products, to ensure the continuous, adequate and stable supply of Petroleum 

Crude Oil and Products in the country. 

SECTION 5. Minimum Inventory Level - All Oil Companies, except Refiners operating 

in the country, and Bulk Suppliers shall maintain a minimum inventory equivalent to fifteen 

(15) Days Supply of Petroleum Products, excluding LPG, which shall have to be maintained 

at seven (7) Days Supply. 

Refiners on the other hand, shall maintain a minimum inventory equivalent to thirty (30) 

Days Supply consisting of Petroleum Crude Oil and refined Petroleum Products. 

The required minimum inventories shall include Petroleum Crude Oil and product stock, 

on shore and en route to stockpoints within the country, but shall exclude importations still in 

transit to the country during the period specified in Section 7 of these Guidelines. 

SECTION 6. Product Type/Mix to be Stocked - For purposes of Section 4 of these 

Guidelines, the type and mix of Petroleum Products to be stocked may vary for each Oil 

Company and Bulk Supplier; Provided, that priority shall be given to the stockpiling of diesel 

and gasoline which are used in the transport sector, LPG for household consumption and 

fuel oil for power generation. 

SECTION 7. Commencement of Minimum Inventory Level Requirement and Duration 

of Compliance - The Minimum Inventory Level requirement shall commence upon a 

determination by the Secretary of Energy of the existence of circumstances enumerated in 

Section 4 of these Guidelines that would require its imposition. The requirement of Minimum 

Inventory Level shall continue until such time that the Secretary of Energy makes a determination 

that the circumstance/s warranting the application thereof no longer exists. The Oil 

Companies and Bulk Suppliers shall be notified in writing of the commencement and termination 

of the Minimum Inventory Level requirement. 

Article III - Monitoring 

SECTION 8. Reportorial Requirements - To ensure full compliance with E.O. 134 and 

these Guidelines, and for DOEs effective monitoring of the countryís inventory level of supply 

of Petroleum Crude Oil and Products, all Oil Companies and Bulk Suppliers, shall submit to 

the Bureau weekly reports, prepared under oath, of their inventory on a per crude and per

300 


product basis including their actual and projected importations and local purchases and 

such other matters required for compliance with these Guidelines for the duration to be 

specified by the Secretary of Energy pursuant to Section 6 of these Guidelines. 

The Bureau shall conduct, and the Oil Companies and Bulk Suppliers shall cooperate 

with, periodic inventory checks on the storage facilities, bulk plants, terminals or depots to 

reconcile actual submissions. 

Article IV - Final Provisions 

SECTION 9. Penalties - Failure to comply with the provisions of these Guidelines shall 

constitute a violation of Section 12 of Republic Act No. 8479, in relation to Section 15 of 

Republic Act No. 8479, and Section 5(c) of Republic Act No. 7638, and shall be punishable 

in accordance therewith. 

SECTION 10. Effectivity - These Guidelines shall take effect upon complete publication 


Adopted: 20 Jan. 2003. 



Secretary 

--o0o-- 

Department Circular No. DC-2003-03-002 

Providing for the Relaxation of the Minimum Inventory Requirements of 

All Oil Companies and Bulk Suppliers Operating in the Country 

WHEREAS, under the Downstream Oil Industry Deregulation Act of 1998 (RA 8479), 

in relation to the Department of Energy Act of 1992 (RA 7638), the Secretary of Energy is 

authorized to exercise such powers concomitant with the policy of ensuring continuous, 

adequate and stable supply of energy, in respect of the conservation, stockpiling and storage 

of energy resources; 

WHEREAS, Executive Order No. 134 requires the Oil Companies and Bulk Suppliers 

to maintain a sufficient minimum inventory of petroleum, for purposes of ensuring a continuous, 

adequate and stable supply of Petroleum Crude Oil and Products, in cases where 

domestic and international events threaten or restrict the supply of Petroleum Crude Oil and 

Products to the Philippines such as, but not limited to, terrorist attacks, armed conflict in the 

Middle East and in other regions from which the Philippines draws or transits its supply of 

Petroleum Crude Oil and Products, and other similar events; 

WHEREAS, Section 5 of Department Circular No. 2003-01-001, requires all Oil Companies, 

except Refiners operating in the country, and Bulk Suppliers to maintain a minimum


inventory equivalent to fifteen (15) Days Supply of Petroleum Products, excluding LPG, 

which shall be maintained at seven (7) days supply. 

WHEREAS, the same Section provides that Refiners shall maintain a minimum inventory 

equivalent to thirty (30) days supply consisting of Petroleum Crude Oil and refined 

Petroleum Products; 

WHEREAS, Section 7 of the same Circular provides for the Secretary of the Department 

of Energy to make a determination as to the commencement and duration of the 

compliance of the Minimum Inventory Level Requirement; 

WHEREAS, with the outbreak of the US-Iraq war, current crude prices in the world 

market started to soften and the country has recorded a high level of inventory of in-country 

stocks of petroleum; 

NOW, THEREFORE, the following rules are hereby promulgated, relaxing minimum 

inventory level requirement to all Oil Companies and Bulk Suppliers operating in the country. 

SECTION 1. Minimum Inventory Level - All Oil Companies, except Refiners, and Bulk 

Suppliers operating in the country, shall maintain a minimum inventory equivalent to seven 

(7) Days Supply of Petroleum Products, excluding LPG, which shall also be maintained at 

seven (7) Days Supply. 

Refiners on the other hand, shall maintain a minimum inventory equivalent to fifteen 

(15) Days Supply consisting of Petroleum Crude Oil and refined Petroleum Products. 

The required minimum inventories shall include Petroleum Crude Oil and Products 

stock, on shore and en route to stockpoints within the country, but shall exclude importations 

still in transit to the country during the period specified in Section 7 of Department Circular 

2003-01-001. 

SECTION 2. Product Type/Mix to be Stocked 

The type and mix of products to be stocked shall still be in accordance to Section 6 of 

Department Circular 2003-01-001. 

All other provisions of the same Circular, particularly Sections 7, 8 and 9 shall still be in 

effect upon effectivity of this Circular. 

SECTION 3. Effectivity - These Guidelines shall take effect upon complete publication 




Secretary

302 


DEPARTMENT OF ENVIRONMENT AND NATURAL 

RESOURCES 


DENR Administrative Order No. 2003-07 

Revocation of DENR Administrative Order 17, s. 2001 

This Order is issued pursuant to the Department of Justice (DOJ) Opinion No. 100 

dated 27 November 2002 interpreting Section 123 of Republic Act No. 8550 which reads as 

follows: 

ìSec. 123 Charting of Navigational Lanes and Delineation of Municipal Waters 

- The Department shall authorize the National Mapping and Resource 

Information Authority (NAMRIA) for the designation and charging of navigational 

lanes in fishery areas and delineation of municipal waters. The Philippine 

Coast Guard shall exercise control and supervision over such designated lanes. 

DOJ Opinion No. 100 notes that the Department referred to in Section 123 is the 

Department of Agriculture as provided for in Section 5 (15) of RA 8550. ìBy law, therefore, 

it is the Department of Agriculture that shall authorize the NAMRIA to perform the delineation 

of municipal waters. This power vested in (the DA) carries with it the authority to 

issue the guidelines,î the Secretary of Justice opined. Citing Angara vs. Electoral Commission 

(63 Phil 139) the Opinion states that ìwhere a general power is conferred or duty 

enjoined, every particular power necessary for the exercise of one or the performance of 

the other is also conferredî. 

In view of the foregoing Opinion, the DENR Administrative Order 17, series of 2001 

entitled ìGuidelines for Delineating/Delimiting Municipal Watersî is hereby revoked. 




(SGD.) ELISEA G. GOZUN 

Secretary 

--o0o-- 

DENR Administrative Order No. 2003-06 

Revocation of DENR Administrative Order No. 2000-83 

and Memorandum Circular No. 2001-05


Pursuant to Her Excellency President Gloria Macapagal-Arroyoís instruction during the 

15th Regional Development Council-Regional Peace and Order Council (RDC-RPOC) meeting 

held in Tagbiliran City on 17 July 2002, the DENR Administrative Order No. 2000-83, 

ìGuidelines for the Management and Development of Small Islands, Including its Coastal 

Areasî, as amended and Memorandum Circular No. 2001-05, prescribing the preparation 

and submission of an Island Physical Framework Plan for small island/island group, is hereby 

revoked. Likewise, the moratorium dated July 6, 1999 on the disposition and granting of any 

title, concession, permit or lease on all small islands nationwide, is hereby lifted. 

In view thereof, all applications for land titling in classified A & D lands and the issuance 

of lease/permit over public lands in small islands, whether new or renewed, or any extension 

of the same, shall now be processed in accordance with the existing administrative/operational 

procedures. The EIA system will be used to adequately address the environmental 

concerns in small islands. 


Adopted: 17 Mar. 2003 



Secretary 

--o0o-- 

Joint DENR-DAR Memorandum Circular No. 2003-01, s. 2003 

Reaffirming the Policies and Procedures Contained in the Joint DAR-DENR 

Memorandum Circular Nos. 14 and 19, Both Series of 1997, in View of the 

Extension of the Free Patent Law Under Republic Act No. 9176 

I. In view of the extension of the Free Patent Law under R.A. 9176 and the consequent 

continuation of policies on free patent as provided in the said law, the policies, instructions, 

procedures and processes enunciated in Joint DAR-DENR Memorandum Circular Nos. 14 

and 19, both series of 1997, are hereby reiterated and reaffirmed. 

II. Specifically, the criteria mentioned in paragraph II-B, Joint M.C. No. 14, series of 1997, 

for determining whether or not a specific landholding has attained the status of untitled 

private agricultural land are hereby restated as follows: 

A. Continuous occupancy and cultivation by oneself or through oneís predecessors-in-interest 

for at least thirty (30) years prior to the effectivity of R.A. 9176 on 

December 04, 2002; 

B. The land must have been classified as Alienable and Disposable for at least 

thirty (30) years prior to the effectivity of R.A. 9176; 

C. One must have paid the real estate taxes thereon; and

304 


D. There are no adverse claims on the land. 

III. Similarly, the procedure enumerated in paragraph III of the implementing guidelines, 

Joint DAR-DENR M.C. No. 19, series of 1997, are hereby restated, to wit: 

A. DAR, through its offices, shall provide DENR through its field offices, the list of 

untitled properties identified and/or documented for CARP coverage and other 

documents and data/information as may be necessary; 

B. As soon as DAR and DENR have jointly identified specific properties that may 

be covered under the Land Acquisition and Distribution (LAD) component of 

CARP, the CENRO, or RTD-LMS shall issue to DAR the certification required 

under DAR-DENR-LBP Joint Memorandum Circular No. 12, series of 1994 for 

the landholdings being covered. Thereafter, the MARO shall initiate the acquisition 

process for the landholding concerned by sending the Notice of Coverage 

(CARP Form No. 5 (a), Revised 2003) to the landowner, who shall have the right 

to select his retention area, and completes the documentation and distribution 

process; 

C. DENR, through the CENRO, PENRO or RTD, as the case may be, shall make 

available to DAR officials concerned certified copy of the following to implement 

this Circular: 

1. The cadastral survey records and/or isolated survey records including the 

list of claimants; 

2. Land classification maps; and 

3. Other documents, data and/or information. 

D. In case the landowner opts for retention, DAR shall conduct the segregation 

survey of the retention area and the subdivision of the remaining area for distribution 

and submits the survey returns to the DENR for verification and approval; 

E. DENR shall accept and process the application for Free Patent from the occupant/land 

claimant covering the retained area; and 

F. DENR shall issue the Order of Approval for the Free Patent application covering 

the retention area a copy of the same shall be a pre-requisite for the payment 

of the landownerís compensation. 

DAR shall generate the CLOAs covering the areas outside the retention area 

in accordance with the existing guidelines, registers the same with the Register of 

Deeds and distributes titles to the agrarian reform beneficiaries. 

IV. The following types of land shall not be covered by this Joint Memorandum Circular: 

A. All unclassified lands of the public domain;


B. All lands classified as inalienable, i.e. timber or forest lands, national parks, 

mineral lands, and other reservation for specific purposes; 

C. All un-surveyed lands or lands not covered by an approved plan even if classified 

as A & D for 30 years or more; and 

D. All lands classified as A & D after December 04, 1972. 

V. This Circular shall take effect immediately. 


DEPARTMENT OF HEALTH 



Secretary, DENR 

(SGD.) ROBERTO M. PAGDANGANAN 

Secretary, DAR 


Amendment to Administrative Order No. 41, s. 2001 Re: Adoption of 

Approved List of Blood Testing Reagents for Use of Blood Service Facilities 

(Text Available at Office of the National Administrative Register, U.P. Law 

Complex, Diliman, Quezon City) 

Adopted: 26 March 2002 


(SGD.) MANUEL M. DAYRIT, MD, MSC 

Secretary of Health 

óo0oó 


Guidelines for Multiple Micronutrient Supplementation for 

Pregnant Women in UNICEF CPC V Areas 


Complex, Diliman, Quezon City)

306 


Adopted: 3 Apr. 2002 




óo0oó 


Coverage/Scope and Frequency of Medical Examination of 

Overseas Contract Workers and Seafarers 

Pursuant to Administrative Order No. 176, s. 2000 dated January 23, 2001 on the 

Subject ìCoverage and Validity of Medical Examination of Overseas Contract Workers and 

Seafarersî, it is hereby amended to read as follows: 

V. Procedural Guidelines 

2. On the Coverage, Scope and Frequency of Medical Examination 

a) Coverage This shall apply to All Filipino Seafarers 

b) xxx 

c) Frequency of Medical There shall be a fitness examination to be 

Examination conducted prior to every deployment or 

service of seafarers at sea. 

All provisions of A.O. No. 176 not affected by this amendment shall continue to be in full 

force and effect. This order shall take effect 15 days after publication in a newspaper of 






óo0oó 

Administrative Order No. 100-A, s. 2002 

Revised Operational Guidelines for the Implementation 

of the Doctors to the Barrios (DTTB) Program 


Complex, Diliman, Quezon City)






óo0oó 

Administrative Order No. 100-B, s. 2002 

Operational Guidelines for the Implementation of the 

Rural Health Team Placement Program (RHTPP) 

(Text Available at Office of the National Administrative Register, U.P. law 

Complex, Diliman, Quezon City) 






óo0oó 


Schedule of Fees for Certain Services Rendered by the 

Bureau of Health Facilities and Services 






óo0oó 


Supplemental Guidelines on the Usage of 10,000 I.U. Vitamin A for 

Pregnant Women Under the Vitamin A Supplementation Program 


U.P. Law Complex, Diliman, Quezon City)

308 







óo0oó 


Batch Certification of Antibiotics 


U.P Law Center, Diliman, Quezon City) 




óo0oó 


Amendment to Administrative Order No. 33, s. 2001 re: Guidelines on 

the Accreditation of Suppliers of Medical Equipment, Parts, Accessories 

and Medical Equipment Repair Shop 

To augment the provisions of Administrative Order No. 33, s. 2001 and to better carry 

out the purposes for which the DOH-Accreditation Committee on Medical Equipment was 

created, in accordance with the policy of the Department of Health of Accrediting reputable 

companies with the capability to deliver quality goods and services at a fair price and recognizing 

their right to a fair and equal enterprise, the following amendment is hereby issued. 

Provisions 3.1, 3.2 and 4.5 of Administrative Order No. 33, s. 2001 are hereby amended 

to read as follows: 

3.1 Company Profile 

3.1.a An applicant (whether a single proprietorship, partnership or corporation) 

must be a holder of an exclusive distributorship agreement issued by 

the manufacturer/principal with the agreement notarized in the country of origin 

and authenticated by its respective Philippine Consular Office. 

3.1.b For corporations ñ The applicantís nature of business (particularly 

in the field of importing, exporting, sale and distribution of either medical, hospi-


tal, dental, laboratory, radiological equipment) must be expressly specified in the 

primary/secondary purposes of the corporation (Articles of Incorporation). 

3.1.c The applicant corporation, whether a parent company or its subsidiary/consortium, 

shall carry only a single product line (for a particular genus of 

equipment), irrespective of the various brands/specifications of the equipment, to 

avoid monopoly, collusion, agreements and schemes geared towards any direct 

or indirect circumvention of the existing guidelines, policies, purposes and directives 

of this Committee. 

3.2 Track Record 

3.2.a For new applicants ñ At least 20% of the customers/clients of the 

new applicants or its parent company, over the past two (2) years belong to the 

private sector (local and foreign). 

3.2.b For new applicants newly incorporated under the Corporation Law 

ñ The company has to await the lapse of the two (2) years requirement provided 

in provision 3.2.a. 

However, if the new applicant is a subsidiary/consortium of a parent company 

having an impeccable track record with the DOH as an accredited supplier. The 

following are the requirements: 

3.2.b.1 The entity and business operations of the mother company must 

not cease to exist, or must not be in financial distress or in the dissolution/liquidation 

stage. 

3.2.b.2 In order for the subsidiary to meet the requirement provided in 

provision 3.2.a hereof, a Board Resolution, duly acknowledged by the Corporate 

Secretary of the mother company, must be submitted resolving that the mother 

company shall be in full financial support of the subsidiary until the latter shall 

have fully complied with provision 3.2.a. 

*This requirement shall be good only for the first two (2) years of operation of the 

new subsidiary. 

4.5 Upon approval of the application and payment to the Department of Health 

of the accreditation fee of one thousand pesos (P1,000.00) per brand per category 

per year or a fraction thereof, a certificate of accreditation shall be issued. 

The certificate shall identify the specific classification of the supplier, category, 

particular brand and product/equipment carried and date of expiration of the 

exclusive distributorship agreement. This certificate shall be issued by the Committee 

for Accreditation of Medical Equipment Suppliers and Medical Equipment 

Repair Shop and shall be approved by the Undersecretary of Health, Health 

Regulation Cluster. 

All other provisions of Administrative Order No. 33, s. 2001 remains in full force and 

effect.

310 


This amendment shall take effect immediately following its publication in a newspaper 

of general circulation. 

Adopted: 2 May 2002 




óo0oó 


Management of the Construction Phase of Infrastructure 

Projects for Hospitals and Other Health Facilities 

I. Rationale 

One of the reform strategies under the Health Sector Reform Agenda for the hospital 

system is the physical development and revitalization of hospitals and other health facilities. 

This strategy demands the smooth and unobstructed implementation of infrastructure projects. 

Construction activities involve enormous influx of materials and labor. These greatly 

affect delivery of hospital care as well as overall operations of the hospital. Hence, construction 

activities should be properly guided and controlled to guarantee, most importantly, the 

protection of users, visitors, existing buildings and equipment during the period of construction. 

The National Building Code of the Philippines, Fire Code of the Philippines, the Implementing 

Rules and Regulations of Presidential Decree No. 1594, as amended in July 2000, 

stipulating the procedures for the implementation of government infrastructure projects and 

other related rules and regulations serve as bases for the issuance of these guidelines. 

II. Objective 

This Order shall prescribe guidelines for the management of infrastructure projects 

with the end-goal of ensuring the orderliness of construction activities, and the safety and 

cleanliness of institutional areas especially hospital facilities during construction phase. 

III. Coverage 

These rules and procedures shall cover all existing, on-going and future infrastructure 

projects of the DOH nationwide. 

IV. Definition of Terms 

A. Building Permit ñ A document which should be obtained first by any person, firm or 

corporation including any agency or instrumentality of the government, intending to erect,


construct, alter, repair, move, convert or demolish any building or structure or cause the 

same to be done, from the Office of the Building Official assigned in the place where the 

subject building is located or the building work is to be done. 

B. Occupancy Permit ñ A certificate issued by the Building Official within thirty (30) days 

if, after final inspection and submission of Certificate of Completion of the Project by the 

Full Time Project Supervisor, it is found that the building or structure complies with the 

National Building Code and the Fire Code of the Philippines. 

C. Project Site ñ Includes the construction area, area for temporary facilities prescribed 

herein and access to the construction area. 

D. Construction Site ñ Covers the actual area of construction work including parts of 

existing buildings or structures if the work is repair/renovation. 

E. Variation Order ñ May either be in the form of a Change Order, Extra Work Order or a 

supplemental agreement, issued to cover any increase/decrease in work quantity, including 

the introduction of new work items that are not included in the original contract, and 

reclassification of work items that are due to change of plans or specifications. 

A. Permits 

V. General Guidelines and Specific Procedures 

1. Any infrastructure project without a Building Permit from the Office of the Building Official 

shall not be allowed to be started. 

2. The Building Permit number shall be displayed at all times at the Project Site, adjacent to 

the project billboard. 

3. The project billboard indicating project title, location, name of contractor, contract amount, 

implementing agency/unit, architect/s, engineer/s, project duration, etc. shall also be displayed. 

4. An infrastructure project shall be required to secure an Occupancy Permit from the 

Office of the Building Official, and clearance from the Bureau of Fire Protection after final 

completion and prior to acceptance and turnover. 

B. Temporary Facilities 

1. The temporary facilities of contractors shall be limited to a warehouse for construction 

materials, a field office with toilet and meeting room and laborersí lounging/eating area 

(open pavilion style with toilets). The same temporary facilities should be located within the 

project site and enclosed with temporary fencing. 

2. The materials and specifications for temporary fencing include: 

a. Corrugated G.I. Roofing Sheets Ga., 26 with a minimum height of 1800 millimeters 

or six (6) feet.

312 


b. Cocolumber or formlumber for frame/bracing at the interior side 

c. Pre-painted or painted finish. 

3. No temporary housing for the contractorís staff and laborers will be constructed within the 

project site and the rest of the institutional premise. Hence, all existing temporary housing 

for contractorís staff and laborers shall be demolished as soon as possible. 

C. Security and Safety 

1. The contractors staff and laborers are not allowed to conduct any of the following activities 

within the construction site: 

a. Cooking of food and eating 

b. Smoking and drinking of alcoholic beverages during, between and after working 

hours 

c. Washing and drying of clothes 

d. Sleeping or napping 

e. Loitering especially outside the construction site and project site 

f. Urinating (Portable toilets shall be placed at the most practical locations within the 

construction site). 

2. Contractors staff and workers shall be in uniform with IDís hung around their necks at all 

times. 

3. Hard hats shall be worn at all times by staff, laborers and visitors at designated areas. 

4. A ìsari-sariî store may be provided by the contractor but they should be erected within 

the project site, away from public view and should sell only to contractorís staff and 

laborers. 

5. A temporary fencing around the project site should be retained for suspended projects 

and properly maintained during the period of suspension. 

6. An entry for contractorís staff and laborers and for construction equipment and materials 

shall be provided separated from the institutionís main entrance. 

D. Good Housekeeping Practices 

The following practices should be strictly observed by the Contractor on a daily basis: 

1. Clearing of construction site and project site of garbage, at least thirty (30) minutes prior 

to end of a work shift. 

2. Collection of debris and excess materials and hauling at designated areas. 

E. Variation Orders 

1. As a general rule, Variation Orders shall not be allowed during the construction period.


2. Any changes from the original plan may be done after the original contract period or after 

the defects liability period has lapsed. 

3. Any changes in materials will be permitted only if the alternative is stronger or more 

durable than the originally specified material and that funds for any additional cost for the 

purpose is available and certified by the institutionís budget officer. 

F. Monitoring/Evaluation Through Contractorís Performance Evaluation System 

1. As soon as possible and by virtue of separate Orders, the DOH Central Office, Centers 

for Health Development and the Hospitals shall each create a Contractorís Performance 

Evaluation System ñ Implementing Unit (CPES-IU) which will be responsible for adopting 

the guidelines set by the NEDA Infracom for contractors performance. 

2. The CPES-IU shall evaluate a contractorís performance at least twice during the construction 

period. First, when the accomplishment is almost 50% and immediately upon 

completion or when the contractor has claimed 100% completion of the project. Their 

reports shall be sent promptly to the Secretary of Health, copy furnished the National 

Center for Health Facility Development, for appropriate action and submission to the 

Construction Industry Authority of the Philippines, Department of Trade and Industry. 

3. The CPES-IU of each of the said DOH units shall be composed of the following: 

a. Unit supervisor ñ He/she shall act as the head of the unit. 

b. Technical Personnel ñ They shall assist the head in the performance of the unitís 

technical functions. (They could come from the institutionís infrastructure or 

engineering, administrative, and nursing services units and from departmental 

representatives). 

c. Clerk ñ He/she shall perform all the unitís administrative and coordinative activities. 

4. The CPES-IU shall be under the direct technical supervision of the Director III, NCHFD. 




(SGD.) MANUEL M. DAYRIT, MD, MSC. 


óo0oó 


Schedule of Fees for Certain Services Rendered by the 

Bureau of Health Facilities and Services 









óo0oó 


National Policy on Kidney Transplantation from 

Living Non-Related Donors (LNRDs) 

I. Rationale 

Republic Act No. 7170 otherwise known as the Organ Donation Act of 1991 which 

addresses the issue of brain dead cadaver donors does not include provisions for the acceptance 

and management of living organ donors. Living donor transplantation is offered as 

the preferred option for most patients with End Stage Renal Disease (ESRD) given the high 

cost of dialysis treatment. A 2-3 session per week of dialysis treatment costs P32,000- 

P54,000 per month (NKTI RedCop Registry, 2001). As a modality of treatment on a longterm 

basis, this amount is unaffordable for an average income earning Filipino. 

Ninety percent of kidney transplants in the Philippines are from living donors while only 

ten percent come from cadaver donors. Of the total living donors, twelve percent are from 

Living Non Related Donors (LNRDs). The latter are currently increasing yearly because of 

rising need for transplantation and unavailability of preferred donors coming from Living 

Related Donors (LRDs) and brain dead cadavers. It is reported by the National Kidney and 

Transplant Institute that there are an estimated 11,250 Filipinos nationwide developing ESRD 

annually (NKTI RedCop 2001 Report). It is estimated that half of these ESRD patients are 

suitable kidney transplant candidates but only five percent are actually transplanted to date 

because of insufficient organ supply and the unaffordability of the operative procedure to 

most patients. Transplantation requires a huge financial investment but it is considered as the 

preferred therapy in terms of the effect on the quality of life of the patient and its long-term 

cost. 

Advances in technology during the past decade have made transplantation from LNRDs 

comparable if not better than those coming from cadavers. Culturally, LNRDs are also becoming 

to be acceptable in the country as evidenced from a survey conducted by the 

Philippine Information Agency. Forty four percent of respondents agreed that LNRDs are 

acceptable sources of organs (Nationwide Survey on the Peopleís Knowledge and Opinions 

About Organ Donation, January 2001). 

Recent media reports on transplantation using LNRDs have highlighted the potential for 

abuse and manipulation. Both the organ vendor and potential recipient are easy and vulnerable 

targets in organ sale and brokering. Thus, there is a need for a guiding policy governing 

LNRDs to curb the reported cases of ìbackdoorî operations that defy acceptable ethical and 

medical standards in transplantation.


This Order therefore sets the general guidelines and ethical principles whereby the act 

of donation and conduct of transplantation from LNRDS shall be managed and regulated. 

This Order supports a rational, equitable, ethical and accessible renal health care program in 

the country. 

II. Coverage 

The following shall be governed by this Order: 

1. Kidney donors and recipients 

2. All health and health-related professionals and private individuals engaged or have any 

participation in the conduct of transplantation and donation. 

3. All Offices/Bureaus, including attached agencies and field offices of the Department of 

Health. 

4. All health and health-related facilities such as hospitals, clinics, laboratories, etc. 

5. Other government and non-government agencies and organizations, such as foundations 

organized to promote and support transplantation and donation programs; and, associations 

such as medical and specialty societies. 

1. Living Related Donors (LRDs) 

III. Definition of Terms 

Following legal definition, this includes first-degree consanguinity ñ i.e. parents and 

children. However, considering the cultural and close kinship relationship in the country, this 

Order extends the definition of LRDs to include: siblings, cousins, nephews, nieces, and 

other blood relatives. 

2. Living Non Related Donors (LNRDs) 

They are not related to the recipient by blood but have the willingness and intention to 

donate a kidney based on certain reasons. These donors are classified into two types: 

a. Voluntary Donors ñ They are benefactors who donate out of the kindness of their hearts. 

They are of two kinds: (a) The first kind are those who are not related by blood to the 

recipient but bear close emotional ties with him/her. Examples are: spouses, relatives by 

affinity, friends, employees or employers, colleagues, fiancÈ/fiancÈe and adoptive parents 

or children, (b) The second are those who are strangers who have no consanguine 

and direct emotional ties with the recipient but who donate out of benevolence or purely 

altruistic motivation. In both instances, gifts or tokens of appreciation are not a precondition 

or requirement for donation. 

b. Kidney Vendors ñ also known as commercial donors for the reason that they offer their 

kidneys for a valuable consideration. They may engage the services of a broker or agent. 

Payment or a promise of payment is a precondition and pre-requisite to the organ donation. 

IV. General Policy Statements 

As the mandated agency to promote and protect the health of the Filipino people, the 

Department of Health adopts the following policies and principles in the practice of kidney 

transplantation through the LNRDs:

316 


1. Living non-related donations are permitted only under Section III, 2-a of this Order. Sale 

and purchase of kidney organs by kidney vendors is prohibited. 

All health and health-related facilities and professionals shall not allow the trade of kidney 

vendors. Violators shall be penalized through cancellation of licenses and other sanctions. 

(Refer to Section VII) 

2. Kidney organ donation programs shall be guided by these principles: Equity, Justice, 

Benevolence, Nonmalifecence, Solidarity, Altruism and Volunteerism. 

3. All health and health-related facilities shall implement and adopt quality standards and 

practices in the medical and organizational management of kidney transplantation. 

4. The Department of Health (DOH) and the Philippine Health Insurance Corporation 

(Philhealth) shall enforce and monitor these health facilities through their licensing and 

accreditation rules and regulations. 

5. An Organ Donation Program (ODP) shall be created under the Department of Health to 

develop policy guidelines for a rational and equitable program of kidney organ sharing 

and exchange. A National Ethics Committee shall also be put in place to serve as a body 

that shall exercise objectivity and fairness to both donor and recipient in the resolution of 

ethical issues. 

A. Department of Health (DOH) 

V. Operational Mechanism: Roles and Functions 

The Organ Donation Program (ODP) shall be organized directly under the Center for 

Degenerative Diseases, Health Operations Cluster of the Department of Health. It shall be 

headed by a Program Manager duly designated by the Secretary of Health. It shall formulate 

policies in support of a rational, ethical, accessible and equitable renal health care program 

in the country through coordination with the National Kidney and Transplant Institute (NKTI) 

and other organizations, associations and professionals engaged in transplantation and donation 

programs and activities. 

The ODP shall serve as an advisory and recommendatory body to the Undersecretary 

or Assistant Secretary concerned in the area of policy development, program/project development 

and in matters involving kidney donation. ODP may also deal with issues pertaining 

to the donation of other solid organs except tissues (i.e. blood and cornea) as developments 

warrant. 

Specifically, the ODP shall be responsible for the: 

1. setting of guidelines or criteria for the prioritization of recipients of kidney organs from 

donors. 

2. development of systems and procedures that will allow for transparency, exchange, networking 

and collaboration with different health facilities, organizations, associations and 

professionals.


3. facilitate and promote technical assistance among professionals and health and healthrelated 

facilities involved in kidney and other organ transplantation. 

The ODP shall have an Advisory Board which shall be composed of five to seven 

members: a transplant physician/surgeon, a nephrologist, a bio-ethicist, a representative 

from the donor/recipient group and one to three other members coming from both public and 

private agencies, sectors, societies, associations and interested groups and individuals. The 

Secretary of Health shall appoint the members of this Advisory Board for a term of at most 3 

years on a staggered basis, renewable for another term. 

A National Transplant Ethics Committee (NTEC) shall also be formed. It shall formulate 

the ethical standards as an input to the operations of the Organ Donation Program. The 

NTEC shall be composed of three to five members to be appointed by the Secretary of 

Health. 

A Kidney Donor Monitoring Unit (KDMU) shall be put in place under the ODP. This 

unit shall maintain a national kidney transplant registry to include. 

a. Registry of all kidney transplants performed in the country 

b. Registry of all LNRDs 

c. Registry of all patients seeking kidney transplantation using LNRDs 

The Office of the Secretary of Health shall allocate funds on an annual basis for the 

operation of the ODP, the NTEC and the Monitoring Unit. Donations/grants/ or endowments 

can also be additional sources of funds to sustain operations of the program. 

B. Bureau of Health Facilities and Services (BHFS), DOH 

Health and health-related facilities engaged in the conduct of kidney transplantation 

shall be regulated by the Bureau of Health Facilities and Services (BHFS). BHFS shall be 

primarily responsible for the issuance or revocation of the license of health facilities engaged 

in kidney transplantation. 

To this effect, the BHFS shall upgrade its existing licensing system for licensing kidney 

transplant health facilities. Initially, it shall ensure that these health facilities meet the following 

requirements: 

a. Capability in immunosuppressive drug level monitoring studies 

b. Laboratory diagnostic capability in virology and other post immuno-suppression infection 

c. Surgical and medical expertise of medical practitioners and support staff earned through 

training, specialization, and recognition by medical specialty societies 

d. Existence or creation of these committees: Ethics Committee on Organ Donation/Transplantation, 

Organ Donors and Recipients Registry, and Organ Transplant Programs. 

e. All other minimum requirements for licensing. 

The BHFS shall regularly update these essential requirements as advances in transplantation 

technology prosper. 

The BHFS in effectively performing its functions shall regularly coordinate with the 

ODP in terms of policies, ethical standards and information updates.

318 


C. Philippine Health Insurance Corporation (Philhealth) 

In support of regulation, Philhealth shall be responsible for: 

1. Accrediting health facilities and providers that meet the accreditation requirements subject 

to the conditions stipulated in Article VIII of the National Health Insurance Act of 1995 

and other related Philhealth reimbursement guidelines and directives. 

2. Conducting utilization reviews and performance monitoring in relation not only to cost 

efficiency measures and programs but also in support of accreditation standards with the 

end-view of institutionalizing best quality clinical and medical practices in kidney transplantation. 

To effectively undertake their functions, BHFS and Philhealth shall regularly coordinate 

and synchronize their efforts to regulate health and other health-related facilities involved in 

organ transplantation. 

D. Health and Health-Related Facilities 

All health and health-related facilities engaged in kidney transplantation shall develop 

and organize programs and services in support of its development and improvement as 

required by existing DOH standards and regulations. These health and health-related facilities 

must put in place the following: 

1. An Ethics Committee that shall be primarily responsible for resolving ethical issues and 

concerns relating to the act or process of donation. They shall be guided by the minimum 

ethical standards and requirements set by the NETC. 

2. A Donors/Recipients Registry Unit shall actively coordinate and network with the Kidney 

Donor Monitoring Unit (KDMU) under the ODP. This unit shall be responsible for 

providing reports to the KDMU on a quarterly basis. The report shall include the number of 

kidney transplants performed in the hospital, lists of all LNRDs and lists of all patients 

seeking kidney transplantation using LNRDs. Failure to submit report for a specified 

period of time shall become a basis for the non-issuance of license to perform transplantation. 

The Donors/Recipients Registry Unit shall be responsible for developing a mechanism for 

a comprehensive psycho-social and economic profiling of the prospective donors. It shall 

likewise facilitate transplantation, organ exchange, as well as information/technical exchange. 

3. The Organ Transplant Unit that shall take charge of advocacy activities in renal health 

care and promotion of voluntary organ donation; conduct family education, pre-transplant 

sessions and screening; issuance of clearances; and, undertake pre and post clinical 

transplant follow-ups. 

E. Organizational Structure and Linkages 

This organizational diagram represents the linkages and coordination of the different 

offices/structures involved in LNRDs:


(Diagram available at ONAR, U.P. Law Center) 

VI. Monitoring and Evaluation 

The Undersecretary of the Health Operations Cluster shall take the lead in the conduct 

of monitoring relative to compliance to rules and regulations of all those covered in this 

Order. The Undersecretary shall call on the support of independent bodies and organizations 

involved in kidney transplantation such as medical and specialty societies, non-government 

organizations, the private sector, other professionals and the civil society in its monitoring 

activities and programs. It shall continually develop and support programs and projects towards 

achieving a world-class status for the country in renal care and transplantation. 

VII. Sanctions and Penalties 

Violations done in relation to this Order shall be dealt with according to existing licensing 

and accreditation rules and regulations of the DOH and the Philhealth. Erring health 

professionals shall also be dealt with according to the rules and regulations of the Professional 

Regulations Commission and other sanctions as may be agreed among medical and 

specialty societies and organizations in nephrology and organ transplantation. 

VIII. Repealing Clause 

Any existing provision or issuance found inconsistent with this Order shall be repealed. 

IX. Effectivity 

Specific operational guidelines shall be formulated to allow for a smooth implementation 

of this Order as these relate to the management, regulation and conduct of transplantation 

from LNRDs and all other types of donors as conditions warrant. 


Adopted: 3 June 2002 



(SGD.) MANUEL M. DAYRIT, M.D., M.SC. 


óo0oó 


National Policy on Diagnosis and Chemotherapy for Malaria 

(Text available at Office of the National Administrative Register , 


320 





óo0oó 


Waiver of Excess Fees and Charges for Philhealth Indigent 

Patients in All DOH Retained Hospitals 

Pursuant to Section 11 of Article XIII of the Constitution of the Republic of the Philippines 

which states that ì(t)he state shall adopt an integrated and comprehensive approach to 

health development which shall endeavor to make essential goods, health and other social 

services available to all the people at affordable cost xxxî and to the National Health Insurance 

Act of 1995 which seeks to provide universal health insurance and ensure affordable, 

available and accessible health care services for all citizens of the Philippines, the Department 

of Health (DOH), through its attached agency, the Philippine Health Insurance Corporation 

(PhilHealth), commits to prioritize the provision of health services to all Filipino especially 

the indigents who cannot afford such services. 

In light of the above, the DOH shall adopt as a policy the waiver of all excess fees and 

charges for all indigent patients who are enrolled under the National Health Insurance Program 

and who are admitted to DOH-retained hospitals. To effect this, all DOH-retained hospitals 

shall be governed by the following: 

1. National health insurance/medicare rates shall at all times be the basis for the billing of 

indigent members; 

2. There shall be an outright waiver of all excess billings and no charging of any kind of copayment 

for all indigent patients confined in medicare wards; 

3. Hospital pharmacies shall always ensure availability of drugs and medicines which are in 

the hospital formulary or Philippine National Drug Formulary (PNDF); 

4. Physicians shall be mandated to prescribe drugs and medicines which are in the PNDF; 

5. Ordering of diagnostics that are not available within the hospital or medical center shall be 

minimized; 

6. A referral system shall be set-up and put in place for necessary but unavailable diagnostics. 

Compliance to/enforcement of the above-mentioned measures shall ensure timely reimbursement 

by PhilHealth of all claims filed by DOH-retained hospitals for the services 

rendered to indigent members. 

All other government hospitals, particularly Local Government Unit (LGU) hospitals, are 

hereby encouraged to adopt and/or likewise comply with this directive. 

All administrative orders and other orders and issuances inconsistent hereto are hereby 

rescinded. 

This Order shall take effect immediately.


Adopted: 24 July 2002 




óo0oó 

Administrative Order No. 142, s. 2002 

Implementing Guidelines for the Full Operationalization of the 

Contract Distribution System (CDS) for DOH Procured Drugs 


Center, Diliman, Quezon City) 

Adopted: 5 Aug. 2002 




óo0oó 

Administrative Order No. 146, s. 2002 

Implementing Guidelines of the Electronic Procurement System in the 

Department of Health Central Office Using a Private Sector Partner Platform 



U.P. Law Center, Diliman, Quezon City) 




óo0oó 


Implementing Guidelines and Procedures in the Procurement and 

Requisition of Drugs and Medicines by the Department of Health 

Pursuant to Executive Order No. 49 Dated January 21, 1993

322 








óo0oó 


Revised Guidelines on Management of Animal Bite Patients 

I. Rationale 

The National Objectives for Health 1999-2004 states that rabies is a public health problem 

in the Philippines. Approximately 300 to 600 Filipinos die of rabies every year. Indeed, 

rabies is a fatal disease particularly in developing countries where animal immunization and 

dog control measures are inadequate. In view of the 100% case fatality of human rabies, the 

prevention of rabies infection after exposure is of utmost importance. With the aim of eliminating 

rabies and declaring the Philippines rabies-free in 2020, the Department of Health in 

collaboration with other agencies has committed itself to the prevention of human deaths due 

to rabies. In support of this, the DOH, through its rabies prevention and control program, 

shall provide vaccines for post exposure treatment through the Animal Bite Treatment Centers 

to high risk exposed patients. 

II. Coverage 

To ensure uniformity in the management of animal bite patients, government doctors at 

all levels as well as private practitioners in the country are hereby advised to follow these 

guidelines. 

III. General Policies 

A. The new anti-rabies management policy as prescribed herein and its implementation shall 

be subject to continuing review and evaluation by technical experts; 

B. Advocacy, training of health workers have to be conducted, systems need to be in place 

and funding requirements need to be secured prior to the full implementation of this 

policy; and 

C. Support from and collaboration among government, non-government and private organizations 

shall be a necessary requisite for its successful implementation. 

IV. Program Policies


A. Management of Potential Rabies Exposure 

1. There are three (3) categories of exposure to rabid animal or to animal suspected to be 

rabid. Each of the three categories has a corresponding management of potential rabies 

exposure. (Annex A*) 

B. Immunization 

1. Active Immunization 

a) Vaccine is administered to induce antibody and T-cell production in order to neutralize 

the rabies virus in the body. It induces an active immune response (in 7-10 days 

after vaccination) and may persist for one year or more. 

b) The types of anti-rabies vaccine available in the Philippines: (a) Purified Free Cell 

Rabies Vaccine (PVRV) ñ 0.5 ml/vial; (b) Purified Duck Embryo Vaccine (PDEV) ñ 1.0 

ml/vial; and (c) Purified Chick Embryo Cell Vaccine (PCECV) ñ 1.0 ml/vial. 

c) All vaccines are considered to be highly immunogenic and safe. For active immunization, 

any of the three vaccines may be administered either intra-muscularly or intradermally. 

2. Passive Immunization 

a) Rabies Immunoglobulin (RIG) is given in combination with anti-rabies vaccine to 

provide immediate protection to patients with Category III exposure. RIG has a half-life of 

approximately 21 days. 

b) Only rabies vaccines and RIG that have been evaluated and recognized by WHO 

and approved by BFAD should be used. National health authorities should evaluate any 

new vaccine or RIG prior to use. 

c) RIG is of two types: 

ï Human Rabies Immunoglobulin (HRIG) derived from plasma of human donors 

administered at 20 IU per kilogram body weight; and 

ï Equine Rabies Immunoglobulin (ERIG) derived from horse serum administered 

at 40 IU per kilogram body weight; 

c) Computation of RIG dosage 

ï HRIG at 20 IU/Kg. Body weight (150 IU/ML) 

50 kg. Patient x 20 iu/kg 

150 iu/ml. 

* Text Available at Office of the National Administrative Register, U.P. Law Center, Diliman, 

Quezon City

324 


= 50 kg x .0133 

= 6.7 ml. 

ï ERIG at 40 IU/kg. Body weight (200 iu/ml) 

50 kg patient x 40 iu/kg 

200 iu/ml. 

= 50 kg. X 0.20 

= 10 ml. 

d) Rabies immunoglobulin (RIG) should be given as a single dose for all Category III 

exposures 

e) RIG should be infiltrated around and into the wound as much as automatically feasible, 

even if the lesion has begun to heal. Any remaining RIG should be administered 

intramuscularly at the site distant from the site of vaccine injection. 

f) The RIG should not exceed the calculated dose as it may reduce the efficacy of the 

vaccine. If the calculated dose of RIG is sufficient to infiltrate bite wounds, it may be 

diluted with sterile saline 2 or 3 fold for thorough infiltration. 

g) RIG should be administered at the same time as the first dose of vaccine. However, 

if RIG is unavailable when the first dose of vaccine is injected, it may be given until 7 days 

after the first dose of the vaccine. This assumes that the patient received the day 3 and 7 

doses. 

h) A skin test must be performed prior to ERIG administration. Hypersensitivity to ERIG 

may not be predicted by skin test. Always be ready with adrenaline and antihistamines for 

treatment of hypersensitivity. A positive interpretation is based on an induration of 6 mm 

or more. 

C. Treatment 

1. Post-Exposure Treatment 

a. Local Wound Treatment 

a.1 Wounds should be immediately and vigorously washed and flushed with 

soap and water preferably for 10 minutes. 

a.2 Apply alcohol, tincture of iodine or any antiseptic. 

a.3 If possible, suturing of wounds should be avoided, however, if suturing is 

necessary, anti-rabies immunoglobulin should be infiltrated around and into the 

wound before suturing. 

a.4 Do not apply any ointment, cream or occlusive dressing to the bite site. 

a.5 Anti-tetanus immunization and anti-microbial may be given, if indicated.


Animal bites are considered tetanus prone wounds (Annex B*). 

b. Treatment Regimen 

b.1 2-Site Intradermal Schedule (2-2-2-0-1-1) 

ï One dose for intradermal administration is equivalent to 0.1 ml. For PVRV and 

0.2 ml for PDEV/PCECV. 

ï One dose should be given at two sites on Days 0, 3 and 7 and at one site on 

Days 30 and 90 (Annex C1*) 

ï Injections should be given on the deltoid area of each upper arm in adults, or 

in infants, at the anterolateral aspect of the thigh. 

ï The schedule should be strictly followed as it may cause treatment failure. In 

certain instances when patient fails to come on the scheduled date for his succeeding 

dose, the following rules should be followed: 

> If only 1 dose (day 0) has been given and the time lapse between the 1 st 

(day 0) and 2 nd (day 3) doses is more than one week, repeat the first dose. 

RIG should not be repeated. 

> If at least 2 doses (day 0 and 3) have been given, missed doses may be 

adjusted but the remaining doses should be given according to the original 

schedule. 

> If day 30 dose is missed, it may still be given when the patient comes. The 

succeeding dose (day 90) may be given as originally scheduled or at least 

1 month after the day 30 dose, whichever is longer. 

> If day 90 is missed, it may be given when the patient comes. 

ï A one (1) ml. insulin syringe with gauge 25 or 26 needle should be used for 

intradermal injection. 

ï Vaccine should be stored within 4 0C and 8 0C and after reconstitution should 

be used within 8 hours. 

b.2 2-1-1 Intramuscular Schedule 

ï Using 2-1-1 regimen, one dose is equivalent to 1 vial of 0.5 ml. of PVRV or 1.0 

ml. of PDEV/PCECV. Two (2) doses are given intramuscularly (1M) on Day 0. 

One dose is given in the deltoid area of each upper arm, or in infants, at the 

anterolateral aspect of the thigh on Day 7 and on Day 21 (Annex C2*) 

ï Treatment schedule should be strictly followed to prevent treatment failure. In 

certain instances when a patient fails to come on the scheduled date for his 

succeeding dose, the patient need not restart treatment. The prescribed interval 

between the day he receives the injection and the date of his succeeding injections 

will be followed. 

*Text Available at Office of the National Administrative Register, U.P. Law Center, Diliman, 

Quezon City.

326 


ï The 2-1-1 regimen induces an early antibody response. However, it should be 

used in combination with rabies immunoglobulin for Category III exposure. 

ï If dog is alive and healthy after the 14-day observation period, discontinue the 

last dose. 

ï The 2-1-1 IM regimen should be considered when RIG is not available. The 

patient must be informed that this is not the optimum regimen for Category III 

exposures. 

b.3 Standard Intramuscular Schedule 

ï Using the standard IM regimen, one dose is equivalent to 1 vial of 0.5 ml of 

PVRV or 1.0 ml of PDEV/PCECV. One (1) dose is given intramuscularly (IM) on 

days 0, 3, 7, 14 and 28 (Annex C3*) 

ï Vaccines should be given on the deltoid muscle in adults and the anterolateral 

thigh in infants. 

ï Treatment schedule should be strictly followed to prevent treatment failure. In 

certain instances when a patient fails to come on the scheduled date for his 

succeeding dose, the patient need not restart treatment. The prescribed interval 

between the day he receives the injection and the date of his succeeding injections 

will be followed. 

b.4 8-site Intradermal Schedule 

ï Using the 8-site intradermal regimen, one dose is equivalent to 0.1 ml of PCECV. 

Eight (8) doses are given intradermal (ID) on day 0, four (4) doses on day 7, and 

one (1) dose on days 30 and 90. (Annex C4*) 

ï The vaccine should be given at the following sites: 

> day 0 ñ 2 injections each on the deltoid muscles, anterolateral thigh, lower 

quadrant of the abdomen and suprascapular region (back). 

> day 7 ñ 2 injections each on the deltoid muscles, anterolateral thigh 

> day 30 ñ 1 injection on the deltoid 

> day 90 ñ 1 injection on the deltoid 

ï The 8-site ID regimen should be considered when RIG is not available. The 

patient must be informed that this is not the optimum regimen for Category III 

exposures. 

c. Post-Exposure Treatment under Special Conditions 

1. Pregnancy and infancy are NOT contraindications to treatment with purified cell 

culture vaccines (PVRV, PDEV, PCEC) 

*Text Available at Office of the National Administrative Register, U.P. Law Center, Diliman, 

Quezon City.


2. Avoid chloroquine, anti-epileptic drugs, systemic steroids and heavy alcohol consumption 

during rabies immunization as they may interfere with the immune response. If 

this cannot be avoided, the standard IM regimen should be used. 

3. Immuno compromised individuals (such as those with HIV infection, cancer/transplant 

patients on immunosuppressive therapy, etc.) should be given vaccine using standard 

IM regimen and RIG for both Category II and III exposures. 

4. Exposed persons who present for evaluation or treatment weeks or months after the 

bite should be treated as if exposure has occurred recently. However, if the biting animal 

has remained healthy and alive until 14 days after the bite, no treatment is needed. 

5. Bites by rodents, rabbits and domestic animals other than dogs and cats do not 

required rabies post-exposure treatment unless the animal is proven rabid. Anti-tetanus 

prophylaxis should be given. 

6. Patients bitten by monkeys and other wild animals should be managed similarly as 

patients bitten by dogs and cats. 

d. Post-Exposure Treatment of Previously Immunized Animal Bite Patients 

ï Local wound treatment should always be carried out. 

ï Persons with a second exposure after having previously received complete 

pre-exposure prophylaxis or post-exposure treatment (PET) with tissue culture 

vaccine should be vaccinated as follows: 

Give: 

a) < than 1 month no booster dose 

b) 1 ñ 3 years two booster doses (D0, D3) 

c) > than 3 years another full course of active immunization 

ï Booster doses may be given intradermally at 0.1 ml for PVRV or 0.2 ml for 

PDEV/PCECV or intramuscularly at 1 vial of PVRV, PDEV or PCECV. There is 

no need to give rabies immunoglobulin. 

2. Pre-Exposure Prophylaxis 

a. Prophylaxis immunization is recommended to individuals at high risk of exposure to rabies 

such as personnel in rabies diagnostic laboratories, veterinarians, animal handlers, 

and others directly involved in rabies control. 

b. One dose is 0.1 ml for all vaccine types given intradermally (ID) or 1 vial of 0.5 ml for 

PVRV of 1 vial of PDEV/PCEC given intramuscularly (IM) given at one site. (Annex D*) 

c. Initial pre-exposure prophylaxis consists of giving one dose of either vaccine of Days 0, 7 

and 21 or 28. One booster dose should be given every two or three years depending on 

risk of work-related exposure. 

d. One booster dose should be given every two or three years depending on risk of workrelated 

exposure. 


Quezon City.

328 


D. Laboratory Confirmation of Suspected Rabid Animal 

1) Animals for laboratory testing should be placed in a leak proof double plastic bag. This, in 

turn, is placed in a bigger container with liberal amounts of ice. If animal can be brought to 

the laboratory within 12 hours of death, no ice is needed. 

2) Do not put chemical disinfectants or preservatives such as formalin, alcohol, etc. 

3) Animals for testing should be brought to the nearest rabies diagnostic laboratories, addresses 

of which are detailed out in Annex E*. 

E. Management of the Biting Animal 

It is advisable for patients to consult a veterinarian regarding biting animal management, 

when possible by observing the following: 

1. Sudden change of behavior (from mild to vicious temperament or vice versa) 

2. Characteristic hoarse howl 

3. Watchful, apprehensive expression of the eyes, staring, blank gaze 

4. Drooling of saliva 

5. Paralysis or uncoordinated gait of handless 

6. Marked restlessness, pacing in cage 

7. If at large runs aimlessly, biting anything in its way 

8. Depraved appetite, self mutilation 

9. In some cases, lies quiescent, biting when provoked 

10. Snaps at imaginary objects 

11. Paralysis of lower jaw and tongue; inability to drink 

12. Sudden death without associated s/sx 

F. Dispensing of Human Anti-Rabies Immunizing Agent 

1. Patients needing post-exposure treatment shall be referred to the Animal Bite Treatment 

Center where free human anti-rabies immunizing agents (vaccines and RIG) are administered. 

2. The following procedures shall be observed when assessing animal bite patients and 

dispensing anti-rabies immunizing and dispensing anti-rabies immunizing agents (vaccine 

and RIG): 

a. Assess the victim thoroughly and record in the Municipal/City/Hospital Rabies Surveillance 

Form (Facility-based form). 

b. Decide whether or not to initiate treatment using the Guide for Rabies Post-Exposure 

Treatment as reference. 

c. If the situation warrants an immunization (Category II and Category III), the patient 

shall be provided the initial 2 doses of tissue culture vaccine for the 2-1-1 schedule. 

Succeeding doses shall be the responsibility of the patients. However, if intradermal regimen 

is used, complete course of active immunization is given for free. 


Quezon City.


d. If indicated, the patient shall be provided the required dose of rabies immunization 

(RIG), if available. EIG is preferably the first RIG of choice. 

e. Explain your decision to the patient with particular emphasis on adherence to treatment 

schedules, if immunization is indicated. 

f. Observe courtesy and tactfulness when dealing with patients particularly among 

individuals who need not be immunized. 

g. Give advice on the practice of Responsible Pet Ownership. 

G. Provision of Free Anti-Rabies Immunizing Agents 

a. Dispensing free anti-rabies immunizing agents shall be the sole responsibility of government 

health agencies if available. 

b. Category III patients who do not have the capacity to buy the succeeding vaccine doses 

shall be provided the vaccine requirement for free, if available. 

c. Only animal bite patients who have been properly assessed and are physically present 

can avail of the vaccine. No vaccine shall be given to non-patients. 

d. The following shall be the programís order of priority for free vaccine assistance: 

ï Patients bitten by animals found to be positive for ìnegri bodiesî regardless of 

type of bite exposure. 

ï Patients with Category III exposure 

ï Individuals exposed to human rabies patients through bite/non-bite exposure 

(mouth-to-mouth resuscitation, licking of intact mucosa such as eyes, lips and 

vulva) 

ï Patients bitten by animal that are not available for observation (stray/ 

slaughtered) 

ï Patients with Category II exposure 

e. Government veterinarian and laboratory technicians working for rabies diagnosis, prevention 

and control shall be provided free pre-exposure prophylaxis, using the intradermal 

technique of vaccine administration if available. 

V. Implementing Mechanisms 

A. Roles and Responsibilities on Vaccine Allocation and Distribution 

1. Central Office ñ The National Center for Disease Prevention and Control shall be responsible 

for the procurement of vaccine. It shall ensure that all Regional Health Offices are 

given their allocation every quarter subject to availability of vaccines. 

2. Centers for Health Development ñ The Centers for Health Development through the Director 

and the Rabies Control Program Coordinator shall be responsible for distribution of 

vaccines to the Provincial/City Health Offices.

330 


3. Local Government Units ñ The Provincial Rabies Control Coordinators shall distribute the 

vaccines to establish Animal Bite Treatment Center where free human anti-rabies immunizing 

agents (vaccines and RIG) are administered. 


Administrative Order No. 15-A, s. 1997 dated August 15, 1997 and any other order 

inconsistent herewith are hereby rescinded. 








óo0oó 


Revised Maximum Allowable Service Fees for the Provision of 

Whole Blood and Blood Components 






óo0oó 


Operational Guidelines in the Conduct of Pre-Employment 

Medical Examination of Overseas Workers and Seafarers 

I. Rationale and Objective 

These Operational Guidelines are issued in order to implement the functions of the 

Bureau of Health Facilities and Services under Executive Order 102, s. 1999 and the Memorandum 

of Agreement among the Department of Health, Department of Labor and Employment, 

and the Maritime Industry Authority. These guidelines are promulgated in order to


establish, regulate, and upgrade the standards of medical services and examination of overseas 

land-based workers and seafarers for inter-island/overseas employment to ensure that 

only occupationally qualified and those physically and medically fit workers/seafarers participate 

in the inter-island/overseas employment program. 

In view of the current advances in the medical diagnostic procedure, there is a need to 

update and further enhance the rules and regulations governing the conduct of pre-employment 

medical examination of overseas workers and seafarers in order to cope with the 

changes and development. 

II. Definition of Terms 

Accredited medical facility ñ a clinic that passed the accreditation requirements of the 

Department of Health to conduct Pre-Employment Medical Examination for land-based overseas 

workers and seafarers on inter-island and overseas employment. 

Agency ñ private recruitment entity, employment agency or manning agency duly authorized/licensed 

by the Philippine Overseas Employment Administration, and Department of 

Labor and Employment to recruit and deploy workers overseas. 

BHFS ñ acronym for Bureau of Health Facilities and Services. A regulatory body under the 

Department of Health. It shall exercise regulatory function under these rules and regulations. 

PEME ñ acronym for Pre-Employment Medical Examination. Refers to the complete medical 

examination being conducted to an applicant as a requirement for screening to determine 

whether physically and mentally fit to work abroad. 

Seafarers: 

1. Inter-island seafarers ñ sailing/working within the Philippine sea 

2. Overseas seafarers ñ sailing/working outside the country 

Secondary category laboratory ñ provides the following: 

1. Routine hematology (complete blood count or CBC) ñ includes hemoglobin mass 

concentration, erythrocyte volume fraction (hematocrit), leucocytes number 

concentration (white blood cell or WBC count) and leucocytes type number fraction 

(differential count), qualitative platelet determination. 

2. Routine urinalysis 

3. Routine fecalysis 

4. Blood typing ñ hospital based 

5. Quantitative platelet determination ñ hospital based 

6. Routine clinical chemistry ñ includes blood glucose substance concentration, blood 

urea nitrogen concentration, blood uric acid substance concentration, blood creatinine 

concentration, blood total cholesterol concentration. 

7. Cross marching ñ hospital based 

Shipping company ñ any Philippine registered shipping company engaged in local and 

foreign trade.

332 


III. Conduct of Pre-Employment Medical Examination 

The following guidelines shall govern the conduct of PEME for landbased overseas 

workers and seafarers for inter-island and overseas employment: 

1. General Guidelines 

1.1 PEME of land-based overseas workers and seafarers both for inter-island and overseas 

employment shall be conducted only by medical facilities duly accredited for the purpose. 

1.2 The PEME of overseas workers and seafarers for inter-island and overseas employment 

shall be conducted only after the agency or its principal/shipping company has interviewed, 

trade tested and finally decided to accept the applicant for employment. This acceptance 

shall be stated in a referral slip for pre-employment medical examination, duly accomplished 

stating the name of the worker. It shall be addressed to the accredited medical facility 

where the PEME shall be conducted. Any violation of the agency shall be reported to the 

Philippine Overseas Employment Administration. 

1.3 In the event the employer rejects the applicant or terminates the employment of the 

worker within a period of three (3) months from the date of examination due to medical 

reasons, the cost of repatriation shall be shouldered by the medical facility. For such event, 

the medical facility shall file with the applicantís agency or company and the DOH, an 

affidavit of undertaking to that effect. This includes major cardiac cases, pulmonary tumor, 

tuberculosis, bronhiectasis and other illnesses, the program or state of which could have 

been detected during the PEME. 

1.4 The cost of repatriation shall be taken from the cash bond posted at the DOH by the 

accredited facility. 

1.5 In cases of nonñdeployment within ninety (90) days from the date of PEME, the 

applicant shall undergo another PEME to ensure that no infections or illnesses that are 

prevailing in the land were acquired from the time of last PEME. 

2. Specific Guidelines 

2.1 Unless otherwise stated in the PEME referral slip, the pre-employment medical examinations 

shall include the following: 

ï complete history taking and physical examination 

ï chest x-ray using plates not smaller than 11î x 14î 

ï complete blood count ñ includes hemoglobin determination, hematocrit, WBC, RBC 

and differential count and platelet determination (qualitative and quantitive) 

ï blood typing 

ï routine urinalysis 

ï routine fecalysis 

ï dental examination 

ï psychometric evaluation 

ï electrocardiograph examination-if applicant is forty years old and above 

2.2 Seafarers shall undergo all of the above examinations plus visual acuity and color 

perception test specifically using Ishihara Test. Hearing and audiometric testing are also 

required for all seamen regardless of position.


2.3 Test for HIV antibodies or hepatitis B antigen or VDRL as required by country of 

destination or per principalís request shall be done. 

2.4 Medical examinations not included in the scope of the PEME, as defined above, may be 

conducted on land-based workers and seafarers upon request by the agency or its principal/shipping 

company. 

2.5 Result of the PEME shall be submitted to the referring agency or its principal/shipping 

company within seventy-two (72) hours after completion of required PEME test. In the event 

that medical findings indicate the need for certain minor ailments to be treated, the clinic 

shall advise the agency/company of the estimated period/time that said treatment shall be 

undertaken so that the same may be referred to the agency/company for his acquiescence. 

2.6 In order to standardize the PEME of workers/seafarers, the medical facility shall use the 

prescribed medical rating system as stipulated in Administrative Order No. 176, s. 2001 for 

seafarers and the Bureau Circular No. 5, s. 1990 for overseas land-based workers. Similarly, 

the prescribed Medical Examination Record Form shall be used. 

2.7 A full time psychologist registered with BHFS shall take the full responsibility of the 

psychological screening and evaluation which includes: 

2.7.1 battery of psychological tests: 

ï Draw a Person Test/or House Tree Person Test 

ï Sack Sentence Completion Test 

ï Bender Gestalt Motor Visual Test 

ï Ravenís Progressive Matrices or Purdue Non-Language Test 

2.72 An autobiography 

2.73 Comprehensive interview 

2.8 PEME Results 

2.8.1 The medical facility shall guarantee the integrity of its examination results. 

2.8.2 The PEME results shall be valid up to the end of the contract in land-based 

workers. While following the International Labor Organization guidelines, seabased workers 

shall have two years for its validity period of the PEME Certificate in a continuous sea 

based service on board. In cases of extension of contract per decision of the hiring 

vessel, a medical examination shall be conducted in the nearest port health examination 

center. Effectivity of PEME results shall be considered by all agencies in cases of transfer 

to another agency as long as it is within the prescribed validity period. 

2.8.3 The medical facility must have a Master Logbook, duly registered and stamped 

by the BHFS. 


All previous Orders inconsistent in part or in whole to this Administrative Order are 

hereby rescinded or amended accordingly.

334 






(SGD.) MANUEL M. DAYRIT, M.D., MSC. 


óo0oó 


Guidelines on Labeling and Advertisements of Cigarettes 

Administrative Order No. 10, s. 1993 dated March 22, 1993 provides for the Rules and 

Regulations on Labeling and Advertisement of Cigarettes. As stated in Administrative Order 

No. 56, s. 2001 dated 24 October 2001, the Supreme Court on 20 June 2001 ruled with 

finality the Court of Appealsí decision dated 10 February 2000 modifying the warning statement 

and its Filipino equivalent stated in Section 5 of A.O. No. 10, s. 1993. Pertinent provisions 

on labeling and advertisements are hereby stated, to wit: 

Section 5. The package of all cigarettes for sale or distribution within the 

country shall bear the statement: 

ìWARNING: CIGARETTE SMOKING IS DANGEROUS TO HEALTHî 

a. The warning statement shall be located on the lower portion of the front and 

back of the principal display panel of the cigarette pack. 

b. The warning statement shall be of black color in type-size letters of bold 

Helvetica, not less than 3 mm. On the standard size cigarette packs of about 10 

cm. Length, and shall be enclosed by an outlined box of the same black color on 

a rectangular white background not less than 25% of the area of the front and 

back principal display panels. 

c. The Filipino equivalent of the warning statement may be used, which shall 

read: 

ìBABALA: ANG PANINIGARILYO AY MAPANGANIB SA KALUSUGANî 

d. The word ìpackageî referred to here shall include the primary cigarette 

pack, the carton containing the packs (ream), the boxes containing the cartons 

as well as equivalent containers for cigars. 

e. Prototype labels containing the above warning shall be submitted to the 

Bureau of Food and Drugs for approval prior to final printing.


Section 6. Any advertisement of cigarette shall contain the warning statement 

indicated in the label. 

a. In advertisement through television, the warning statement shall appear and 

be voiced over in the same prominence and volume as the brand name at the end 

of the advertisement and shall be printed at the upper 25% portion of the advertisement, 

preferably by character generated running subtitle. The warning statement 

shall not be accompanied by music or any background sound. 

b. In advertisement through radio of any length, the warning statement shall be 

voiced over before the end of the commercial. 

c. For advertisement through print, media, billboards, neon signs and 

promotionally items as hereafter defined, the statement shall be featured prominently 

on the upper half portion of the board, advertisement space or promotional 

item. The same statement shall be in the same color and background as the brand 

name, and shall be in type-size letters not smaller than 25% of the brand name, 

dominant logo or image characters. 

d. As defined in R.A. 7394 or the Consumer Act of 1992, ìAdvertisement 

means the prepared and through any form of mass medium, subsequently applied, 

disseminated or circulated advertising matter,î and ìAdvertising means the 

business of conceptualizing, presenting, or making available to the public through 

any form of mass media, fact, data or information about the attributes, features, 

quality or availability of consumer products, services or credit.î 

For this purpose, ìany form of mass mediumî shall include, but shall not be 

limited to promotional items like pens, shirts, hats, caps and the like where promotional 

matters referring to the cigarette or smoking are printed thereon. 

e. All advertisement containing the required warning statement shall be submitted 

for approval prior to dissemination, to a Multisectoral Screening and Monitoring 

Committee on Tobacco Advertisements to be created by the Secretary of 

Health. 

Section 7. No cigarette without warning statement will be allowed in the market 

beginning July 1. 2003. 

Section 8. Advertisements of cigarettes shall contain the warning statement 

not later than May 1, 2003. 

Superimposition of the warning statement on existing advertisement may be allowed. 

Section 9. Cigarettes without the warning statement in the market beginning 

July 1, 2003 will be subject to seizure and confiscation by the Bureau of Food 

and Drugs Regulation Officers and duly authorized officers of the Department of 

Health. 

Section 10. Advertisement of cigarettes without the warning statement beginning 

May 12, 2003 will be stopped by a cease and desist order of the Director of 

Bureau of Food and Drugs.

336 


In case of failure to comply with the Cease and Desist Order, the advertiser or the 

person whose account the advertising is prepared or disseminated and the advertising 

agency, shall be made liable administratively or criminally in accordance 

with Article 95 and Article 164 of R.A. 7394, after due notice and hearing. 

Section 12. The following are acts and omissions in violation of the law and 

these implementing rules and regulations: 

1. Producing cigarettes in packages which do not bear the warning statement 

or when the layout, color or typography does not comply with these rules. 

2. Advertising cigarettes without the health warning statement or when the 

presentation of the warning statement does not comply with the requirements and 

guidelines provided by this Order. 

3. Distributing, selling or offering for sale cigarettes in a package which does 

not contain the health warning provided for by R.A. 7394. 

Section 13. After due notice and hearing, the applicable administrative penalties 

provided for under Article 164 of R.A. 7394 shall be imposed against any 

person who committed the act or omission in violation of the law and its implementing 

rules and regulations. 

Section 14. Cases of violation of Article 94 of R.A. 7394 or these implementing 

rules and regulations will be heard by the Bureau of Food and Drugs in accordance 

with R.A. 7394. 

Section 16. This Order shall take effect fifteen (15) days following the date of 

its publication in a newspaper of general circulation and supersedes all other 

issuances inconsistent therewith. 

All other provisions of A.O. No. 10, s. 1993 are still in effect and full force. 




DEPARTMENT OF LABOR AND EMPLOYMENT 


Department Order No. 33-02 

Guidelines and Operational Procedures on the 

Master Listing of Child Laborers


In the interest of the service and in line with the National Program Against Child Labor 

(NPACL or the Program) goal of making the invisible visible, the Guidelines and Operational 

Procedures on the Master Listing of Child Laborers, which concept has been approved by 

the National Child Labor Committee on March 18, 2002, is hereby issued for adoption and 

implementation by this Department, including the attached agencies, its Regional Offices 

and NPACL Partners. 

A. 

Rationale 

The strategic direction of the Program framework for 2002 to 2004 has recognized that 

one of the key characteristics of child labor is the relative invisibility of those engaged in it. 

This poses problems in identifying necessary and appropriate interventions to be provided to 

these working children, their families and communities. It must be stressed that the Philippine 

government, having ratified ILO Convention No. 182 on the Worst Forms of Child Labor, 

is committed to take immediate and effective measures to secure the prohibition of the forms 

of child labor in our country. 

The development of a database of child laborers through a systematic collection, analysis 

and evaluation of data on working children is, therefore, necessary to address the above 

concern. Master listing child laborers will enable the NPACL implementers to identify particular 

child laborers in specific areas, their immediate needs or concerns and the appropriate 

services and interventions necessary to improve the quality of life of these working children, 

their families and possibly their communities. Data gathered will also help in the assessment 

of the impact of the Program. 

B. 

Objective 

A computerized databank on child laborers benefiting from NPACL services and interventions, 

that will reflect their number socio-economic profile, geographical distribution, as 

well as the nature, extent and effect of services availed of, established by end of June 2003. 

C. Coverage 

Master listing of child laborers shall be done in all regions and in all areas or localities 

with existing/on-going activities or services aligned with the goals of the Program, regardless 

of the funding source, and shall cover each child who is: 

1. rescued/removed/pulled out from child labor, or 

2. found to be in child labor and given intervention or service to gradually remove him 

or her from such situation, or 

3. prevented from being engaged in child labor, such as those found being recruited 

for work activities not allowed for children and given intervention or service. 

For this purpose, intervention or service refers to any direct service provided by DOLE 

and its partners to the child laborer and his or her family, such as restitution, legal assistance, 

temporary shelter, educational assistance, job placement for an older sibling, livelihood 

skills training for parents, among others.

338 


D. Operational Procedures 

For DOLE Regional Offices and Attached Agenciesí centers, branches or units 

1. The DOLE Regional Office (RO) shall designate a Chief LEO to manage the master listing 

of child laborers and at least one technical staff to assist him or her. 

2. Personnel from any Division, District Office or Provincial Office of the DOLE RO who 

encounter child laborers in the course of their activities shall accomplish the attached Form 

in accordance with the accompanying instructions and send it to the designated Chief LEO 

through the Regional Director. 

3. Personnel from any DOLE Attached Agency or its Branch, Unit or Center who encounter 

the above described child laborers shall refer them or send the information to the Regional 

Office for master listing and other appropriate action. 

4. The designated RO personnel shall ensure the collection of accomplished Master Listing 

Forms, and the transfer of accurate information from the Form to the computerized databank 

through encoding. They shall also ensure that Forms accomplished and submitted by NPACL 

partners are returned to the latter after encoding, if such is the arrangement. 

5. The Regional Director shall ensure that the Master List of Child Laborers in the region as 

stored in the computerized databank will be continuously updated and made electronically 

available to the Bureau of Women and Young Workers. The RO shall report on the status of 

its Master List of the BWYW not later than every last working day of July. 

For DOLE Partners in the NPACL 

1. Partner organizations, whether government or not, implementing the Program at the local 

level, shall designate from among their ranks particular individual/s who will undertake the 

master listing activity. 

2. The designated person shall record, using Master Listing Form 1, data for each child 

laborer encountered or being serviced by his/her organization in specific localities, as may 

be gathered through performance of duties, home visitation, interview, survey or other similar 

means and activities of the organization. 

3. Program partners that use other intake forms per child laborer, as required by the needs 

of their organization and where data asked in Master Listing Form 1 can be derived, will 

submit copy of the accomplished intake form to the DOLE Regional Office. 

4. The Program partner shall submit the appropriate intake forms on per semester basis to 

the DOLE Regional Office having jurisdiction over the locality or area where the services are 

provided. If original copies are submitted, they may arrange with the DOLE Regional Office 

that the same shall be returned, after DOLE encoding, to the partner organization, for its 

ready reference and regular updating. 

For the BWYW


1. The BWYW shall develop a computerized database system on master listed child laborers 

and maintain the same for easy access to information on child laborers, in support to policy 

formulation and program development. At a later phase, the BWYW shall develop a system 

to link all the regional officesí data on master listed child laborers and have access thereon. 

2. The BWYW shall likewise consolidate data on all master listed child laborers from all 

regions, maintain the national databank and ensure that any information derived from the 

databank would be used for official and Program purposes only. 

E. 

Effectivity 

These guidelines and procedures shall take effect immediately. 




(SGD.) PATRICIA A. STO. TOMAS 

Secretary 

--o0o-- 


Donation and Grants to the DOLE 





Secretary 

--o0o-- 


Revised Guidelines on the Management of the Nine Percent 

(9%) Socio-Economic Project Fund Under Republic Act No. 6982 





Secretary 

--o0o--

340 




AMENDING THE IMPLEMENTING RULES OF BOOK V 

OF THE LABOR CODE OF THE PHILIPPINES 

ARTICLE I. The Rules Implementing Book V of the Labor Code are hereby amended 

to read as follows: 

Section 1. Definition of Terms. 

RULE I 

DEFINITION OF TERMS 

a) ìAffiliateî refers to an independent union affiliated with a federation, national union or 

a chartered local which was subsequently granted independent registration but did not 

disaffiliate from its federation, reported to the Regional Office and the Bureau in accordance 

with Rule III, Sections 6 and 7 of these Rules. 

b) ìAppealî refers to the elevation by an aggrieved party to an agency vested with appellate 

authority of any decision, resolution or order disposing the principal issues of a 

case rendered by an agency vested with original jurisdiction, undertaken by filing a 

memorandum of appeal. 

c) ìAudit Examinerî refers to an officer of the Bureau or Labor Relations Division of the 

Regional Office authorized to conduct an audit or examination of the books of accounts, 

including all funds, assets and other accountabilities of a legitimate labor organization 

and workersí association. 

d) ìBargaining Unitî refers to a group of employees sharing mutual interests within a 

given employer unit, comprised of all or less than all of the entire body of employees in 

the employer unit or any specific occupational or geographical grouping within such 

employer unit. 

e) ìBoardî refers to the National Conciliation and Mediation Board established under 

Executive Order No. 126. 

f) ìBureauî refers to the Bureau of Labor Relations. 

g) ìCancellation Proceedingsî refer to the legal process leading to the revocation of the 

legitimate status of a union or workersí association. 

h) ìCertification Electionî or ìConsent Electionî refers to the process of determining 

through secret ballot the sole and exclusive representative of the employees in an 

appropriate bargaining unit for purposes of collective bargaining or negotiation. A certification 

election is ordered by the Department, while a consent election is voluntarily 

agreed upon by the parties, with or without the intervention by the Department. 

i) ìChartered Localî refers to a labor organization in the private sector operating at the 

enterprise level that acquired legal personality through the issuance of a charter certificate 

by a duly registered federation or national union, and reported to the Regional 

Office in accordance with Rule III, Section 2-E of these Rules. 

j) ìCollective Bargaining Agreementî or ìCBAî refers to the contract between a legitimate 

labor union and the employer concerning wages, hours of work, and all other 

terms and conditions of employment in a bargaining unit. 

k) ìConciliator Mediatorî refers to an officer of the Board whose principal function is to 

assist in the settlement and disposition of labor-management disputes through concilia-


tion and preventive mediation, including the promotion and encouragement of voluntary 

approaches to labor disputes prevention and settlement. 

l) ìConsolidationî refers to the creation or formation of a new union arising from the 

unification of two or more unions. 

m) ìDeregistration of Agreementî refers to the legal process leading to the revocation of 

CBA registration. 

n) ìDepartmentî refers to the Department of Labor and Employment. 

o) ìElection Officerî refers to an officer of the Bureau or Labor Relations Division in the 

Regional Office authorized to conduct certification elections, election of union officers 

and other forms of elections and referenda in accordance with Rule XII, Sections 2-5 

of these Rules. 

p) ìElection Proceedingsî refer to the period during a certification election, consent or 

run-off election and election of union officers, starting from the opening to the closing 

of the polls, including the counting, tabulation and consolidation of votes, but excluding 

the period for the final determination of the challenged votes and the canvass thereof. 

q) ìEligible Voterî refers to a voter belonging to the appropriate bargaining unit that is the 

subject of a petition for certification election. 

r) ìEmployeeî refers to any person working for an employer. It includes one whose work 

has ceased in connection with any current labor dispute or because of any unfair labor 

practice and one who has been dismissed from work but the legality of the dismissal is 

being contested in a forum of appropriate jurisdiction. 

s) ìEmployerî refers to any person or entity who employs the services of others, one for 

whom employees work and who pays their wages or salaries. An employer includes 

any person directly or indirectly acting in the interest of an employer. It shall also refer 

to the enterprise where a labor organization operates or seeks to operate. 

t) ìExclusive Bargaining Representativeî refers to a legitimate labor union duly recognized 

or certified as the sole and exclusive bargaining representative or agent of all the 

employees in a bargaining unit. 

u) ìGrievanceî refers to any question by either the employer or the union regarding the 

interpretation or implementation of any provision of the collective bargaining agreement 

or interpretation or enforcement of company personnel policies. 

v) ìImproved Offer Ballotingî refers to a referendum by secret ballot involving union 

members on the improved offer of the employer on or before the 30th day of a strike. 

w) ìIndependent Unionî refers to a labor organization operating at the enterprise level 

that acquired legal personality through independent registration under Article 234 of the 

Labor Code and Rule III, Section 2-A of these Rules. 

x) ìInter-Union Disputeî refers to any conflict between and among legitimate labor unions 

involving representation questions for purposes of collective bargaining or to any other 

conflict or dispute between legitimate labor unions. 

y) ìInterlocutory Orderî refers to any order that does not ultimately resolve the 

main issue/s in a dispute. 

z) ìInterpleaderî refers to a proceeding brought by a party against two or more parties 

with conflicting claims, compelling the claimants to litigate between and among themselves 

their respective rights to the claim, thereby relieving the party so filing from suits 

they may otherwise bring against it. 

aa) ìInterventionî refers to a proceeding whereby a person, labor organization or entity 

not a party to a case but may be affected by a decision therein, formally moves to make 

himself/herself/itself a party thereto. 

bb) ìIntra-Union Disputeî refers to any conflict between and among union members, 

including grievances arising from any violation of the rights and conditions of member-

342 


ship, violation of or disagreement over any provision of the unionís constitution and bylaws, 

or disputes arising from chartering or affiliation of union. 

cc) ìLabor Organizationî refers to any union or association of employees in the private 

sector which exists in whole or in part for the purpose of collective bargaining, mutual 

aid, interest, cooperation, protection, or other lawful purposes. 

dd) ìLabor Relations Divisionî refers to the (1) Labor Organization and CBA Registration 

Unit and (2) Med-Arbitration Unit in the Regional Office. The Labor Organization and 

CBA Registration Unit is in charge of processing the applications for registration of 

independent unions, chartered locals, workers associations and collective bargaining 

agreements, maintaining said records and all other reports and incidents pertaining to 

labor organizations and workersí associations. The Med-Arbitration Unit conducts hearings 

and decides certification election or representation cases, inter/intra-union and 

other related labor relations disputes. 

ee) ìLegitimate Labor Organizationî refers to any labor organization in the private sector 

registered or reported with the Department in accordance with Rules III and IV of these 

Rules. 

ff) ìLegitimate Workersí Associationî refers to an association of workers organized for 

mutual aid and protection of its members or for any legitimate purpose other than 

collective bargaining registered with the Department in accordance with Rule III, Sections 

2-C and 2-D of these Rules. 

gg) ìLockoutî refers to the temporary refusal of an employer to furnish work as a result of 

a labor or industrial dispute. 

hh) ìManagerial Employeeî refers to an employee who is vested with powers or prerogatives 

to lay down and execute management policies or to hire, transfer, suspend, layoff, 

recall, discharge, assign or discipline employees. 

ii) ìMed-Arbiterî refers to an officer in the Regional Office or in the Bureau authorized to 

hear and decide representation cases, inter/intra-union disputes and other related labor 

relations disputes, except cancellation of union registration cases. 

jj) ìMergerî refers to a process where a labor organization absorbs another resulting in 

the cessation of the absorbed labor organizationís existence, and the continued existence 

of the absorbing labor organization. 

kk) ìNational Unionî or ìFederationî refers to a group of legitimate labor unions in a 

private establishment organized for collective bargaining or for dealing with employers 

concerning terms and conditions of employment for their member unions or for participating 

in the formulation of social and employment policies, standards and programs, 

registered with the Bureau in accordance with Rule III, Section 2-B of these Rules. 

ll) ìOrganized Establishmentî refers to an enterprise where there exists a recognized 

or certified sole and exclusive bargaining agent. 

mm) ìPreventive Mediation Casesî refer to labor disputes which are the subject of a 

formal or informal request for conciliation and mediation assistance sought by either or 

both parties or upon the initiative of the Board. 

nn) ìRank-and-File Employeeî refers to an employee whose functions are neither managerial 

nor supervisory in nature. 

oo) ìRegional Directorî refers to the Head of the Regional Office. 

pp) ìRegional Officeî refers to the office of the Department of Labor and Employment at 

the administrative regional level. 

qq) ìRegistrationî refers to the process of determining whether the application for registration 

of a union or workersí association and collective bargaining agreement complies 

with the documentary requirements for registration prescribed in Rules III, IV, and XVII 

of these Rules.


rr) ìRelated Labor Relations Disputeî refers to any conflict between a labor union and 

the employer or any individual, entity or group that is not a labor union or workersí 

association. 

ss) ìRun-off Electionî refers to an election between the labor unions receiving the two (2) 

highest number of votes in a certification or consent election with three (3) or more 

choices, where such a certified or consent results in none of the three (3) or more 

choices receiving the majority of the valid votes cast; provided that the total number of 

votes for all contending unions is at least fifty percent (50%) of the number of votes 

cast. 

tt) ìSecretaryî refers to the Head of the Department. 

uu) ìStrikeî refers to any temporary stoppage of work by the concerted action of employees 

as a result of a labor or industrial dispute. 

vv) ìStrike Areaî refers to the establishment, warehouses, depots, plants or offices, including 

the sites or premises used as run-away shops of the employer, as well as the 

immediate vicinity actually used by picketing strikers in moving to and fro before all 

points of entrance. 

ww) ìStrike Vote Ballotingî refers to the secret balloting undertaken by the members of the 

union in the bargaining unit concerned to determine whether or not to declare a strike 

in meetings or referenda called for that purpose. 

xx) ìSupervisory Employeeî refers to an employee who, in the interest of the employer, 

effectively recommends managerial actions and the exercise of such authority is not 

merely routinary or clerical but requires the use of independent judgment. 

yy) ìTerm of Officeî refers to the fixed period of five (5) years during which the duly 

elected officers of a labor organization discharge the functions of their office, unless a 

shorter period is stipulated in the organizationís constitution and by-laws. 

zz) ìUnionî refers to any labor organization in the private sector organized for collective 

bargaining and for other legitimate purposes. 

aaa) ìVoluntary Arbitratorî refers to any person accredited by the Board as such, or any 

person named or designated in the collective bargaining agreement by the parties to 

act as their voluntary arbitrator, or one chosen by the parties, with or without the assistance 

of the Board, pursuant to a selection procedure agreed upon in the collective 

bargaining agreement. 

bbb) ìVoluntary Recognitionî refers to the process by which a legitimate labor union is 

recognized by the employer as the exclusive bargaining representative or agent in a 

bargaining unit, reported with the Regional Office in accordance with Rule VII, Section 

2 of these Rules. 

ccc) ìWorkersí Associationî refers to an association of workers organized for the mutual 

aid and protection of its members or for any legitimate purpose other than collective 

bargaining. 

RULE II 

COVERAGE OF THE RIGHT TO SELF-ORGANIZATION 

Section 1. Policy. It is the policy of the State to promote the free and responsible 

exercise of the right to self-organization through the establishment of a simplified mechanism 

for the speedy registration of labor unions and workers associations, determination of representation 

status and resolution of inter/intra-union and other related labor relations disputes. 

Only legitimate or registered labor unions shall have the right to represent their members for 

collective bargaining and other purposes. Workersí associations shall have the right to represent 

their members for purposes other than collective bargaining.

344 


Section 2. Who may join labor unions and workersí associations. All persons 

employed in commercial, industrial and agricultural enterprises, including employees of government 

owned or controlled corporations without original charters established under the 

Corporation Code, as well as employees of religious, charitable, medical or educational 

institutions whether operating for profit or not, shall have the right to self-organization and to 

form, join or assist labor unions for purposes of collective bargaining: provided, however, 

that supervisory employees shall not be eligible for membership in a labor union of the rankand-file 

employees but may form, join or assist separate labor unions of their own. Managerial 

employees shall not be eligible to form, join or assist any labor unions for purposes of 

collective bargaining. Alien employees with valid working permits issued by the Department 

may exercise the right to self-organization and join or assist labor unions for purposes of 

collective bargaining if they are nationals of a country which grants the same or similar rights 

to Filipino workers, as certified by the Department of Foreign Affairs. 

For purposes of this section, any employee, whether employed for a definite period or 

not, shall beginning on the first day of his/her service, be eligible for membership in any 

labor organization. 

All other workers, including ambulant, intermittent and other workers, the self-employed, 

rural workers and those without any definite employers may form labor organizations for 

their mutual aid and protection and other legitimate purposes except collective bargaining. 

RULE III 

REGISTRATION OF LABOR ORGANIZATIONS 

Section 1. Where to file. Applications for registration of independent labor unions, 

chartered locals, workersí associations shall be filed with the Regional Office where the 

applicant principally operates. It shall be processed by the Labor Relations Division at the 

Regional Office in accordance with Sections 2-A, 2-C, and 2-E of this Rule. 

Applications for registration of federations, national unions or workersí associations 

operating in more than one region shall be filed with the Bureau or the Regional Offices, but 

shall be processed by the Bureau in accordance with Sections 2-B and 2-D of this Rule. 

Section 2. Requirements for application. A. The application for registration of an 

independent labor union shall be accompanied by the following documents: 

1) the name of the applicant labor union, its principal address, the name of its officers and 

their respective addresses, approximate number of employees in the bargaining unit where 

it seeks to operate, with a statement that it is not reported as a chartered local of any 

federation or national union; 

2) the minutes of the organizational meeting(s) and the list of employees who participated in 

the said meeting(s); 

3) the name of all its members comprising at least 20% of the employees in the bargaining 

unit; 

4) the annual financial reports if the applicant has been in existence for one or more years, 

unless it has not collected any amount from the members, in which case a statement to 

this effect shall be included in the application; 

5) the applicantís constitution and by-laws, minutes of its adoption or ratification, and the list 

of the members who participated in it. The list of ratifying members shall be dispensed


with where the constitution and by-laws was ratified or adopted during the organizational 

meeting. In such a case, the factual circumstances of the ratification shall be recorded in 

the minutes of the organizational meeting(s). 

B. The application for registration of federations and national unions shall be accompanied 

by the following documents: 

1) a statement indicating the name of the applicant labor union, its principal address, the 

name of its officers and their respective addresses; 

2) the minutes of the organizational meeting(s) and the list of employees who participated in 

the said meeting(s); 

3) the annual financial reports if the applicant union has been in existence for one or more 

years, unless it has not collected any amount from the members, in which case a statement 

to this effect shall be included in the application; 

4) the applicant unionís constitution and by-laws, minutes of its adoption or ratification, and 

the list of the members who participated in it. The list of ratifying members shall be 

dispensed with where the constitution and by-laws was ratified or adopted during the 

organizational meeting(s). In such a case, the factual circumstances of the ratification 

shall be recorded in the minutes of the organizational meeting(s); 

5) the resolution of affiliation of at least ten (10) legitimate labor organizations, whether 

independent unions or chartered locals, each of which must be a duly certified or recognized 

bargaining agent in the establishment where it seeks to operate; and 

6) the name and addresses of the companies where the affiliates operate and the list of all 

the members in each company involved. 

Labor organizations operating within an identified industry may also apply for registration 

as a federation or national union within the specified industry by submitting to the 

Bureau the same set of documents. 

C. The application for registration of a workersí association shall be accompanied by the 

following documents: 

1) the name of the applicant association, its principal address, the name of its officers and 

their respective addresses; 

2) the minutes of the organizational meeting(s) and the list of members who participated 

therein; 

3) the financial reports of the applicant association if it has been in existence for one or 

more years, unless it has not collected any amount from the members, in which case a 

statement to this effect shall be included in the application; 

4) the applicantís constitution and by-laws to which must be attached the names of ratifying 

members, the minutes of adoption or ratification of the constitution and by-laws and the 

date when ratification was made, unless ratification was done in the organizational 

meeting(s), in which case such fact shall be reflected in the minutes of the organizational 

meeting(s). 

D. Application for registration of a workersí association operating in more than one region 

shall be accompanied, in addition to the requirements in the preceding subsection, by a 

resolution of membership of each member association, duly approved by its board of directors.

346 


E. The report of creation of a chartered local shall be accompanied by a charter certificate 

issued by the federation or national union indicating the creation or establishment of the 

chartered local. 

Section 3. Notice of change of name of labor organizations; Where to file. The 

notice for change of name of a registered labor organization shall be filed with the Bureau or 

the Regional Office where the concerned labor organizationís certificate of registration or 

certificate of creation of a chartered local was issued. 

Section 4. Requirements for notice of change of name. The notice for change of 

name of a labor organization shall be accompanied by the following documents: 

a) proof of approval or ratification of change of name; and 

b) the amended constitution and by-laws. 

Section 5. Certificate of Registration/Certificate of Creation of Chartered Local 

for change of name. The certificate of registration and the certificate of creation of a 

chartered local issued to the labor organization for change of name shall bear the same 

registration number as the original certificate issued in its favor and shall indicate the following: 

(a) the new name of the labor organization; (b) its former name; (c) its office or business 

address; and (d) the date when the labor organization acquired legitimate personality as 

stated in its original certificate of registration/certificate of creation of chartered local. 

Section 6. Report of Affiliation with federations or national unions; Where to 

file. The report of affiliation of an independently registered labor union with a federation or 

national union shall be filed with the Regional Office that issued its certificate of registration. 

Section 7. Requirements of affiliation. The report of affiliation of independently 

registered labor unions with a federation or national union shall be accompanied by the 

following documents: 

a) resolution of the labor unionís board of directors approving the affiliation; 

b) minutes of the general membership meeting approving the affiliation; 

c) the total number of members comprising the labor union and the names of members who 

approved the affiliation; 

d) the certificate of affiliation issued by the federation in favor of the independently registered 

labor union; and 

e) written notice to the employer concerned if the affiliating union is the incumbent bargaining 

agent. 

Section 8. Notice of Merger/Consolidation of labor organizations; Where to 

file. Notice of merger or consolidation of independent labor unions, chartered locals and 

workersí associations shall be filed with and recorded by the Regional Office that issued the 

certificate of registration/certificate of creation of chartered local of either the merging or 

consolidating labor organization. Notice of merger or consolidation of federations or national 

unions shall be filed with and recorded by the Bureau. 

Section 9. Requirements of notice of merger. The notice of merger of labor 

organizations shall be accompanied by the following documents:


a) the minutes of merger convention or general membership meeting(s) of all the merging 

labor organizations, with the list of their respective members who approved the same; and 

b) the amended constitution and by-laws and minutes of its ratification, unless ratification 

transpired in the merger convention, which fact shall be indicated accordingly. 

Section 10. Certificate of Registration. The certificate of registration issued to merged 

labor organizations shall bear the registration number of one of the merging labor organizations 

as agreed upon by the parties to the merger. 

The certificate of registration shall indicate the following: (a) the new name of the 

merged labor organization; (b) the fact that it is a merger of two or more labor organizations; 

(c) the name of the labor organizations that were merged; (d) its office or business address; 

and (e) the date when each of the merging labor organizations acquired legitimate personality 

as stated in their respective original certificate of registration. 

Section 11. Requirements of notice of consolidation. The notice of consolidation of 

labor organizations shall be accompanied by the following documents: 

a) the minutes of consolidation convention of all the consolidating labor organizations, with 

the list of their respective members who approved the same; and 

b) the amended constitution and by-laws, minutes of its ratification transpired in the consolidation 

convention or in the same general membership meeting(s), which fact shall be 

indicated accordingly. 

Section 12. Certificate of Registration. The certificate of registration issued to a 

consolidated labor organization shall bear the registration number of one of the consolidating 

labor organizations as agreed upon by the parties to the consolidation. 

The certificate of registration shall indicate the following (a) the new name of the consolidated 

labor organization; (b) the fact that it is a consolidation of two or more labor 

organizations; (c) the name of the labor organizations that were consolidated; (d) its office or 

business address; and (e) the date when each of the consolidating labor organizations 

acquired legitimate personality as stated in their respective original certificates of registration. 

RULE IV 

PROVISIONS COMMON TO THE REGISTRATION OF 

LABOR ORGANIZATIONS AND WORKERS ASSOCIATION 

Section 1. Attestation requirements. The application for registration of labor unions 

and workersí associations, notice for change of name, merger, consolidation and affiliation 

including all the accompanying documents, shall be certified under oath by its Secretary or 

Treasurer, as the case may be, and attested to by its President. 

Section 2. Payment of registration fee. A labor union and workersí association shall 

be issued a certificate of registration upon payment of the prescribed registration fee. 

Section 3. Accompanying documents. One (1) original copy and two (2) duplicate 

copies of all documents accompanying the application or notice shall be submitted to the 

Regional Office or the Bureau.

348 


Section 4. Action on the application/notice. The Regional Office or the Bureau, as 

the case may be, shall act on all applications for registration or notice of change of name, 

affiliation, merger and consolidation within ten (10) days from receipt either by: (a) approving 

the application and issuing the certificate of registration/acknowledging the notice/report; 

or (b) denying the application/notice for failure of the applicant to comply with the requirements 

for registration/notice. 

Section 5. Denial of Application/Return of Notice. Where the documents supporting 

the application for registration/notice of change of name, affiliation, merger and consolidation 

are incomplete or do not contain the required certification and attestation, the Regional 

Office or the Bureau shall, within five (5) days from receipt of the application/notice, notify 

the applicant/labor organization concerned in writing of the necessary requirements and 

complete the same within thirty (30) days from receipt of notice. Where the applicant/labor 

organization concerned fails to complete the requirements within the time prescribed, the 

application for registration shall be denied, or the notice of change of name, affiliation, 

merger and consolidation returned, without prejudice to filing a new application or notice. 

Section 6. Form of Denial of Application/Return of Notice; Appeal. The notice of 

the Regional Office or the Bureau denying the application for registration/returning the notice 

of change of name, affiliation, merger or consolidation shall be in writing stating in clear 

terms the reasons for the denial or return. The denial may be appealed to the Bureau if 

denial is made by the Regional Office or to the Secretary if denial is made by the Bureau, 

within ten (10) days from receipt of such notice, on the ground of grave abuse of discretion 

or violation of these Rules. 

Section 7. Procedure on appeal. The memorandum of appeal shall be filed with the 

Regional Office or the Bureau that issued the denial/return of notice. The memorandum of 

appeal together with the complete records of the application for registration/notice of change 

of name, affiliation, merger or consolidation, shall be transmitted by the Regional Office to 

the Bureau or by the Bureau to the Office of the Secretary, within twenty-four (24) hours 

from receipt of the memorandum of appeal. 

The Bureau or the Office of the Secretary shall decide the appeal within twenty (20) 

days from receipt of the records of the case. 

Section 8. Effect of registration. The labor union or workersí association shall be 

deemed registered and vested with legal personality on the date of issuance of its certificate 

of registration or certificate of creation of chartered local. 

Such legal personality may be questioned only through an independent petition for 

cancellation of union registration in accordance with Rule XIV of these Rules, and not by 

way of collateral attack in petition for certification election proceedings under Rule VIII. 

Section 9. Effect of change of name. The change of name of a labor organization 

shall not affect its legal personality. All the rights and obligations of a labor organization under 

its old name shall continue to be exercised by the labor organization under its new name. 

Section 10. Effect of merger or consolidation. Where there is a merger of labor 

organizations, the legal existence of the absorbed labor organization(s) ceases, while the


legal existence of the absorbing labor organization subsists. All the rights, interests and 

obligations of the absorbed labor organizations are transferred to the absorbing organization. 

Where there is consolidation, the legal existence of the consolidating labor organizations 

shall cease and a new labor organization is created. The newly created labor organization 

shall acquire all the rights, interests and obligations of the consolidating labor organizations. 

RULE V 

REPORTING REQUIREMENTS OF LABOR UNIONS 

AND WORKERS ASSOCIATIONS 

Section 1. Reporting requirements. It shall be the duty of every legitimate labor 

unions and workers associations to submit to the Regional Office or the Bureau which issued 

its certificate of registration or certificate of creation of chartered local, as the case may be, 

two (2) copies of each of the following documents: 

a) any amendment to its constitution and by-laws and the minutes of adoption or ratification 

of such amendments, within thirty (30) days from its adoption or ratification; 

b) annual financial reports within thirty (30) days after the close of each fiscal year or 

calendar year; 

c) updated list of newly-elected officers, together with the appointive officers or agents who 

are entrusted with the handling of funds, within thirty (30) days after each regular or 

special election of officers, or from the occurrence of any change in the officers of 

agents of the labor organization or workers association; 

d) updated list of individual members of chartered locals, independent unions and workersí 

associations within thirty (30) days after the close of each fiscal year; and 

e) updated list of its chartered locals and affiliates or member organizations, collective bargaining 

agreements executed and their effectivity period, in the case of federations or 

national unions, within thirty (30) days after the close of each fiscal year, as well as the 

updated list of their authorized representatives, agents or signatories in the different regions 

of the country. 

As understood in these Rules, the fiscal year of a labor organization shall coincide with 

the calendar year, unless a different period is prescribed in the constitution and by-laws. 

RULE VI 

DETERMINATION OF REPRESENTATION STATUS 

Section 1. Policy. It is the policy of the State to promote free trade unionism through 

expeditious procedures governing the choice of an exclusive bargaining agent. The determination 

of such exclusive bargaining agent is a non-litigious proceeding and, as far as practicable, 

shall be free from technicalities of law and procedure, provided only that in every 

case, the exclusive bargaining agent enjoys the majority support of all the employees in the 

bargaining unit. 

Section 2. Determination of representation status; modes. The determination of 

an exclusive bargaining agent shall be through voluntary recognition in cases where there is

350 


only one legitimate labor organization operating within the bargaining unit, or through certification, 

run-off or consent election as provided in these Rules. 

RULE VII 

VOLUNTARY RECOGNITION 

Section 1. When and where to file. In unorganized establishments with only one 

legitimate labor organization, the employer may voluntarily recognize the representation 

status of such a union. Within thirty (30) days from such recognition, the employer and 

union shall submit a notice of voluntary recognition with the Regional Office which issued the 

recognized labor unionís certificate of registration or certificate of creation of a chartered 

local. 

Section 2. Requirements for voluntary recognition. The notice of voluntary recognition 

shall be accompanied by the original copy and two (2) duplicate copies of the following 

documents: 

a) a joint statement under oath of voluntary recognition attesting to the fact of voluntary 

recognition; 

b) certificate of posting of the joint statement of voluntary recognition for fifteen (15) consecutive 

days in at least two (2) conspicuous places in the establishment or bargaining 

unit where the union seeks to operate; 

c) the approximate number of employees in the bargaining unit, accompanied by the names 

of those who support the voluntary recognition comprising at least a majority of the members 

of the bargaining unit; and 

d) a statement that the labor union is the only legitimate labor organization operating within 

the bargaining unit. 

All accompanying documents of the notice for voluntary recognition shall be certified 

under oath by the employer representative and president of the recognized labor union. 

Section 3. Action on the Notice. Where the notice of voluntary recognition is sufficient 

in form, number and substance and where there is no other registered labor union 

operating within the bargaining unit concerned, the Regional Office, through the Labor Relations 

Division shall, within ten (10) days from receipt of the notice, record the fact of voluntary 

recognition in its roster of legitimate labor unions and notify the labor union concerned. 

Where the notice of voluntary recognition is insufficient in form, number and substance, 

the Regional Office shall, within the same period, notify the labor union of its findings 

and advise it to comply with the necessary requirements. Where neither the employer nor 

the labor union failed to complete the requirements for voluntary recognition under Section 2 

of this Rule within thirty (30) days from receipt of the advisory, the Regional Office shall 

return the notice for voluntary recognition together with all its accompanying documents 

without prejudice to its re-submission. 

Section 4. Effect of recording of fact of voluntary recognition. From the time of 

recording of voluntary recognition, the recognized labor union shall enjoy the rights, privileges 

and obligations of an existing bargaining agent of all the employees in the bargaining 

unit.


Entry of voluntary recognition shall bar the filing of a petition for certification election 

by any labor organization for a period of one (1) year from the date of entry of voluntary 

recognition. Upon expiration of this one-year period, any legitimate labor organization may 

file a petition for certification election in the same bargaining unit represented by the voluntarily 

recognized union, unless a collective bargaining agreement between the employer and 

voluntarily recognized labor union was executed and registered with the Regional Office in 

accordance with Rule XVII of these Rules. 

RULE VIII 

CERTIFICATION ELECTION 

Section 1. Who may file. Any legitimate labor organization may file a petition for 

certification election. 

When requested to bargain collectively, an employer may file a petition for certification 

election with the Regional Office. If there is no existing registered collective bargaining 

agreement in the bargaining unit, the Regional Office shall, after hearing, order the conduct 

of a certification election. 

Section 2. Where to file. A petition for certification election shall be filed with the 

Regional Office which issued the petitioning unionís certificate of registration/certificate of 

creation of chartered local. 

The petition shall be heard and resolved by the Med-Arbiter. 

Where two or more petitions involving the same bargaining unit are filed in one Regional 

Office, the same shall be automatically consolidated with the Med-Arbiter who first 

acquired jurisdiction. Where the petitions are filed in different Regional Offices, the Regional 

Office in which the petition was first filed shall exclude all others; in which case, the latter 

shall indorse the petition to the former for consolidation. 

Section 3. When to file. A petition for certification election may be filed anytime, 

except: 

a) when a fact of voluntary recognition has been entered or a valid certification, consent or 

run-off election has been conducted within the bargaining unit within one (1) year prior to 

the filing of the petition for certification election. Where an appeal has been filed from the 

order of the Med-Arbiter certifying the results of the election, the running of the one year 

period shall be suspended until the decision on the appeal has become final and executory; 

b) when the duly certified union has commenced and sustained negotiations in good faith 

with the employer in accordance with Article 250 of the Labor Code within the one year 

period referred to in the immediately preceding paragraph; 

c) when a bargaining deadlock to which an incumbent or certified bargaining agent is a 

party had been submitted to conciliation or arbitration or had become the subject of a valid 

notice of strike or lockout; 

d) when a collective bargaining agreement between the employer and a duly recognized or 

certified bargaining agent has been registered in accordance with Article 231 of the 

Labor Code. Where such collective bargaining agreement is registered, the petition may 

be filed only within sixty (60) days prior to its expiry.

352 


Section 4. Form and contents of petition. The petition shall be in writing, verified 

under oath by the president of petitioning labor organization. Where the petition is filed by a 

federation or national union, it shall be verified under oath by the president or its duly 

authorized representative. The petition shall contain the following: 

a) the name of petitioner, its address, and affiliation if appropriate, the date and number of its 

certificate of registration. If the petition is filed by a federation or national union, the date 

and number of the certificate of registration or certificate of creation of chartered local; 

b) the name, address and nature of employerís business; 

c) the description of the bargaining unit; 

d) the approximate number of employees in the bargaining unit; 

e) the names and addresses of other legitimate labor unions in the bargaining unit; 

f) a statement indicating any of the following circumstances: 

1) that the bargaining unit is unorganized or that there is no registered collective bargaining 

agreement covering the employees in the bargaining unit; 

2) if there exists a duly registered collective bargaining agreement, that the petition is 

filed within the sixty-day freedom period of such agreement; or 

3) if another union had been previously recognized voluntarily or certified in a valid 

certification, consent or run-off election, that the petition is filed outside the one-year 

period from entry of voluntary recognition or conduct of certification or run-off election 

and no appeal is pending thereon. 

g) in an organized establishment, the signature of at least twenty-five percent (25%) of all 

employees in the appropriate bargaining unit shall be attached to the petition at the time of 

its filing; and 

h) other relevant facts. 

Section 5. Raffle of the case. Upon the filing of the petition, the Regional Director or 

any of his/her authorized representative shall allow the party filing the petition to personally 

determine the Med-Arbiter assigned to the case by means of a raffle. Where there is only 

one Med-Arbiter in the region, the raffle shall be dispensed with and the petition shall be 

assigned to him/her. 

Section 6. Notice of preliminary conference. Immediately after the raffle of the case 

or receipt of the petition, the same shall be transmitted to the Med-Arbiter, who shall in the 

same instance prepare and serve upon the petitioning party a notice for preliminary conference. 

The first preliminary conference shall be scheduled within ten (10) days from receipt 

of the petition. 

Within three (3) days from receipt of the petition, the Med-Arbiter shall cause the 

service of notice for preliminary conference upon the employer and incumbent bargaining 

agent in the subject bargaining unit directing them to appear before him/her on a date, time 

and place specified. A copy of the notice of preliminary conference and petition for certification 

election shall be posted in at least two conspicuous places in the establishment. 

Section 7. Forced Intervenor. The incumbent bargaining agent shall automatically be 

one of the choices in the certification election as forced intervenor. 

Section 8. Motion for Intervention. When a petition for certification election was filed 

in an organized establishment, any legitimate labor union other than the incumbent bargaining 

agent operating within the bargaining unit may file a motion for intervention with the Med-


Arbiter during the freedom period of the collective bargaining agreement. The form and 

contents of the motion shall be the same as that of a petition for certification election. 

In an unorganized establishment, the motion shall be filed at any time prior to the 

decision of the Med-Arbiter. The form and contents of the motion shall likewise be the same 

as that of a petition for certification election. The motion for intervention shall be resolved in 

the same decision issued in the petition for certification election. 

Section 9. Preliminary Conference; Hearing. The Med-Arbiter shall conduct a preliminary 

conference and hearing within ten (10) days from receipt of the petition to determine 


a) the bargaining unit to be represented; 

b) contending labor unions; 

c) possibility of a consent election; 

d) existence of any of the bars to certification election under Section 3 of this Rule; and 

e) such other matters as may be relevant for the final disposition of the case. 

Section 10. Consent Election; Agreement. In case the contending unions agree to a 

consent election, the Med-Arbiter shall not issue a formal order calling for the conduct of 

certification election, but shall enter the fact of the agreement in the minutes of the hearing. 

The minutes of the hearing shall be signed by the parties and attested to by the Med-Arbiter. 

The Med-Arbiter shall, immediately thereafter, forward the records of the petition to the 

Regional Director or his/her authorized representative for the determination of the Election 

Officer by the contending unions through raffle. The first pre-election conference shall be 

scheduled within ten (10) days from the date of entry of agreement to conduct consent 

election. 

Section 11. Number of Hearings; Pleadings. If the contending unions fail to agree to 

a consent election during the preliminary conference, the Med-Arbiter may conduct as 

many hearings as he/she may deem necessary, but in no case shall the conduct thereof 

exceed fifteen (15) days from the date of the scheduled preliminary conference/hearing, 

after which time the petition shall be considered submitted for decision. The Med-Arbiter 

shall have control of the proceedings. Postponements or continuances shall be discouraged. 

Within the same 15-day period within which the petition is heard, the contending labor 

unions may file such pleadings as they may deem necessary for the immediate resolution of 

the petition. Extensions of time shall not be entertained. All motions shall be resolved by the 

Med-Arbiter in the same order or decision granting or denying the petition. 

Section 12. Failure to appear despite notice. The failure of any party to appear in 

the hearing(s) when notified or to file its pleadings shall be deemed a waiver of its right to be 

heard. The Med-Arbiter, however, when agreed upon by the parties for meritorious reasons 

may allow the cancellation of scheduled hearing(s). The cancellation of any scheduled 

hearing(s) shall not be used as a basis for extending the 15-day period within which to 

terminate the same. 

Section 13. Order/Decision on the petition. Within ten (10) days from the date of 

the last hearing, the Med-Arbiter shall issue a formal order granting the petition or a decision

354 


denying the same. In organized establishments, however, no order or decision shall be 

issued by the Med-Arbiter during the freedom period. 

The order granting the conduct of a certification election shall state the following: 

a) the name of the employer or establishment; 

b) the description of the bargaining unit; 

c) a statement that none of the grounds for dismissal enumerated in the succeeding paragraph 

exists; 

d) the names of contending labor unions which shall appear as follows: petitioner union/s in 

the order in which their petitions were filed, forced intervenor, and no union; and 

e) a directive upon the employer and the contending union(s) to submit within ten (10) days 

from receipt of the order, the certified list of employees in the bargaining unit, or where 

necessary, the payrolls covering the members of the bargaining unit for the last three (3) 

months prior to the issuance of the order. 

Section 14. Denial of the petition; Grounds. The Med-Arbiter may dismiss the petition 

on any of the following grounds: 

a) the petitioner is not listed in the Departmentís registry of legitimate labor unions or that its 

legal personality has been revoked or cancelled with finality in accordance with Rule XIV 

of these Rules; 

b) the petition was filed before or after the freedom period of a duly registered collective 

bargaining agreement; provided that the sixty-day period based on the original collective 

bargaining agreement shall not be affected by any amendment, extension or renewal of 

the collective bargaining agreement; 

c) the petition was filed within one (1) year from entry of voluntary recognition or a valid 

certification, consent or run-off election and no appeal on the results of the certification, 

consent or run-off election is pending; 

d) a duly certified union has commenced and sustained negotiations with the employer in 

accordance with Article 250 of the Labor Code within the one-year period referred to in 

Section 14.c of this Rule, or there exists a bargaining deadlock which had been submitted 

to conciliation or arbitration or had become the subject of a valid notice of strike or lockout 

to which an incumbent or certified bargaining agent is a party; 

e) in case of an organized establishment, failure to submit the twenty-five percent (25%) 

support requirement for the filing of the petition for certification election. 

Section 15. Prohibited grounds for the denial/suspension of the petition. All issues 

pertaining to the existence of employer-employee relationship, eligibility or mixture in 

union membership raised before the Med-Arbiter during the hearing(s) and in the pleadings 

shall be resolved in the same order or decision granting or denying the petition for certification 

election. Any question pertaining to the validity of petitioning unionís certificate of registration 

or its legal personality as a labor organization, validity of registration and execution of 

collective bargaining agreements shall be heard and resolved by the Regional Director in an 

independent petition for cancellation of its registration and not by the Med-Arbiter in the 

petition for certification election, unless the petitioning union is not found in the Departmentís 

roster of legitimate labor organizations or an existing collective bargaining agreement is 

unregistered with the Department.


Section 16. Release of Order/Decision within ten (10) days from the last hearing. 

The Med-Arbiter shall release his/her order or decision granting or denying the petition 

personally to the parties on an agreed date and time. 

Section 17. Appeal. The order granting the conduct of a certification election in an 

unorganized establishment shall not be subject to appeal. Any issue arising therefrom may 

be raised by means of protest on the conduct and results of the certification election. 

The order granting the conduct of a certification election in an organized establishment 

and the decision dismissing or denying the petition, whether in an organized or unorganized 

establishment, may be appealed to the Office of the Secretary within ten (10) days from 

receipt thereof. 

The appeal shall be verified under oath and shall consist of a memorandum of appeal, 

specifically stating the grounds relied upon by the appellant with the supporting arguments 

and evidence. 

Section 18. Where to file appeal. The memorandum of appeal shall be filed in the 

Regional Office where the petition originated, copy furnished the contending unions and the 

employer, as the case may be. Within twenty-four (24) hours from receipt of the appeal, the 

Regional Director shall cause the transmittal thereof together with the entire records of the 

case to the Office of the Secretary. 

Section 19. Finality of Order/Decision. Where no appeal is filed within the ten-day 

period, the Med-Arbiter shall enter the finality of the order/decision in the records of the case 

and cause the transmittal of the records of the petition to the Regional Director. 

Section 20. Period to Reply. A reply to the appeal may be filed by any party to the 

petition within ten (10) days from receipt of the memorandum of appeal. The reply shall be 

filed directly with the Office of the Secretary. 

Section 21. Decision of the Secretary. The Secretary shall have fifteen (15) days 

from receipt of the entire records of the petition within which to decide the appeal. The filing 

of the memorandum of appeal from the order or decision of the Med-Arbiter stays the 

holding of any certification election. 

The decision of the Secretary shall become final and executory after ten (10) days 

from receipt thereof by the parties. No motion for reconsideration of the decision shall be 

entertained. 

Section 22. Transmittal of records to the Regional Office. Within forty-eight (48) 

hours from notice of receipt of decision by the parties and finality of the decision, the entire 

records of the case shall be remanded to the Regional Office of origin for implementation. 

Implementation of the decision shall not be stayed unless restrained by the appropriate 

court. 

Section 23. Effects of consent election. Where a petition for certification election 

had been filed, and upon the intercession of the Med-Arbiter, the parties agree to hold a 

consent election, the results thereof shall constitute a bar to the holding of a certification 

election for one (1) year from the holding of such consent election. Where an appeal has

356 


been filed from the results of the consent election, the running of the one-year period shall 

be suspended until the decision on appeal has become final and executory. 

Where no petition for certification election was filed but the parties themselves agreed 

to hold a consent election with the intercession of the Regional Office, the results thereof 

shall constitute a bar to another petition for certification election. 

Section 24. Effects of early agreements. The representation case shall not be adversely 

affected by a collective bargaining agreement registered before or during the last 

sixty (60) days of a subsisting agreement or during the pendency of the representation case. 

Section 25. Non-availability of Med-Arbiter. Where there is no Med-Arbiter available 

in the Regional Office by reason of vacancy, prolonged absence, or excessive workload as 

determined by the Regional Director, he/she shall transmit the entire records of the case to 

the Bureau, which shall within forty-eight (48) hours from receipt assign the case to any 

Med-Arbiter from any of the Regional Offices or from the Bureau. 

RULE IX 

CONDUCT OF CERTIFICATION ELECTION 

Section 1. Raffle of the case. Within twenty-four (24) hours from receipt of the notice 

of entry of final judgment granting the conduct of a certification election, the Regional Director 

shall cause the raffle of the case to an Election Officer who shall have control of the preelection 

conference and election proceedings. 

Section 2. Pre-election conference. Within twenty-four (24) hours from receipt of 

the assignment for the conduct of a certification election, the Election Officer shall cause the 

issuance of notice of pre-election conference upon the contending unions and the employer, 

which shall be scheduled within ten (10) days from receipt of the assignment. 

The pre-election conference shall set the mechanics for the election and shall determine, 

among others, the following: 

a) date, time and place of the election, which shall not be later than forty-five (45) days from 

the date of the first pre-election conference, and shall be on a regular working day and 

within the employerís premises, unless circumstances require otherwise; 

b) list of eligible and challenged voters; 

c) number and location of polling places or booths and the number of ballots to be prepared 

with appropriate translations, if necessary; 

d) name of watchers or representatives and their alternates for each of the parties during 

election; 

e) mechanics and guidelines of the election. 

Section 3. Waiver of right to be heard. Failure of any party to appear during the preelection 

conference despite notice shall be considered as a waiver to be present and to 

question or object to any of the agreements reached in said pre-election conference. Nothing 

herein, however, shall deprive the non-appearing party or the employer of its right to be 

furnished notices of subsequent pre-election conferences and to attend the same.


Section 4. Minutes of pre-election conference. The Election Officer shall keep the 

minutes of matters raised and agreed upon during the pre-election conference. The parties 

shall acknowledge the completeness and correctness of the entries in the minutes by affixing 

their signatures thereon. Where any of the parties refuse to sign the minutes, the Election 

Officer shall note such fact in the minutes, including the reason for refusal to sign the same. 

In all cases, the parties shall be furnished a copy of the minutes. 

The pre-election conference shall be completed within thirty (30) days from the date of 

the first hearing. 

Section 5. Qualification of voters; inclusion-exclusion. All employees who are members 

of the appropriate bargaining unit sought to be represented by the petitioner at the time 

of the issuance of the order granting the conduct of a certification election shall be eligible to 

vote. An employee who has been dismissed from work but has contested the legality of the 

dismissal in a forum of appropriate jurisdiction at the time of the issuance of the order for the 

conduct of a certification election shall be considered a qualified voter, unless his/her dismissal 

was declared valid in a final judgment at the time of the conduct of the certification 

election. 

In case of disagreement over the votersí list or over the eligibility of voters, all contested 

voters shall be allowed to vote. But their votes shall be segregated and sealed in individual 

envelopes in accordance with Sections 10 and 11 of this Rule. 

Section 6. Posting of Notices. The Election Officer shall cause the posting of notice 

of election at least ten (10) days before the actual date of the election in two (2) most 

conspicuous places in the company premises. The notice shall contain: 

a) the date and time of the election; 

b) names of all contending unions; 

c) the description of the bargaining unit and the list of eligible and challenged voters. 

The posting of the notice of election, the information required to be included therein 

and the duration of posting cannot be waived by the contending unions or the employer. 

Section 7. Secrecy and sanctity of the ballot. To ensure secrecy of the ballot, the 

Election Officer, together with the authorized representatives of the contending unions and 

the employer, shall before the start of the actual voting, inspect the polling place, the ballot 

boxes and the polling booths. 

Section 8. Preparation of ballots. The Election Officer shall prepare the ballots in 

English and Filipino or the local dialect, corresponding to the number of voters and a reasonable 

number of extra ballots. All ballots shall be signed at the back by the Election Officer and 

authorized representative of each of the contending unions and employer. Failure or refusal 

to sign the ballots shall be considered a waiver thereof and the Election Officer shall enter the 

fact of such refusal or failure in the records of the case as well as the reason for the refusal 

or failure to sign. 

Section 9. Marking of votes. The voter must put a cross ( x ) or check ( ¸) mark in the 

square opposite the name of the union of his choice or ìNo Unionî if he/she does not want to 

be represented by any union

358 


If a ballot is torn, defaced or left unfilled in such a manner as to create doubt or 

confusion or to identify the voter, it shall be considered spoiled. If the voter inadvertently 

spoils a ballot, he/she shall return it to the Election Officer who shall destroy it and give him/ 

her another ballot. 

Section 10. Challenging of votes. An authorized representative of any of the contending 

unions and employer may challenge a vote before it is deposited in the ballot box 

only on any of the following grounds: 

a) that there is no employer-employee relationship between the voter and the company; 

b) that the voter is not a member of the appropriate bargaining unit which petitioner seeks to 

represent. 

Section 11. Procedure in the challenge of votes. When a vote is properly challenged, 

the Election Officer shall place the ballot in an envelope which shall be sealed in the 

presence of the voter and the representatives of the contending unions and employer. The 

Election Officer shall indicate on the envelope the voterís name, the union or employer 

challenging the voter, and the ground for the challenge. The sealed envelope shall then be 

signed by the Election Officer and the representatives of the contending unions and employer. 

The Election Officer shall note all challenges in the minutes of the election and shall 

be responsible for consolidating all envelopes containing the challenged votes. The envelopes 

shall be opened and the question of eligibility shall be passed upon only if the number 

of segregated voters will materially alter the results of the election. 

Section 12. On-the-spot questions. The Election Officer shall rule on any question 

relating to and raised during the conduct of the election. In no case, however, shall the 

election officer rule on any of the grounds for challenge specified in the immediately preceding 

section. 

Section 13. Protest; when perfected. Any party-in-interest may file a protest based 

on the conduct or mechanics of the election. Such protests shall be recorded in the minutes 

of the election proceedings. Protests not so raised are deemed waived. 

The protesting party must formalize its protest with the Med-Arbiter, with specific grounds, 

arguments and evidence, within five (5) days after the close of the election proceedings. If 

not recorded in the minutes and formalized within the prescribed period, the protest shall be 

deemed dropped. 

Section 14. Canvassing of votes. The votes shall be counted and tabulated by the 

Election Officer in the presence of the representatives of the contending unions. Upon 

completion of the canvass, the Election Officer shall give each representative a copy of the 

minutes of the election proceedings and results of the election. The ballots and the tally 

sheets shall be sealed in an envelope and signed by the Election Officer and the representatives 

of the contending unions and transmitted to the Med-Arbiter, together with the minutes 

and results of the election, within twenty-four (24) hours from the completion of the canvass. 

Where the election is conducted in more than one region, consolidation of results shall 

be made within fifteen (15) days from the conduct thereof.


Section 15. Conduct of election and canvass of votes. The election precincts shall 

open and close on the date and time agreed upon during the pre-election conference. The 

opening and canvass shall proceed immediately after the precincts have closed. Failure of 

any party or the employer or his/her/their representative to appear during the election proceedings 

shall be considered a waiver to be present and to question the conduct thereof. 

Section 16. Certification of Collective Bargaining Agent. The union which obtained 

a majority of the valid votes cast shall be certified as the sole and exclusive bargaining agent 

of all the employees in the appropriate bargaining unit within five (5) days from the day of the 

election, provided no protest is recorded in the minutes of the election. 

Section 17. Failure of election. Where the number of votes cast in a certification or 

consent election is less than the majority of the number of eligible voters and there are no 

material challenged votes, the Election Officer shall declare a failure of election in the minutes 

of the election proceedings. 

Section 18. Effect of failure of election. A failure of election shall not bar the filing of 

a motion for the immediate holding of another certification or consent election within six (6) 

months from date of declaration of failure of election. 

Section 19. Action on the motion. Within twenty-four (24) hours from receipt of the 

motion, the Election Officer shall immediately schedule the conduct of another certification 

or consent election within fifteen (15) days from receipt of the motion and cause the posting 

of the notice of certification election at least ten (10) days prior to the scheduled date of 

election in two (2) most conspicuous places in the establishment. The same guidelines and 

list of voters shall be used in the election. 

Section 20. Proclamation and certification of the result of the election. Within 

twenty-four (24) hours from final canvass of votes, there being a valid election, the Election 

Officer shall transmit the records of the case to the Med-Arbiter who shall, within the same 

period from receipt of the minutes and results of election, issue an order proclaiming the 

results of the election and certifying the union which obtained a majority of the valid votes 

cast as the sole and exclusive bargaining agent in the subject bargaining unit, under any of 

the following conditions: 

a) no protest was filed or, even if one was filed, the same was not perfected within the fiveday 

period for perfection of the protest; 

b) no challenge or eligibility issue was raised or, even if one was raised, the resolution of the 

same will not materially change the results of the elections. 

The winning union shall have the rights, privileges and obligations of a duly certified 

collective bargaining agent from the time the certification is issued. 

Where majority of the valid votes cast results in ìNo Unionî obtaining the majority, the 

Med-Arbiter shall declare such fact in the order. 

RULE X 

RUN-OFF ELECTIONS

360 


Section 1. When proper. When an election which provides for three (3) or more 

choices results in none of the contending unions receiving a majority of the valid votes cast, 

and there are no objections or challenges which if sustained can materially alter the results, 

the Election Officer shall motu proprio conduct a run-off election within ten (10) days from 

the close of the election proceedings between the labor unions receiving the two highest 

number of votes; provided, that the total number of votes for all contending unions is at least 

fifty (50%) percent of the number of votes cast. 

ìNo Unionî shall not be a choice in the run-off election. 

Notice of run-off elections shall be posted by the Election Officer at least five (5) days 

before the actual date of run-off election. 

Section 2. Qualification of voters. The same votersí list used in the certification 

election shall be used in the run-off election. The ballots in the run-off election shall provide 

as choices the unions receiving the highest and second highest number of the votes cast. 

The labor union receiving the greater number of valid votes cast shall be certified as the 

winner, subject to Section 20, Rule IX. 

RULE XI 

INTER/INTRA-UNION DISPUTES AND OTHER RELATED 

LABOR RELATIONS DISPUTES 

Section 1. Coverage. Inter/intra-union disputes shall include: 

a) cancellation of registration of a labor organization filed by its members or by another 

labor organization; 

b) conduct of election of union and workersí association officers/nullification of election of 

union and workersí association officers; 

c) audit/accounts examination of union or workersí association funds; 

d) deregistration of collective bargaining agreements; 

e) validity/invalidity of union affiliation or disaffiliation; 

f) validity/invalidity of acceptance/non-acceptance for union membership; 

g) validity/invalidity of impeachment/expulsion of union and workers association officers and 

members; 

h) validity/invalidity of voluntary recognition; 

i) opposition to application for union and CBA registration; 

j) violations of or disagreements over any provision in a union or workersí association 

constitution and by-laws; 

k) disagreements over chartering or registration of labor organizations and collective bargaining 

agreements; 

l) violations of the rights and conditions of union or workersí association membership; 

m) violations of the rights of legitimate labor organizations, except interpretation of collective 

bargaining agreements; 

n) such other disputes or conflicts involving the rights to self-organization, union membership 

and collective bargaining ñ 

(1) between and among legitimate labor organizations; 

(2) between and among members of a union or workersí association.


Section 2. Coverage. Other related labor relations disputes shall include any conflict 

between a labor union and the employer or any individual, entity or group that is not a labor 

organization or workersí association. This includes: (1) cancellation of registration of unions 

and workers associations; and (2) a petition for interpleader. 

Section 3. Effects of the filing/pendency of inter/intra-union and other related 

labor relations disputes. The rights, relationships and obligations of the parties litigants 

against each other and other parties-in-interest prior to the institution of the petition shall 

continue to remain during the pendency of the petition and until the date of finality of the 

decision rendered therein. Thereafter, the rights, relationships and obligations of the parties 

litigants against each other and other parties-in-interest shall be governed by the decision so 

ordered. 

The filing or pendency of any inter/intra-union dispute and other related labor relations 

dispute is not a prejudicial question to any petition for certification election and shall not be a 

ground for the dismissal of a petition for certification election or suspension of proceedings 

for certification election. 

Section 4. Who may file. Any legitimate labor organization or member(s) thereof 

specially concerned may file a complaint or petition involving disputes or issues enumerated 

in Section 1 hereof. Any party-in-interest may file a complaint or petition involving disputes 

or issues enumerated in Section 2 hereof. 

Where the issue involves the entire membership of the labor organization, the complaint 

or petition shall be supported by at least thirty percent (30%) of its members. 

Section 5. Where to file. Complaints or petitions involving labor unions with independent 

registrations, chartered locals, workersí associations, its officers or members shall be 

filed with the Regional Office that issued its certificate of registration or certificate of creation 

of chartered local. Complaints involving federations, national unions, industry unions, its 

officers or member organizations shall be filed with the Bureau. 

Petitions for cancellation of registration of labor unions with independent registration, 

chartered locals and workers association and petitions for deregistration of collective bargaining 

agreements shall be resolved by the Regional Director. He/She may appoint a Hearing 

Officer from the Labor Relations Division. 

Other inter/intra-union disputes and related labor relations disputes shall be heard and 

resolved by the Med-Arbiter in the Regional Office. 

Complaints or petitions involving federations, national or industry unions, trade union 

centers and their chartered locals, affiliates or member organizations shall be filed either 

with the Regional Office or the Bureau. The complaint or petition shall be heard and resolved 

by the Bureau. 

When two or more petitions involving the same parties and the same causes of 

action are filed, the same shall be automatically consolidated. 

Section 6. Formal requirements of the complaint or petition. The complaint or 

petition shall be in writing, verified under oath and shall, among others, contain the following:

362 


a) name, address and other personal circumstances of the complainant(s) or petitioner(s); 

b) name, address and other personal circumstances of the respondent(s) or person(s) 

charged; 

c) nature of the complaint or petition; 

d) facts and circumstances surrounding the complaint or petition; 

e) cause(s) of action or specific violation(s) committed; 

f) a statement that the administrative remedies provided for in the constitution and by-laws 

have been exhausted or such remedies are not readily available to the complainant(s) or 

petitioner(s) through no fault of his/her/their own, or compliance with such administrative 

remedies does not apply to complainant(s) or petitioner(s); 

g) relief(s) prayed for; 

h) certificate of non-forum shopping; and 

i) other relevant matters. 

Section 7. Raffle of the case. Upon the filing of the complaint or petition, the Regional 

Director or any of his/her authorized representative in the Regional Office and the Docket 

Section of the Bureau shall allow the party filing the complaint or petition to determine the 

Med-Arbiter or Hearing Officer assigned to the case by means of a raffle. Where there is 

only one Med-Arbiter or Hearing Officer in the region, the raffle shall be dispensed with and 

the complaint or petition shall be assigned to him/her. 

Section 8. Notice of preliminary conference. Immediately after the raffle of the case 

or receipt of the complaint or petition, the same shall be transmitted to the Med-Arbiter or 

Hearing Officer, as the case may be, who shall in the same instance prepare the notice for 

preliminary conference and cause the service thereof upon the party filing the petition. The 

preliminary conference shall be scheduled within ten (10) days from receipt of the complaint 

or petition. 

Within three (3) days from receipt of the complaint or petition, the Med-Arbiter or 

Hearing Officer, as the case may be, shall cause the service of summons upon the 

respondent(s) named therein, directing him/her to file his/her answer/comment on the complaint 

or petition on or before the scheduled preliminary conference and to appear before 

the Med-Arbiter or Hearing Officer on the scheduled preliminary conference. 

Section 9. Conduct of preliminary conference. The Med-Arbiter or Hearing Officer, 

as the case may be, shall conduct a preliminary conference and hearing within ten (10) 

days from receipt of the complaint or petition. He/She shall exert every effort to effect an 

amicable settlement of the dispute. 

Where the parties agree to settle amicably, their agreements shall be specified in the 

minutes of the conference and a decision based on compromise shall be issued by the Med- 

Arbiter or the Regional Director, as the case may be, within five (5) days from the date of the 

mandatory conference. 

Where no amicable settlement is reached, the Med-Arbiter or Hearing Officer, as the 

case may be, shall proceed with the stipulation of facts, limitation or definition of the issues, 

clarificatory questioning and submission of laws and jurisprudence relied upon in support of 

each otherís claims and defenses.


Section 10. Conduct of Hearing(s). The Med-Arbiter or Hearing Officer, as the case 

may be, shall determine whether to call further hearing(s) on the complaint or petition. 

Where the Med-Arbiter or Hearing Officer, as the case may be, decides to conduct 

further hearing(s), he/she shall require the parties to submit the affidavits of their witnesses 

and such documentary evidence material to prove each otherís claims and defenses. The 

hearing(s) shall be limited to clarificatory questions by the Med-Arbiter or Hearing Officer 

and must be completed within twenty-five (25) days from the date of preliminary conference. 

The complaint or petition shall be considered submitted for decision after the date of 

the last hearing or upon expiration of twenty-five (25) days from date of preliminary conference, 

whichever comes first. 

Section 11. Affirmation of testimonial evidence. Any affidavit submitted by a party to 

prove his/her claims or defenses shall be re-affirmed by the presentation of the affiant 

before the Med-Arbiter or Hearing Officer, as the case may be. Any affidavit submitted 

without the re-affirmation of the affiant during a scheduled hearing shall not be admitted in 

evidence, except when the party against whom the affidavit is being offered admits all allegations 

therein and waives the examination of the affiant. 

Section 12. Filing of pleadings. The parties may file his/her pleadings, including their 

respective position papers, within the twenty-five (25) days period prescribed for the conduct 

of hearing(s). No other pleading shall be considered or entertained after the case is 

considered submitted for decision. 

Section 13. Hearing and resolution of the complaint or petition in the Bureau. 

The Bureau shall observe the same process and have the same period within which to hear 

and resolve the complaints or petitions filed before it. 

Section 14. Decision. The Bureau and the Med-Arbiter or Regional Director, as the 

case may be, shall have twenty (20) days from the date of the last hearing within which to 

decide the complaint or petition. The decision shall state the facts, findings, conclusion, and 

reliefs granted. 

Section 15. Release of Decision. The notice of decision shall be signed by the 

Records Officer in the Bureau and by the Med-Arbiter or Hearing Officer in the Regional 

Office. Within twenty (20) days from date of last hearing, the decision shall be released to 

the parties personally on a date and time agreed upon during the last hearing. 

Section 16. Appeal. The decision of the Med-Arbiter and Regional Director may be 

appealed to the Bureau by any of the parties within ten (10) days from receipt thereof, copy 

furnished the opposing party. The decision of the Bureau Director in the exercise of his/her 

original jurisdiction may be appealed to the Office of the Secretary by any party within the 

same period, copy furnished the opposing party. 

The appeal shall be verified under oath and shall consist of a memorandum of appeal 

specifically stating the grounds relied upon by the appellant, with supporting arguments and 

evidence.

364 


Section 17. Where to file appeal. The memorandum of appeal shall be filed in the 

Regional Office or Bureau where the complaint or petition originated. Within twenty-four (24) 

hours from receipt of the memorandum of appeal, the Bureau or Regional Director shall 

cause the transmittal thereof together with the entire records of the case to the Office of the 

Secretary or the Bureau, as the case may be. 

Section 18. Finality of Decision. Where no appeal is filed within the ten-day period, 

the Bureau and Regional Director or Med-Arbiter, as the case may be, shall enter the finality 

of the decision in the records of the case and cause the immediate implementation thereof. 

Section 19. Period to reply. A reply to the appeal may be filed by any party to the 

complaint or petition within ten (10) days from receipt of the memorandum of appeal. The 

reply shall be filed directly with the Bureau or the Office of the Secretary, as the case may 

be. 

Section 20. Decision of the Bureau/Office of the Secretary. The Bureau Director or 

the Secretary, as the case may be, shall have twenty (20) days from receipt of the entire 

records of the case within which to decide the appeal. The filing of the memorandum of 

appeal from the decision of the Med-Arbiter or Regional Director and Bureau Director stays 

the implementation of the assailed decision. 

The Bureau or Office of the Secretary may call the parties to a clarificatory hearing in 

aid of its appellate jurisdiction. 

Section 21. Finality of Decision of Bureau/Office of the Secretary. The decision of 

the Bureau or the Office of the Secretary shall become final and executory after ten (10) 

days from receipt thereof by the parties, unless a motion for its reconsideration is filed by 

any party therein within the same period. Only one (1) motion for reconsideration of the 

decision of the Bureau or the Office of the Secretary in the exercise of their appellate 

jurisdiction shall be allowed. 

Section 22. Execution of decision. The decision of the Med-Arbiter and Regional 

Director shall automatically be stayed pending appeal with the Bureau. The decision of the 

Bureau in the exercise of its appellate jurisdiction shall be immediately executory upon 

issuance of entry of final judgment. 

The decision of the Bureau in the exercise of its original jurisdiction shall automatically 

be stayed pending appeal with the Office of the Secretary. The decision of the Office of the 

Secretary shall be immediately executory upon issuance of entry of final judgment. 

Section 23. Transmittal of records to the Regional Office/Bureau. Within fortyeight 

(48) hours from notice of receipt of decision by the parties and finality of the decision, 

the entire records of the case shall be remanded to the Bureau or Regional Office of origin 

for implementation. The implementation of the decision shall not be stayed unless restrained 

by the appropriate court. 

RULE XII 

ELECTION OF OFFICERS OF LABOR UNIONS AND 

WORKERS ASSOCIATIONS


Section 1. Conduct of election of union officers; procedure in the absence of 

provisions in the constitution and by-laws. In the absence of any agreement among the 

members or any provision in the constitution and by-laws of a labor union or workersí 

association, the following guidelines may be adopted in the election of officers. 

a) within sixty (60) days before the expiration of the term of the incumbent officers, the 

president of the labor organization shall constitute a committee on election to be composed 

of at least three (3) members who are not running for any position in the election, 

provided that if there are identifiable parties within the labor organization, each party shall 

have equal representation in the committee; 

b) upon constitution, the members shall elect the chairman of the committee from among 

themselves, and case of disagreement, the president shall designate the chairman; 

c) within ten (10) days from its constitution, the committee shall, among others, exercise the 

following powers and duties: 

1) set the date, time and venue of the election; 

2) prescribe the rules on the qualification and eligibility of candidates and voters; 

3) prepare and post the votersí list and the list of qualified candidates; 

4) accredit the authorized representatives of the contending parties; 

5) supervise the actual conduct of the election and canvass the votes to ensure the 

sanctity of the ballot; 

6) keep minutes of the proceedings; 

7) be the final arbiter of all election protests; 

8) proclaim the winners; and 

9) prescribe such other rules as may facilitate the orderly conduct of election. 

Section 2. Dispute over conduct of election of officers. Where the terms of the 

officers of a labor organization have expired and its officers failed or neglected to do so call 

for an election of new officers, or where the labor organizationís constitution and by-laws do 

not provide for the manner by which the said election can be called or conducted and the 

intervention of the Department is necessary, at least thirty percent (30%) of the members of 

the labor organization may file a petition for the conduct of election of their officers with the 

Regional Office that issued its certificate of registration or certificate of creation of chartered 

local. 

In the case of federations, national or industry unions and trade union centers, the 

petition shall be filed with the Bureau or the Regional Office but shall be heard and resolved 

by the Bureau. 

This rule shall also apply where a conduct of election of officers is an alternative relief 

or necessary consequence of a petition for nullification of election of officers, impeachment/ 

expulsion of officers, or such other petitions. 

Section 3. Formal requirements and proceedings. The formal requirements, processes 

and periods of disposition of this petition stated in Rule XI shall be followed in the 

determination of the merits of the petition and appeal. 

Section 4. Pre-election conference and conduct of election. The appointment of an 

election officer and the procedures and periods in the conduct of the pre-election confer-

366 


ence and election proceedings prescribed in Rule IX shall also apply in the conduct of a preelection 

conference and election of officers in any labor organization. 

Section 5. Applicability of the provisions of the labor organizationís constitution 

and by-laws. Where the conduct of election of officers is ordered by the Med-Arbiter, the 

Bureau or Office of the Secretary, the rules and regulations governing the filing of candidacies 

and conduct of election under the constitution and by-laws of the labor organization 

may be applied in the implementation of the decision, or new and additional rules may be 

adopted as agreed upon by the parties. 

The entire proceedings shall be presided by the Election Officer from the Labor Relations 

Division of the Regional Office or the Bureau. He/She shall act as the COMELEC 

referred to in the labor organizationís constitution and by-laws and obligate himself/herself to 

comply with his/her mandate under the decision to be implemented and the constitution and 

by-laws. 

RULE XIII 

ADMINISTRATION OF TRADE UNION FUNDS AND ACTIONS 

ARISING THEREFROM 

Section 1. Right of union to collect dues and agency fees. The incumbent bargaining 

agent shall continue to be entitled to check-off and collect dues and agency fees despite 

the pendency of a representation case, other inter/intra-union disputes or related labor 

relations disputes. 

Section 2. Visitorial power under Article 274. The Regional or Bureau Director may 

inquire into the financial activities of any legitimate labor organization and examine their 

books of accounts and other records to determine compliance with the law and the 

organizationís constitution and by-laws. Such examination shall be made upon the filing of a 

request or complaint for the conduct of an accounts examination by any member of the labor 

organization, supported by the written consent of at least twenty (20%) percent of its total 

membership. 

Section 3. Where to file. A request for examination of books of accounts of independent 

labor unions, chartered locals and workers associations pursuant to Article 274 shall be 

filed with the Regional Office that issued its certificate of registration or certificate of creation 

of chartered local. 

A request for examination of books of accounts of federations or national unions and 

trade union centers pursuant to Article 274 shall be filed with the Bureau. Such request or 

complaint, in the absence of allegations pertaining to a violation of Article 241, shall not be 

treated as an intra-union dispute and the appointment of an Audit Examiner by the Regional 

or Bureau Director shall not be appealable. 

Section 4. Actions arising from Article 241. Any complaint or petition with allegations 

of mishandling, misappropriation or non-accounting of funds in violation of Article 241 shall 

be treated as an intra-union dispute. It shall be heard and resolved by the Med-Arbiter 

pursuant to the provisions of Rule XI.


Section 5. Prescription. The complaint or petition for audit or examination of funds 

and book of accounts shall prescribe within three (3) years from the date of submission of 

the annual financial report to the Department or from the date the same should have been 

submitted as required by law, whichever comes earlier. 

Section 6. Decision. A decision granting the conduct of audit shall include the appointment 

of the Audit Examiner and a directive upon him/her to submit his/her report and 

recommendations within ten (10) days from termination of audit. The decision granting the 

conduct of audit is interlocutory and shall not be appealable. The decision denying or dismissing 

the complaint or petition for audit may be appealed within ten (10) days from receipt 

thereof pursuant to the provisions prescribed in Rule XI. 

Section 7. Pre-audit conference. Within twenty-four (24) hours from receipt of the 

decision granting the conduct of audit, the Regional Director shall summon the parties to a 

pre-audit conference conducted by the Audit Examiner to determine and obtain the following: 

a) sources of funds covered by the audit; 

b) the banks and financial institutions where the labor organization maintains its account; 

c) union books of accounts and financial statements; 

d) disbursement vouchers with supporting receipts, invoices and other documents; 

e) income and revenue receipts; 

f) cash books; 

g) minutes of general membership meeting and board meetings; 

h) other relevant matters and documents. 

The first pre-audit conference shall be scheduled within ten (10) days from receipt by 

the Audit Examiner of the decision granting the conduct of an audit. 

Section 8. Issuance of subpoena. The Regional Director may compel any party to 

appear or bring the required financial documents in a conference or hearing through the 

issuance of a subpoena ad testificandum or subpoena duces tecum. He/She may also 

require the employer concerned to issue certifications of union dues and other assessments 

remitted to the union during the period of audit. 

Section 9. Conduct of audit examination. Where book of accounts are submitted by 

the parties, the Audit Examiner shall: 

a) examine the transactions reflected in the disbursement vouchers; 

b) determine the validity of the supporting documents attached to the vouchers consistent 

with the unionís constitution and by-laws, relevant resolutions of the union and the Labor 

Code; 

c) trace recording and posting in the disbursement book; 

d) record observations or findings of all financial transactions. 

Where no book of accounts are maintained by the officers of the labor organization, 

the Audit Examiner shall: 

a) examine the transactions reflected in the disbursement vouchers; 

b) determine the validity of the supporting documents attached to the vouchers consistent 

with the labor organizationís constitution and by-laws, relevant board resolutions, and the 

Labor Code;

368 


c) prepare working papers or worksheet/s; 

d) record and post all financial transactions reflected in the cash vouchers in the working 

papers or worksheet/s; and 

e) record observations or findings of all financial transactions. 

The Audit Examiner shall conduct an inventory of all physical assets acquired by the 

labor organization, if any, and on the basis of his/her findings prepare his/her audited 

financial report or statement reflecting the true and correct financial accounts and balances 

of the labor organization with relevant annexes attached. 

Section 10. Period of audit. The Audit Examiner shall have sixty (60) days from the 

date of first pre-audit conference within which to complete the conduct of audit, unless the 

volume of financial records, the period covered by the audit and other circumstances warrant 

the extension thereof. In such a case, the Audit Examiner shall notify the Med-Arbiter or 

the Bureau Director, as the case may be, of such fact at least ten (10) days before the 

expiration of the sixty (60) days period. 

Section 11. Audit Report. The Audit Examiner shall make a report of his/her findings 

to the parties involved and the same shall include the following: 

a) name of the labor organization; 

b) name of complainant(s) or petitioner(s) and respondent(s); 

c) name of officers of the labor organization during the period covered by the audit report; 

d) scope of the audit; 

e) list of documents examined; 

f) audit methods and procedures adopted; and 

g) findings and recommendations. 

Section 12. Completion of audit. A copy of the audit report shall be forwarded by the 

Audit Examiner to the Med-Arbiter or the Bureau Director, as the case may be, within ten 

(10) days from termination of the audit, together with the entire records of the case and all 

documents relative to the conduct of the audit. 

Section 13. Decision after audit. The Med-Arbiter or the Bureau Director shall render 

a decision within twenty (20) days from receipt of the audit report. All issues raised by the 

parties during the conduct of the audit shall be resolved by the Med-Arbiter. The decision 

shall be released in the same manner prescribed in Section 15, Rule XI. 

When warranted, the Med-Arbiter or Bureau Director shall order the restitution of 

union funds by the responsible officer(s) in the same decision. 

Section 14. Appeal. Appeal from the decision of the Med-Arbiter denying the conduct 

of audit and from the results of the audit may be filed by any of the parties with the Bureau. 

Decisions rendered by the Bureau after the conduct of audit in the exercise of its original 

jurisdiction may be appealed to the Office of the Secretary. Both shall be resolved in accordance 

with the provisions of Section 16, Rule XI. 

Section 15. Period of inquiry or examination. No complaint for inquiry or examination 

of the financial and book of accounts as well as other records of any legitimate labor 

organization shall be entertained during the sixty (60) days freedom period or within thirty


(30) days immediately preceding the date of election of union officers. Any complaint or 

petition so filed shall be dismissed. 

RULE XIV 

CANCELLATION OF REGISTRATION OF LABOR ORGANIZATIONS 

Section 1. Where to file. Subject to the requirements of notice and due process, the 

registration of any legitimate independent labor union, chartered local and workersí association 

may be cancelled by the Regional Director, or in the case of federations, national or 

industry unions and trade union centers, by the Bureau Director, upon the filing of an 

independent complaint or petition for cancellation. 

Section 2. Who may file. Any party-in-interest may commence a petition for cancellation 

of registration, except in actions involving violations of Article 241, which can only be 

commenced by members of the labor organization concerned. 

Section 3. Grounds for cancellation. The following shall constitute grounds for cancellation 

of registration of labor organizations: 

a) misrepresentation, false statement or fraud in connection with the adoption or ratification 

of the constitution and by-laws or amendments thereto, the minutes of ratification, the list 

of members who took part in the ratification of the constitution and by-laws or amendments 

thereto, the minutes of ratification, the list of members who took part in the ratification; 

b) failure to submit the documents mentioned in the preceding paragraph within thirty (30) 

days from adoption or ratification of the constitution and by-laws or amendments thereto; 

c) misrepresentation, false statements or fraud in connection with the election of officers, 

minutes of the election of officers, the list of voters, failure to submit these documents 

together with the list of the newly elected or appointed officers and their postal address 

within thirty (30) days from election; 

d) failure to submit the annual financial report to the Bureau within thirty (30) days after the 

close of every fiscal year and misrepresentation, false entries or fraud in the preparation 

of the financial report; 

e) acting as a labor contractor or engaging in the ìcaboî system, or otherwise engaging in 

any activity prohibited by law; 

f) entering into collective bargaining agreements which provide for terms and conditions of 

employment below minimum standards established by law; 

g) commission of any of the acts enumerated under Article 241 of the Labor Code; provided 

that no petition for cancellation based on this ground may be granted unless supported by 

at least thirty (30%) percent of all the members of the respondent labor organization; 

h) asking for or accepting attorneyís fees or negotiation fees from the employer; 

i) other than for mandatory activities under the Labor Code, checking off special assessments 

or any other fees without duly signed individual written authorizations of the members; 

j) failure to submit list of individual members to the Bureau once a year or whenever required 

by the Bureau; 

k) failure to comply with the requirements of registration prescribed under Rules III and IV. 

Section 4. Action on the petition. The petition shall be resolved by the Regional 

Director in accordance with Rule XI, unless the petition is based on paragraphs (d) and (j) of

370 


the foregoing section or non-compliance with the labor organizationís reportorial obligations, 

in which case the petition shall be acted upon pursuant to the following Rule. 

RULE XV 

CANCELLATION OF REGISTRATION OF LABOR ORGANIZATIONS 

DUE TO NON-COMPLIANCE WITH THE REPORTORIAL REQUIREMENTS 

Section 1. When proper. Where a registered labor organization in the private sector 

failed to submit the reports required under Rule V for five (5) consecutive years despite 

notices for compliance sent by the Labor Relations Division or the Bureau, the latter may 

cause the institution of the administrative process for cancellation of its registration, upon its 

own initiative or upon complaint filed by any party-in-interest. 

Section 2. Procedure. The Labor Relations Division of the Regional Office shall make 

a report of the labor organizationís non-compliance and submit the same to the Bureau for 

verification with its records. The Bureau shall send by registered mail with return card to the 

labor organization concerned, a notice for compliance indicating the documents it failed to 

submit and the corresponding period in which they were required, with notice to comply with 

the said reportorial requirements and to submit proof thereof to the Bureau within ten (10) 

days from receipt thereof. 

Where no response is received by the Bureau within thirty (30) days from the release 

of the first notice, another notice for compliance shall be made by the Bureau, with warning 

that failure on its part to comply with the reportorial requirements within the time specified 

shall cause the continuation of the proceedings for the administrative cancellation of its 

registration. 

Section 3. Publication of notice of cancellation of registration. Where no response 

is again received by the Bureau within thirty (30) days from release of the second notice, the 

Bureau shall cause the publication of the notice of cancellation of registration of the labor 

organization in two (2) newspapers of general circulation. The Bureau may conduct an 

investigation within the employerís premises and at the labor organizationís last known address 

to verify the latterís existence. 

Section 4. Cancellation of registration. Where no response is received by the Bureau 

within thirty (30) days from date of publication, or where the Bureau has verified the 

dissolution of the labor organization, it shall order the cancellation of registration of the labor 

organization and cause its de-listing from the roster of legitimate labor organizations. 

Section 5. Conditions for administrative cancellation of certificate of registration. 

No registration of labor organization shall be cancelled administratively by the Bureau 

due to non-compliance with the reportorial requirements unless: 

a) non-compliance is for a continuous period of five (5) years; 

b) the procedures laid down in this Rule were complied with; and 

c) the labor organization concerned has not responded to any of the notices sent by the 

Bureau, or its notices were returned unclaimed. 

RULE XVI 

COLLECTIVE BARGAINING


Section 1. Policy. It is the policy of the State to promote and emphasize the primacy of 

free and responsible exercise of the right to self-organization and collective bargaining, 

either through single enterprise level negotiations or through the creation of a mechanism by 

which different employers and recognized or certified labor unions in their establishments 

bargain collectively. 

Section 2. Disclosure of information. In collective bargaining, the parties shall, at the 

request of either of them, make available such up-to-date financial information on the economic 

situation of the undertaking, which is normally submitted to relevant government agencies, 

as is material and necessary for meaningful negotiations. Where the disclosure of 

some of this information could be prejudicial to the undertaking, its communication may be 

made condition upon a commitment that it would be regarded as confidential to the extent 

required. The information to be made available may be agreed upon between the parties to 

collective bargaining. 

Section 3. When single enterprise bargaining available. Any voluntarily recognized 

or certified labor union may demand negotiations with its employer for terms and conditions 

of work covering employees in the bargaining unit concerned. 

Section 4. Procedure in single enterprise bargaining. A recognized or certified 

labor union that desires to negotiate with its employer shall submit such intention in writing to 

the employer, together with its proposals for collective bargaining. 

The recognized or certified labor union and its employer may adopt such procedures 

and processes they may deem appropriate and necessary for the early termination of their 

negotiations. They shall name their respective representatives to the negotiation, schedule 

the number and frequency of meetings, and agree on wages, benefits and other terms and 

conditions of work for all employees covered in the bargaining unit. 

Section 5. When multi-employer bargaining available. A legitimate labor union(s) 

and employers may agree in writing to come together for the purpose of collective bargaining, 

provided: 

a) only legitimate labor unions who are incumbent exclusive bargaining agents may participate 

and negotiate in multi-employer bargaining; 

b) only employers with counterpart legitimate labor unions who are incumbent bargaining 

agents may participate and negotiate in multi-employer bargaining; and 

c) only those legitimate labor unions who pertain to employer units who consent to multiemployer 

bargaining may participate in multi-employer bargaining. 

Section 6. Procedure in multi-employer bargaining. Multi-employer bargaining may 

be initiated by the labor unions or by the employers. 

a) Legitimate labor unions who desire to negotiate with their employers collectively shall 

execute a written agreement among themselves, which shall contain the following: 

1) the names of the labor unions who desire to avail of multi-employer bargaining; 

2) each labor union in the employer unit; 

3) the fact that each of the labor unions are the incumbent exclusive bargaining agents 

for their respective employer units;

372 


4) the duration of the collective bargaining agreements, if any, entered into by each 

labor union with their respective employers. 

Legitimate labor unions who are members of the same registered federation, national, or 

industry union are exempt from execution of this written agreement. 

b) The legitimate labor unions who desire to bargain with multi-employers shall send a written 

notice to this effect to each employer concerned. The written agreement stated in the 

preceding paragraph, or the certificates of registration of the federation, national, or 

industry union, shall accompany said notice. 

Employers who agree to group themselves or use their existing associations to engage in 

multi-employer bargaining shall send a written notice to each of their counterpart legitimate 

labor unions indicating their desire to engage in multi-employer bargaining. Said 

notice shall indicate the following: 

1) the names of the employers who desire to avail of multi-employer bargaining; 

2) their corresponding legitimate labor organizations; 

3) the fact that each corresponding legitimate union is any incumbent exclusive bargaining 

agent; 

4) the duration of the current collective bargaining agreement, if any, entered into by 

each employer with the counterpart legitimate labor union. 

(c) Each employer or concerned labor union shall express its willingness or refusal to participate 

in multi-employer bargaining in writing, addressed to its corresponding exclusive 

bargaining agent or employer. Negotiations may commence only with regard to respective 

employers and labor unions who consent to participate in multi-employer bargaining; 

(d) During the course of negotiations, consenting employers and the corresponding legitimate 

labor unions shall discuss and agree on the following: 

1) the manner by which negotiations shall proceed; 

2) the scope and coverage of the negotiations and the agreement; and 

3) where appropriate, the effect of the negotiations on current agreements or conditions 

of employment among the parties. 

Section 7. Posting and registration of collective bargaining agreement. Two (2) 

signed copies of collective bargaining agreement reached through multi-employer bargaining 

shall be posted for at least five (5) days in two conspicuous areas in each workplace of 

the employer units concerned. Said collective bargaining agreement shall affect only those 

employees in the bargaining units who have ratified it. 

The same collective bargaining agreement shall be registered with the Department in 

accordance with the following Rule. 

RULE XVII 

REGISTRATION OF COLLECTIVE BARGAINING AGREEMENTS 

Section 1. Where to file. Within thirty (30) days from execution of a collective bargaining 

agreement, the parties thereto shall submit two (2) duly signed copies of the agree-


ment to the Regional Office which issued the certificate of registration/certificate of creation 

of chartered local of the labor union-party to the agreement. Where the certificate of creation 

of the concerned chartered local was issued by the Bureau, the agreement shall be 

filed with the Regional Office which has jurisdiction over the place where it principally operates. 

Multi-employer collective bargaining agreements shall be filed with the Bureau. 

Section 2. Requirements for registration. The application for CBA registration shall 

be accompanied by the original and two (2) duplicate copies of the following documents 

which must be certified under oath by the representative(s) of the employer(s) and labor 

union(s) concerned 

a) the collective bargaining agreement; 

b) a statement that the collective bargaining agreement was posted in at least two (2) conspicuous 

places in the establishment or establishments concerned for at least five (5) 

days before its ratification; and 

c) a statement that the collective bargaining agreement was ratified by the majority of the 

employees in the bargaining unit of the employer or employers concerned. 

No other document shall be required in the registration of collective bargaining agreements. 

Section 3. Payment of registration fee. The certificate of registration of collective 

bargaining agreement shall be issued by the Regional Office upon payment of the prescribed 

registration fee. 

Section 4. Action on the application. The Regional Office and the Bureau shall act 

on applications for registration of collective bargaining agreements within five (5) days from 

receipt thereof, either by: (a) approving the application and issuing the certificate of registration; 

or (b) denying the application for failure of the applicant to comply with the requirements 

for registration. 

Where the documents supporting the application are not complete or are not verified 

under oath, the Regional Office or the Bureau shall, within five (5) days from receipt of the 

application, notify the applicants in writing of the requirements needed to complete the application. 

Where the applicants fail to complete the requirements within ten (10) days from 

receipt of notice, the application shall be denied without prejudice. 

Section 5. Denial of registration; grounds for appeal. The denial of registration 

shall be in writing, stating in clear terms the reasons therefor and served upon the applicant 

union and employer within twenty-four (24) hours from issuance. The denial by the Regional 

Office of the registration of single enterprise collective bargaining agreements may be appealed 

to the Bureau within ten (10) days from receipt of the notice of denial. The denial by 

the Bureau of the registration of multi-employer collective bargaining agreements may be 

appealed to the Office of the Secretary within the same period. 

The memorandum of appeal shall be filed with the Regional Office or the Bureau, as the 

case may be. The same shall be transmitted, together with the entire records of the applica-

374 


tion, to the Bureau or the Office of the Secretary, as the case may be, within twenty-four (24) 

hours from receipt of the memorandum of appeal. 

Section 6. Period and manner of disposition of appeal. The Bureau and the Office 

of the Secretary shall resolve the appeal within the same period and in the same manner 

prescribed in Rule XI of these Rules. 

Section 7. Term of representation status; contract bar rule. The representation 

status of the incumbent exclusive bargaining agent which is a party to a duly registered 

collective bargaining agreement shall be for a term of five (5) years from the date of the 

effectivity of the collective bargaining agreement. No petition questioning the majority status 

of the incumbent exclusive bargaining agent or petition for certification election filed outside 

of the sixty-day period immediately preceding the expiry date of such five-year term shall be 

entertained by the Department. 

The five-year representation status acquired by an incumbent bargaining agent either 

through single enterprise collective bargaining or multi-employer bargaining shall not be 

affected by a subsequent collective bargaining agreement executed between the same bargaining 

agent and the employer during the same five-year period. 

Section 8. Re-negotiation of collective bargaining agreements. All provisions of a 

collective bargaining agreement, except the representation status of the incumbent bargaining 

agent shall, as a matter of right, be renegotiated not later than three (3) years after its 

execution. 

The re-negotiated collective bargaining agreement shall be ratified and registered with 

the same Regional Office where the preceding agreement was registered. The same requirements 

and procedure in the registration of collective bargaining agreements prescribed 

in the preceding rules shall be applied. 

RULE XVIII 

CENTRAL REGISTRY OF LABOR ORGANIZATIONS AND 

COLLECTIVE BARGAINING AGREEMENTS 

Section 1. Forms for registration. Consistent with the policy of the State to promote 

unionism, the Bureau shall devise or prescribe such forms as are necessary to facilitate the 

process of registration of labor organizations and collective bargaining agreements or of 

compliance with all documentary or reporting requirements prescribed in these Rules. 

Section 2. Transmittal of records; central registry. The Labor Relations Division of 

the Regional Offices shall, within forty-eight (48) hours from issuance of a certificate of 

creation of chartered locals or certificate of registration of labor organizations and collective 

bargaining, transmit to the Bureau a copy of such certificates accompanied by a copy of the 

documents supporting registration. 

The Labor Relations Division of the Regional Office shall also transmit to the Bureau a 

copy of every final decision canceling or revoking the legitimate status of a labor organization 

or collective bargaining agreement, indicating therein the date when the decision became 

final.


In cases of chartering and affiliation or compliance with the reporting requirements 

under Rule V, the Regional Office shall transmit within two (2) days from receipt thereof the 

original set of documents to the Bureau, retaining one set of documents for its file. 

RULE XIX 

GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATION 

Section 1. Establishment of grievance machinery. The parties to a collective bargaining 

agreement shall establish a machinery for the expeditious resolution of grievances 

arising from the interpretation or implementation of the collective bargaining agreement and 

those arising from the interpretation or enforcement of company personnel policies. Unresolved 

grievances will be referred to voluntary arbitration and for this purpose, parties to a 

collective bargaining agreement shall name and designate in advance a voluntary arbitrator 

or panel of voluntary arbitrators, or include in the agreement a procedure for the selection of 

such voluntary arbitrator or panel of voluntary arbitrators, preferably from the listing of qualified 

voluntary arbitrators duly accredited by the Board. 

In the absence of applicable provision in the collective bargaining agreement, a grievance 

committee shall be created within ten (10) days from signing of the collective bargaining 

agreement. The committee shall be composed of at least two (2) representatives each 

from the members of the bargaining unit and the employer, unless otherwise agreed upon by 

the parties. The representatives from among the members of the bargaining unit shall be 

designated by the union. 

Section 2. Procedure in handling grievances. In the absence of a specific provision 

in the collective bargaining agreement or existing company practice prescribing for the 

procedures in handling grievance, the following shall apply: 

a) An employee shall present his grievance or complaint orally or in writing to the shop 

steward. Upon receipt thereof, the shop steward shall verify the facts and determine 

whether or not the grievance is valid. 

b) If the grievance is valid, the shop steward shall immediately bring the complaint to the 

employeeís immediate supervisor. The shop steward, the employee and his immediate 

supervisor shall exert efforts to settle the grievance at their level. 

c) If no settlement is reached, the grievance shall be referred to the grievance committee 

which shall have ten (10) days to decide the case. 

Where the issue involves or arises from the interpretation or implementation of a provision 

in the collective bargaining agreement, or from any order, memorandum, circular or 

assignment issued by the appropriate authority in the establishment, and such issue cannot 

be resolved at the level of the shop steward or the supervisor, the same may be referred 

immediately to the grievance committee. 

Section 3. Submission to voluntary arbitration. Where grievance remains unresolved, 

either party may serve notice upon the other of its decision to submit the issue to 

voluntary arbitration. The notice shall state the issue or issues to be arbitrated, copy thereof 

furnished the board or the voluntary arbitrator or panel of voluntary arbitrators named or 

designated in the collective bargaining agreement.

376 


If the party upon whom the notice is served fails or refuses to respond favorably within 

seven (7) days from receipt thereof, the voluntary arbitrator or panel of voluntary arbitrators 

designated in the collective bargaining agreement shall commence voluntary arbitration proceedings. 

Where the collective bargaining agreement does not so designate, the board shall 

call the parties and appoint a voluntary arbitrator or panel of voluntary arbitrators, who shall 

thereafter commence arbitration proceedings in accordance with the preceeding paragraph. 

In instances where parties fail to select a voluntary arbitrator or panel of voluntary 

arbitrators, the regional branch of the Board shall designate the voluntary arbitrator or panel 

of voluntary arbitrators, as may be necessary, which shall have the same force and effect as 

if the parties have selected the arbitrator. 

Section 4. Jurisdiction of voluntary arbitrator or panel of voluntary arbitrators. 

The voluntary arbitrator or panel of voluntary arbitrators shall have exclusive and original 

jurisdiction to hear and decide all grievances arising from the implementation or interpretation 

of the collective bargaining agreements and those arising from the interpretation or 

enforcement of company personnel policies which remain unresolved after exhaustion of the 

grievance procedure. 

They shall also have exclusive and original jurisdiction, to hear and decide wage distortion 

issues arising from the application of any wage orders in organized establishments, as 

well as unresolved grievances arising from the interpretation and implementation of the productivity 

incentive programs under RA 6971. 

The National Labor Relations Commission, its regional branches and Regional Directors 

of the Department of Labor and Employment shall not entertain disputes, grievances or 

matters under the exclusive and original jurisdiction of the voluntary arbitrator or panel of 

voluntary arbitrators and shall immediately dispose and refer the same to the appropriate 

grievance machinery or voluntary arbitration provided in the collective bargaining agreement. 

Upon agreement of the parties, any other labor dispute may be submitted to a voluntary 

arbitrator or panel of voluntary arbitrators. Before or at any stage of the compulsory arbitration 

process, the parties may opt to submit their dispute to voluntary arbitration. 

Section 5. Powers of voluntary arbitrator or panel of voluntary arbitrators. The 

voluntary arbitrator or panel of voluntary arbitrators shall have the power to hold hearings, 

receive evidence and take whatever action is necessary to resolve the issue/s subject of the 

dispute. 

The voluntary arbitrator or panel of voluntary arbitrators may conciliate or mediate to 

aid the parties in reaching a voluntary settlement of the dispute. 

Section 6. Procedure. All parties to the dispute shall be entitled to attend the arbitration 

proceedings. The attendance of any third party or the exclusion of any witness from the 

proceedings shall be determined by the voluntary arbitrator or panel of voluntary arbitrators. 

Hearing may be adjourned for cause or upon agreement by the parties. 

Unless the parties agree otherwise, it shall be mandatory for the voluntary arbitrator or 

panel of voluntary arbitrators to render an award or decision within twenty (20) calendar 

days from the date of submission for resolution.


Failure on the part of the voluntary arbitrator to render a decision, resolution, order or 

award within the prescribed period, shall upon complaint of a party, be sufficient ground for 

the Board to discipline said voluntary arbitrator, pursuant to the guidelines issued by the 

Secretary. In cases that the recommended sanction is de-listing, it shall be unlawful for the 

voluntary arbitrator to refuse or fail to turn over to the board, for its further disposition, the 

records of the case within ten (10) calendar days from demand thereof. 

Section 7. Finality of Award/Decision. The decision, order, resolution or award of the 

voluntary arbitrator or panel of voluntary arbitrators shall be final and executory after ten (10) 

calendar days from receipt of the copy of the award or decision by the parties and it shall not 

be subject of a motion for reconsideration. 

Section 8. Execution of Award/Decision. Upon motion of any interested party, the 

voluntary arbitrator or panel of voluntary arbitrators or the Labor Arbiter in the region where 

the movant resides, in case of the absence or incapacity for any reason of the voluntary 

arbitrator or panel of voluntary arbitrators who issued the award or decision, may issue a writ 

of execution requiring either the Sheriff of the Commission or regular courts or any public 

official whom the parties may designate in the submission agreement to execute the final 

decision, order or award. 

Section 9. Cost of voluntary arbitration and voluntary arbitratorís fee. The parties 

to a collective bargaining agreement shall provide therein a proportionate sharing scheme 

on the cost of voluntary arbitration including the voluntary arbitratorís fee. The fixing of fee of 

voluntary arbitrators or panel of voluntary arbitrators, whether shouldered wholly by the 

parties or subsidized by the Special Voluntary Arbitration Fund, shall take into account the 

following factors: 

a) Nature of the case; 

b) Time consumed in hearing the case; 

c) Professional standing of the voluntary arbitrator; 

d) Capacity to pay of the parties; and 

e) Fees provided for in the Revised Rules of Court. 

Unless the parties agree otherwise, the cost of voluntary arbitration proceedings and 

voluntary arbitratorís fee shall be shared equally by the parties. 

Parties are encouraged to set aside funds to answer for the cost of voluntary arbitration 

proceedings including voluntary arbitratorís fee. In the event the said funds are not sufficient 

to cover such expenses, an amount by way of subsidy taken out of the Special Voluntary 

Arbitration fund may be availed of by either or both parties subject to the guidelines on 

voluntary arbitration to be issued by the Secretary. 

Section 10. Maintenance of case records by the Board. The Board shall maintain all 

records pertaining to a voluntary arbitration case. In all cases, the Board shall be furnished a 

copy of all pleadings and submitted to the voluntary arbitrator as well as the orders, awards 

and decisions issued by the voluntary arbitrator. 

The records of a case shall be turned over by the voluntary arbitrator or panel of 

voluntary arbitrators to the concerned regional branch of the Board within ten (10) days 

upon satisfaction of the final arbitral award/order/decision.

378 


RULE XX 

LABOR EDUCATION AND RESEARCH 

Section 1. Labor education of workers and employees. The Department shall develop, 

promote and implement appropriate labor education and research programs on the 

rights and responsibilities of workers and employers. 

It shall be the duty of every legitimate labor organization to implement a labor education 

program for its members on their rights and obligations as unionists and as employees. 

Section 2. Mandatory conduct of seminars. Subject to the provisions of Article 241, 

it shall be mandatory for every legitimate labor organization to conduct seminars and similar 

activities on existing labor laws, collective agreements, company rules and regulations and 

other relevant matters. The union seminars and similar activities may be conducted independently 

of or in cooperation with the Department and other labor education institutions. 

Section 3. Special fund for labor education and research. Every legitimate labor 

organization shall, for the above purpose, maintain a special fund for labor education and 

research. Existing strike funds may, in whole or in part, be transformed into labor education 

and research funds. The labor organization may also periodically assess and collect reasonable 

amounts from its members for such funds. 

RULE XXI 

LABOR-MANAGEMENT AND OTHER COUNCILS 

Section 1. Creation of labor-management and other councils. The Department 

shall promote the formation of labor-management councils in organized and unorganized 

establishments to enable the workers to participate in policy and decision-making processes 

in the establishment, insofar as said processes will directly affect their rights, benefits and 

welfare, except those which are covered by collective bargaining agreements or are traditional 

areas of bargaining. 

The Department shall promote other labor-management cooperation schemes and, 

upon its own initiative or upon the request of both parties, may assist in the formulation and 

development of programs and projects on productivity, occupational safety and health, improvement 

of quality of work life, product quality improvement, and other similar scheme. 

In line with the foregoing, the Department shall render, among others, the following 

services: 

a) Conduct awareness campaigns; 

b) Assist the parties in setting up labor-management structures, functions and procedures; 

c) Provide process facilitators upon request of the parties; and 

d) Monitor the activities of labor-management structures as may be necessary and conduct 

studies on best practices aimed at promoting harmonious labor-management relations. 

Section 2. Selection of representatives. In organized establishments, the workersí 

representatives to the council shall be nominated by the exclusive bargaining representative. 

In establishments where no legitimate labor organization exists, the workers representative 

shall be elected directly by the employees at large.


RULE XXII 

CONCILIATION, STRIKES AND LOCKOUTS 

Section 1. Conciliation of labor-management disputes. The board may, upon request 

of either of both parties or upon its own initiative, provide conciliation-mediation services 

to labor disputes other than notices of strikes or lockouts. Conciliation cases which are 

not subjects of notices of strike or lockout shall be docketed as preventive mediation cases. 

Section 2. Privileged communication. Information and statements given in confidence 

at conciliation proceedings shall be treated as privileged communications. Conciliators 

and similar officials shall not testify in any court or body regarding any matter taken up 

at conciliation proceedings conducted by them. 

Section 3. Issuance of subpoena. The Board shall have the power to require the 

appearance of any parties at conciliation meetings. 

Section 4. Compromise Agreements. Any compromise settlement, including those 

involving labor standard laws, voluntarily agreed upon by the parties with the assistance of 

the Board and its regional branches shall be final and binding upon the parties. The National 

Labor Relations Commission or any court shall not assume jurisdiction over issues involved 

therein except in case of non-compliance thereof or if there is prima facie evidence that the 

settlement was obtained through fraud, misrepresentation, or coercion. Upon motion of any 

interested party, the Labor Arbiter in the region where the agreement was reached may 

issue a writ of execution requiring a sheriff of the Commission or the courts to enforce the 

terms of the agreement. 

Section 5. Grounds for strike or lockout. A strike or lockout may be declared in 

cases of bargaining deadlocks and unfair labor practices. Violations of collective bargaining 

agreements, except flagrant and/or malicious refusal to comply with its economic provisions, 

shall not be considered unfair labor practice and shall not be strikeable. No strike or lockout 

may be declared on grounds involving inter-union and intra-union disputes without first having 

filed a notice of strike or lockout or without the necessary strike or lockout vote having 

been obtained and reported to the Board. Neither will a strike be declared after assumption 

of jurisdiction by the Secretary or after certification or submission of the dispute to compulsory 

or voluntary arbitration or during the pendency of cases involving the same grounds for 

the strike or lockout. 

Section 6. Who may declare a strike or lockout. Any certified or duly recognized 

bargaining representative may declare a strike in cases of bargaining deadlocks and unfair 

labor practices. The employer may declare a lockout in the same cases. In the absence of a 

certified or duly recognized bargaining representative, any legitimate labor organization in 

the establishment may declare a strike but only on grounds of unfair labor practices. 

Section 7. Notice of strike or lockout. In bargaining deadlocks, a notice of strike or 

lockout shall be filed with the regional branch of the Board at least thirty (30) days before the 

intended date thereof, a copy of said notice having been served on the other party concerned. 

In cases of unfair labor practice, the period of notice shall be fifteen (15) days. 

However, in case of unfair labor practice involving the dismissal from employment of any 

union officer duly elected in accordance with the union constitution and by-laws which may 

constitute union-busting where the existence of the union is threatened, the fifteen-day cool-

380 


ing-off period shall not apply and the union may take action immediately after the strike vote 

is conducted and the results thereof submitted to the appropriate regional branch of the 

Board. 

Section 8. Contents of notice. The notice shall state, among others, the names and 

addresses of the employer and the union involved, the nature of the industry to which the 

employer belongs, the number of union members and of the workers in the bargaining unit, 

and such other relevant data as may facilitate the settlement of the dispute, such as a brief 

statement or enumeration of all pending labor disputes involving the same parties. 

In cases of bargaining deadlocks, the notice shall, as far as practicable, further state 

the unresolved issues in the bargaining negotiations and be accompanied by the written 

proposals of the union, the counter-proposals of the employer and the proof of a request for 

conference to settle the differences. In cases of unfair labor practices, the notice shall, as 

far as practicable, state the acts complained of and the efforts taken to resolve the dispute 

amicably. 

In case a notice does not conform with the requirements of this and the foregoing 

section/s, the regional branch of the Board shall inform the concerned party of such fact. 

Section 9. Action on Notice. Upon receipt of the notice, the regional branch of the 

Board shall exert all efforts at mediation and conciliation to enable the parties to settle the 

dispute amicably. The regional branch of the Board may, upon agreement of the parties, 

treat a notice as a preventive mediation case. It shall also encourage the parties to submit the 

dispute to voluntary arbitration. 

During the proceedings, the parties shall not do any act which may disrupt or impede 

the early settlement of the dispute. They are obliged, as part of their duty to bargain collectively 

in good faith and to participate fully and promptly in the conciliation meetings called by 

the regional branch of the Board. 

A notice, upon agreement of the parties, may be referred to alternative modes of 

dispute resolution, including voluntary arbitration. 

Section 10. Strike or lockout vote. A decision to declare a strike must be approved 

by a majority of the total union membership in the bargaining unit concerned obtained by 

secret ballot in meetings or referenda called for the purpose. A decision to declare a lockout 

must be approved by a majority of the Board of Directors of the employer, corporation or 

association or the partners in a partnership obtained by a secret ballot in a meeting called for 

the purpose. 

The regional branch of the Board may, at its own initiative or upon request of any 

affected party, supervise the conduct of the secret balloting. In every case, the union or the 

employer shall furnish the regional branch of the Board and the notice of meetings referred 

to in the preceding paragraph at least twenty-four (24) hours before such meetings as well 

as the results of the voting at least seven (7) days before the intended strike or lockout, 

subject to the cooling-off period provided in this Rule. 

Section 11. Declaration of strike or lockout. Should the dispute remain unsettled 

after the lapse of the requisite number of days from the filing of the notice of strike or lockout


and of the results of the election required in the preceding section, the labor union may strike 

or the employer may lock out its workers. The regional branch of the Board shall continue 

mediating and conciliating. 

Section 12. Improved offer balloting. In case of a strike, the regional branch of the 

Board shall, at its own initiative or upon the request of any affected party, conduct a referendum 

by secret balloting on the improved offer of the employer on or before the 30th day of 

strike. When at least a majority of the union members vote to accept the improved offer, the 

striking workers shall immediately return to work and the employer shall thereupon re-admit 

them upon the signing of the agreement. 

In case of a lockout, the regional branch of the Board shall also conduct a referendum 

by secret balloting on the reduced offer of the union on or before the 30th day of the lockout. 

When at least a majority of the board of directors or trustees or the partners holding the 

controlling interest in the case of partnership vote to accept the reduced offer, the workers 

shall immediately return to work and the employer shall thereupon readmit them upon the 

signing of the agreement. 

Section 13. Peaceful picketing. Workers shall have the right to peaceful picketing. No 

person engaged in picketing shall commit any act of violence, coercion or intimidation or 

obstruct the free ingress to or egress from the employerís premises for lawful purposes, or 

obstruct public thoroughfares. 

No person shall obstruct, impede or interfere with, by force, violence, coercion, threats 

or intimidation, any peaceful picketing by workers during any labor controversy or in the 

exercise of the right to self-organization or collective bargaining or shall aid or abet such 

obstruction or interference. No employer shall use or employ any person to commit such 

acts nor shall any person be employed for such purpose. 

Section 14. Injunctions. No court or entity shall enjoin any picketing, strike or lockout, 

except as provided in Articles 218 and 263 of the Labor Code. 

The Commission shall have the power to issue temporary restraining orders in such 

cases but only after due notice and hearing and in accordance with its rules. The reception 

of evidence for the application of a writ of injunction may be delegated by the Commission to 

any Labor Arbiter who shall submit his recommendations to the Commission for its consideration 

and resolution. 

Any ex parte restraining order issued by the Commission, or its chairman or Vice- 

Chairman where the Commission is not in session and as prescribed by its rules, shall be 

valid for a period not exceeding twenty (20) days. 

Section 15. Criminal prosecution. The regular courts shall have jurisdiction over any 

criminal action under Article 272 of the Labor Code. 

RULE XXIII 

CONTEMPT 

Section 1. Direct contempt; Person guilty of misbehavior. A person guilty of 

misbehavior in the presence of or so near the Secretary, the Chairman or any member of 

the Commission, Bureau Director or any Labor Arbiter as to obstruct or interrupt the pro-

382 


ceedings before the same, including disrespect toward said officials, offensive personalities 

toward others, or refusal to be sworn or to answer as a witness or to subscribe an affidavit or 

deposition when lawfully required to do so may be summarily adjudged in direct contempt by 

said officials and punished by fines not exceeding five hundred pesos (P500.00) or imprisonment 

not exceeding five (5) days or both, if it be the Secretary, the Commission or 

members thereof, or a fine not exceeding one hundred pesos (P100.00) or imprisonment not 

exceeding one (1) day, or both, if it be the Bureau Director or Labor Arbiter. 

The person adjudged in direct contempt by a Labor Arbiter may appeal to the Commission 

while the person adjudged in direct contempt by the Bureau Director may appeal to the 

Secretary. The execution of the judgment shall be suspended pending the resolution of the 

appeal upon the filing by such person of a bond on condition that he will abide by and 

perform the judgment should the appeal be decided against him. The judgment of the Commission 

and the Secretary is immediately executory and inappealable. 

Section 2. Indirect contempt. Indirect contempt shall be dealt with by the Secretary, 

Commission, Bureau Director or Labor Arbiter in the manner prescribed under Rule 71 of 

the Revised Rules of Court. 

RULE XXIV 

EXECUTION OF DECISIONS, AWARDS OR ORDERS 

Section 1. Execution of decisions, orders or awards. (a) The Secretary or the 

Bureau or Regional Director, the Labor Arbiter, the Med-Arbiter or Voluntary Arbitrator may, 

upon his/her own initiative or on motion of any interested party, issue a writ of execution on a 

judgment within five (5) years from the date it becomes final and executory, requiring the 

Sheriff or the duly deputized officer to execute or enforce their respective final decisions, 

orders and awards. 

(b) The Secretary and the Chairman of the Commission may designate special sheriffs and 

take any measure under existing laws to ensure compliance with their decisions, orders or 

awards and those of the Labor Arbiters and voluntary arbitrators, including the imposition of 

administrative fines, which shall not be less than five hundred (P500.00) pesos nor more 

than ten thousand (P10,000.00) pesos. 

(c) Alternatively, the Secretary, the Commission, any Labor Arbiter, the Regional Director 

or the Director of the Bureau of Labor Relations in appropriate cases may deputize the 

Philippine National Police or any law enforcement agencies in the enforcement of final 

awards, orders or decisions. 

RULE XXV 

GENERAL PROVISIONS 

Section 1. Incidental motions will not be given due course. In all proceedings at all 

levels, motions for dismissals or any other incidental motions shall not be given due course, 

but shall remain as part of the records for whatever they may be worth when the case is 

decided on the merits. 

Section 2. Non-intervention of outsiders in labor disputes. No person other than 

the interested parties, their counsels or representatives may intervene in labor disputes 

pending before the Regional Office, the Bureau, Labor Arbiters, the compulsory or voluntary


arbitrators, the Commission, and the Secretary. Any violation of this provision will subject the 

outsider to the administrative fines and penalties provided for in the Code. 

Section 3. When complaint deemed filed. A complaint is deemed filed upon receipt 

thereof by the appropriate agency which has jurisdiction over the subject matter and over the 

parties. 

Section 4. Check-off from non-members. Pursuant to Article 248 (e) of the Code, 

the employer shall check-off from non-union members within a collective bargaining unit the 

same reasonable fee equivalent to the dues and other fees normally paid by union members 

without the need for individual check-off authorizations. 

RULE XXVI 

TRANSITORY PROVISIONS 

Section 1. Rules governing prior applications, petitions, complaints, cases. All 

applications, petitions, complaints, cases or incidents commenced or filed prior to the effectivity 

of these amendatory Rules shall be governed by the old rules as amended by Department 

Order No. 9, series of 1997. 

Section 2. Equity of the incumbent. Industry unions or trade union centers registered 

by virtue of the old rules as amended by Department Order No. 9, series of 1997, shall 

maintain their legitimate status, with all rights and obligations appurtenant thereto. 

ARTICLE II. All other rules, regulations, issuances, circulars and administrative 

orders inconsistent herewith are hereby superseded. If any part or provision of these 

Rules shall be held unconstitutional or invalid, other parts or provisions thereof which 

are not affected thereby shall continue to be in full force and effect. 

ARTICLE III. The foregoing rules shall take effect two weeks after completion of 

publication in one (1) newspaper of general circulation. 



Secretary 

DEPARTMENT OF SCIENCE AND TECHNOLOGY 


DOST Memorandum Circular No. 001, s. 2002 

Providing for a Mechanism to Operationalize Intellectual Property and 

Technology Management in the Department of Science and Technology 

and the National Research and Development System, and Amending 

Pertinent Provisions of Memorandum Circulars 001 (Series of 1998) 

and 002 (Series of 1992), and for Other Purposes*

384 




DEPARTMENT OF TOURISM 


(SGD.) ESTRELLA F. ALABASTRO 

Secretary 

Rules and Regulations Implementing Republic Act No. 9174, 

An Act Amending the Balikbayan Program (RA 6768) 

Pursuant to Section 8 of Republic Act 9174, the following Rules and Regulations of the 

Balikbayan Program are hereby promulgated for the effective implementation thereof. 

Rule I. Coverage - These rules and regulations shall govern the benefits enumerated 

under Republic Act No. 9174. 

Rule II. Definition of Terms - For the purpose of this Act: 

1. The Term ìbalikbayanî shall mean: 

a. Filipino citizen who has been continuously out of the Philippines for a period of 

at least one (1) year from the date of last departure; 

b. A Filipino overseas worker; or 

c. A former Filipino citizen and his or her family, as this term is defined hereunder, 

who had been naturalized in a foreign country and comes or returns to the 

Philippines. 

The term ìfamilyî shall mean the spouse and the children of the balikbayan who 

are not balikbayans in their own right travelling with the latter to the Philippines. 

The term ìminorî shall mean an individual whose age does not exceed 18 years old. 

2. The term ìlivelihood toolsî shall mean: 

a. Instruments used by hand or by machine necessary to a person in the practice 

of his or her trade, vocation or profession, such as hand tools, power tools, 

precision tools, farm tools, tools for dressmaking, shoe repair, beauty parlor, 

barber shop and the like, as may be determined by the Overseas Workers Welfare 

Administration (OWWA), for purposes of application or use in a livelihood 

undertaking.


b. A computer unit and its accessories. 

Rule III. Determination of the Balikbayan Status - The following are the BALIKBAYAN 

CATEGORIES: 

a. Filipino citizen who has been continuously out of the Philippines for a period 

of at least one (1) year from the date of last departure; 

b. A Filipino overseas worker; or 

c. Former Filipino with foreign passport and members of his or her family, meaning 

the spouse and children of balikbayan who are not balikbayans in their own 

right but who are travelling with the balikbayan. 

In the availment of incentives from the agencies concerned, without prejudice to 

the requirements for travel tax exemption as provide under existing laws, the 

following documents are to be presented to show proof of balikbayan status: 

a. Filipino citizen who has been continuously out of the country 

1. Philippine passport showing date of last departure 

b. Filipino overseas worker 

1. Passport and any of the following: 

- POEA approved contract of employment 

- Certificate of Contract of employment by the foreign employer 

- Certificate of employment issued by the Philippine Embassy/consulate 

- Contract Worker stamp on passport 

- Seamanís Service Record Book 

- E-Card (OFW electronic identification card) 

c. Foreign pasport holder 


- Old Philippine passport 

- Foreign naturalization papers to show former Philippine citizenship 

- Certification issued by the embassy or consulate of adoptive country that the 

individual is a former Filipino citizen 

d. Family members of the Balikbayan who are travelling with the balikbayan should 

present 


- Birth certificate in case of children 

- Marriage certificate in case of spouse 

- Adoption papers (proof of adoption) in case of legally adopted children

386 


Rule IV. Benefits and Privileges of the Balikbayan - Eligible participants in the program 

shall be entitled to the duty and tax-free maximum purchase of goods at Philippine 

duty-free shops operated by Duty Free Philippines pursuant to Executive Order No. 46, s. 

1986, in the amount of One Thousand Five Hundred United States dollars (US$1,500) or its 

equivalent in Philippine Peso and other acceptable foreign currencies subject to the following 

limitations: 

a. Purchases shall be made in US dollars or its equivalent in Philippine Peso and other 

acceptable foreign currencies based on the list of acceptable foreign currencies provided 

by the Bangko Sentral ng Pilipinas. 

b. The balikbayan shopping privilege provided for herein shall be subject to the following 

conditions: 

b.1 Purchases shall be made within fifteen (15) calendar days from the date of 

arrival: 

b.2 During the Christmas season, reckoned from November 15 to January 15, 

the privilege is extended to thirty (30) calendar days from the date of arrival; 

b.3 The privilege shall be availed of on a one time shopping basis only; 

b.4 In the case of senior citizens and handicapped balikbayan, they shall be 

allowed to enjoy the privilege within one (1) year from date of arrival in the country. 

c. The privilege is non-transferable, hence, purchases shall be made personally 

by the balikbayan, except under the following circumstances: 

c.1 That a balikbayan who has gone back abroad may still avail of the Kabuhayan 

shopping privilege provided for herein within a maximum period of one (1) year 

from date of arrival in the country, and that immediate family members of the 

balikbayan shall be allowed to claim the kabuhayan tools purchased. 

c.2 That an Overseas Filipino Worker (OFW), duly certified as such by the 

Philippine Overseas Employment Administration (POEA), or by the Overseas 

Worker Welfare Administration (OWWA) or by the Philippine Overseas Labor 

Officer, or by the embassy/consulate of the Philippines in the country where he 

or she had been deployed, taking into consideration the evidence of remittance, 

may opt to endorse in writing his or her kabuhayan shopping privilege to his or 

her immediate family members within the second degree of consanguinity or 

affinity residing in the Philippines once within two (2) years from the date of 

effectivity of his or her contract of employment and only during the duration of 

the same. 

d. The privilege may only be availed of by a balikbayan once a year; 

e. Only a balikbayan of majority age under Philippine laws can enjoy the privilege: 

Provided, however, that family members of the balikbayan who are minors 

shall continue to be entitled to purchase privilege not exceeding the allowable duty


and tax-exempt limit for arriving passenger provided for under Customs Administrative 

Order No. 4-92; and 

f. In addition to existing limitations on the number of consumables purchased 

such as, two (2) reams of cigarettes of any brand, two (2) bottles of wine and/or 

liquor of any brand as provided for under Customs Administrative Order No. 4- 

92, a balikbayan shall be entitled to buy only one (1) item of every product 

category of consumer durables the selling prices of which exceeds two hundred 

United States dollars (US$200.00). Attached* herewith is a partial list of Consumer 

Durables the selling prices of which may exceed two hundred United States 

dollars (US$200.00). 

For the effective implementation of the above limitations, the availment of duty and taxfree 

shopping privilege by the balikbayan shall be personal in nature. Purchases jointly made 

by the balikbayan family shall be considered on an individual basis for purposes of the 

limitation on value of purchase provided for under this Administrative Order. 

Rule V. Other Benefits and Privileges - In addition to the duty and tax-free purchases 

of goods at Philippine duty free shops operated by Duty Free Philippines pursuant to Executive 

Order No. 46, s. 1986, a balikbayan and his or her family shall likewise be entitled to the 

following: 

a. A special promotional/incentive program for the balikbayan established by all domestic 

carriers pursuant to the provisions of Republic Act No. 9174; 

b. Visa-free entry to the Philippines for a maximum stay of one (1) year for foreign passport 

holders, with the exception of restricted nationals, subject to such fees and the rules and 

regulations of the Bureau of Immigration and Deportation; 

c. Travel tax exemption to a qualified balikbayan pursuant to the provisions of Presidential 

Decree No. 1183; Executive Order No. 283, and other related laws, 

d. Availment of especially designated reception areas at the authorized ports of entry for the 

expeditious processing of documents; 

e. Use of accredited transportation facilities that will ensure their safe and convenient trips 

upon arrival, and 

f. Kabuhayan shopping privilege, through an additional duty and tax-exempt purchase in the 

amount of TWO THOUSAND UNITED STATES DOLLARS (US$2,000.00) or its equivalent in 

Philippine Peso and other acceptable foreign currencies, exclusively for the purchase of 

livelihood tools at government-owned and controlled/operated Duty-Free Shops. 

The total amount of duty and tax exempt maximum purchase as mentioned in Rule IV 

and sub-par F of this Rule may be used for the Kabuhayan shopping program, subject to the 

limitations imposed on the balikbayan under these rules and regulations. 

RULE VI. Monitoring System - To monitor the purchase period in Rule IV, item b 

hereof, as well as the maximum allowable purchase provided for herein, the following control 

*Attachment not included.

388 


system is hereby implemented in coordination with the Bureau of Customs and the Bureau of 

Immigration and Deportation, to wit: 

1. Balikbayan Shopping - 

a. A balikbayan shopping card shall be issued by the Duty Free Philippinesí representative 

only after confirmation of the buyerís Balikbayan status, and subject to further check at 

random by the Bureau of Customsí representative as to its veracity. 

b. The passport of the balikbayan shall be stamped with a balikbayan identifying mark by the 

Duty Free Philippineís representative after confirmation of his balikbayan status. 

c. The shopping card shall indicate the date of purchase, value of purchase for both 

consumables and non-consumables and quantity of non-consumables purchased. 

2. Kabuhayan Shopping 

2.1 Overseas Filipino Worker (OFW) 

a. Upon registration at the DFP Customer Relations and Registration (CRR) Counter, 

the OFW shall be asked to present his/her passport or seamanís book (whichever 

is applicable) on which the CRR Representative will check for the following: 

- POEA sticker 

- Last departure date 

- Arrival date 

- OFW E-Card 

Confirmation by the CRR Representative of the above information shall automatically 

entitle the eligible balikbayan OFW to an additional TWO THOUSAND DOL- 

LARS (US$2,000.00) worth of livelihood shopping privilege. 

b. The passport (or seamanís book) of the balikbayan shall be marked by the 

Duty Free Philippinesí representative after confirmation of the balikbayanís sta 

tus. 

c. The shopping card, which will reflect a shopping limit of FOUR THOUSAND 

FIVE HUNDRED DOLLARS ($4,500.00) shall indicate the date of purchase, value 

of purchase for both consumables and non-consumables and quantity of nonconsumables 

purchased. 

2.2 Non-Overseas Filipino Worker (Non-OFW) 

a. Upon registration at the DFP Customer Relations and Registration (CRR) Counter, 

the Non-OFW shall be asked to present his or her passport on which the CRR 

Representative will check for the following: 

- last departure date 

- arrival date


b. The passport of the balikbayan shall be marked by the Duty Free Philippinesí 

representative after confirmation of his/her balikbayan status. 


FIVE HUNDRED DOLLARS ($4,500.00), shall indicate the date of purchase, 

value of purchase for both consumables and non-consumables and quantity of 

non-consumables purchased. 

2.3 Retirees 

a. Upon registration at the DFP Customer Relations and Registration (CRR) 

Counter, the Non-OFW shall be asked to present his/her passport. 

b. The passport of the balikbayan shall be marked by the Duty Free Philippinesí 

representative after confirmation of his/her balikbayan status. 


FIVE HUNDRED DOLLARS (P4,500.00) shall indicate the date of purchase, value 

of purchase for both consumables and non-consumables and quantity of nonconsumables 

purchased. 

3. Absentee-Shopping under the Kabuhayan Program 

a. Approval and Endorsement of Waiver Form 

a.1 Upon registration at the DFP counter for OFW Balikbayans, the arriving 

contract worker shall secure a waiver form (one copy) from the OWWA representative 

and completely accomplish the form. This waiver form shall signify his/ 

her consent in assigning his/her livelihood shopping privilege to any of his/her 

immediate family as defined in Rule IV (c.2) of this Administrative Order. 

The OFW worker should indicate the complete name of the family member 

whom he/she has authorized to exercise the shopping privilege. 

a.2 Once completely accomplished, the OFW shall submit the form to the 

OWWA representative for validation. 

a.3 Once the information has been validated by examining the passport, Ecard 

and employment contract, the OWWA representative shall sign on the waiver 

form, indicating approval or authenticity of the data on the form. 

a.4 The OFW shall then turn over the waiver form to the family member whom 

he/she has indicated as his/her authorized representative. 

b. Shopping Procedure for the Authorized Family Member 

b.1 The authorized family member shall proceed to the Customer Relations 

counter and present the accomplished and signed waiver form together with his/ 

her ID to the Customer Relations and Registration (CRR) Representative.

390 


b.2 Upon checking of the OWWAís endorsement on the waiver form by the 

Bureau of Customs (BOC), the CRR Representative shall issue a shopping card. 

b.3 The attending CRR Representative shall then mark the passport ìBî which 

stands for Balikbayan, to indicate that the absentee shopping privilege for livelihood 

items have been availed of. 

Rule VII. Philippine-Made Products in Duty-Free Shops - To effectively showcase 

Philippine culture, craftsmanship and industry, all government-owned and controlled/operated 

duty free shops, in coordination with the Department of Trade and Industry, shall ensure 

at all times that a minimum of ten percent (10%) of the goods being sold by them shall, as far 

as practicable, whether by direct purchase or concession, be sourced from Philippinebased 

manufacturers of prominence and that in the selection of said goods, factors such as 

competitiveness, design, excellence, marketability, regional representation and world-class 

appeal are considered. 

Rule VIII. Training Programs - The Department of Labor and Employment (DOLE), 

through the OWWA, in coordination with the Technology and Livelihood Resource Center 

(TLRC), Technical Education and Skills Development Authority (TESDA), and other concerned 

government agencies, shall provide the necessary entrepreneurial training and livelihood 

skills programs and marketing assistance to a balikbayan, including his or her immediate 

family members, who shall avail of the Kabuhayan shopping privilege in line with the 

existing rules on the governmentís reintegration program. 

In the case of non-OFW balikbayan, the Department of Tourism (DOT) shall make the 

necessary arrangements with the TLRC and other training institutions for possible livelihood 

training. 

RULE IX. Semi-Annual Report of Sales - The Department of Tourism shall submit 

semi-annual reports to the President through the Secretary of Finance and to both Houses of 

Congress containing statement of the quantities and the value of the goods sold by the 

Government-Owned and Controlled Operated Duty-Free Shops, in accordance with the 

classification categories in the Tariff and Customs Code of the Philippines, as amended. 

RULE X. Repealing Clause - All rules and regulations inconsistent with these rules are 

repealed, amended or modified accordingly. 

RULE XI. Separability Clause - The provisions of this Administrative Order are hereby 

declared separable and in the event that any of such provisions is declared invalid, the 

validity of all other provisions shall not be affected thereby. 

RULE XII. Issuance of Additional Rules - The Department of Tourism shall, in coordination 

with other concerned government agencies, whenever necessary or as the need 

arises, issue from time to time additional rules and regulations for the effective implementation 

of the Balikbayan Program as instituted by Republic Act No. 9174. 

RULE XIII. Effectivity - This Administrative Order shall take effect immediately after its 

publication in at least two (2) newspapers of general circulation. 

Adopted: 3 Jan. 2003


(SGD.) RICHARD J. GORDON 

Secretary 

Department of Tourism 

DEPARTMENT OF TRADE AND INDUSTRY 


Department Administrative Order No. 02, s. 2002 

Defining the Responsibilities and Liabilities of Manufacturers, 

Importers, Traders, Wholesalers, Distributors, Retailers and or Their 

Agents, with Regard to Products Covered by Mandatory Product 

Certification and Prescribing Penalties for Violation Thereof 

Pursuant to Section 4, R.A. 4109, Section 2 of Executive Order No. 913, Section 3 (x) 

of Executive Order No. 133, and Article 6 of R.A. 7394, empowering the Secretary of the 

Department of Trade and Industry (DTI) to promulgate rules and regulations to implement the 

provisions and intent of any trade and industry law, the following revised rules and regulations 

implementing Republic Act No. 4109 and the provisions of Republic Act No. 7394 

relative to product standards are hereby prescribed and promulgated. 

SECTION 1. Scope and Coverage - This Department Administrative Order prescribes 

the rules and regulations that cover the responsibilities and liabilities of manufacturers, importers, 

traders, wholesalers, distributors, retailers and or their agents of all products covered 

by mandatory standards, the procedures for compliance and to ensure compliance, as 

well as corrective measures and penalties in the event of non-compliance and violations. It 

shall likewise apply to the mediation and/or adjudication of administrative actions initiated by 

the DTI or a private complainant under R.A. No. 7394 based on violation of Product Standards 

laws, rules and regulation .1 

SECTION 2. Definition of Terms - As used in this Department Administrative Order 

(DAO), the following terms are defined to mean: 

2.1 BPS refers to the Bureau of Product Standards of the Department of Trade and Industry 

(DTI). 

2.2 DTI Regional Director refers to the designated head of a regional office of the DTI. 

2.3 DTI Provincial/Area Director refers to the designated head of a provincial/area office of 

the DTI. 

1 Complaints arising from violations of R.A. 7394 are at present covered and implemented by Joint DTI- 

DOH-DA Administrative Order No. 1 series of 1993 and DTI Administrative Order No. 2 series of 1993. 

Complaints (under R.A. 7394 or R.A. 4109) whether initiated by DTI or by a Private Complainant anchored 

on a violation of product standard covered by mandatory product certification will now be covered 

by this DAO. Under Articles 10, 11 and 159 of R.A. 7394, the DTI can motu propio initiate proceedings for 

violation of mandatory product standard.

392 


2.4 OLA refers to the Office of Legal Affairs of the DTI. 

2.5 DAO 1:1997 provides for the ìRevised Rules and Regulations Concerning the Philippine 

Standard (PS) Quality and/or Safety Certification Mark Schemeî and its future revisions or 

amendments thereto. 

2.6 DAO 8:1995 provides for the ìRevised Rules and Regulations Concerning the Issuance 

of Import Commodity Clearanceî and its future revisions or amendments thereto. 

2.7 PNS 01:1997 refers to the Philippine National Standard entitled ìA Standard for Standardsî. 

2.8 E.O. 913 provides for ìStrengthening the Rule-Making and Adjudicatory Powers of the 

Minister of Trade and Industry in Order to Further Protect Consumers.î 

2.9 E.O. 133 provides for ìReorganizing the Department of Trade and Industry, its Attached 

Agencies, and for Other Purposesî. 

2.10 R.A. 7394 provides for the ìConsumer Act of the Philippinesî. 

2.11 R.A. 4109 provides ìAn Act to Convert the Division of Standards Under the Bureau of 

Commerce Into a Bureau of Standards to Provide for the Standardization and/or Inspection 

of Products and Imports of the Philippines and for Other Purposesî. 

2.12 Ministry Order 69, Series of 1983 provides for the ìRules and Regulations Governing 

Administrative Actions for Violations of Trade and Industry Lawsî. 

2.13 Philippine National Standard (PNS) refers to a standard promulgated by the BPS relating 

to a set of conditions to be fulfilled to ensure the quality and safety of a product. 2 It shall 

contain product specifications, test method, terminology, standardization procedures, and 

guidelines or practices. 

2.14 Mandatory Philippine National Standards are standards for which PS marking on product 

covered is compulsory. Product standards, which will affect life, safety and health of the 

people and its environment, are declared for mandatory product certification for which approval 

by the Secretary of Trade and Industry is necessary. 

2.15 PS (Philippine Standard) Quality Certification Mark refers to a mark of conoformity to 

product quality standards, which appears on a product or product packaging as specified 

under DAO 1, Series of 1997. 

2.16 PS (Philippine Standard) Safety Certification Mark refers to a mark of conformity to 

product safety standards, which appears on a product or product packaging as specified 

under DAO 1, Series of 1997. 

2.17 Import Commodity Clearance (ICC) refers to a document issued by the DTI/BPS attesting 

that the imported product, which is covered by a mandatory PNS, conforms to the 

specific Philippine National Standard. 

2 Definition of product ìStandardî is taken from Par. (br), Art. 4, R.A. 7394 and DAO 1, Series of 1997.


2.18 Manufacturer refers to any natural person or juridical entity, whether domestic or 

foreign, producing, assembling, and/or processing a material or product except if the goods 

are manufactured, assembled, or processed for another person who attaches his own 

brand name to the final products, the latter shall be deemed the manufacturer. In case of 

imported products, the manufacturerís representatives or, in his absence, the importer shall 

be deemed the manufacturer. 

2.19 Importer refers to any natural person or juridical entity that brings in products from a 

foreign country to the Philippines. 

2.20 Trader refers to any natural person or juridical entity, whose business is buy and sell or 

barter. A trader may therefore be an importer-trader, manufacturer, wholesaler or retailer. 

2.21 Distributor refers to any natural person or juridical entity, whether domestic or foreign, 

to whom a product is delivered or sold for purposes of distribution in commerce, who markets 

a product whether for an importer-trader or for a manufacturer, wholesaler, or retailer. 

2.22 Wholesaler refers to any natural person or juridical entity that sells products in bulk or 

in large scale but not to the end-user. 

2.23 Retailer refers to any natural person or juridical entity engaged in the business of selling 

products directly to end-users. 

2.24 Agent refers to a person who is deemed authorized to act or transact for and in behalf 

of the manufacturer, importer, wholesaler, trader, retailer or distributor. 

2.25 Suspension of License refers to a penalty in which a PS license, or an ICC, is temporarily 

revoked by the BPS, during which period the license shall not manufacture, sell, offer 

for sale, or otherwise dispose of their product(s) covered by the suspension order. 

2.26 Cancellation of License refers to a permanent revocation of a PS license or an ICC, 

which mandates that the licensee or ICC Certificate holder immediately and permanently 

cease to manufacture, sell, offer for sale, or otherwise dispose of products covered by the 

cancellation order. 

2.27 Closure refers to a penalty imposed by the Secretary of Trade and Industry or his 

assigns, whether of a temporary or permanent nature, consisting of a shutdown and cessation 

of a plant or business operation. 

2.28 Complainant refers to any natural or juridical person, which shall include the DTI or any 

of its authorized officials, having a cause of action against any person natural or juridical, for 

violating any of the provisions of this DAO. 

2.29 Respondent refers to the party called upon to answer an administrative formal charge or 

complaint. 

2.30 Adjudicating Officer refers to the DTI Regional Director or his authorized DTI hearing 

officer designated to hear and decide a case as well as impose penalties as per EO 913.

394 


2.31 Consumer Arbitration Officer refers to the DTI officer duly appointed pursuant to Articles 

160 and 161 of R.A. 7394. 

2.32 Stockpiling means manufacturing or importing a product between the date of promulgation 

of its consumer product safety rule and its effective date, at a rate which is significantly 

greater than the rate at which such product was produced or imported during a base 

period as prescribed under Art. 9., R.A. 7394, ending before the promulgation of consumer 

product safety rule. 

2.33 Complaint is a written statement charging a natural or juridical person for committing 

any of the acts prohibited under this DAO, subscribed and sworn before a person authorized 

to administer oath. 

2.34 Statement of Violation is a statement charging a natural or juridical person, for violation 

of this DAO, subscribed and sworn by the Head of the Office concerned. 

2.35 Enforcement Activity refers to surveillance audit, market monitoring, and inspection/ 

inventory of products covered by mandatory standards. 

SECTION 3. Responsibilities of a Manufacturer, Importer, Trader, Wholesaler, Distributor, 

Retailer or their Agents - 

3.1 Manufacturers of any product covered by mandatory product certification are required 

to first secure a PS license prior to selling, offering for sale, or otherwise disposing of their 

product(s), the original copy of which shall be displayed in a conspicuous place at their plant 

or manufacturing facility. 

3.2 Manufacturers shall ensure that their product(s) comply with the applicable mandatory 

product certification, and have the product or product packaging, whichever applies, for the 

purpose of conveying the required information about the products. 

3.3 Importers of any product covered by mandatory product certification are required to first 

secure an Import Commodity Clearance (ICC) pursuant to DAO 5, Series of 2001 and its 

future amendments or revisions prior to selling, offering for sale, or otherwise disposing of 

their product(s). 

3.4 An importer of a product covered by mandatory product certification shall ensure that all 

its imported products comply with the requisite product specifications, product markings, 

and other requirements prescribed under the applicable Philippine National Standard. 

3.5 Distributors, wholesalers, retailers and those who offer for sale a product covered by 

mandatory product certification shall sell, or offer for sale only such products which complied 

with the requisite Philippine National Standard and with the required PS Mark, or with a 

valid ICC in the case of imported products. 

3.6 Manufacturers who desire to produce/manufacture any product covered by mandatory 

product certification for a special application shall notify and request BPS for the issuance 

of a Special Permit, which states the justification for such request, description of the product, 

specifications, size/ weight/quantity/volume and the like, as well as the specific period to 

cover such activity.


SECTION 4. Requisite License and/or Certificates 

4.1 For any manufactured product covered by mandatory product certification, the applicable 

PS License shall be required of the said manufactured product before any sale is 

permitted, in accordance with the provisions of DAO 1, Series of 1997 and its future amendments 

or revisions. 

4.2 For any imported product covered by mandatory product certification, an ICC shall be 

required of the said imported product before any sale is permitted, where the particular ICC 

certificate covers only the specific shipment and no other, in accordance with DAO 5, Series 

of 2001 and its future amendments of revisions. 

4.3 BPS Permit allowing manufacturers to manufacture products covered by mandatory 

product certification for their special application. 

SECTION 5. Requisite Markings - 

5.1 As a rule, all products covered by mandatory product certification must carry and display 

on the product itself all necessary product identification marks required by and in the 

manner specified in the applicable Philippine National Standard. 

5.2 In case a product does not allow markings to be carried by and displayed on the product 

itself, the productís packaging, labels, identifying tags, or container, must bear and clearly 

display the required product-related information and markings as specified in the applicable 

Philippine National Standard. 

5.3 All marks and markings shall be clear and legible, and must not be misleading. 

5.4 Whichever applies, product labels, identifying tags, or product packaging must clearly 

bear and show the standard PS Quality and/or PS Safety Mark and ICC Mark in the manner 

required under DAO 1, Series of 1997 and DAO 5, series of 2001, respectively, and their 

subsequent amendments or revisions. 

5.5 In case of deformed steel bars, logos that are used shall be as registered with and as 

approved by the Bureau of Product Standards. 

5.6 As required, the importer shall indicate the ICC number on the product or container 

whichever is applicable as determined by DTI/BPS. 

5.7 An imported product covered by mandatory product certification shall follow the same 

marking requirements set-forth above. 

SECTION 6. Prohibited Acts - The following are the acts prohibited under this DAO: 

6.1 Distribution, sale or offer for sale of any product covered by mandatory product certification 

which does not conform with the required and applicable PNS quality or safety standards. 

6.1.1 An article/product is presumed for sale or offered for sale if it is found in the 

premises of the wholesaler, retailer, distributor or their agents.

396 


6.1.2 An article/product is presumed manufactured for sale if it is found in the 

premises of the manufacturer claiming that the same is for special application 

only but who does not possess the necessary BPS permit for that purpose. 

6.2 Distribution, sale, offer for sale or manufacture of any product covered by mandatory 

product certification without the required BPS license or Permit. 


product certification which does not bear the BPS required identification and product covered 

by mandatory product certification which does not bear the BPS required identification 

and product markings. 


product certification under a fake, withdrawn, suspended or cancelled BPS license. 

6.5 Distribution, sale, offer for sale of imported products covered by mandatory product 

certification without Import Commodity Clearance as required under DAO 5, series of 2001 

and its subsequent amendments or revisions. 

6.6 Refuse access to/copying of pertinent records, to permit entry of or inspection conducted 

by authorities. 

6.7 Failure to comply with any duly served notice, summons, or subpoenas issued by the 

Mediation Officer, Consumer Arbitration Officer or Hearing Officer. 

6.8 Giving of false or misleading data/information, misrepresenting a material and substantial 

fact, or willingly concealing a material data or fact. 

6.9 Failure to comply with the applicable rules and regulations regarding stockpiling, as 

defined in Article 9(b) of R.A. 7394. 

6.10 Failure to comply with the Orders issued pursuant to Article 11 of R.A. 7394, relating to 

the a) notification requirements on; and b) recall, repair, replacement or refund of substandard 

products. 

SECTION 7. General Implementing Guidelines 

7.1 Market Monitoring Activity 

The DTI Regional and Provincial/Area Director shall conduct periodic provincial of 

regional market survey and random sampling of products covered by mandatory product 

certification, through appropriate Market Monitoring Teams organized specifically for this 

purpose. This is without prejudice to the authority of the BPS to conduct special market 

monitoring activities, motu proprio or in coordination with DTI Regional and Provincial/Area 

Office concerned, as it may deem necessary from time to time. 

7.1.1. In every market monitoring activity/operation, all members of the monitoring 

team shall, before entering a particular business establishment, be properly 

authorized in writing by the BPS Director or the DTI Regional or Provincial/Area


Director, and present their written authority and proper identification papers to 

any responsible person within the premises. 

7.2 Product Specific Monitoring Scheme 

Given the wide variety of products covered by mandatory product certification to be 

monitored, different guidelines and procedures may be developed to enable DTI to perform 

market inspection and sampling operations. 

SECTION 8. Adjudication of Cases - The following rules, in addition to the provisions 

of E.O. 912, M.O. 69, series of 1983, and the Consumer Act and its Implementing Rules and 

Regulations, shall govern the adjudication of cases under this DAO. 

In the adjudication of cases, the CAO or Hearing Officer shall use every and all reasonable 

means to ascertain the facts of the case speedily and objectively without regard to 

technicalities of law procedure and strict rule of evidence prevailing in the court of law. 

With respect to consumer complaints, the CAO shall have exclusive and original jurisdiction 

to mediate, conciliate, hear and adjudicate the same. Accordingly these rules shall 

apply in cases of consumer complaints involving the issue of product standards. In all other 

consumer complaints, the provisions of Joint DTI-DOH-DA Administrative Order No. 1, 

series of 1993 shall apply. 

8.1 Commencement of Action - Actions under this DAO shall commence by filing of a 

Complaint or a Statement of Violation. 

8.1.1. The Complainant shall file a verified complaint together with the sworn 

statement of the witnesses covering their testimonies and the documentary evidence 

against a retailer, importer, wholesaler or manufacturer and or their agents 

for violation/s of any prohibited acts enumerated under Section 6 with the DTI 

Provincial/Area Office shall assist the Complainant in the filing of complaint, assuring 

as far as practicable simple and easy access on the part of the consumer 

to seek redress for his grievances. 

On the other hand, the DTI Provincial/Area Director shall initiate administrative 

proceedings against a retailer, importer, wholesaler or manufacturer and or their 

agents for violations of any prohibited acts enumerated under Section 6 by filing 

a Statement of Violation before the DTI Provincial/Area Office having jurisdiction 

over the place where the offense was committed or where the article was introduced 

to commerce. The offense is deemed committed or the article is introduced 

into commerce in the place where the article was seized or found. 

The verified complaint shall be prosecuted by the complainant himself or counsel. 

The Statement of Violation shall be prosecuted by the DTI Provincial/Area Director 

of the office concerned or with the assistance of his authorized representative 

or counsel from DTI. The Verified Complaint/Statement of Violation shall be defended 

by the Respondent himself or counsel. 

8.1.2 Conversion of the Complaint - At the discretion of the Head of Office and 

with the consent of the Complainant, a Complaint may be converted into a Statement 

of Violation and filed directly with the Chief Hearing Officer, provided, that

398 


the date of filing of the said Statement of Violation is within the 3 years limitation 

provided in Section 11 (a) of M.O. 69 series of 1983 3 provided that in cases of 

consumer complaints under R.A. 7394 the period of prescription shall be two 

years. 

8.2 Sufficiency of Complaint - The Verified Complaint/Statement of Violation shall be submitted 

in legal size paper. Its caption shall state name and address of the office with which it 

is filed, the title of the action, the statement ìAdm. Case No. --î and the word ìComplaintî or 

ìStatement of Violationî as the case may be. The said title shall include the names of the 

parties and the words ìComplainantî and ìRespondentî. 

The Complaint/Statement of Violation shall also state the following: 

a) names and addresses of the Complainant and Respondent; 

b) the section, article of paragraph of the trade and industry law violated; 

c) the ultimate facts of the cause of action and/or the acts or omissions complained of 

as constituting the offense; 

d) the approximate time of the commission of the offense or the approximate time of the 

discovery of such commission; and 

e) the Complaint shall state further the relief prayed for, while the Statement of Violation 

shall state further the penalties and preliminary and preventive orders recommended 

by the DTI Provincial/Area or Regional Director. 

The verified complaint/statement of violation shall be supported by documentary and 

physical evidence such as but not limited to the product itself, results of test, invoices, and 

affidavits of witnesses. However, any defect or insufficiency in the form of complaint shall 

not invalidate the complaint. 

Based on the verified complaint, the DTI Provincial/Area Director or Regional Director 

through his designated hearing officer shall decide whether the complaint pass through the 

mediation stage first or elevate the complaint to the Chief Hearing Officer. 

8.3 Mediation Conference - The case shall be scheduled for mediation conference. 

If a mediation conference is necessary, a Mediation Officer/CAO shall be designated 

to conduct the mediation and shall within five (5) days from the date of her designation 

accordingly send both parties a Notice of Mediation attached with a copy of the Complaint/ 

Statement of Violation together with all the papers attached hereto. The Mediation Officer 

has no more than thirty (30) days from receipt of the Complaint within which to mediate the 

case. 

8.3.1 Schedule of mediation conference - During the initial conference, the 

Mediation Officer, Complainant and Respondent or their authorized representatives 

shall set at most two (2) more dates provided such settings does not go 

beyond the thirty-day period within which to mediate the case. 

3 (note: Section 11 of M.O. 69 series of 1983 When to file complaint/Statement of Violation. 

-a) The Complaint/Statement of Violation shall be filed within three years from the day of the commission 

of the offense or if such date is unknown at the time, from the discovery thereof. After the said period of 

three years, the filing thereof shall be barred. (b) the administrative action under these rules and regulations 

is independent of the corresponding criminal or civil actions of the violations of the trade and industry 

laws)


8.3.2 Elevation of the Case - If at any stage of the mediation settlement appears 

to be impossible or either of the parties failed to appear for two (2) consecutive 

prescheduled conferences despite due notice, mediation shall be terminated and 

the case elevated to the Regional Office or Consumer Arbitration Officer for 

formal hearing. 

On the other hand, if settlement is reached, the terms and conditions agreed 

upon by the parties shall be reduced in writing to be approved by the Provincial/ 

Area Director concerned. In the Decision, the DTI Provincial/Area Director may 

require the parties to submit to him from time to time reports on compliance with 

their undertakings under the said Agreement. The said Decision is not appealable 

and is immediately executory. 

If a party fails or refuses to abide by the terms and conditions set forth in the 

Agreement, the other party shall notify the DTI Provincial/Area Office of the same 

and may either enforce the compromise or regard it as rescinded and insist upon 

his/her original demand. Under the first option, the aggrieved party shall request 

the DTI Official who approved the compromise agreement to enforce the same. 

Under the second option, the case shall be elevated to the DTI Regional/NCR 

Office concerned for formal hearing. 

8.4 Duties of the DTI Office Where the Case is Elevated - The Director concerned shall 

have five (5) days from receipt of the Record of the Case within which to assign the same to 

a Consumer Arbitration Officer or Hearing Officer depending upon the violation. 

The assigned CAO/Hearing Officer has five (5) days from the date the case was 

assigned to him/her within which to issue Summons, ordering the Respondent to file Answer 

and not a Motion to Dismiss within fifteen (15) days from receipt thereof. Within five (5) days 

from receipt of the Answer a preliminary conference shall be scheduled and a notice to that 

effect be sent to the parties. If the Respondent wants the case dismissed, the same shall be 

alleged as an affirmative defense in the Answer, to be resolved together with the other issues 

after trial. 

8.5 Service of Summons/Notices - Summons together with the Complaint and all attachments 

shall be served by the Process Server/Liaison Officer of the DTI Office concerned on 

the respective addresses of the parties on record, preferably through personal service, 

otherwise it shall be through registered mail or substituted service in accordance with the 

Rules of Court. 

8.5.1 The DTI Process Server/Liaison Officer shall, within two (2) days from the 

date of service of the Summons/Notice submit to the assigned CAO/Hearing 

Officer and BPS his/her report stating therein the actual date of service, the 

name and relation of the recipient or the reason why no service was effected. 

8.6 Effect of failure to file anwer - If the respondent fails to file Answer within the 15-day 

period, the Complainant may file a Motion to declare the former in default and for the case to 

be tried ex-parte. An order to that effect shall be issued unless a Motion to Admit Belated 

Answer based on reasonable ground(s) is filed.

400 


8.7 Judgment based on the Pleadings - Where the Answer fails to tender an issue or 

otherwise all the material allegations in the Complaint are admitted therein, the Consumer 

Arbitration Officer or the Hearing Officer may, on motion of the Complainant render judgment 

based on the pleadings. 

8.8 Preliminary Conference - Before proceeding to a formal hearing, a preliminary conference 

among the parties and the CAO/Hearing Officer shall be held, to take into consideration 


a. the possibility of an amicable settlement or of a submission to alternative 

modes of dispute resolution; 

b. the simplification of the issues; 

c. the necessity or desirability of amendments to the pleadings; 

d. the possibility of obtaining stipulations or admissions of facts and documents to 

avoid unnecessary proof. 

e. the limitation of the number of witnesses; 

f. the propriety of rendering judgments on the pleadings, or summary judgment, 

or of dismissing the action should a valid ground therefor be found to exist; 

g. the advisability or necessity of suspending the proceedings; and 

h. such other matters as may aid in the prompt disposition of the action. 

8.8.1 The Hearing Officer/Consumer Arbitration Officer shall within five (5) days 

from receipt of the Answer notify the parties of the schedule of preliminary conference, 

which shall not be more than fifteen days from the issuance of the 

Notice. 

8.8.2 Effect of failure to appear at the preliminary conference - The failure of 

the Complainant to appear when so required shall be cause for dismissal of the 

action. The dismissal, however, shall be without prejudice, provided the Complainant 

can, to the satisfaction of the CAO/Hearing Officer, show cause why the 

Complaint should not be dismissed. A similar failure on the part of the Respondent 

shall be cause to allow the Complainant to present evidence ex-parte and a 

judgment be rendered on the basis thereof, subject, however, to the foregoing 

proviso. 

8.9 Answer to Amended Complaint/Statement of Violation - The Respondent has ten 

(10) days from receipt of Amended Complaint/Statement of Violation within which to file his 

Answer. An Answer earlier filed may serve as the Answer to the Amended Complaint/Statement 

of Violation if no new answer is filed. 

8.10 Submission of Position Papers/Memorandum - Should the parties fail to agree upon 

an amicable settlement, either in whole or in part during the preliminary conference, the 

hearing officer shall issue an order stating therein the matters taken up and agreed upon


during the conferences, and directing the parties to simultaneously file their respective verified 

position papers. 

These verified position papers shall cover only those claims and causes of action raised 

in the complaint/statement of violation excluding those that may have been amicably settled, 

and shall be accompanied by all supporting documents including the affidavits of their respective 

witnesses which shall take place of the latterís testimony. The parties shall not 

thereafter be allowed to allege facts, or present evidence to prove facts, not referred to and 

any cause or causes of action not included in the complaint or positions papers, affidavits 

and other documents. Unless otherwise requested by both parties in writing, the hearing 

officer shall direct both parties to submit simultaneously their position papers/memorandum 

with the supporting documents and affidavits within fifteen (15) calendar days from with the 

the date of the last conference, with proof of service upon the other party. The hearing 

officer may also direct the simultaneous filing of replies and rejoinders thereon. 

8.11 Prohibited Pleadings and Motions - The following petitions, motions or pleadings shall 

not be allowed: 

a. Motion to dismiss the complaint except on the ground of lack of jurisdiction over 

the subject matters. 

b. Motion for a bill of particulars 

c. Demurrer to evidence 

d. Petition for relief from judgment; 

e. Motion for extension of time to file pleadings, affidavits or any other paper; 

f. Petition for certiorari, mandamus, or prohibition against any interlocutory order 

issued by the court 

g. Dilatory motions for postponement; 

8.12 Determination of Necessity of Hearing - Immediately after the submission by the 

parties of their position papers/memorandum, the hearing officer shall motu proprio determine 

whether there is a need for a formal trial or hearing. At this stage, he may, at his 

discretion and for the purpose of making such determination, ask clarificatory questions to 

further elicit facts or information from any party or witness. 

8.13 Order of presentation of evidence - In case trial is ordered, the Complainant shall be 

the first to present his evidence to support his case. Any and all witnesses presented by the 

Complainant may be cross-examined, at the option of the Respondent or his counsel. 

Redirect and re-cross examinations may likewise, be conducted by the parties or their 

counsels. After which, the Complainant shall rest his case and formally offer all the pieces of 

evidence presented. 

The CAO/Hearing Officer shall give the respondent opportunity to file his comments/ 

objections to the Complainantís Formal Offer of Evidence. Upon receipt of the latter, the 

CAO/Hearing Officer shall rule on the admissibility of the pieces of evidence formally offered 

and schedule the case for the initial presentation of Respondentís evidence, following 

the same aforestated procedure.

402 


8.14 Hearing Schedule and Postponement - After the termination of the preliminary conference, 

the CAO/Hearing Officer, Complainant, and Respondent shall set not more than 

seven (7) hearing dates in advance to avoid motions for postponement. Postponements/resettings 

are entertained only upon motion, based on meritorious grounds. Any Motion to 

Postpone or Cancel Hearings shall be filed at least five (5) days prior to the pre-scheduled 

hearing date. Motions of such nature via the telephone and other electronic means shall be 

allowed provided the other party has been duly informed of the same and that both parties 

have agreed on the next hearing date. 

8.15 Non-Appearance of a party in a scheduled hearings - Failure of a party to appear 

in a scheduled hearing, no motion to postpone or cancel hearing having been filed, shall be 

tantamount to a waiver of such partyís right to present his evidence for that particular stage 

or cross-examine the witness presented on that particular date. 

8.16 Consolidation of Cases - Where there are two or more cases pending before the 

different hearing officers in the same DTI Provincial/Area Office involving the same 

respondent(s) and issues, or the same parties through the issues may differ, the subsequent 

case(s) shall, whenever practicable, be consolidated with the first to avoid unnecessary cost 

and delay. Such consolidated cases shall be disposed of by the hearing officer to whom the 

first case was assigned. 

In case of objection to the consolidation, the same shall be resolved by the Chief 

Hearing Officer. 

8.17 Records of Proceedings - All proceedings need not be recorded by a Stenographic 

Reporter. A written summary of the proceedings of every hearing, signed by both parties 

shall suffice except for testimonies made by the witnesses, which need not be recorded 

verbatim. 

8.18 Orders of Dismissal - Orders of Dismissal are considered final except for those 

issued without prejudice. 

8.19 Decision or judgment when rendered - The DTI Office concerned shall render/issue 

the decision/judgment within thirty (30) days from the termination of the formal hearing. The 

decision/judgment shall be in writing and shall state clearly therein the facts of the case, the 

issues raised, the applicable laws/rules on which it is based, the penalties/sanctions imposed 

and the relief granted to the party in whose favor the same was issued. 

SECTION 9. Preliminary and Preventive Orders - A preliminary order or preventive 

order refers to an order issued by a DTI Provincial Director, BPS Director, or by the DTI 

Regional Director during the investigation of the case or after the commencement of an 

action and before judgment, requiring a person to (a) refrain performing a particular action, 

or (b) to perform a particular act, under any of the following conditions: 

9.1 A preliminary order may be issued by the DTI Provincial/Area Director, BPS 

Director, DTI Regional Director to prevent the disposition or tampering of evidence. 

It may also be issued to prevent the alteration, destruction, suppression or 

concealment, transportation, and movement of any paper, record, document, or 

object/article with intent to impair its veracity, authenticity, legibility, availability, or


admissibility as evidence in any investigation of or official proceedings under this 

DAO. 4 

9.2 A preliminary order may be issued by the DTI Regional Director after a case 

has been filed with the Office of the DTI Regional Director immediately recalling, 

banning, or seizure from public sale or distribution a product declared to be 

imminently injurious, unsafe or dangerous. In which case, the seller, distributor, 

manufacturer or producer thereof shall be afforded a hearing within forty-eight 

(48) hours from such order. The ban on the sale and distribution of a consumer 

product adjudged injurious, unsafe or dangerous, or imminently injurious, unsafe 

or dangerous shall stay in force until such time that its safety has been established. 

5 After due notice and hearing, the said preliminary order may be published 

in a newspaper of general circulation for the protection of the consumer at 

the expense of the manufacturer, distributor, or seller. 6 

9.3 A preliminary order may be issued by the DTI Regional Director directing the 

manufacturer or importer to cease and desist from producing, importing, and 

distributing the article covered by a mandatory product standard in case of flagrant, 

rampant, widespread, or recurring violation of the product standards law, 

rules, or regulations. 

SECTION 10. Procedure for Filing an Appreal - 

10.1 Period of Filing an Appeal - Any final order/decision/judgment, which disposes of the 

action/case, shall be appealed to the appropriate DTI Office within fifteen (15) days from 

receipt thereof. 

The period of appeal shall be interrupted by only one Motion for Reconsideration filed 

within ten (10) days from receipt of the final order/decision/judgment. 

10.2 Where to File an Appeal - Final orders/decisions/judgment of CAOs/Hearing Officers 

of the different DTI Regional Offices and Acting CAOs of OLA shall be filed with the Office of 

the Secretary. However, those rendered by the Hearing Officers of OLA shall be filed directly 

with the Office of the President or the Court of Appeals. 

10.3 Requisites for the Perfection of Appeal - A partyís appeal is deemed perfected upon 

the filing of the Memorandum of Appeal within the 15-day filing period from notice of the 

Decision or Order denying the motion for reconsideration. 

The Memorandum of Appeal shall be filed with the Office of the Secretary and shall 

likewise state therein the material dates showing the timeliness of the appeal. 

If a Memorandum of Appeal is filed, copy furnished the other party and the Office of 

origin, the Appeals Officer shall determine the timeliness of the appeal and issue an order to 

that effect. If the appeal is perfected, an Order directing the Office of origin to transmit the 

4 Even prior to the commencement of the formal investigation, the DTI may issue an order to prevent 

the disposition or tampering of evidence (Section 11, EO 913 dated 7 October 1993). 

5 Although the preliminary order may be issued ex-parte, the requirement of a hearing to be conducted 

within 48 hours from the issuance of the order is provided for under Art. 10, R.A. 7394. A preliminary 

order may be granted with or without prior notice and hearing on the application at the sound discretion 

of the Adjudication Officer (Sec. 49c Ministry Order 69, series of 1983). 

6 Art. 11, R.A. 7394 allows the DTI to give notice to the public of the defect or failure to comply with the 

product safety standard. Art 11 requires a prior notice and hearing but never mentioned of a final and 

executory judgment before notification to the public can be done.

404 


records of the case and the other party to file his comment within ten (10) days from receipt 

thereof shall be issued. 

No motion for extension to file the memorandum of appeal, or comment thereon shall be 

allowed. 

10.4 Grounds for Appeal - An appeal may be entertained only on any of the following 

grounds: 

a) grave abuse of discretion on the part of the CAO/Hearing Officer amounting to lack or 

excess of jurisdiction; 

b) on pure questions of law; 

c) the final order/decision/judgment is not supported by evidence; 

d) serious error in the finding of facts and which if not corrected, would cause grave, 

irreparable damage, injury or injustice to the Appellant; and 

e) if the final order/decision/judgment was prepared and issued due to coercion, intimidation, 

or grave threat coming from the other party interested in the case. 

Provided that in consumer complaints heard by the CAO, only the grounds specified in 

pars. (a), (c), and (d) shall be allowed. 

Failure to comply with any of the foregoing and preceding provisions shall constitute a 

sufficient ground to deny the appeal of the appellant, or to declare appellee as having waived 

the right to file the comment to the appeal. 

10.5 Duty of the Appeals Officer - In behalf of the Honorable Secretary, the Appeals 

Officer shall issue the resolution within thirty (30) days from receipt of the last pleading filed 

relative to the Appeal. The Resolution shall state clearly and distincly the findings of facts, 

issues, and conclusions of law on which it is based, the corresponding penalties and sanctions 

imposed and the reliefs granted. 

SECTION 11. Penalties and Sanctions - After investigation and hearing, any of the 

following administrative penalties may be imposed even if not prayed for in the Complaint: 

11.1 The issuance of an Order addressed to the manufacturer, seller, distributor and/or 

importer to extend any or all or the following remedies to the Complainant: 

11.1.1 To make the product in question conform with the applicable consumer 

product standards or to repair the defect in order to conform with the same. 

11.1.2 To replace the product with a like or equivalent product which complies 

with the applicable consumer product standards and free from any defect; 

11.1.3 To refund the purchase price of the product less reasonable depreciation 

value, if after exhausting two or more attempts to repair or remedy the defect, the 

product remains to be defective or short of the standards required;


11.1.4 To pay the consumer reasonable damages as may be deemed by the 

Adjudicating Officer. 7 

11.2 Condemnation or seizure of the products which are the subject of the offense; 

11.3 The forfeiture of the paraphernalia and all properties, real or personal, which have been 

used in the commission of the offense. 

11.4 The suspension or cancellation/revocation or withholding of any permit, license, authority, 

or registration which may have been issued or still to be issued by the Department, 

depending upon the gravity of the offense. Suspension shall be for such period of time as the 

CAO/Hearing Officer may deem reasonable which, however, shall not exceed one (1) year. 

11.5 The assessment of damages; 

11.6 Censure; 

11.7 Imposition of administrative fine; 

11.7.1 Amount of fine - Administrative fines shall in no case be less than five 

hundred (P500.00) pesos nor more than One Hundred Fifty Thousand 

(P150,000.00) pesos for statements of violations/complaints under RA 4159/EO 

913/MO 69 and not more than Three Hundred Thousand Pesos (P300,000,00) 

for consumer complaints. An additional fine of not more than One Thousand 

(P1,000.00) pesos of each day of continuing violation 8 from the time the complaint/Statement 

of Violation was filed. 

Fines are likewise meted out on a per violation of type/size/PS license/ICC certificate 

basis. Provided further, that this administrtive fine shall be imposed and 

collected for each case of apprehension, applied to each and every retailer, 

distributor, wholesaler, and or agent found guilty of the violation. The manufacturer 

and or importer of such violative product shall likewise be imposed the 

corresponding administrative fine. The frequency of the violation shall be determined 

on a per region basis. The minimum to maximum range of fines shall be 

imposed considering among others the attendant aggravating or mitigating circumstances, 

size of the industry or of the business establishment. Annex 1* 

(Table of fines) lists the basic fines to be imposed to manufacturers/importers and 

to wholesalers, retailers, distrubutor, and/or agent under E.O. 913 and R.A. 

7394. The fines to be imposed are based on the nature of offense and the frequency 

of violation. 

11.8 The issuance of a cease and desist order which shall specify the act(s) which is the 

subject thereof and with a directive for Respondent to submit a report of compliance therewith 

within a reasonable time. In addition thereto, the Respondent shall execute an undertaking 

that he shall comply with the provisions of this administrative order; to refrain from 

7 Taken from Art. 11, Chapter 1, RA 7394 

8 Taken from Art. 164, RA 7394 

* See Annex 1, page 718.

406 


engaging in unlawful acts and practices or unfair and unethical trade practices subject of the 

investigation or hearing; and to recall, replace or refund the money value of its defective 

product. The respondent shall conduct recall of its defective product(s) based on guidelines 

and procedures to be developed by DTI. 

11.9 Directive requiring the party against whom the decision was rendered to publish a copy 

of the final and executory decision/judgment at his own expense. 

11.10 The issuance of the Order, through the BPS, directing the suspension of the PS 

license from 1 to 90 days, or cancellation of the same, or revocation of Import Commodity 

Clearance Certificate of the particular product in question. Application to renew a PS license 

may be entertained only after one year of cancellation. Importer shall not be allowed to 

import mandatory products within one year from revocation of the ICC certificate. For purposes 

of imposing this penalty, a manufacturer or importer who commits any of the acts 

enumerated in Section 6 shall be meted a suspension of 1 to 5 consecutive working days 

suspension for the first offense; 15 to 30 consecutive working days suspension for the 

second offense; 60 to 90 consecutive working days suspension for the third offense; and 

cancellation of the PS license or ICC for the fourth offense. In the implementation of this 

Section, all acccumulated violations by a manufacturer or importer in a given period as 

defined in product specific market monitoring scheme shall be deemed as one offense. 

11.11 Such other analogous penalties or sanctions. 

SECTION 12. Circumstances/Factors to be Considered in the Imposition of Penalty 

(ies) - In the imposition of penalty or penalties, the gravity of the offense shall be determined 

from the presence of any or one or more mitigating or aggravating circumstance(s). 

12.1 Mitigating circumstances - The following are considered mitigating circumstances: 

12.1.1 Voluntary admission of guilt. 

12.1.2 Willingness to enter into compromise agreement. 

12.1.3 Willingness to furnish evidence and/or testify against supplier/manufacturer. 

12.1.4 Willingness to execute undertaking to cease and desist from violating any 

Trade and Industry Law in the future. 

12.1.5 Compliance with any preliminary order or any preventive measure as 

directed. 

12.1.6 Any analogous circumstances. 

12.2 Aggravating Circumstances - The following circumstances are considered aggravating: 

12.2.1 Failure to divulge the identity of the source, manufacturer, or importer of 

any of the products manufactured or distributed in violation of Section 6.1 to 6.5. 

12.2.2 Violation of two or more Trade and Industry Laws at one instance. 

12.2.3 Violation of another Trade and Industry Law while undergoing proceedings 

of another pending investigation/mediation for violation of a standard law, 

another case is filed for violation of the same or a different Trade and Industry 

Law.


12.2.4 Violation by means of deceit and/or misrepresentation. Falsification of 

official and/or documents as a means to hide violation. 

12.2.5 Non-issuance and/or refusal to issue receipts when required by law. 

12.2.6 Unjustified absence during mediation, conference or hearing. 

12.2.7 Employment of force, violence, intimidation by respondent against complainant. 

12.2.8 Taking advantage of an emergency situation and the like. 

12.2.9 Concealment or attempt to conceal any piece of evidence. 

12.2.10 Engagement in trade by person whose license/permit or authority had 

been previously cancelled or revoked for violation of any of Trade and Industry 

Laws, before the lapse of period for voluntary closure. 

12.2.11 Offender is a public officer. 

12.2.12 Offender not being a public officer but connived with public officer without 

prejudice to the latterís prosecution. 

12.2.13 Failure/Refusal without any valid reason to comply or execute any undertaking 

(e.g. to desist from violating Trade and Industry Law). 

12.2.14 Commencement or engagement in trade/business prior to the issuance 

of license/permit or authority to do business. 

12.2.15 Failure/non-compliance with any preliminary order on a preventive measure. 

12.2.16 Respondent by means of false or fraudulent misrepresentation orally or 

in writing or by other fraudulent means, shall procure from the BPS the registration, 

accreditation, license, authority and/or permit to conduct its business. 

12.2.17 Any analogous circumstances. 

SECTION 13. Execution of Final Orders/Decisions/Judgments - 

13.1 Execution upon final orders/decisions/judgments - Upon the expiration of the period 

to appeal and no appeal has been duly perfected, the prevailing/winning party shall file a 

Motion for the Issuance of an Order of Execution and the corresponding Writ of Execution. 

If the appeal has been duly perfected and finally resolved, the execution may forthwith 

be applied for in the DTI Office where the case was originally filed, on motion of the winning 

party. 

The Appeals Officer may, on motion in the same case, when the interest of justice so 

requires, direct the Office of origin to issue the Writ of Execution. 

13.2 Discretionary execution pending appeal - On motion of the party in whose favor a 

decision was rendered with notice to the other party filed with the Office which rendered the 

decision while it has still jurisdiction over the case and is in possession of the record of the 

case, at the time of the filing of such motion, said Office may, in its discretion, order execution 

of a final order/decision/judgment even before the expiration of the period to appeal. 

After that Office has lost jurisdiction, the motion for execution pending appeal may be filed 

with the appellate Court/Office of the Secretary. 

Discretionary execution may only issue upon good reasons to be stated in a special order 

after due hearing. 

13.2.1 Stay of Discretionary Execution - Discretionary execution may be stayed 

upon approval by the proper Court/Office of the Secretary/Appeals Officer of a

408 


bond filed by the party against whom it is directed, conditioned upon the performance 

of the order/decision/judgment allowed to be executed in case it shall be 

partially sustained in whole or in part. The bond thus given may be proceeded 

against on motion with notice to the party paying the bond. 

13.3 Effect of reversal of executed judgment - Where the executed judgment is reversed 

totally or partially annulled, on appeal or otherwise, the Office of origin may, on motion, issue 

such orders of restitution or reimbursement as equity and justice may warrant under the 

circumstances. 

13.4 How execution is effected - On motion, copy furnished the other party, the CAO/ 

Hearing Officer (with the approval of the Director concerned) shall issue an Order of Execution 

followed by a Writ of Execution. 

Any of the law enforcement agencies provided under Ministry Order No. 69, series of 

1983 preferably the Office of the Ex-Officio Sheriff of the Regional Trial Court of the locality 

where the party against whom the writ is directed, resides or holds business, may be deputized 

to execute the decision. 

SECTION 14. Succession of Offenses - For purposes of determining the First, Second, 

Third, and Fourth Offenses, the lapse of three (3) years from the time of the commission 

of the previous offense, shall be indicative of good business conduct and thus operate 

to give a new and clean record to the former offender. 

SECTION 15. Prescription - The prescription period for instituting the formal investigation 

of any violation of product standards covered by mandatory product certification covered 

by the DAO shall be three (3) years from the time the consumer transaction was 

consummated or the violation was committed. In case of hidden defects, the three (3) years 

period shall be counted from the date of discovery thereof. 

In consumer complaints, the prescriptive period shall be two (2) years from the time the 

consumer transaction was consummated or the deceptive or unfair or unconscionable act 

or practice was committed and in case of hidden defects, from discovery thereof. 9 

SECTION 16. Separability Clause - In the event any provision of this DAO or the 

application of such provision to any person or circumstance is declared invalid, the remainder 

of this DAO shall not be affected by such declaration. 

SECTION 17. Repealing Clause - All Department Administrative Orders, Rules, Regulations, 

and other similar issuances inconsistent herewith are hereby repealed or amended 

accordingly. 

SECTION 18. Effectivity - This Department Administrative Order Number 02 ( DAO 

02) Series fo 2002 shall take effect thirty (30) days after publication in two newspapers of 

general circulation/official gazette. 


9 Conformably with Art. 169, R.A. 7394. 

(SGD.) ADRIAN S. CRISTOBAL, JR. 


Consumer Welfare and Trade Regulation Group



(SGD.) JESUS L. MOTOOMULL 


Bureau of Product Standards 

Approved by: 

(SGD.) MAR ROXAS 

Secretary 

--o0o-- 

Department Administrative Order No. 03, s. 2002 

Rules and Regulations Concerning the Issuance of DTI Accreditation 

of Motor Vehicle Private Emission Testing Centers (PETCs) 

Whereas, pursuant to Sec. 21(d) of Republic Act No. 8749, otherwise known as the 

Philippine Clean Air Act of 1999, the DTI is mandated to develop and implement standards 

and procedures on the licensing of qualified private service centers and their technicians as 

prerequisite for performing the testing, servicing, repair and the required adjustment to the 

vehicle emission system; 

Whereas, Artice 24 Section 21 (b) (3) of RA 8749 states that the DOTC shall ìauthorize 

private emission testing centers duly accredited by the DTI;î 

Whereas, pursuant to Presidential Decree No. 1572, the DTI is mandated to implement 

accreditation of repair and service firms or establishments and their technical personnel in 

order to protect the interest of the consumer availing of their services; 

Whereas, pursuant to Executive Order No. 292, Series of 1987, the Department of 

Trade and Industry is empowered to formulate and implement policies, plans and programs 

relative to the development, expansion, promotion and regulation of trade, industry, and 

investment, and is mandated to protect consumers from trade malpractice; 

Now, wherefore, and in pursuance thereto, the following rules and regulations governing 

the issuance of accreditation of PETCs is hereby prescribed and promulgated for the 

compliance, information and guidance of all concerned. 

1.0 

Scope 

1.1 This Department Administrative Order (DAO) promulgates the rules and regulations for 

the implementation of the DTI-DOTC Joint Administrative Order No. 01 series of 2001, 

Guidelines for Accreditation and Authorization of Motor Vehicles Emission Testing Centers 

(PETCs) as mandated in the Republic Act No. 8749, otherwise known as ìThe Philippine 

Clean Air Act of 1999î.

410 


1.2 The rules and regulations describe the objectives, structure, guidelines and procedures 

designed to ensure the efficient and effective implementation of the DTI nationwide Accreditation 

Program for PETCs. 

2.1 DTI - Department of Trade and Industry 

2.0 

Definition of Terms 

2.2 BTRCP - Bureau of Trade Regulation and Consumers Protection 

2.3 DTI RO/PO - Refers to DTI Regional Office or Provincial Office 

2.4 TESDA - Technical Education and Skills Development Authority. 

2.5 DOTC - Department of Transportation and Communications 

2.6 Accreditation - A formal recognition by DTI of a motor vehicle private emission testing 

center as competent to carry out the task on motor vehicle emission testing. 

2.7 Applicant - A person, natural or juridical, seeking accreditation to engage in emission 

testing business. 

2.8 Approved Signatory - Any officer nominated/designated by the applicant/grantee competent 

to evaluate test results critically and occupying a position involving responsibility for 

adequacy of test results, eligible for approval as signatory of endorsed test documents. 

2.9 Authorized Representative - A person duly authorized by the applicant/grantee to represent 

the PETC in matters relating to the accreditation. He is the official contact person of the 

PETC. 

2.10 Assessment - A process of determining whether an organization, individual, process 

or service meets the requirements of standards or guides. 

2.11 Assessment Procedural Manual - A document which contains guidelines, objectives, 

structure and procedures for the efficient and effective implementation of the accreditation 

of PETCs. 

2.12 Assessment Team - A group of two or more assessors designated by the DTI who 

assesses the applicantís conformance to the requirements for accreditation. 

2.13 Bond - An amount issued in favor of the Republic of the Philippines which shall guarantee 

the faithful and honest performance of the job done by the accredited PETC. 

2.14 Private Emission Testing Center (PETC) - A private facility engaged in testing the level 

of opacity and/or the analysis of the gaseous emission of a motor vehicle. 

2.15 Private Emission Testing Center Advisory Committee - A body designated by the Secretary 

of the Department of Trade and Industry that shall formulate and review policies 

pertaining to accreditation of motor vehicle emission testing centers.


2.16 Grantee - A PETC formally recognized under established procedures for its competence 

to carry out motor vehicle emission testing. 

2.17 PNS ISO/IEC 17025 - The International Standard promulgated by the Bureau of Product 

Standards (BPS) as Philippine National Standard (PNS), containing the general requirements 

for the competence of testing and calibration laboratories. 

3.0 

DTI Accreditation Program 

3.1 The DTI-DOTC Joint Administrative Order (JAO) No. 01 Series of 2001, Guidelines for 

Accreditation and Authorization of Motor Vehicle Emission Testing Centers was issued by 

the DTI & DOTC to harmonize the accreditation and authorization of Motor Vehicle Private 

Emission Testing Centers (PETCs). 

3.2 By virtue of R.A. No. 8749, the accreditation is mandatory and is open to all existing and 

potential investors of motor vehicle private emission testing centers, provided that they meet 

the requirements of the DTI Accreditation Program. However, the accreditation of PETCs 

program shall be operated in a non-discriminatory manner. 

3.3 The DTI Accreditation Program shall be implemented nationwide. 

3.4 For guidance, applicant shall be provided with the Checklist of Requirements ( See 

Annex A, PETC Form 01) and the DTI-DOTC Joint Administrative Order (JAO) No. 01 Series 

of 2001, Guidelines for the Accreditaton and Authorization of Motor Vehicle Emission Testing 

Centers. 

3.5 All applicants shall however, comply with the requirements as provided in JAO No. 01, 

Series of 2001. Documentary requirements shall be accomplished by the applicant and 

submitted to DTI including the applicantsí letter of intent. 

3.6 Assessment of PETCs shall be based on the requirements specified in the JAO No. 01, 

Series of 2001. 

3.7 A Certificate of Accreditation shall be issued to a PETC that meets all the requirements of 

the DTI accreditation program. 

4.0 

Management of the DTI Accreditation Program 

4.1 The BTRCP shall be the lead agency in the management of the DTI Accreditation Program 

for PETCs. 

4.2 All Regional and Provincial Directors shall be responsible for the implementation of the 

accreditation program in their jurisdictions. They shall designate a permanent staff (Accreditation 

Officer) who shall be in charged of all accreditation matters. 

5.0 

Duties and Responsibilities

412 

5.1 DTI-BTRCP 


The DTI, through the BTRCP, shall oversee the implementation of the accreditation 

program for PETC. It shall have the following functions: 

5.1.1. Formulate and prescribe policy guidelines for the transparent, efficient and 

effective implementation of the accreditation program for PETC; 

5.1.2 Exercise Visitorial Powers over the applicants and accredited PETCs; 

5.1.3 Maintain a Registry of Accredited Motor Vehicle Private Emission Testing 

Centers and of accredited technicians for each center; 

5.1.4 Develop and maintain an Assessment Procedural Manual; 

5.1.5 Maintain a registry of qualified assessors; 

5.1.6 Enter into agreement with other government agencies and private sector in 

the implementation of the accreditation program; 

5.1.7 Represent DTI in various interagency activities like consultative meetings, 

seminars/workshops geared towards the improvement of the accreditation program; 

5.1.8 Coordinate closely with the DOTC and other DTI agencies on the accreditation, 

authorization of PETCs; and 

5.1.9 Undertake such other appropriate measures as may be deemed necessary 

to improve the accreditation program. 

5.2 DTI REGIONAL OFFICE (RO) 

5.2.1 The Regional Director shall sign the Certificate of Accreditation of PETCs 

endorsed by the Provincial Director. 

5.2.2 Exercises visitorial power over the facilities of applicants and accredited 

PETC for purposes of determining compliance with the conditions of accreditation 

and to ensure the quality and effectiveness of the tests conducted. 

5.2.3 Regularly furnish BTRCP of all information of every motor vehicle private 

emission testing centers accredited. 

5.2.4 Ensures adequate and appropriate staff resources who shall implement the 

accreditation program. 

5.3 DTI PROVINCIAL OFFICE (PO) 

5.3.1 The Provincial Director shall endorse to the Regional Director the Certificate 

of Accreditation for his signature.


5.3.2 Accepts, reviews and processes applications for accreditation of applicants 

operating within their jurisdiction. 

5.3.3 Grants and releases the Certificate of Accreditation to applicants that comply 

with all the requirements of the accreditation program. 

5.3.4 Assists in the assessment of PETCs in the DTI RO or PO through its trained 

and qualified assessors. 

5.3.5 Represents DTI and participates in meetings, conferences, seminars, training 

courses and other events related to the PETC accreditation in their area of 

jurisdiction. 

5.3.6 Determines and informs potential investors of PETCs of the supply and 

demand situation in his area of jurisdiction. However, he shall not prohibit them 

from filing applications anytime if they are interested in the PETC accreditation. 

5.4 ACCREDITATION OFFICER(S) 

5.4.1 The Regional and Provincial Directors shall designate a permanent Accreditation 

Officer, who shall have technical background, and who shall be responsible 

for the accreditation activities within their jurisdiction. The Accreditation 

Officer(s) shall report directly to the Regional or Provincial Director and shall 

have the following functions: 

a. Acts as contact and liaison officer between the Regional or Provincial Officer 

and its clients by providing information and advice on DTI accreditation 

procedures, criteria for accreditation, fees and services and on other technical 

matters. 

b. Schedules, coordinates and controls all assessment, review visits and special 

assessments relating to the relevant field, ensuring that they are carried out in 

accordance with the Assessment Procedural Manual and within the time schedule. 

c. Ensures that application for accreditation, review, or re-assessments are 

acted upon in accordance with the requirements of this DAO. 

d. Accepts and reviews reports on surveillance visits and assessments and 

takes action on the recommendation of such reports. 

e. Maintains relevant client files and database records ensuring that information 

contained therein is accurate, up-to-date, legible, relevant and sufficient to 

demonstrate full compliance with the DTI accreditation procedures and criteria. 

f. Ensures that clients are billed for all assessment activities. 

g. Ensures that the procedures described in the Assessment Procedural Manual 

are followed.



h. Monitors and reviews assessment activities to ensure that all the relevant 

expenses are presented to the Administrative Finance Unit for action. 

5.5. ADMINISTRATIVE SUPPORT STAFF 

The Administrative Support Staff shall be designated by the Regional or Provincial 

Director who shall be responsible for providing administrative support to the PETC accreditation 

scheme. His functions are as follows: 

5.5.1 Processes application for accreditation. 

5.5.2 Maintains database records including scope of accreditation, assessment schedules 

and conditions clearance dates. 

5.5.3 Answers program-related customer queries. 

5.5.4 Maintains availability of standard forms and other documents. 

5.5.5 Dispatches relevant information materials to prospective clients and records client 

information for future follow-up. 

5.5.6 Performs general administrative activities including client file maintenance, photocopying, 

organization of program mail-outs and upkeep of program booklets. 

5.5.7 Ensures that clients have paid outstanding debts and arrearages prior to the awarding 

of accreditation and continued accreditation. 

5.6 ADVISORY BODY 

5.6.1 The DTI Accreditation Program for PETC shall have an Advisory Body in all matters 

pertaining to accreditation of PETC. 

5.7 ASSESSMENT TEAM AND ACCREDITATION COMMITEE 

5.7.1 The Provincial Director shall designate an Assessment Team which, shall be composed 

of qualified DTI assessors and technical experts/assessors from the DOTC/LTO or private 

experts duly recognized by the BTRCP. 

5.7.2 The Assessment Team shall have the following functions: 

a. Review and evaluate the application and other documentary requirements; and 

b. Conduct on-site assessment of the applicant and/or the accredited DTI PETCs; 

and 

c. Submit to the Accreditation Committee its assessment report within one week 

after an on-site assessment thereof. 

5.7.3 The Accreditation Committee shall be composed of an Accreditation Officer as Chairman, 

assessment Team Leader, and DOTC/LTO or private sector experts.


5.7.4 The Accreditation Committee shall submit within 1 week an evaluation report to the 

Provincial Director for his approval/disapproval of the accreditation. 

5.8 CONFIDENTIALITY 

5.8.1 All information received by the DTI in the processing, granting, maintenance and 

renewal of accreditation by motor vehicle emission testing centers shall be treated confidential 

so as not to prejudice the activities of their client and the privacy of other individuals. 

5.8.2 All DTI staff involved in the accreditation activities like the staff, assessors, technical 

experts and members of committees shall sign a confidentiality agreement. 

5.8.3 Only authorized staff shall have access to client information and files. DTI staff shall be 

aware at all times of their obligation to maintain confidentiality of all files, reports and other 

documents in their care. They shall be used, stored and handled in secure manner so as to 

ensure that no breach of confidentiality occurs. 

5.9 MANAGEMENT REPORTING 

Provincial Directors shall submit to the Director of the BTRCP monthly reports containing 


5.9.1 Summary of new applications received for every month; 

5.9.2 Summary of initial assessments, review visits, or re-assessments undertaken every 

month; 

5.9.3 Summary of accreditation granted, withdrawn or suspended; 

5.9.4 Summary of significant forthcoming events or activities; and 

5.9.5 Other matters of relevance. 

6.0 

DTI ACCREDITATION PROGRAM DOCUMENTARY REQUIREMENTS 

Application requirements shall be those specified in Article III of JAO No. 01 Series of 

2001, as follows: 

6.1 Every branch office of a PETC shall apply for a separate accreditation. It shall be subject 

to the same requirements and processing procedure for accreditation and charged with the 

same fees as that of the main facility of the PETC. 

6.2 Qualifications of an Applicant 

6.2.1 Any natural person who is at least 18 years of age or any juridical person 

who is not disqualified by any existing law or regulation to engage in vehicle 

emission testing activity is qualified to apply for accreditation provided, that the 

following requirements are complied with.

416 


6.2.2 A center duly accredited by DTI as a motor vehicle emission testing center 

may apply for DOTC authorization provided it meets the requirements of the 

DOTC authorization requirements. 

6.3 Documentary Requirements (see Annex A*: PETC Form 01) 

6.3.1 A duly accomplished form, under oath. 

6.3.2 A certified true copy of the following: 

a. For sole proprietorship, Certificate of Business Name Registration 

b. For corporation/partnership, Securities and Exchange Commission Certificate 

of Registration and Articles of Incorporation/Partnership and Board Resolution, 

issued by the Board Secretary, specifying the name of authorized representative 

who must be an officer of the corporation/partnership. 

c. For cooperative, Cooperative Development Authority Certificate of Registration 

and Articles of Cooperation and Board Resolution, issued by the Board 

Secretary, specifying the name of authorized representative who must be an 

officer of the cooperative. 

6.3.3 Mayorís Permit 

6.3.4 BIR Registration and TIN 

6.3.5 SSS Membership Certificate 

6.3.6 Audited Financial Statement for the last two (2) years or a Pre-operating 

Financial Statement whichever is applicable, showing that the owner-applicant 

shall be in such financial condition as to reasonably expect it to operate for at 

least one (1) year. 

6.3.7 Location map of the center and layout of the center, including dimensions, 

proximity/location to the nearest LTO District Office. 

6.3.8 Organizational structure showing the relationship between the center and 

other operations of the firm, when applicable, and the structure of the center 

showing its personnel and its functions. 

6.3.9 List of personnel involved with the operation of the center including their job 

descriptions, responsibilities and qualifications, including the Certificate of Competency 

as Motor Vehicle Emission Control Technician (MVECT) issued by TESDA. 

6.3.10 List of all equipment, including manuals, reference materials required for 

the calibrations and tests, manual of the test procedures, and personnel. 

6.3.11 Such other documents that the DTI may require from time to time to protect 

the interest of the government and the public. 

*Not Included/Filed with ONAR.


7.0 

GENERAL REQUIREMENTS FOR PETCs 

General and minimum requirements shall be those specified in Article IV of DTI-DOTC 

JAO 01 Series of 2001, as follows: 

7.1 PERSONNEL 

7.1.1 A technician shall be certified as a Motor Vehicle Emission Control Technician 

(MVECT) by TESDA. 

7.1.2 Personnel performing specific tasks shall be qualified on the basis of appropriate 

education, training, experience and/or demonstrated skill, as required. 

7.1.3 The testing center shall maintain current job descriptions for managerial, 

technical and key support personnel involved in testing. 

7.1.4 The PETC management shall authorize specific personnel to perform particular 

sampling, tests, to issue test reports, to give opinions and interpretations 

and to operate the emission testing equipment. 

7.2 ACCOMMODATION AND ENVIRONMENTAL CONDITIONS 

7.2.1 The work area shall be within a permanent site and have a maneuvering 

area/site of at least 6 m wide x 6 m long per proposed number of vehicle to be 

inspected at any given time where the driver can park for off-highway emission 

testing. 

7.2.2 The facility for testing and/or calibration, including but not limited to energy 

sources, lighting and environmental conditions shall be such as to facilitate correct 

performance of the tests and/or calibrations. 

7.2.3 The area in which the test will be undertaken shall not invalidate the results 

or adversely affect the required accuracy of measurement. 

7.2.4 Measures shall be undertaken to ensure good housekeeping in the facility. 

Special procedures shall be prepared where necessary. 

7.3 TEST PARAMETERS TO BE MEASURED 

7.4 EQUIPMENT 

7.4.1 The center shall have the minimum test equipment required in the test 

procedures, as follows: 

a. For testing of gasoline-fuelled vehicles: gas analyzer 

b. For testing of diesel-fuelled vehicles: opacimeter 

7.4.2 The equipment shall be certified by the Department of Environment and 

Natural Resources (DENR).

418 


7.4.3 All emission testing equipment shall conform to the specifications of the 

appropriate Philippine National Standards (PNS). The equipment shall be properly 

calibrated and have reference/operating manuals. 

7.4.4 The equipment and its software used for testing, and sampling shall be 

capable of achieving the accuracy required and shall comply with specifications 

relevant to the tests. 

7.4.5 Authorized personnel shall operate the equipment. Up-to-date instructions 

on the use and maintenance of equipment (including any relevant manuals provided 

by the manufacturer of the equipment) shall be readily available for use by 

the appropriate personnel. 

7.5 TEST METHODS/PROCEDURES 

The test methods/procedures that shall be followed shall be those specified in the Clean 

Air Act and its implementing Guidelines as follows: 

7.5.1 Annex B: Emission Test Procedure for In-Use Motor Vehicles Equipped with 

Spark Ignition Engines 

7.5.2 Annex C: Free Accreditation Test for In-Use Compression-Ignition Motor 

Vehicles 

7.6 TEST REPORTS/CERTIFICATES 

A test report shall be issued by the PETC, which shall contain at least the following 

information: 

7.6.1 Title (e.g. ìTest Reportî or ìTest Certificateî); 

7.6.2 Name and address of the center, and location where the test was carried 

out, if different from the address of the center; 

7.6.3 Unique identification of the test report or certificate (such as a serial number) 

7.6.4 Name and address of the client; 

7.6.5 Identification of the test method used; 

7.6.6. Description, condition, and unambiguous identification, of the vehicles 

tested; 

7.6.7 Date test was conducted; 

7.6.8 Test results with the units of measurement of actual test as compared to 

standard; 

7.6.9 Name(s), function(s) and signature(s) or equivalent identification to person(s) 

authorizing the test report; and


7.6.10 Statement to the effect that the results relate only to the items tested. 

7.7. HANDLING OF COMPLAINTS 

The PETC shall have a policy and procedure for the resolution of complaints received 

from clients or other parties. Records shall be maintained of all complaints and of the investigations 

and corrective actions undertaken by the center. 

7.8 COMPLIANCE WITH PNS ISO/IEC 17025 

In recognition of the need to upgrade the accreditation scheme in accordance with 

international standards for competence of testing laboratories (centers), all PETCs shall 

comply with PNS ISO/IEC 17025, General requirements for the competence of testing and 

calibration laboratories. 

Upon issuance of certificate of accreditation, the PETC shall execute an oath of undertaking 

that shall contain the PETCís commitment through an action plan to comply with the 

provisions of PNS ISO/IEC 17025 within one (1) year grant of accreditation. 

8.0 

FEES AND CHARGES; AND BOND REQUIREMENT 

8.1 Fees and charges for accreditation shall depend on the PETCís size in terms of its 

assets and the number of hours and assessors for each assessment as indicated in DTI- 

DOTC JAO 01 Series of 2001. 

Fees and Charges Amount in Philippine Peso, PhP 

Application fee (non-transferrable, 

payable upon filing of application 300.00 

Assessment fee (includes document review, 

follow-up and verification visits, payable 

within 15 day) 

Small 8,000.00 

Medium 16,000.00 

Large 24,000.00 

Reassessment fee (applicable only in cases of 

verification visit) 

Small 4,000.00 

Medium 8,000.00 

Large 12,000.00 

Accreditation certificate 

Small 3,000.00 

Medium 4,000.00 

Large 5,000.00

420 


Annual accreditation fee 

Small 1,000.00 

Medium 2,000.00 

Large 3,000.00 

Other Fees 

Certifications or additional copy of certificate 500.00 

Note: Small PhP 1m-15m; Medium 15M-100M; Large: Over PhP 100M 

8.2 A bond in the amount of One Hundred Thousand Pesos (PhP100,000.00) shall be posted 

before the issuance of the certificate of accreditation. 

9.0 ACCREDITATION PROCESS 

(See Annex B* for Accreditation Process Flowchart) 

9.1 INQUIRIES RELATING TO ACCREDITATION 

Inquiries relating to accreditation of PETC shall be addressed to the BTRCP and/or to 

the DTI Regional Office (RO) and Provincial Office (PO). Records of such inquiries shall be 

maintained by the DTI Office concerned. 

9.2 FILING OF APPLICATION 

9.2.1 Application shall be filed at the Trade and Industry Building, 361 Sen. Gil J. 

Puyat Avenue, Makati City or to the appropriate DTI RO or PO, as the case may 

be. 

9.2.2 A motor vehicle emission testing center seeking and maintaining accreditation 

is required to satisfy the requirements of the DTI Accreditation Program. 

9.2.3 Applications for accreditation shall be made only by legally identifiable 

PETC and only by filing in the prescribed application form. 

9.2.4 Each applicant is required to provide BTRCP/DTI RO/PO a copy of the 

PETC operations manual and other supporting documentation. 

9.3 CHECKING AND RECORDING OF DOCUMENTARY REQUIREMENTS 

9.3.1 Upon receipt of the documents by the Accreditation Officer, he shall check 

the documents submitted based on the Checklist of the Requirements (PETC 

Form 01). 

9.3.2 After all the required documents are submitted, the Accreditation Officer 

shall indicate receipt thereof in space provided in PETC Form 01. 

9.3.3 The Accreditation Officer shall assign a specific number of each applicant. 

This shall be used as reference relating to his application. 

*Not Included/Filed with ONAR.


9.3.4 DTI personnel shall record in the logbook the following: 

a. Name of applicant 

b. Service area and the number of lanes applied for 

c. Date of filing 

d. Name and signature of the person who submitted the application 

e. Signature of the DTI personnel who received the application 

9.4 REVIEW AND EVALUATION PROCESS 

9.4.1 All applications/documents shall be reviewed and evaluated by the Assessment 

Team that will be designated by the Provincial Director. The Assessment 

Team shall evaluate the completeness of application based on the checklist of 

accreditation requirements, and evaluate the application based on financial capability 

to establish the PETC, nature and/or purpose of the business based on 

SEC or DTI records; and authenticity of documents submitted. 

9.4.2 The Assessment Team shall determine the readiness of the applicant for an 

on-site assessment. 

9.4.3 Applicants that are ready for an on-site assessment shall be informed officially 

of the schedule of the on-site assessment. Those not considered shall be 

notified accordingly. 

9.5 ASSESSMENT PROCESS 

9.5.1 The basic objective of the assessment is to confirm that the requirements of 

the DTI-DOTC accreditation and authorization guidelines are followed and to 

ensure that the PETC can competently perform the required motor vehicle emission 

testing. 

9.5.2 Assessment is carried out by the Assessment Team which, shall initiate with 

an opening meeting. The Assessment Team shall be composed of a team leader 

and a Technical Expert, selected for the relevance of their expertise and freedom 

from conflict of interest. Assessors and Technical Experts must be qualified 

according to the specified qualification requirements. 

9.5.3 Assessments shall be conducted within a period depending on the size of 

the PETC. Assessments include detailed discussions with management and testing 

staff, inspection of equipment and premises, and examination of documentation 

and records. Assessors normally witness actual testing by the technicians. 

9.5.4 A closing meeting is held at the completion of the assessment. The Authorized 

Representative is provided with a draft written report of the findings. These 

findings are discussed with the PETCís management during the closing meeting. 

9.6 CORRECTIVE ACTIONS 

9.6.1 The applicant PETC shall be informed of the deficiency or non-conformity 

if any, with the requirements based on the assessment done. The PETC shall be 

given a maximum period of thirty (30) days to make corrective actions on the 

deficiencies found therein.

422 


9.6.2 Within the 30 day period, the applicant shall submit and implement its 

corrective actions. Otherwise, the application shall be deemed abandoned and 

the corresponding fee shall be forfeited in favor of the government. 

9.7 REPORT OF ASSESSMENT 

9.7.1 The Assessment Team Leader shall prepare a written report on the assessment 

findings which, will be presented in the closing meeting. 

9.7.2 The Assessment Report shall be prepared and submitted by the Assessment 

Team to the Accreditation Committee. 

9.7.3 The Accreditation Committee shall evaluate the results of assessment and 

submit the said results to the Provincial Director for approval/disapproval of the 

accreditation. 

9.8 APPROVAL/DISAPPROVAL OF APPLICATION 

9.8.1 Upon receipt of the evaluation result from the Accreditation Committee, the 

Provincial Director shall decide on the approval/disapproval of the accreditation. 

9.8.2 In case of disapproval of accreditation, the Provincial Director shall notify 

the applicant in writing stating the ground for the disapproval. 

9.8.3 The Provincial Director shall endorse the Certificate of Accreditation to the 

Regional Director for his signature. 

9.9. ISSUANCE OF DTI CERTIFICATE OF ACCREDITATION 

9.9.1 The DTI Regional Director shall sign the Certificate of Accreditation endorsed 

by the Provincial Director for approval. 

9.9.2 The Regional Director shall send to the Provincial Director the signed Certificate 

of Accreditation. 

9.9.3 The DTI, through the DTI-PO, shall issue an official letter informing the 

applicant of the granting of accreditation. The applicant shall be required to pay 

the prescribed fees and post the required bond in the amount of One-Hundred 

Thousand Pesos (PhP100,000.00). 

9.9.4 The Certificate of Accreditation shall include the following information: 

a. The name and address of the center 

b. The scope of accreditation 

c. The effectivity of accreditation 

d. The accreditation number 

e. Service area and the number of accredited lanes 

9.9.5 The Certificate of Accreditation shall be valid for 3 years unless the certificate 

of accreditation is sooner cancelled or withdrawn. After 3 years, a re-assessment 

shall be conducted if the PETC decides to continue its accreditation. 

9.9.6 Accredited PETC that intends to renew its accreditation shall file application 

for renewal three (3) months before the validity expires.


9.9.7 In case the Certificate is lost or destroyed, the accredited PETC may 

request for a certified true copy based on the records and upon payment of the 

prescribed fee. 

9.9.8 PETCs duly accredited by the DTI shall accordingly, be authorized by 

DOTC as provided for under Article 24 Section 21 of R.A. 8749. 

9.10 APPEAL 

9.10.1 An applicant aggrieved by the final decision of the DTI-RO Director may, 

within fifteen (15) days from receipt of such decision, file an appeal to the Office 

of the DTI Secretary. The decision of the Secretary shall be immediate executory. 

9.10.2 The grounds for appeal shall be limited to grave abuse of discretion and 

serious errors in the findings of fact, which may cause grave or irreparable injury 

to the aggrieved applicant. 

9.11 MONITORING INSPECTION OF ACCREDITED PETC 

9.11.1 An accredited PETC shall continue to comply with the accreditation requirements. 

The Authorized Representative is required to notify the DTI Regional Office at 

least five days before effecting change of: 

- name of the PETC 

- authorized representative and personnel, and 

- changes on accommodation and equipment (e.g. change in location, or 

physical lay-out) 

9.11.2 DTI shall undertake monitoring and inspection activity of all accredited 

PETCs to check the consistent conformance to the accreditation requirements. 

9.11.3 Surveillance Kits of Accredited PETCs shall be conducted at least once 

every 12 months after accreditation. 

9.12 WITHDRAWAL/CANCELLATION OF ACCREDITATION 

9.12.1 Accreditation shall be withdrawn if the PETC: 

a. fails to achieve full compliance; 

b. declines to take appropriate corrective action on the conditions for accreditation 

within a reasonable period of time; 

c. does not intend to renew its accreditation at the end of the accreditation 

period; 

d. voluntarily declares non-interest in accreditation within the accreditation 

period; and 

e. upon final decision of the DTI-RO revoking/cancelling PETCís accreditation 

on any of the grounds enumerated under Art. XV of the DTI-DOTC JAO No. 01, 

Series of 2001.

424 


11.0. 

PENALTIES 

11.1 Any violation of this Order shall be subject to administrative actions under E.O. No. 913, 

series of 1993 without prejudice to the criminal or civil actions under R.A. No. 4109 and/or 

R.A. 7394. 

12.0 

SEPARABILITY CLAUSE 

12.1 If for any reason any article or provision of this Order or any portions thereof or the 

application of such section, provision or portion thereof to any person or group or circumstances 

is declared invalid or unconstitutional, the remainder of this Order shall not be 

affected by such declarations. 

13.0 

REPEALING CLAUSE 

13.1 Any related orders or parts thereof which are inconsistent with the provisions of this 

Administrative Order are hereby repealed or amended accordingly. 

14.0 

EFFECTIVITY 

14.1 This Order shall take effect fifteen (15) days after its publication in the Official Gazette 

and in two (2) newspapers of general circulation in the Philippines. 


RECOMMENDING APPROVAL: 

(SGD.) JESUS L. MOTOOMULL 

Caretaker, BTRCP 


Undersecretary, CWTRG 

APPROVED: 


Secretary 

--o0o-- 

Department Administrative Order No. 10 

Amending Department Order No. 16, series of 1990 - Rules and Regulations 

on the Accreditation of Consumer Organizations Pursuant to LOI 1337, 

to Include General Provisions; New Accreditation Procedures and 

Conditions of Accreditation; Duties and Responsibilities of Accredited 

Consumer Organizations; and Roles of the 

Department of Trade and Industry


Adopted: 30 Sept. 2002 




(SGD.) MANUEL A. ROXAS II 

Secretary 




--o0o-- 

Department Administrative Order No. 01, s. 2003 

Implementing Rules and Regulations of R.A. 9178, Otherwise known 

as the ìBarangay Micro Business Enterprises (BMBEs) Act of 2002î 

Pursuant to Sec. 15 of R.A. 9178, otherwise known as the ìBarangay Micro Business 

Enterprises (BMBEs) Act of 2002î and after consultation with the Department of the Interior 

and Local Government (DILG), Department of Finance (DOF) and the Bangko Sentral ng 

Pilipinas (BSP), and other concerned agencies, the following Rules and Regulations governing 

BMBEs are hereby prescribed for the compliance, information and guidance of all concerned. 

I 


SECTION 1. Declaration of Policy - As stated in Sec. 2 of RA 9178, it is the policy of 

the State to hasten the countryís economic development by encouraging the formation and 

growth of barangay micro business enterprises which effectively serve as seedbeds of 

Filipino entrepreneurial talents, and integrating those in the informal sector with the mainstream 

economy, through the rationalization of bureaucratic restrictions, the active intervention 

of the government specially in the local level, and the granting of incentives and benefits 

to general much-needed employment and alleviate poverty. 

SECTION 2. Definition of Terms - When used herein, the term: 

a. Act - shall refer to the ìBarangay Micro Business Enterprises Act of 2002.î 

b. Barangay Micro Business Enterprise (BMBE) - as defined in Sec. 3a of the Act, shall 

refer to any business entity or enterprise engaged in the production, processing or 

manufacturing of products or commodities, including agro-processing, trading and services, 

whose total assets including those arising from loans but exclusive of the land on which the 

particular business entityís office, plant and equipment are situated, shall not be more than 

Three Million Pesos (P3,000,000.00) subject to review and upward adjustment by the SMED 

Council, as mandated under Republic Act 6977, as amended by Republic Act 8289. A 

BMBE shall include any individual owning such business entity/enterprise, partnership,

426 


cooperative, corporation, association or other entity incorporated and/or organized and 

existing under Philippine laws; and registered with the office of the treasurer of a city or 

municipality in accordance with this implementing rules and regulations. 

ìServicesî shall exclude those rendered by any one, who is duly licensed by the government 

after having passed a government licensure examination, in connection with the exercise of 

oneís profession as stated in Paragraph 2 Sec. 3 (a), RA 9178. 

c. Certificate of Authority (CA) - shall refer to the certificate issued to an applicant authorizing 

the same to operate as a BMBE and to be entitled to the benefits and privileges 

accorded to a registered BMBE. 

d. Assets - shall refer to all kinds of properties, real or personal, owned by the BMBE and 

used for the conduct of its business as defined by the SMED Council: Provided, That for the 

purpose of exemption from taxes and fees under the Act, this term shall mean all kinds of 

properties, real or personal, owned and/or used by the BMBE for the conduct of its business 

as defined by the SMED Council. 

e. Registration - shall mean the inclusion of a BMBE in the BMBE Registry of a city or 

municipality. 

f. Financing - shall refer to all borrowings of the BMBE from all sources after registration. 

II 

REGISTRATION OF BMBE 

SECTION 3. Place of Registration - The Office of the Treasurer of each city or municipality 

shall register BMBEs and issue a Certificate of Authority (CA) to enable the BMBE 

to avail of incentives under the Act: Provided, That only one Certificate of Authority shall be 

issued for each BMBE and only by the Office of the Treasurer of the city or municipality that 

has jurisdiction over the principal place of business of the BMBE. 

SECTION 4. Who are eligible to register - Any person, natural or juridical, cooperative 

or association having the qualifications herein below enumerated, may apply for registration 

as BMBE: 

a. have an asset size of not more than three million pesos (P3,000,000.00) excluding land, 

before applying for BMBE registration; and 

b. engaged in the business activities as defined in Sec. 2 ( b) of this IRR. 

SECTION 5. Requirements for Registration - The following are the procedures when 

applying for registration as BMBE. 

a. an applicant for BMBE shall go to the Office of the Municipal or City Treasurer where the 

business is located; 

b. the applicant shall accomplish BMBE Form 01 in triplicate and submit to the Office of the 

Municipal or City Treasurer;


c. the Municipal or City Treasurer evaluates the application. Application shall be processed 

within fifteen (15) working days upon submission of complete documents. Otherwise, the 

BMBEs shall be deemed registered; and 

d. a registered BMBE shall be issued a CA as proof of registration, which will be effective for 

a period of two (2) years, renewable for a period of two (2) years from every renewal. 

SECTION 7. Fees and Charges - The LGUs shall issue the CA promptly and free of 

charge. However, to defray the administrative costs of registering and monitoring the BMBEs, 

the LGU may charge a fee not exceeding One Thousand Pesos (P1,000.00). 

SECTION 8. Transfer of ownership - The BMBE shall report to the city or municipality 

of any change in the status of ownership structure, and shall surrender the original copy of 

the BMBE Certificate of Authority for notation of the transfer. 

III 

Incentives and Benefits 

SECTION 9. Exemption from taxes and fees - All BMBEs shall be exempted from 

income tax for income arising from the operation of the enterprise. 

The Local Government Units (LGUs) are encouraged either to reduce the amount of 

local taxes, fees and charges imposed or to exempt the BMBE from local taxes, fees and 

charges. 

SECTION 10. Exemption from the Coverage of the Minimum Wage Law - The BMBEs 

shall be exempt from the coverage of the Minimum Wage Law: Provided, That all employees 

covered under the Act shall be entitled to the same benefits given to any regular employee 

such as social security and healthcare benefits. 

SECTION 11. Credit Delivery - As stated in Sec. 9, upon approval of the Act, the Land 

Bank of the Philippines (LBP), the Development Bank of the Philippines (DBP), Small Business 

Guarantee and Finance Corporation (SBGFC), and Peopleís Credit and Finance Corporation 

(PCFC) shall set up a special credit window that will service the financing needs of 

BMBEs registered under the Act consistent with the BSP policies, rules and regulations. The 

Government Service Insurance System (GSIS) and Social Security System (SSS) shall 

likewise set up a special credit window that will serve the financing needs of their respective 

members who wish to establish a BMBE. The concerned financial institutions (FIs) are 

encouraged to wholesale the funds to accredited private financial institutions including community-based 

organizations such as cooperatives, non-government organizations (NGOs) 

and peopleís organizations, which will in turn, directly provide credit support to BMBEs. 

All loans from whatever sources granted to BMBEs under the Act shall be considered 

as part of alternative compliance to Presidential Decree No. 717, otherwise known as the 

Agri-Agra Law, or to Republic Act No. 6977, otherwise known as the Magna Carta for Small 

and Medium Enterprises, as amended. For purposes of compliance with Presidential Decree 

No. 717 and Republic Act No. 6977, as amended, loans granted to BMBEs under the 

Act shall be computed at twice the amount of the face value of the loans.

428 


Any existing laws to the contrary withstanding, interests, commissions and discounts 

derived from the loans by the LBP, DBP, PCFC, and SBGFC, granted to BMBEs as well as 

loans extended by the GSIS and SSS to their respective member-employees under the Act 

shall be exempt from gross receipts tax (GRT). 

To minimize the risk in lending to the BMBEs, the SBGFC and the Quedan and Rural 

Credit Guarantee Corporation (QUEDANCOR) under the Department of Agriculture, in case 

of agribusiness activities, shall set up a special guarantee window to provide the necessary 

credit guarantee to BMBEs under their respective guarantee programs. 

The LBP, DBP, PCFC, SGBFC, SSS, GSIS and QUEDANCOR shall annually report to 

the appropriate Committees of both Houses of Congress on the status of the implementation 

of this provision. 

The BSP shall formulate the rules for the implementation of this provision and shall 

likewise establish incentive program to encourage and improve credit delivery to the BMBEs. 

SECTION 12. Technology Transfer, Production and Management Training, and Marketing 

Assistance - BMBEs can avail of technology, transfer, production, management training 

programs and marketing assistance of the DTI, DOST, UP-ISSI, CDA, TESDA, TLRC 

and other concerned agencies. 

SECTION 13. BMBE Development Fund - As stated in Sec. 10 of the Act, a BMBE 

Development Fund shall be set up with an endowment of Three Hundred Million Pesos 

(P300,000,000.00) from the PAGCOR and shall be administered by the SMED Council. 

The DTI, DOST, UP ISSI, CDA, TESDA, and TLRC may avail of the said Fund for 

technology transfer, production and management training and marketing assistance to BMBEs. 

SECTION 14,. Trade and Investment Promotion - The data gathered from business 

registration shall be made accessible to and shall be utilized by private sector organizations 

and non-government organizations for purpose of business matching, trade and investment 

promotion. 

SECTION 15. One-Stop Business Registration Center - LGUs are encouraged to 

establish a One-Stop Business Registration to handle the efficient registration and processing 

of permits/licenses of BMBEs. 

IV 

Information Dissemination 

SECTION 16. Information Dissemination - The Philippine Information Agency (PIA) 

in coordination with the concerned agencies (DOLE, the DILG, and the DTI) shall ensure the 

proper and adequate information dissemination of the contents and benefits of the Act to the 

general public especially to its intended beneficiaries in the barangay level. 

V 

Penalty 

SECTION 17. Penalty - Any person who shall willfully violate any provision of the Act 

or who shall in any manner commit any act to defeat any provision of the Act shall, upon


conviction, be punished by a fine of not less than Twenty-five Thousand pesos (P25,000.00) 

but not more than Fifty Thousand Pesos (P50,000.00) and suffer imprisonment of not less 

than six (6) months but not more than two (2) years. 

In case of non-compliance with the provisions of Section 9 of the Act, the BSP shall 

impose administrative sanctions and other penalties on the concerned government financial 

institutions, including a fine of not less than Five Hundred Thousand Pesos (P500,000.00). 

VI 

Miscellaneous Provisions 

SECTION 18. Annual Report - The DILG, DTI, and BSP shall submit Annual Reports to 

Congress on the status of the implementation of the Act. 

SECTION 19. Effectivity - These rules shall take effect fifteen (15) days after its 




Secretary of Trade and Industry 

DEPARTMENT OF TRANSPORTATION AND 

COMMUNICATIONS 

Date FIled: 12 March 2003 

Department Order No. 2003-16 

Rules and Regulations to Implement Executive Order No. 170 Promoting 

Private Sector Participation and Investment in the Development and 

Operation of the Road Roll-On/Roll-Off Terminal System 






Secretary 

--o0o--

430 


Department Order No. 2003-17 

ìColorumî and Smokebelching Vehicles 

Consistent with the Presidential directive to immediately create a task force that will 

implement projects to rid Metro Manila of illegal operation of public transport services, the 

following are hereby issued for the attention and appropriate action by the Office/personnel 

concerned: 

1. The task force shall be composed of the following: 

Chairman : Undersecretary Arturo T. Valdez 

Vice-Chairman : Asst. Sec. Roberto T. Lastimoso 

Member : Chairman Dante M. Lantin 

Member : Chairman Jaime S. Domdom 

Member : Board Member Remedios Belleza 

Member : Board Member Felix S. Racadio 

Member : Director Nestorio B. Gualberto 

Member : Mr. Ferdinand E. Lagman, Jr. 

2. Tha task force is hereby directed to vigorously and seriously pursue the drive against 

ìcolorumî, out-of-line and roadside monitoring of emission standard. 

3. The Land Transportation Franchising and Regulatory Board (LTFRB) is given until end of 

March 2003 to complete the updated records of franchises, available for information retrieval 

and dissemination in hard copy or electronic data (computerized) form consistent with the 

Metro Manila Bus Route Rationalization Program. Any request for extension shall not be 

allowed. Henceforth, no vehicle(s) apprehended for ìcolorumî violation shall be released 

from the impounding area until a franchise covering the operation of subject vehicle is issued 

by LTFRB. The LTFRB is further instructed to impose administrative sanction, i.e., Cease 

and Desist Order, cancellation of franchise for recidivist such as constant out-of-line violators. 

4. All license plates confiscated for violation of the vehicle emission standard as provided for 

in the Clean Air Act of 1999 shall be deposited with the DOTC Action Center for proper 

recording. 

5. Release of vehicle(s) and/or license plate(s) confiscated due to violations of ìcolorumî, 

out-of-line and anti-smoke belching in Metro Manila shall be subject to a clearance. The 

clearance shall be issued by the Office of the Undersecretary for Road Transportation. 

6. Regular report of vehicles apprehended due to the above cited violations shall be filed with 

the Office of the Undersecretary for Road Transportation for onward transmittal to this Office 

and to the Office of the President. The first report to the President shall be fourteen (14) days 

from receipt hereof. 

All issuances that are deemed inconsistent herewith are hereby revoked and/or superceded 

accordingly.





Secretary 

--o0o-- 

Department Circular No. 2003-01 

Regulation of the Operation of Cable Television (CATV) 

The 1987 Constitution fully recognizes the role of communications in nation building. It 

also contains the following provisions: 

a. Article XII. Sec. 1. The goals of the national economy are a more equitable distribution of 

opportunities, income and wealth; 

b. Article XII Sec. 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. 

c. Article XVI Sec. 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 nations 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. 

In view of the above and in order to promote fair and healthy competition in the cable 

television industry so as to provide the Filipino people the widest access possible to sources 

of news, information, entertainment and data available from the CATV market, the Department 

of Transportation and Communications (DOTC) hereby directs the National Telecommunications 

Commission (NTC) to issue the necessary guidelines that will govern the relationship 

between program and content providers and the local cable TV operators, in line 

with the following policy directives; 

1. Program and/or content providers shall conduct their business in a manner that will not be 

in violation of the Constitutional provision prohibiting monopoly, combinations in restraint of 

trade or unfair competition; 

2. Foreign program and/or content providers who are or intending to transact business with 

local CATV operators shall be requird to have an in-country local agent; 

3. Any and all agreement between local CATV operators and foreign and/or content providers 

shall contain a provision submitting any dispute pertaining thereto to the jurisdiction of 

Philippine competent authorities. 

This Circular shall take effect fifteen days after its publication in the Official Gazette or 

any newspaper of general circulation, provided further, that at least 3 certified copies thereof 

shall be filed with the University of the Philippines Law Center.

432 




Secretary 

GARMENTS AND TEXTILE EXPORT BOARD 


Memorandum Circular No. 003-03, s. 2003 

Export Shipment of Infantís Cotton Diapers 

For your information and guidance, all export shipment of Infantís Cotton Diapers that 

are part of infantís wear under Category No. 239 are required to have an ELVIS Transmission. 

In this regard, please ensure that all information pertaining to the infantsí cotton diapers 

such as Cat. No. 239, Quantity, FOB Value, Unit of Measure, MID and Date of Issuance are 

clearly indicated in the application for Textile Export Clearance (TEC). 


(SGD.) SERAFIN N. JULIANO 

Executive Director 

HOUSING AND LAND USE REGULATORY BOARD 


HLURB Administrative Order No. 05, s. 2002 

Resolution No. R-721, Approving the Purchase of Zero Coupon 

Bonds as a Mode of Compliance to the Twenty Percent (20%) 

Socialized Housing Development Requirement Under Section 18 of 

Republic Act No. 7279, Thereby Amending the Implementing 

Rules and Regulations Thereof 

Attached herewith is a copy of the above subject resolution, which was approved by the 

Board on 17 April 2002.




(SGD.) ROMULO Q.M. FABUL 

RESOLUTION NO. R-721 

Series of 2002 

Attachment 

Approving the Purchase of HGC Zero Coupon Bonds As a Mode of Compliance to 

the Twenty Percent (20%) Socialized Housing Development Requirement Under 

Section 18 of Republic Act No. 7279, Thereby Amending the Implementing Rules and 

Regulations Thereof 

WHEREAS, the Board, in its efforts to facilitate the production of socialized as well as 

open market housing units continually strives to find means by which the private sector 

could, in accordance with the law, comply with the twenty percent (20%), balanced housing 

development requirement under Section 18 of Republic Act No. 7279, otherwise known as 

the Urban Development and Housing Act (UDHA) of 1992; 

WHEREAS, the Department of Justice, upon HLURBís request, has issued an opinion 

finding no legal objection to the proposed inclusion of the purchase of socialized housing 

bonds to be floated by local government units or any housing agency as one of the modes of 

compliance to said section of UDHA, the same being germane to the objects and purpose of 

the law and within the scope of the term joint venture as defined in the same law; 

WHEREAS, the HGC Zero Coupon Bonds issued by the Home Guaranty Corporation 

as guaranteed by the Republic of the Philippines, being a similar bond issuance as the 

socialized housing bond of the Home Development Mutual Fund earlier approved by this 

Board under Res. No. R-660, Series of 2000, can qualify as one of the modes of compliance 

to Sec. 18 of RA 7279; 

WHEREFORE, be it resolved as it is hereby resolved that the pertinent portions of 

Section 3, Mode of Compliance, of the Rules and Regulations Implementing Section 18 of 

Republic Act No. 7279, as amended by Resolution 660, s. 2000 be further AMENDED, as 

the same are HEREBY further AMENDED, to read as follows (amendments in all capital 

letters): 

ìSection 3. Mode of Compliance. 

xxx xxx xxx 

d) The socialized housing project equivalent to twenty percent (20%) of total 

subdivision project cost may also be complied with in any of the following manner 

feasible in the municipality or city; 

xxx xxx xxx 

(4) Joint Venture Projects - The developer may enter into a joint project or 

agreement with the concerned local government unit, or any of the housing agencies 

to develop a socialized housing project.

434 


His participation shall be equivalent to 20% of the project area or 20% of the cost 

of the main subdivision project. The developer shall be required to submit to the 

HLURB a copy of the joint venture contract as proof of participation in a joint 

venture project. 

In case the joint venture does not prosper or materialize, the sole responsibility 

for project implementation shall be on the developer of the main subdivision project. 

The developer shall abide by the implementing guidelines on joint venture programs 

of the local government units, Section 6.c of the implementing rules that 

governs Section 18 of R.A. 7279, or any of the housing agencies who shall in turn 

certify the developerís compliance to the 20% requirement. 

The joint venture may consist in or include the purchase of socialized housing 

bonds OR THE HGC ZERO COUPON BONDS by the owner-developer of a main 

project from the local government unit where the main project is located or from 

any of the housing agencies, equivalent to 20% of the cost of the main subdivision 

project. 

Proof of such purchase shall be submitted to the board together with a certification 

by the bond issuer confirming the nature and character of the bond for 

socialized housing OR THE HGC ZERO COUPON BONDS AS THE CASE MAY 

BE. 

Approved. 17 April 2002, Quezon City, Metro Manila. 

(SGD.) MICHAEL T. DEFENSOR 

Chairman, HUDCC 

(SGD.) ROMULO M. FABUL 

Commissioner and Chief Executive Officer 

(SGD.) AUGUSTO B. SANTOS 

Deputy Director General, NEDA 

(SGD.) FRANCISCO L. DAG—ALAN 

Commissioner 

(SGD.) JOEL I. JACOB 

DPWH 

(SGD.) ROQUE ARRIETA MAGNO 

Commissioner 

Attested: 

(SGD.) CHARITO R. LANSANG 

Board Secretary 

--o0o--




Resolution No. R- 725, Amending the Revised Rules and Regulations for 

Presidential Decree No. 957 and Batas Pambansa Blg. 220 

Attached herewith is the resolution Amending the Revised Implementing Rules and 

Regulations for Presidential Decree No. 957 and Batas Pambansa Blg. 220, which was 

approved by the Board on 19 June 2002. 

The above was published in the Philippine Daily Inquirer on 11 July 2002, and in 

accordance with the provisions of law, shall take effect fifteen (15) days from its date of 

publication. 




Resolution No. 725 

Attachment 

Amending the Revised Implementing Rules and Regulations 

for Presidential Decree No. 957 and Batas Pambansa No. 220 

WHEREAS, the HLURB Board approved the revised Implementing Rules and Regulations 

(IRRs) for PD 957 and BP 220 through Res. Nos. 699 and 700, respectively, both 

Series of 2001; 

WHEREAS, in the light of the mandates of the HLURB, this Board and the HUDCC 

jointly conduct continuing dialogue/consultation with stakeholders to harmonize housing policies, 

rules and standards in support of recent policy pronouncements of the administration; 

WHEREAS, pursuant to existing laws, particularly PD 1308, otherwise known as the 

Law Regulating the Practice of Environmental Planning Profession in the Philippines, and 

the Rules and Regulations promulgated by the Professional Regulations Commission pursuant 

thereto, the scope of practice of environmental planning includes, among others the 

preparation of conceptual schemes and site development plans for subdivision projects for 

residential and other urban uses; and the signature of licensed environmental planners is 

required to be affixed on said plans; 

WHEREAS, this Board fully supports the immediate implementation of Executive Order 

No. 45, prescribing time periods for issuance of housing related certifications, clearances 

and permits and imposing sanctions for failure to observe the same; 

WHEREAS, various groups of real estate developers have brought to the attention of 

HUDCC and this Board issues relative to the implementation of the revised IRRs for PD 957 

and BP 220;

436 


WHEREAS, upon thorough review and evaluation of the issues raised by the developersí 

group, as well as the rational and basis of their concerns, this Board finds some of their 

requests reasonable; 

WHEREFORE, be it RESOLVED, as it is hereby RESOLVED, that the following amendments 

to the revised implementing rules and regulations for PD 957 and BP 220 approved by 

virtue of HLURB Resolution Nos. R-699, and R-700, s. of 2001, be APPROVED. 

1. That, the price ceiling provision in the revised implementing rules and regulations 

(IRR) for both PD 957 and BP 220 be deleted but standards as prescribed therein shall 

remain; 

2. That, the provision in the IRRs requiring subdivision owner/developer to register 

as dealer be deleted and that registration as subdivision owner/developer be deemed 

registration as dealer; 

3. That, the allocation of area requirement for parks and playground and community 

facilities prescribed for economic housing be amended to read as follows: 

Rule II, Section 5.C.1.b.1 

b.1 Allocation of Area for Parks and Playgrounds 

xxx 

Table 1. Parks and Playgrounds Allocation 

ECONOMIC HOUSING SOCIALIZED HOUSING 

Density Allocation Density Allocation 

(No. of lots/DU* (% of gross area (No. of lots/DU* (% of gross area 

per hectare) for PP**) per hectare) for PP**) 

150 and below 3.5% 150 and below 3.5% 

151-160 4% 151-160 4% 

161-175 5% 161-175 5% 

176- 200 6% 176-200 6% 

201- 225 7% 201- 225 7% 

Above 225 9% Above 225 9% 

* Dwelling units 

** Parks and Playgrounds 

Rule II, Section 5.C.1.b.2 

b.2 Area Allocated for Community Facilities 

xxx


Table 3. Community Facilities Allocation 

ECONOMIC HOUSING SOCIALIZED HOUSING 

Density Allocation Density Allocation 

(No. of lots/DU* (% of gross area (No. of lots/DU* (% of gross area 

per hectare) for CF**) per hectare) for CF*) 

150 and below 1.0 150 and below 1.0 

151-225 1.5 151-225 1.5 

Above 225 2.0 Above 225 2.0 

* Dwelling units 

** Community Facilities 

4. That, provision requiring planting of trees in areas designated as planting strip be 

deleted; 

5. That, the two (2) years validity of development permit prescribed in the revised 

IRRs be increased to three (3) years; 

6. That, provision on licensed professionals allowed to sign Site Development 

Plant or Subdivision Development Plan remain, and that architects who are not licensed 

environmental planners may in the meantime be allowed to sign the said plans 

for a period of two (2) years from the date of effectivity of the revised rules and regulations; 

7. That, the minimum requirement for a 3-meter right-of-way of alley be reduced to 

2 meters but the same shall not be used as access to property; and that the 3-meter 

pathwalk be maintained which may be used only as pedestrian access to property for 

socialized housing projects; 

8. The requirement that structural design consider future provision of loft for socialized 

housing be deleted; 

9. That, DAR Exemption Clearance be deleted as a requirement for the issuance 

of Development Permit for subdivision and condominium projects, and that in lieu 

thereof, a zoning certification issued by the HLURB Regional Officer be submitted 

indicating that the project site is within the area zoned for urban use (i.e. other than 

agricultural) prior to June 1988; 

10. That, all provisions in the revised IRRs for both PD 957 and BP 220 affected 

and/or in conflict/inconsistent with the above cited amendments be revised and/or 

renumbered accordingly. 

APPROVED this 19th day of June 2002, Quezon City 


Chairman, HUDCC

438 



(SGD.) JOSE C. CALIDA 

Undersecretary, DOJ 

Ex-Officio Commissioner 



(SGD.) TERESITA A. DESIERTO 

Commissioner 




Commissioner 

(SGD.) JOEL I. JACOB 

DPWH 


Commissioner 

Attested: 



--o0o-- 


Resolution No. R-729, Approving the Deletion of Department of Agrarian 

Reform (DAR) Exemption Clearance From the List of Documentary 

Requirements Prescribed in the Rules and Regulations to Govern the 

Processing of Applications for Locational Clearance for Poultry and 

Piggery Projects, Markets and the Implementing Rules and Regulations 

for Memorial Parks and Cemeteries 

Attached herewith is a copy of the above stated Resolution No. R-729, which was 

approved by the Board on 21 August 2002. 

The above was published in the Philippine Daily Inquirer on 25 September 2002, and, 

in accordance with the provisions of law, shall take effect fifteen (15) days from its date of 

publication. 



(SGD.) ROMULO Q.M. FABUL


Board Resolution No. 729 

Series of 2002 

Attachment 

Approving the Deletion of Department of Agrarian Reform (DAR) Exemption 

Clearance From the List of Documentary Requirements Prescribed in the Rules and 

Regulations to Govern the Processing of Applications for Locational Clearance for 

Poultry and Piggery Projects, Markets and the Implementing Rules and Regulations 

for Memorial Parks and Cemeteries 

WHEREAS, the Rules and Regulations to Govern the Applications for Locational Clearance 

for Markets, Memorial Parks and Cemeteries and Poultry and Piggery Projects, were 

approved per HLURB Resolution Nos. 674, 681 and 682, s. of 2000, respectively; 

WHEREAS, the same Rules and Regulations require submission of DAR Exemption 

Clearance as part of the documentary requirements for the processing of locational clearance 

for poultry and piggery projects, markets and for processing of preliminary and final 

approval of memorial park/cemetery plan; 

WHEREAS, the Board approved last 19 June 2002 via Resolution No. 725 the deletion 

of DAR Exemption Clearance as a requirement for the issuance of Development Permit for 

subdivision and condominium projects and that in lieu thereof, a zoning certification issued 

by the HLURB Regional Officer be submitted indicating that the project site is within the area 

zoned for urban use (i.e. other than agricultural) prior to June 1988; 

WHEREAS, for consistency in Boardís policy relative to DAR Exemption Clearance, 

the Management Committee in its meeting last 24 July 2002, recommended the deletion of 

the said requirement in other land development projects such as poultry and piggery, markets 

and memorial parks and cemeteries; 

WHEREFORE, BE IT APPROVED AS THE SAME IS HEREBY APPROVED, that DAR 

Exemption Clearance be deleted as part of the documentary requirements for the processing 

of locational clearance for poultry and piggery projects and markets and the preliminary 

and final approval of memorial park/cemetery plan, and that in lieu thereof, a zoning certification 

issued by the HLURB Regional Officer be submitted indicating that the project site is 

within the area zoned for urban use (i.e. other than agricultural) prior to June 1988. 

APPROVED, this 21st day of August 2002. 


Chairman, HUDCC 

(SGD.) JOSE C. CALIDA 

Undesecretary, DOJ 

Ex-Officio Commissioner 


Commissioner and Chief Executive Officer

440 



(SGD.) TERESITA A. DESIERTO 

Commissioner 




Commissioner 


Commissioner 

Attested: 



--o0o-- 

HLURB Administrative Order No. 01, s. 2003 

Resolution No. R-737, Amending Resolution No. R-656, Series of 1999, 

by Restoring Resolution No. R-543, Series of 1994, Authorizing Joint 

Venture Projects by and Between Subdivision Developers as a Mode of 

Compliance to the Balanced Housing Development Provision 

of Republic Act 7279 


Text Available at Office of the National Administrative Register, 

U.P. Law Center, Diliman, Quezon City 

INSURANCE COMMISSION 




Circular Letter No. 14-2002 

Submission of Electronic Filing and Payment 

System (EFPS) Documents


All insurance companies availing themselves of the Electronic Filing and Payment 

System (EFPS) of the Bureau of Internal Revenue shall submit to this Commission (Budget 

and Management Division) the following documents upon payment of taxes but not later than 

the third (3rd) day following the last day of filing: 

1. Filing Reference Number 

2. Bank Confirmation 

3. Acknowledgement Receipt 

Insurance companies not using the EFPS shall submit photocopy of official receipt and 

application form upon payment of the taxes. 



(SGD.) EDUARDO T. MALINIS 

Insurance Commissioner 

INTELLECTUAL PROPERTY OFFICE 


Memorandum Circular No. 01, s. 2003 

Prohibition or Restriction of the Publication of a Patent Application 

This concerns the implementation of Section 44, particularly Section 44.3 of Republic 

Act No. 8293 otherwise known as the Intellectual Property Code of the Philippines (IP Code) 

which provides that: 

ìSec. 44. Publication of Patent Application - x x x 

44.3 The Director General, subject to the approval of the Secretary of Trade and Industry, 

may prohibit or restrict the publication of an application, if in his opinion, to do so would be 

prejudicial to the national security and interests of the Republic of the Philippines.î 

Accordingly, the following procedure shall be followed: 

1. On his/her own initiative, or, on motion of applicant subject to payment of the corresponding 

fee under the IPO Fee Structure (Reference Code 129), the Examiner may determine 

whether to prohibit or restrict the publication of a patent application. 

2. The Examiner may, motu proprio, submit a recommendation to the Director of Patents 

stating the grounds, which form the basis of his finding that the publication of the patent

442 


application would be prejudicial to the national security and interests of the Republic of the 

Philippines. The Director of Patents shall evaluate the recommendation to the Director 

General. 

3. In case of a motion filed by an applicant, the Examiner shall decide the same on the basis 

of the allegations thereof regarding national security and interests within fifteen (15) working 

days. The applicant may file an appeal to the Director of Patents from an adverse 

decision of the Examiner within two (2) months from the mailing date of the decision. The 

Director of Patents shall decide the appeal within fifteen (15) working days. The applicant 

may file an appeal to the Director General within thirty (30) days from receipt of the 

decision of the Director of Patents. The Director General shall decide the appeal within 

fifteen (15) working days. For this purpose, the provisions of the Uniform Rules on Appeal 

shall not apply. 

Appeals to the Director of Patents and the Director General shall be in the form of an 

Appeal Memorandum and subject to the payment of the corresponding appeal fee under 

the IPO Fee Structure (Reference Codes 124 and 128, respectively). No other pleadings 

shall be submitted unless directed otherwise. 

An appeal filed beyond the prescribed period, and/or if not accompanied but the corresponding 

appeal fee, shall be dismissed outright. 

4. After review of the recommendation or decision of the Director of Patents, the Director 

General, subject to the approval of the Secretary of Trade and Industry, may prohibit or 

restrict the publication of the application. 

For compliance. 


(SGD.) EMMA C. FRANCISCO 

Director General 

KOMISYON NG KARERA SA PILINAS 


Notice 

Appeal on Horses Found to be Suffering 

from Lameness After the Race 

Please be informed that the Commission, aftert a dialogue and consultation with the 

officers of the Phil. Race Horse Trainers Association, Inc. (PRHTA), held on January 3, 

2003, resolved that as an interim solution, after the race, horses found limping by the Club


and PHILRACOM Veterinarians shall be automatically suspended in accordance with the 

Horse Racing Rules and Regulations and its jockey and/or groom shall sign the suspension 

slip. In case of dispute or contestion, they have to present a veterinary certificate from 

a Veterinarian accredited by PHILRACOM together with supporting documents (e.g. X-ray, 

diagnosis, treatment, Lab. Exam) before the lifting of the suspension. 

This rules shall take effect immediately. 



(SGD.) NARMO P. NOBLEJAS 

Executive Director III 

--o0o-- 

Notice 

Amendment to Section 45.0.B of the Racing Rules and Regulations 

Please be informed that the Commission in its meeting held on January 6, 2003, after 

due deliberation, resolved to amend Section 45.0.B of the Horse Racing Rules and Regulations, 

to wit: 

SECTON 45. PENALTIES FOR RACE HORSES: 

SECTION 45.0 - VICIOUS HORSES - A horse is considered ìviciousî if it acts or 

behaves as described in Sections 45.0.A, 45.0.B, 45.0.C, 45.0.D, and 45.0.E. 

45.0.B - Does not leave the starting gate (refused to run) within two (2) seconds 

or more, therefore, compromising or diminishing its CHANCE OF SUCCESS 

shall be penalized as follows: 

1st Offense - barrier trial 

and Subsequent Offenses 

There will be no penalty for any late starter if the horse wins the race. 

AMENDING SECTION 45.0.B WILL NOW READ AS: 

45.0.B - Does not leave the starting gate (refused to run) within two (2) 

seconds or more, therefore, compromising or diminishing its CHANCE OF 

SUCCESS shall be penalized as follows: 

Said horse will be required to pass the barrier trials for vicious horses 

three (3) consecutive times in order to be eligible to participate in a regular 

race.* 

All succeeding repetitions of viciousness (bad start) shall follow the same 

pattern of three (3) consecutive good starts. 

There will be no penalty for any late starter if the horse wins the race.

444 


This rule shall take effect fifteen days after publication. 




Executive Director III 

--o0o-- 

Notice 

Amendment to the Rules Section 8.4.C - Duties of the Board of Judges 

Please be informed that the Commission in its meeting held on January 20, 2003, after 

due deliberation, resolved to amend Section 8.4.C, to wit: 

SECTION 8.4.C - DUTIES OF THE BOARD OF JUDGES - The Board of Judges 

shall determine and decide the win (1st place), the place (2nd place), show (third 

place), the fourth place horses, and subsequent places of other horses where 

such placing is warranted. In every race, however, the decision of the Board of 

Judges shall be subject to confirmation by the Board of Stewards. It shall be the 

duty of the Board of Judges to submit its decision to the Board of Stewards in 

each and every race for confirmation. In the event that the Board of Stewards 

disagrees with the findings of the judges, the decision of the former shall prevail. 

The result of the race in a deadheat can only be relied upon the sound and 

honest judgment of the Board of Judges on the actual arrival of the horses across 

the finish line with the aid of a photo finish photograph and , inoperable, a video 

footing and the final confirmation of the Board of Stewards. The decision of the 

Board of Stewards in declaring a deadheat shall be final and unappealable. 

In determining the winners, the Board shall take into account the position of the 

noses of the horses at the time they reach the finish line. If necessary, the 

photograph of the arrival (photo finish) and if inoperable, a video footing of the 

horses shall be consulted as an aid in determining the results of the race. If the 

Board of Judges decides for a photo finish and for any reasons, no photograph 

is available, the video footing will be used or if the same is unclear, the Board 

shall declare a deadheat. 

It shall be the duty of the Racing Club to take a photograph (photo finish) and 

provide a video footing of the arrivals of the horses from first to AT LEAST all 

placers in the case of exotic betting (Pentafecta, Superfecta, etc.) in each 

race. The video camera shall be placed aligned with the photo patrol camera 

for accurate recording. 

This rules shall take effect fifteen (15) days after publication. 


Executive Director III


LAND TRANSPORTATION FRANCHISING REGULATORY 

BOARD 


Memorandum Circular No. 2002-016 

Liability of LTFRB-Registered CPC Owner or Grantee When 

Registered Vehicle Meet an Accident or Untoward Incident 

Pursuant to pertinent provisions of the Civil Code, related laws and Supreme Court 

rulings, the registered owner of a motor vehicle is liable in case of accident involving such 

vehicle. 

Considering that there are instances when an LTFRB registered CPC holderís or 

granteeís registered unit is involved in an accident and the CPC holder or grantee wants to 

evade liability by putting-up the defense that the CPC has already been conveyed or sold 

prior to the accident or incident, the following guidelines are hereby issued: 

1. Whether or not the CPC and/or unit is sold or transferred to another at any given time, the 

LTFRB registered CPC grantee is always liable for the accident or incident; 

2. The defense that such CPC and/or unit has been sold by the grantee prior to accident or 

incident is not acceptable as a defense for as long as the CPC remains registered in his/her 

name in the Boardís records; 

3. The Board reserves the right to impose the appropriate sanctions on CPC grantees 

involved in situations covered by this Memorandum Circular. 

All issuances or parts thereof inconsistent herewith are hereby modified, superceded 

and/or revoked accordingly. 

This Memorandum Circular shall take effect fifteen (15) days after its due publication 

under Presidential Memorandum Circular No. 11 dated October 9, 1992. 


(SGD.) DANTE M. LANTIN 

Chairman 

(SGD.) REMEDIOS G. BELLEZA 

Board Member 

(SGD.) FELIX S. RACADIO 

Board Member 

--o0o--

446 




Implementation of Department Order No. 2002-29 

Pursuant to DOTC Department Order No. 2002-29 dated 09 August 2002 directing this 

Board to resolve PUB CPC applications on provincial routes ìthat were heard and submitted 

for resolution but which up to now have not been resolved as their resolution was 

suspended when DOTC Department Order No. 2002-57 was re-imposedî, the following 

guidelines are hereby issued for compliance: 

FOR APPLICATIONS FORMALLY SUBMITTED FOR DECISION: 

Under this category are applications where the applicants complied with the Boardís 

jurisdictional requirements of publication of the notices of hearing and procedural requirements 

of submission of Formal Offers of Evidence. 

Considering that the applicantsí Formal Offers of Evidence which were submitted prior 

to 2002 are no longer reliable as proof of their current financial capacity, said applicants 

should submit their audited financial statements for the year ending December 31, 2001 

which were submitted to the Bureau of Internal Revenue, on or before January 31, 2003. 

Within the same period, said applicants should submit to the Board their respective lists 

of proposed units with their corresponding description, i.e., make, model, chassis and engine 

numbers supported by LTO registration papers. 

FOR APPLICATIONS WITHOUT FORMAL OFFERS OF EVIDENCE 

Under this category are applications where the applicants though complying with the 

jurisdictional requirement of publication of the Boardís notices of hearing, did not submit 

their respective Formal Offers of Evidence, a basic requirement for the Board to judiciously 

resolve the application. 

The applicants under this category are, therefore, directed to submit their Formal 

Offers of Evidence with their audited financial statements for the year ending December 31, 

2001 which they submitted to the Bureau of Internal Revenue, on or before January 31, 

2003. 

Within the same period, said applicants should submit to the Board their respective 

lists of proposed units with their corresponding description, i.e. model, chassis and engine 

numbers supported by LTO registration papers. 

BOARDíS CRITERIA IN RESOLVING APPLICATIONS 

Considering that the number of units applied for by the applicants in all of these cases 

directed by the DOTC to be resolved are more than the Route Measured Capacity (RMC) on 

the routes applied for, this Board will be guided by the following criteria in granting the CPCs 

applied for:


1. who is better financially qualified to operate the proposed bus service; 

2. who has the newest buses proposed for operation; 

3. who has the necessary support facilities to efficiently and safely operate the buses 

applied for, i.e., maintenance and repair facilities and terminals or garages. 

On Batangas-Manila route, to fully support the DOEís Natural Gas Vehicle Program 

for Public Transport and to abide by the directive of Her Excellency President Gloria 

Macapagal-Arroyo to open the Batangas-Manila route for CNG-fed units, CNG-fed buses will 

be given priority in the grant of CPCs on said route. 

This Memorandum Circular takes effect immediately and repeals all previous circulars, 

inconsistent with it. 

The Boardís Legal Division is hereby directed to disseminate this Memo Circular to all 

applicants covered by its applicability and to post copies thereof in conspicuous places of 

the Board. 




Chairman 


Board Member 


Board Member 

--o0o-- 


Twenty (20%) Percent Margin Between Regular 

and Air-Conditioned Bus Fares 

To check the unfair and cutthroat competition between operators of regular/ordinary 

buses and air-con bus operators, the DOTC issued Department Order No. 2002-77 dated 05 

December 2002 setting a margin of twenty (20%) percent between regular/ordinary bus 

fares and air-con bus fares, directing this Board to issue the corresponding standard fare 

advisory for the purpose. 

Pursuant to the said DOTC policy directive, air-con bus fares should be at least twenty 

(20%) percent higher than ordinary/regular bus fares. 

In accordance with this memorandum circular, it shall be deemed a violation of the 

terms and conditions of the Certificates of Public Convenience of air-con bus operators to 

charge air-con fares below this mandated twenty (20%) percent margin of difference with

448 


ordinary/regular bus fares, warranting the imposition of the appropriate sanctions or penalties. 

This Memorandum Circular shall take effect fifteen (15) days after its due publication 

under Presidential Memorandum Circular No. 11 dated October 9, 1992. 




Chairman 


Board Member 


Board Member 

--o0o-- 

Memorandum Circular No. 2003-001 

Reclassification of Tourist Transport Services 

It has been a continuing policy of the transport agencies and offices of the Government 

to boost tourism, a rich source of revenue for the country. 

In this regard, the Department of Tourism (DOT), Department of Transportation and 

Communications (DOTC) and the Metro Manila Development Authority (MMDA) have signed 

a Memorandum of Agreement to provide better transport facilities for our tourists in the hope 

of boosting the tourism industry. 

Pursuant to this Memorandum of Agreement, the three (3) agencies have also signed 

the ìRules and Regulations Implementing the Memorandum of Agreement on the Rationalization 

of the Public Utility Vehicle System in Tourismî. 

In relation to the aforesaid purposes, this Board hereby reclassifies tourist transport 

service as follows: 

1. Tourist Shuttle Service: refers to heavy duty passenger vans moving on wheels or runners, 

all seats facing front, with luggage compartment, with concessionaire agreement, plying 

the international and/or domestic airports, seaports and/or hotels covered with tourist 

shuttle service franchise, which fare charges are predetermined by the Board, requiring 

minimum of three (3) units at maximum age limit of 10 years from date of manufacture; 

2. Tourist Metered Taxi Service: refers to 4-door sedan vehicles or Asian Utility Vehicle with 

concessionaire agreement, plying the international and/or domestic airports, seaports and/ 

or hotels covered with tourist metered taxi service franchise which fare charges are by meter


with receipts, requiring minimum of ten (10) units, at maximum age limit of 10 years from 

date of manufacture, and with 2-way radio; 

3. Tourist Coupon Taxi Service: refers to 4-door sedan vehicles with concessionaire agreement, 

plying the international and/or domestic airports, seaports and hotels covered with 

tourist coupon taxi service franchise, which fare charges are predetermined by the Board, 

requiring minimum of ten (10) units, at maximum age limit of 10 years from date of manufacture; 

4. Tourist Chartered Service: refers to bus, coaster, van (other than AUV) and 4-door sedan 

vehicles catering to tourists covered with tourist chartered service franchise which fare 

charges are predetermined by the Board, requiring minimum of three (3) units, at maximum 

age limit of 15 years for bus and coaster and 10 years for van and car, from date of 

manufacture. 

To record and control the number of tourist service vehicles to be granted CPCs by the 

Board within the purview of the DOTC Policies, Plans and Programs for land transportation, 

the following shall be adopted: 

1. The applicant shall secure from the Department of Tourism (DOT) indorsement for its 

application for a particular tourist transport service enumerated above; 

2. The DOT indorsement shall be forwarded to DOTC Planning for evaluation consistent with 

the latterís existing guidelines; 

3. Once approved, the DOTC shall forward the same to the Board for franchise application. 

The above cited procedures and requirements shall be in addition to those already 

enforced by the Board in applications for CPCs. Applications for extension of validity of 

existing CPCs for tourist transport services, shall, likewise, be covered by this Memorandum 

Circular. 

All other Memorandum Circulars inconsistent with this circular are hereby amended 

and/or repealed. 

This Memorandum Circular takes effect fifteen (15) days following its publication in the 

Official Gazette or in a newspaper of general circulation or by filing of three (3) copies of the 

same with the U.P. Law Center pursuant to Presidential Memorandum Circular No. 11, dated 

October 9, 1992. 



Chairman 


Board Member 


Board Member 

--o0o--

450 




Addendum to Memorandum Circular No. 2002-003 (Yearly Issuance of 

Certificate of Public Convenience and Sticker for Public Utility Vehicles) 

For proper and effective enforcement and implementation of Memorandum Circular 

No. 2002-003, the Board hereby resolves to impose a penalty of One Thousand Pesos 

(P1,000.00) for violation or non compliance with said Memorandum Circular, specifically the 

following: 

a. Failure of the Franchisee/Operator to secure yearly a Certificate of Public Convenience 

and Sticker from the Board within 15 days from date of current registration of the unit/s with 

the LTO; and 

b. Non compliance with the 2nd paragraph of Memorandum Circular 2002-003, to wit: 

All issuances or parts thereof, which are inconsistent herewith, are hereby modified, 

suspended and/or revoked accordingly. 

This Memorandum Circular shall take effect fifteen (15) days after its publication in a 

newspaper of general circulation or by filing of three (3) copies of the same with the U.P. 

Law Center pursuant to Presidential Memorandum Circular No. 11, dated October 9, 1992. 




Chairman 


Board Member 


Board Member 

--o0o-- 


Extension of Memorandum Circular No. 2002-010 

(Late Filing of Petition for Extension of Validity) 

In as much as there are still transport operators nationwide requesting the Board to 

allow the late filing of petition for extension of validity of CPC despite the lapse of the effectivity 

of Memorandum Circular No. 2002-010 (Amendment to Memorandum Circular Nos.


2001-003 and 2002-002 re: Late Filing of Petition for Extension of Validity) last December 

31, 2002, the Board hereby resolves to extend the effectivity of said circular until December 

31, 2003 subject to the same conditions and restrictions found therein. 

After the expiration of this Memorandum Circular, no other Memorandum Circular shall 

be issued by the Board extending this one. 

All other issuances or parts thereof which are inconsistent herewith are heretofore 

modified or superceded accordingly to conform with this new Memorandum Circular. 

This Memorandum Circular shall take effect immediately. 




Chairman 


Board Member 


Board Member 

--o0o-- 


Temporary Suspension of Acceptance of Applications 

for School Transport Service in Regions 3, 4 and NCR 

In view of the proliferation of illegal use of school transport service to another type of 

service contrary to its approved franchise and considering that the school year 2002-2003 is 

nearing its end thereby finding no cogent reason to act on any petition for school transport 

service, the acceptance of new application for the said service is hereby temporarily suspended. 

All pending applications for evaluation and resolution are not covered by this memorandum 

circular. 

This Memorandum Circular takes effect immediately. 



Chairman 


Board Member 


Board Member 

--o0o--

452 




Implementing Guidelines on USec. Valdezís Memo Dated 09 January 2003 

(Re: Metro Manila Bus Route Rationalization Program) 

Pursuant to Usec. Valdezís Memo dated January 09, 2003, on Bus Route Rationalization 

Program, temporarily holding in abeyance the acceptance of petition/application for 

sale and transfer and dropping and substitution until after the above program is culminated, 

and all request for confirmation of franchised units for renewal of registration shall be filed 

and processed only at the LTFRB Central Office, the following guidelines are to be strictly 

followed: 

1. Acceptance of Petition/Application for Sale and Transfer and Dropping and Substitution of 

Buses under the Bus Route Rationalization Program is temporarily being held in abeyance 

until such program is finished. The same shall also be enforced in LTFRB National Capital 

Region except for the following: 

1.1 Units included in Tables 1, 2 and 3, of the Bus Rationalization Program 

1.2 Units already approved under the Bus Rationalization Program 

2. All requests for confirmation of franchised PUB units under such program shall be 

eventually be filed and processed only at LTFRB Central Office. In the meantime, to forestall 

any unwarranted interruption/cut-off on services, particularly as it relates to renewal of registration 

of PUBs, the National Capital Region (NCR) may continue the present and prevailing 

practice of processing such requests until such time that the Central Office is already in 

possession of the records from the NCR and is, thus technically capable of performing said 

function. 

All other issuances or parts thereof, which are inconsistent herewith are heretofore 

modified or superceded accordingly to conform with this new Memorandum Circular. 

This circular shall take effect fifteen (15) days after the filing of three (3) copies hereof 

with the UP Law Center, pursuant to Presidential Memorandum Circular No. 11, dated 09 

October 1992. 



Chairman 


Board Member 


Board Member


LAND TRANSPORTATION OFFICE 



Memorandum Circular No. RTL-MC-02415 

Collection of Computer Fees 





Assistant Secretary 

--o0o-- 


Amendment to LTO MC No. RTL-MC-02413 dated 

18 December 2002 on Mandatory Emission Test 

In the interest of the public, paragraphs #2, #4 and #5 of LTO Memorandum Circular 

No. RTL-MC-02413, dated 18 December 2002, are hereby accordingly amended to read as 

follows, viz: 

2. All emission tests for (1) renewal of registration, and (2) redemption of vehicle 

or vehicle license plate, whichever is applicable, confiscated due to roadside 

apprehension shall be done at the authorized Private Emission Testing Centers 

(PETC). The government Motor Vehicle Inspection Stations (MVIS) shall continue 

to conduct emission tests for the same purposes aforementioned to cover only 

public utility vehicles. In addition, the MVIS shall have the exclusive authority to 

conduct emission testing to vehicles submitted for adjudication purpose to the 

exclusion of the PETCs. 

4. In proper cases, only emission tests conducted at properly authorized PETC, 

after payment of their corresponding fees and charges to DOTC, shall be valid. 

5. No application for renewal of registration shall be accepted at LTO without valid 

CEC in the form prescribed in paragraph #3 hereof issued by properly authorized 

PETC whenever the emission test is conducted by the latter. 

This Circular takes effect immediately.

454 






--o0o-- 


Procedures to Implement Executive Order No. 142 in Relation to Joint 

Department Order (JDO) No. 2002-82 Requiring Owners of Taxable 

Imported Motor Vehicles to Secure from the BOC-BIR a Clearance as a 

Precondition for their Initial or Renewal of Registration with the 

Land Transportation Office 

I 

Objectives 

To ensure that the payment of duties and taxes as provided for under E.O. 142 in 

relation to JDO No. 2002-82, the following rules and regulations are hereby issued in order 

to effectively implement and attain the objectives thereof. 

II 

Scope 

a. This Memorandum Circular shall cover untaxed and unregistered completely built-up (CBU) 

units of imported motor vehicles regardless of year model, including motorcycles. 

b. This Memorandum Circular shall likewise cover tax-paid/duty-paid and currently registered 

Motor Vehicle Imported into the country during the year 2000, 2001 and 2002, regardless 

of the Port of Entry, except those imported under the Motor Vehicle Development Program 

(MVDP) of the Board of Investment (BOI). These imported motor vehicles are required 

to secure clearance from the BOC-BIR as a precondition to the renewal of registration. 

III 

Implementing Procedures 

To ensure that there will be a proper and orderly flow of documents, the following 

implementing Procedures are hereby adopted: 

A. For Untaxed and Unregistered Imported Motor Vehicles* 

Step 1. Assistant Secretaryís Office 

a. Filing of the Letter of Request 

b. Filing of Undertaking (affidavit) 

Note: Endorsement to Bureau of Customs - Customs Collection Unit 

(BOC-CCU) for appropriate action


Step 2. BOC-CCU 

a. Issuance of official receipt covering the payment of duties and taxes 

b. Issuance of Certificate of Payment and Clearance. 

Note: Original documents shall be forwarded to LTO-Registration Section Central 

Office. 

Step 3. LTO-Registration Section 

a. To Issue Confirmation Certificate (CC) 

Step 4. LTO District Offices 

Registration of imported Motor Vehicles and the following documents are required: 

a. LTO-Confirmation Certificate issued by Registration Section Central Office 

b. PNP- Traffic Management Group (TMG) Clearance 

c. LTO-North Motor Vehicle Inspection Station certificate of compliance for smoke 

emission and road worthiness 

d. Certificate of Compliance to Emission Standard (CCES) issued by DOTC 

e. Stencil of Engine and Chassis 

f. Mandatory CTPL Insurance 

B. For tax-paid/duty-paid and registered Motor Vehicles Imported in the year 2000, 2001, 

and 2002* 

Step 1. Assistant Secretaryís Office 

a. Filing of the Letter of Request 

b. Filing of the undertaking (affidavit) 

Note: Endorsement of BOC-CCU for appropriate action 

Step 2. BOC-CCU 

a. Issuance of official receipt covering the payment of duties and taxes (if any) 

b. Issuance of Certificate of Payment (if applicable) and clearance. 

Step 3. LTO-Registration Section 

a. To issue Confirmation Certificate (if applicable) 

b. Endorsement to designated LTO District Office 

Step 4. LTO District Office 

Renewal of Registration of imported motor vehicles and the following Documents are 

required:

456 


a. Original Certificate of Registration and Latest Official Receipt 

b. LTO Registration Section Confirmation Certificate (if applicable) 

c. Certificate of Emission Compliance (CEC) coming from a duly accredited and 

authorized Private Emission Testing Center (PETC) 

d. Inspection form duly accomplished by LTO inspector. 

IV 

Monitoring Procedure 

To ensure that the implementing procedure will be monitored properly and orderly, only 

the following National Capital Region District Offices are hereby assigned to accept registration 

under this Memorandum Circular: 

a. Pasay District Office 

b. Caloocan District Office 

c. Diliman District Office 

d. Quezon City District Office 

The district heads of the aforementioned designated district offices are required to 

submit their respective reports to the NCR Director who, in turn, shall submit a summary 

report to the Assistant Secretary. 

V 

Repealing Clause 

Previous orders, memoranda, circulars, rules and regulations inconsistent herewith 

are hereby superseded and/or modified accordingly. 

This order shall take effect immediately. 



VI 

Effectivity 



--o0o-- 


Mandatory Emission Test 

Due to the agreements made during the public hearing of 03 January 2003 and considering 

that the Private Emission Testing Centers (PETC) are not fully operational in some 

areas in the country, all LTO Regional Offices and District Offices are hereby ordered to


temporarily suspend the enforcement of the above subject requirement in all regions except 

NCR, Region III and Region IV. 

Further agreed was allowing an option to public transport vehicles (for hire) including 

for hire tricycles owners to submit vehicles at LTO testing facilities. However, procurement 

and deployment of subject equipment is yet to be completed. Hence, it is imperative for the 

LTO to temporarily shelve the requirement in regions outside NCR, Region III and IV until 

further notified. 

For information and appropriate action. 





--o0o-- 


Cost of Emission Test for Public Utility Tricycles 

Pursuant to the appropriate pronouncement of Her Excellency, President Gloria 

Macapagal-Arroyo, the cost of emission test to be conducted by the LTO Motor Vehicles 

Inspection System (MVIS) on all public utility tricycles shall be forty pesos (P40) only and 

the fifty pesos (P50) inspection fee is hereby waived. 






--o0o-- 


Amendment to Memorandum Circular No. RTL-MC-03417 re: Procedures 

to Implement Executive Order No. 142 in relation to Joint Department Order 

(JDO) No. 2002-82 Requiring Owners of Taxable Imported Motor Vehicles to 

Secure From the BOC-BIR a Clearance as a Precondition for their Initial or 

Renewal of Registration with the Land Transportation Office

458 


To further enhance the procedures on the implementation of Executive Order No. 142 

in relation to the JDO No. 2002-82 and promote the utmost convenience of all the motor 

vehicle owners concerned, Sections III (B) and IV of Memorandum Circular No. RTL-MC- 

03417 dated January 13, 2003, are hereby amended to read as follows, viz: 

III. IMPLEMENTING PROCEDURES 

B. For tax-paid/duty-paid and registered Motor Vehicles imported in the year 

2000, 2001 and 2002. 

Renewal of Registration of imported motor vehicles under this category may 

be undertaken in the LTO district office where the same is currently registered or 

in any other LTO district office at the option of the owner subject to existing LTO 

Regulations on change of venue. However, the corresponding new validation sticker 

will be issued and released only after the appropriate clearance shall have been 

secured from the BOC-CCU at the LTO Central Office in East Ave., Q.C. 

IV. MONITORING PROCEDURE: 

To ensure that the implementing procedure will be monitored properly and 

orderly, only the following National Capital Region District Offices are hereby 

assigned to accept registration of Imported Motor Vehicles falling, under the category 

as defined in Section III (A) of this Memorandum Circular: 

a. Pasay District Office 

b. Caloocan District Office 

c. Diliman District Office 

d. Quezon City District Office 

The district heads of the aforementioned designated district offices are required 

to submit their respective reports to the NCR Director who, in turn, shall 

submit a summary report to the Assistant Secretary. 

All other provisions of Memorandum Circular No. RTL-MC-03417 not amended hereby 

shall remain in full force and effect. 






--o0o-- 

Memorandum 

Clarification on the Implementation Memorandum Circular No. RTL-MC-03417, 

as Amended by Memorandum Circular No. RTL-MC-03421


1. It is hereby reiterated and confirmed that the BOC-BIR clearance of all untaxed and 

unregistered completely built-up (CBU) units or imported motor vehicles regardless of year 

model, including motorcycles provided under Section II (a) of RTL-MC-03417 shall be secured 

at the One-Stop Shop established at the Central Office for the purpose. Further, 

registration of all covered motor vehicles hereunder may be done only in any of the following 

district office, viz: Pasay District Office, Caloocan District Office, Diliman Office, and Quezon 

City District Office; 

2. As regards all motor vehicles that are tax-paid/duty-paid and currently registered Motor 

Vehicles imported into the country during the year 2000, 2001 and 2002, regardless of the 

Port of Entry, except those imported under the Motor Vehicle Development Program (MVDP) 

of the Board of Investment (BOI), the requirement to secure clearance from the BOC-BIR as 

a precondition to the renewal of registration as provided under Section II (b) of RTL-MC- 

03417 shall commence on 1 April 2003. Prior to said date, all subject motor vehicles with 

plates ending in 1, 2 and 3 may be renewed registration this year without the said clearance 

however, the District Head concerned is required to stamp on the Official Receipt the words 

ìSUBJECT TO BOC-BIR CLEARANCEî. 

Adopted: 5 Feb. 2003. 




--o0o-- 


Inspection of Used Imported Motor Vehicles by the 

Accredited Vehicle Inspection and Testing Corporation (VITEC) 

In line with the existing LTO and SBMA Memorandum of Agreement (MOA) and LTO 

Memorandum Circular No. RTL-MC-02412 dated 23 July 2002, all concerned are hereby 

directed not to accept initial registration of used motor vehicles imported through the Subic 

Bay Freeport Zone (SBFZ) without the required certificate of inspection duly issued by the 

Vehicle Inspection and Testing Corporation (VITEC), an LTO accredited alternate motor 

vehicle inspection station. The said certificate of inspection to be issued by VITEC as a 

mandatory requirement for registration of subject imported motor vehicles shall cover the 

following: 

1. Determination of the correctness of the repositioning/conversion of all imported Right 

Hand Drive (RHD) to Left Hand Drive (LHD) motor vehicles, their roadworthiness, identification 

and compliance with smoke emission standards as provided under Republic Act 8749 

and its implementing Rules and Regulations; and 

2. Determination of roadworthiness, identification, and compliance with smoke emission 

standards as provided under RA 8749 and its IRR of all imported and originally Left Hand 

Drive (LHD) motor vehicles.

460 


Any LTO personnel found violating this Memorandum Circular shall be subject to appropriate 

administrative sanctions. 

This Memorandum Circular supersedes RTL-MC-02414 and all other orders and memoranda 

in conflict herewith. 



Date Fiiled: 17 February 2003 



--o0o-- 


Amendment to Paragraph #4 of Memorandum Circular 

No. RTL-MC-03423 on Mandatory Emission Test 

In district(s)/area(s) where LTO testing facilities have yet to be installed, owners of 

public utility vehicles (For Hire) such as PUJ, PUB, taxi and Filcab including motorcycles 

and tricycles, may be allowed to renew registration upon presentation of an undertaking by 

the owner, which need not be under oath, that the subject vehicle shall be presented for 

emission testing within three (3) months therefrom or upon availability of the test equipment 

at LTO offices. Notwithstanding the registration, the validation sticker shall be retained by 

LTO and shall not be released to the owner until the emission test is completed and the 

subject vehicle shall have passed the same. 






--o0o-- 

Memorandum 

Contestability of Smoke Belching Cases 

Pursuant to the provisions of Republic Act No. 8749, and consistent with DENR Administrative 

Order No. 3, series of 2000, dated 07 November 2000, effective immediately and in


order to provide for a uniform and consistent standard operating procedure in the apprehension, 

testing and adjudication of smoke belching motor vehicles, all concerned are hereby 

directed to observe the following: 

1. Drivers/Operators apprehended may contest the emission test performed only within 

twenty-four (24) hours from the date and time of apprehension. 

Provided, that the contested roadside inspection is supported, among others, by a printout 

of the roadside inspection result on the involved unit; 

2. The LTO MVIS/PETC, for purposes of the aforesaid contested apprehension, shall not 

conduct Smoke Emission Test (SET) on the apprehended motor vehicle UNLESS the printout 

of the questioned roadside inspection result for the unit is submitted as part of the SET 

application; 

3. After 24 hours had elapsed without the motor vehicle having been tested as when the 

apprehension was made on a Friday, Saturday, or a holiday, the 24-hour contestability 

period shall not be deemed extended. In such a case, Section 4 (d), Rule XXXV of the IRR of 

RA 8749 dated 07 November 2000 shall be applicable. 

All orders and directives in conflict with the guidelines herein set forth are deemed 

revoked and superseded. 

For guidance and strict compliance. 





--o0o-- 


Mandatory Validation of Emission Testing Results 

in the LTO IT Projectís System 

WHEREAS, pursuant to DOTC Department Order No. 2002-31, the LTO issued the 

Memorandum dated September 10, 2002, directing compliance by all Private Emission Testing 

Centers (PETCs) with the stated requirements. More specifically, Section 2.4 of the 

subject Memorandum requires, to quote: 

ìEmployment of an IT based data storing, retrieval system, which is capable of 

delivering a nationwide real time information and/or all other data that may be 

required by either DOTC or LTO.î 

WHEREAS, LTO has undertaken and continues to implement the comprehensive 

modernization and computerization of its system or business processess by virtue of the 

LTO Information Technology (IT) Project;

462 


NOW, THEREFORE, in view of the foregoing, all duly accredited and authorized PETCís 

and all LTO officials and employees are hereby directed to comply with the following: 

1. Effective immediately, duly accredited and authorized PETCs shall ensure that all emission 

test results issued are registered and verified in real time under a system integrated with 

the Motor Vehicle Registration System (MVRS) workflow of LTO and its offices nationwide, 

through the LTO IT Project Proponent -- Stradcom Corporation. 

2. Effective February 27, 2003, all applications for LTO authorization shall not be accepted 

without the required system integration with the LTO IT Project. 

3. Commencing on March 10, 2003. LTO officials and employees in the National Capital 

Region, Regions 3 and 4 shall start accepting emission test results that can be verified and 

authenticated in real time/on-line under the LTO IT Project, in compliance with the subject 

Memorandum. 

4. Commencing on May 5, 2003, all LTO officials and employees shall strictly accept only 

emission test results that are verified and authenticated in real time -on-line under the LTO IT 

Project. 

5. Since the real time PETC validation work step integrated with the MVRS of the LTO IT 

project shall confirm and secure the authenticity of the emission test results, all LTO personnel 

are also directed to accept any Certificate of Emission Compliance (CEC) form from the 

Department of Trade and Industry Accredited and DOTC/LTO Authorized PETCs, provided it 

has the following information as mandated by Section 12 of the DTI-DOTC Joint Administrative 

Order No. 1, series of 2001: 

a. Title (e.g. ìTest Reportî or ìTest Certificateî); 

b. Name and address of the Center; 

c. Unique number of the test report or certificate; 

d. Name and address of the client; 

e. Identification of the test method used; 

f. Description, condition, and ambiguous identification of the vehicle tested; 

g. Date of test; 

h. Test results with the units of measures of actual test as compared to standard; 

i. Name(s), function(s), and signature(s) or equivalent identification of the person(s) 

authorizing the test report; and 

j. Statement to the effect that the results relate only to the items tested. 

LTO Memorandum Circular No. RTL-MC-02413, as amended, and all other previous 

issuances of LTO insofar as they are inconsistent with the provisions of this Memorandum 

Circular, are hereby amended accordingly. 




--o0o--




Temporary Number 

In lieu of the temporary plates specified in Memorandum Circular 82-028 dated 08 

June 1982, all employees are hereby required to adopt the following procedures in assigning 

the temporary number in the Motor Vehicle Registration System (MVRS) of the LTO IT 

System: 

a. The temporary number will only be assigned in cases where there is no physical plate 

available in the LTO offices. 

b. A range of Temp 01 to Temp10 will be used as temporary number to all classifications and 

Motor Vehicle types. 

e.g. 

Classification Motor Vehicle Motorcycle 

Private TMP01 TMP02 

For Hire TMP05 TMP03 

Government TMP06 TMP08 

c. For New Registration, the MVRS shall assign a temporary number wherein one (1) year 

collection can be applied; For Change Classification, the temporary number ending should 

have a similar ending number with the previous plate number. 

d. The LTO Office shall issue an Authorization Letter to allow the owner to use an improvised 

plate. The owner is required to use the MV File Number as the plate number; 

e. In case a motor vehicle with no plate number assigned (manually processed) applies for 

any miscellaneous transaction, a temporary number shall be assigned in the Data Take One 

module of the MVRS to follow the format specified above. 

f. Upon availability of the physical plate number, the LTO office shall update the plate number 

field using the MV Maintenance Facility of the LTO IT system. The LTO is required to indicate 

the assigned plate number in the OR/CR. The motor vehicle owner is also required to surrender 

the Authorization to use improvised plates; 

g. No surcharge shall be collected in case a motor vehicle with temporary number fails to 

register within the weekly deadline for its renewal registration. 

h. For vehicles with temporary number, the MV File Number, Engine Number or Chassis 

Number will be used as search criteria in the MVRS. 

i. An inventory of motor vehicles with temporary number can be generated at the Approving 

Officer or DOSYSADMIN role of the LTO IT system.

464 


j. Over or under collection shall be applied to the ensuring renewal registration of the motor 

vehicle. 

For your strict compliance. 




MARITIME INDUSTRY AUTHORITY 



Rules in the Accreditation of Shipping Companies for Purposes of 

Acquiring/Operating Philippine-Registered Ships for International 

Voyages under Regulation XV of the Philippine Merchant Marine 

Rules and Regulations (PMMRR), 1997 

In order to further develop the Philippines overseas merchant fleet thereby pursue 

the objectives of national growth and economic development, the following rules on accreditation 

of shipping companies, firms and entities operating Philippine-registered ships engaged in 

international voyages were adopted by the Maritime Industry Board during its 162 nd Regular 

Meeting on 22 January 2003. 

I. Objective 

This Circular aims to provide the qualification requirements for accreditation of 

shipping companies which shall acquire ships to be registered under the Philippine flag or 

operate Philippine-registered ships for international voyages. 

II. Coverage 

1. All shipping companies/firms operating Philippine-registered ships in international voyages; 

and 

2. All shipping companies/firms which shall acquire ships under Presidential Decree No. 

760, as amended or Republic Act No. 7471. 


1. Only shipping companies, firms and entities established under Philippine laws and authorized 

to engage primarily in overseas shipping may apply for accreditation under this 

Circular.


2. Shipowning companies must have a paid-up capital of Seven Million Pesos (P7 M) and 

companies without owned ships must have a paid-up capital of Ten Million Pesos (P10 M). 

3. The Chief Executive and Chief Operating Officers (but if he is one and the same, the next 

ranking Operating Officer) shall be citizens and permanent residents of the Philippines. 

4. Two (2) of the principal officers (e.g., President, Vice President for Operations, General 

Manager, or their equivalents) of the company shall have at least five (5) years experience 

in ship management, shipping operations and/or chartering. 

5. Any change/replacement of the principal officers of the company shall be subject to the 

requirements as provided in paragraph III.4. 

6. Accreditation under this Circular shall be valid for a period of three (3) years. 

7. A MARINA-accredited company under this Circular shall submit the following reports and/ 

or documents in original or certified true copies attested by a responsible officer of the 

accredited enterprise, independent auditor, or proper government agency; 

a. Any amendment of the Articles of Incorporation or By-Laws within thirty (30) days from 

the date of registration of said amendment with the Securities and Exchange Commissions 

(EC); 

b. Replacement of any director or any principal officer within thirty (30) days from date of 

replacement; and 

c. Audited annual financial statements on or before 15 May of the following year. 

8. Companies accredited under this Circular need not be registered under Memorandum 

Circular No. 9, series of 1976. 

IV. Requirements/Procedure for Accreditation 

1. The applicant company shall file with the MARINA an application in writing supported by 

the following documents: 

a. Certificate of registration with the SEC, together with the Articles of Incorporation and 

By-Laws; 

b. Personal Information Sheet or bio-data of Principal officers with pictures; and 

c. A management contract or any other document acceptable to MARINA in case of sister 

companies as proof that they belong to the same management. 

2. Only applications with complete requirements shall be accepted. Mailed applications that 

are incomplete shall be immediately returned to the applicant. 

3. The applicant company shall upon filing of application under this Circular pay a processing 

fee of P8,000.00.

466 


V. Suspension of Accreditation and Penal Provisions 

1. The MARINA shall, after due investigation, suspend the accreditation of MARINA-accredited 

enterprise for the following grounds: 

1.1 Failure to maintain the qualification requirements under this Circular; 

1.2 Violation of any of the terms and conditions of accreditation; and 

1.3 Violation of any law, rule or regulation pertinent to ship registration/operation. 

2. Companies with existing Philippine-registered ships and which fail to renew its accreditation 

on time shall be required to pay fines/penalties in accordance with the following 

schedule: 

First violation - P10,000.00 

Second violation - P20,000.00 

Third violation and 

succeeding violations - P25,000.00 


Memorandum Circular Nos. 33-A and 33-B are hereby repealed. 

VII. Effectivity Clause 

This Memorandum Circular shall take effect fifteen (15) days after its publication 

once in a newspaper of general circulation. 



(SGD.) OSCAR M. SEVILLA 

Administrator 

óo0oó 


Rules in the Acquisition of Ships under Presidential Decree (PD) 760, 

As Amended, and Providing Herewith the Implementing Rules under 

Chapter XV of the 1997 Philippine Merchant Marine Rules and Regulations 

(PMMRR) on Registration, Documentation and Licensing of 

Ships for International Voyages 

The Maritime Industry Board during its 162nd Regular Meeting held on 22 January 

2003 adopted the following rules in the implementation of PD 760, as amended and which 

shall form part of the implementing rules under Regulation XV/3.3.1 of the 1997 PMMRR.


I. OBJECTIVE 

This Circular aims to: 

1. rationalize the rules in the ships under the Philippine flag; and 

2. achieve maximum benefits as envisioned under PD 760, as amended. 

II. COVERAGE 

This Circular shall apply to all shipping companies that shall acquire and register 

ships for international voyages pursuant to PD 760, as amended. 

III. DEFINITION OF TERMS 

For purposes of this Circular: 

1. Administration refers to the Maritime Industry Authority (MARINA). 

2. Company refers to the person or entity which has qualified under Memorandum Circular 

No. 181 and complied with the requirements of this Circular to bareboat charter a ship for 

registration under the Philippine flag. 

3. Shipowning company refers to a company which, at the time of application under this 

Circular, shall have at least one (1) permanently registered ship under Philippine flag. 

4. Bareboat Charter refers to a contract for the lease of a ship for a stipulated period not less 

than one (1) year, by virtue of which the lessee has complete possession and control of 

the ship including the obligation to appoint the Master and the other crew of the ship for 

the duration of the lease. 

5. Crew refers to the officers and ratings of the ship. 

6. Philippine national refers to a citizen of the Philippines or a partnership or association 

wholly owned by and composed of the Philippines or of which at least sixty percent (60%) 

of the capital stock outstanding and entitled to vote is owned and held by Philippine 

citizens or a trustee of funds for pensions or other employee retirement or separation 

benefits, where the trustee is a Philippine national and at least sixty percent of the funds 

will accrue to the benefit of the Philippine national: Provided, that where a corporation and 

its non-Filipino stockholders own stock in an enterprise, at least sixty percent of the 

members of the governing board of both corporation must be Philippine nationals. 

7. Supernumerary refers to a person who is not a crew of the ship and whose presence 

onboard is for a specific purpose other than to perform navigation, operation and management 

functions. 

8. Principal Officers refer to the Chief Executive Officer, Chief Operating Officer or any 

other officer involved in the management and operation of the company.

468 


IV. GENERAL PROVISIONS 

1. Any foreign-owned ship bareboat chartered by a Philippine national may be entered 

under the Philippine Register of Ships upon approval by the Administration. 

2. The registration of a ship under a lease-irrevocable purchase arrangement shall be governed 

by this Circular. A ship subject of a lease-irrevocable purchase arrangement shall 

be treated as a bareboat chartered ship; it shall be considered an owned ship only after 

the full purchase price had been paid. 

3. The documentation of ships registered under PD 760, as amended shall be governed by 

the provisions of this Circular and Chapter XV of the 1997 PMMRR. 

4. Companies without owned ships which qualify under Regulation V.1 shall be allowed to 

acquire and register ships pursuant to PD 760, as amended, up to a maximum of ten (10) 

ships while shipowning companies have no limit as to the number of ships to be chartered. 

5. Ships registered under the Philippine flag pursuant to this Memorandum Circular shall be 

issued a Certificate of Philippine Registry (CPR) consistent with Regulation XV/3.2 of the 

1997 Philippine Merchant Marine Rules and Regulations (PMMRR). 

V. Conditions for Ship Registration 

1. Only companies which have complied with the following requirements may bareboat charter 

ships under PD 760, as amended: 

1.1 The company is accredited under Memorandum Circular No. 181, provided, that such 

accreditation shall be maintained for the period that it has a bareboat chartered ship. 

1.2 Shipowning companies must have a paid-up capital of Seven Million Pesos (P7 M) 

and companies without owned ships must have a paid-up capital of Ten Million Pesos (P10 

M). 

1.3 The company shall have the following management profile: 

a. The Chief Executive and Chief Operating Officer (but if he is one and the 

same, the next ranking Operating Officer) shall be citizens and residents of the 

Philippines; and 

b. Two (2) principal officers of the company shall have at least five (5) years 

experience in ship management, shipping operations and/or chartering. 

2. A ship shall be registered under this Circular for a period of not less than one (1) year. 

3. Extension of the registration of the ship for less than one (1) year for the purpose of 

finalizing documentation for the extension of the bareboat charter party or the eventual 

deletion of the ship from the Philippine Registry shall be allowed for a period not to exceed 

ninety (90) days provided that the registration shall be under the same company.


4. If the bareboat charter party is pre-terminated within one (1) year from date of delivery of 

the ship, the charterer shall be liable to pay the MARINA as penalty the amount equivalent 

to six (6) months withholding tax or the higher. For purposes of this provision, a ship which 

has continuously been registered for more than one (1) year under the Philippine flag 

under the same group of companies shall be deemed to have complied with Regulation 

V.2 hereof. 

5. Any change in the terms and conditions of the charter party shall be approved by the 

Administration. 

6. Ships registered under this Circular shall be completely manned by Filipino crew except in 

cases as may be determined by the Administration. For this purpose, Filipino crew onboard 

Philippine-registered ships shall be covered by prescribed Shipping Articles which shall 

be submitted for notation by the Administration. 

7. A Philippine-registered ship, may under circumstances to be determined by the administration, 

have on board supernumeraries provided that they shall not perform any of the 

functions of the crew nor interfere with the operation/management of the ship. 

8. Crew onboard Philippine-registered ships are required to be certificated in accordance 

with the International Convention on Standards of Training, certification and watchkeeping 

for seafers, 1978 as amended. 

9. Ships registered under this Circular shall, when calling for the first time at a Philippine 

port, shall be inspected by authorized MARINA surveyors. 

10. All ships registered under this Circular must be class maintained by an internationally 

recognized classification society. Any change in the classification of a Philippine-registered 

ship shall be immediately communicated to the Administration. 

11. Philippine-registered ships shall comply with the requirements of the International Safety 

Management (ISM) Code for the safe operation of ships and for pollution prevention. 

12. Companies and ships covered by this Circular shall at all times comply with national rules 

and regulations as well as international conventions, codes and standards on safety and 

marine environment protection. 

13. The bareboat charterer shall ensure that payment of the 4.5% withholding tax on gross 

charter hire is remitted to the Bureau of Internal Revenue. 

14. Companies with bareboat chartered ships shall deposit in favor of the Maritime Industry 

Authority with any reputable commercial bank the amount equivalent to One Hundred 

Thousand Pesos (P100,000.00) per ship to answer for the payment of the 4.5% withholding 

tax, fines and penalties due the government in the event that company fails to settle the 

same upon deletion of the ship from the Philippine Registry. In addition, companies shall 

also post a surety bond per ship in an amount equivalent to the cash bond. After the 

deletion of the ship from the Philippine Register of Ships, the amount of P100,000.00 

may be withdrawn provided that proof of payment of all taxes/penalties due to the government 

by reason of the registration of the ship under the Philippine flag had been submitted. 

Shipowning companies shall be exempted from this requirement for their bareboat 

chartered ships.

470 


15. All ships registered under this Circular shall not be deleted from the Philippine registry/ 

reverted to its foreign flag or registry without the prior approval of the Administration. 

16. The company shall comply with all laws, rules and regulations pertaining to Philippine flag 

ships. 

VI. Procedures for Registration 

1. Only applications with complete documentary requirements shall be accepted. 

2. An application for the approval of the shipís plan shall be approved by the Administration. 

3. The applicant shall pay the following fees: 

a. Bareboat Charter ñ P18,720.00 for the first three years plus P4,000.00 for every year 

thereafter; 

b. Certificate of Philippine Registry (CPR) 

i. Initial (good for three (3) months) ñ P2,000.00 for the first 500 gt plus P0.80 for 

every gt thereafter or a fraction thereof 

ii. Full Term ñ P1,200.00 

iii. Re-issuance ñ P1,200.00 

VII. Documentary Requirements: 

1. The following documents shall be submitted upon filing of an application: 

a. Letter of Intent; 

b. Duly signed Bareboat Charter Contract (with names printed below the signatures), 

provided that the document duly notarized in the State where it was executed and authenticated 

by the Philippine Embassy/Consulate concerned shall be submitted within sixty 

(60) days from approval of the application; 

c. Copy of a Certificate of Deletion or Suspension of the original registry or consent to 

the Bareboat Charter registration in the Philippines by the state of original registry, provided, 

that the original copy of the document shall be submitted within thirty (30) days 

from approval of the application; 

d. Copy of Certificate of Good Standing of the registered owners recently issued by the 

State of Registry , provided, that the original copy of the document shall be submitted 

within thirty (30) days from approval of the application; 

e. Power of Attorney/Board Resolution authorizing the signatory to the bareboat charter 

party to act as such in behalf of the registered owners, provided that the document duly 

notarized in the State where it was executed and authenticated by the Philippine Embassy/


Consulate concerned shall be submitted within sixty (60) days from approval of the 

application; 

f. Copy of the shipís subsisting Certificate of Original Registry, provided that the document 

duly certified to be a true copy of the original by the State of Original Registry or by 

the Philippine Embassy/Consulate concerned shall be submitted within sixty (60) days 

from approval of the application; 

g. Board Resolution/Secretaryís Certificate duly notarized, certified by the Board Secretary, 

authorizing the filing of the application and designating the official/s authorized representatives 

to represent the applicant-company; 

h. Assignment of Bank Deposit (cash bond of One Hundred Thousand Pesos); and 

i. Builders Certificate (For New Buildings). 

2. For bareboat sub-charter applications, the following additional documents shall be submitted: 

a. Copy of the consent of registered Owners to the bareboat Sub-Charter Agreement 

entered into by and between the disponent owners and bareboat sub-charterers, provided, 

that the document duly notarized in the State where it was issued/executed and 

authenticated by the Philippine Embassy/Consulate concerned shall be submitted within 

sixty (60) days from approval of the application; 

b. Power of Attorney or Board Resolution authorizing the person who issued the consent 

to act as such in behalf of the bareboat charterers, provided that the document duly 

notarized in the State where it was issued/executed and authenticated by the Philippine 

Embassy/Consulate concerned shall be submitted within sixty (60) days from approval of 

the application; and 

c. A copy of the Certificate of Good Standing of the bareboat sub-charterers recently 

issued by the State of Registry, provided, that the original copy of the document shall be 

submitted within thirty (30) days from approval of the application. 

3. The following post approval documents, if applicable shall be submitted within the prescribed 

period as stipulated in the MARINA approval: 

a. Colored photographs (different angles) of the ship showing the place of registry in the 

astern portion; 

b. Certified true copy of the shipís Protocol of Delivery and Acceptance; 

c. Sworn statement of crew salaries and wages (on an annual basis), indicating therein 

the names of all crew members, their respective positions and corresponding salaries/ 

wages; 

d. Shipís drydocking schedule and list of survey status;

472 


e. Proof of monthly payment of the 4.5% withholding tax with a breakdown of payments by 

ship (Original copy of BIR receipts shall be presented for verification purposes); and 

f. Original copy of a document issued by the State of original registry providing details of 

the shipís name, ownership and registered mortgages. 

VIII. Issue of Certificates 

1. A ship approved to be registered under the Philippine Register of Ships pursuant to this 

Circular shall be issued a Certificate of Philippine Registry (CPR) valid for period of three 

(3) months which may be extended for another ninety (90) days. 

2. Upon submission of the Protocol of Delivery and the approved ship plans, a full term CPR 

shall be issued co-terminus with the approved duration of the bareboat charter party. Nonsubmission 

of these documents after six (6) months from the date of issuance of the first 

CPR shall result in the outright cancellation of the authority to register the ship under the 

Philippine flag. 

3. Typographical corrections in the entries of a CPR shall be allowed through the re-issuance 

of CPR, provided that the original CPR being corrected shall be surrendered within 

thirty (30) days from the date of the re-issued CPR. 

4. Where material change in the entries of the CPR is to be effected such as in the case of 

alteration of the shipís specifications or change of name, the Administration shall require 

the submission of additional documents attesting to the change. 

5. The period of validity of the CPR of a ship re-issued pursuant to paragraphs 3 and 4 of this 

Regulation shall be equivalent to that reflected in the CPR being replaced. 

IX. SANCTIONS 

After due notice and hearing, the following administrative fines shall be imposed 

upon a company found to have violated/contravened any provisions of this Circular: 

First offense - P 25,000.00 

Second offense - P 50,000.00 

Third and succeeding offenses 

without prejudice to the cancellation 

of the CPR - P 100,000.00 

X. REPEALING CLAUSE 

Any provision of the 1997 PMMRR and existing MARINA Rules and Regulations and 

Orders which are inconsistent herewith are deemed modified accordingly. Memorandum 

Circular Nos. 38, 42, 111, 160 and the Rules and Regulations Implementing 760, as amended 

are hereby repealed. 

XI. EFFECTIVITY


This Memorandum Circular shall be published once in a newspaper of general 

circulation and shall take effect fifteen (15) days after publication. 




By Authority of the MARINA Board: 



óo0oó 

Memorandum Circular No. 183 

Revised Schedules of Fees and Charges 






--o0o-- 

Memorandum Circular No. 184 

Revised Rules Governing Mandatory Cover Against 

Civil Liability for Oil Pollution Damage 

Pursuant to the provisions of the International Convention on Civil Liability for Oil Pollution 

Damage, 1992 (CLC 92), Executive Order No. 125, as amended, and Presidential Decree 

No. 474, the Maritime Industry Board during its Special Meeting held on February 21, 2003 

adopted the following Rules, amending MARINA Memorandum Circular No. 128, to govern 

mandatory cover against oil pollution damage. 

I. APPLICATION 

These shall apply to the following types of Philippine-registered tankers/barges plying 

in domestic trade: 

1.1 Those carrying more than 2,000 tons of persistent oil in bulk as cargo. 

1.2 Those carrying 2,000 tons and below of persistent oil in bulk as cargo. 

1.3 The term persistent is used to describe those oils, which, because of their chemical 

composition, are usually slow to dissipate naturally when spilled into the marine environment 

and are therefore likely to spread and require cleaning up, such as, but not limited 

to, crude oil, fuel oil, heavy diesel oil and lubricating oil. Non-persistent oils tend to evaporate 

quickly when spilled and do not require cleaning up, such as, but not limited to, 

gasoline, light diesel oil and kerosene.

474 


II. LIMIT OF LIABILITY 

All Philippine-registered ships, defined under I are required to be covered by insurance 

or other financial security for not less than the limits herein set to answer for the liability for 

pollution damage under the CLC 92. 

1.3 Tankers/barges falling under I.1.1: 

(a) 3 million Special Drawing Rights (SDR) for tankers/barges not exceeding 

5,000 gross tons. 

(b) for tankers and barges above 500 gross tons, the limit shall be 3 million SDR 

plus an additional insurance cover of 420 SDR per tonnage in excess of 5,000 

GT. 

2.2 Tankers/barges falling under I.1.2 

Gross Tonnage (GT) of Ship Minimum Cover (SDR or its peso equivalent 

at thetime of the acquisition of the cover) 

More than 750 to 1000 2.5 million SDR 

More than 500 to 750 2 million SDR 

More than 250 to 500 1.5 million SDR 

250 and less 1 million SDR 

III. TYPE OF COVER 

Any of the following shall be considered as acceptable financial security for purposes 

of compliance with this Rules: 

3.1 insurance cover 

3.2 other financial security 

3.2.1bank guarantee 

3.2.2certificate delivered by an international compensation fund 

3.2.3other similar securities 

IV. ISSUE OF CERTIFICATE 

4.1 The Administration (MARINA) shall, upon submission of a copy(ies) of the insurance 

cover or other financial security, issue the CLC Certificate for those falling under I.1.1. 

and an equivalent certificate for those covered under I.1.2 hereof. 

4.2 Any interpretation relative to the implementation of this Circular shall be made in accordance 

with the CLC 92. 

V. PENALTIES AND SANCTIONS 

Any tanker/barge not holding a valid CLC certificate or its equivalent shall be subject to 

the following penalties:


5.1 For those falling under I.1.1. 

First Violation - P75,000 + suspension of CPC/PA/SP until compliance 

Second Violation - 150,000 + suspension of CPC/PA/SP until compliance 

Third Violation - P300,000 + cancellation of CPC/PA/SP 

5.2 For those falling under I.1.2 

First Violation - P30,000/vessel + suspension of CPC/PA/SP until compliance 

Second Violation - P75,000/vessel + suspension of CPC/PA/SP until compliance 

Third Violation - P150,000 + cancellation of CPC/PA/SP 

Submission of any false or fraudulent document in an application for issuance of CLC 

certificate or its equivalent shall be subject to the penalty of P100,000. 

VI. FEES 

Certificate issued under this Circular shall have a processing fee of P1,200.00 

VII. REPEALING CLAUSE 

Any provision of existing MARINA circulars, rules and regulations inconsistent herewith 

are hereby repealed or modified accordingly. 

VIII. EFFECTIVITY CLAUSE 

This Memorandum Circular shall take effect immediately after its publication once in a 

newspaper of general circulation in the Philippines. 



By the Authority of the MARINA Board: 



--o0o-- 

Flag State Advisory No. 33, s. 2003 

Implementation of Shipboard Marine Pollution Emergency 

Plant for Noxious Liquid Substances 

Notice is hereby given to all concerned that, pursuant to Regulation 16, Annex II of 

MARPOL 73/78, which requires an Administration-approved SHIPBOARD MARINE 

POLLUTION EMERGENCY PLAN for noxious liquid substances, domestic ships 150 gross 

tons and above, certified to carry the aforecited substances in bulk, shall be required to 

comply with the same effective 01 July 2003.

476 


For information and guidance of all concerned. 





--o0o-- 

Flag State Administration Advisory No. 34, s. 2003 

Reiteration of Flag State Administration Advisory No. 027, Series of 2002 

on the Additional Mesures to Ensure the Safety and Security of our 

Ships, their Passengers and Cargoes 

In response to the directive issued today by Her Excellency, President Gloria Macapagal 

Arroyo to ensure the safety and security of our passengers and/or cargo ships and the 

people and goods that they carry, and in order to prevent extremist forces from taking 

advantage of the present crisis, Flag State Administration Advisory No. 027, series of 2002 

dated 22 October 2002, is hereby reiterated. All shipping companies/ship owners/operators 

are hereby directed to more strictly institute the following measures: 

1. Exercise 24-hour monitoring/vigilance of all entry points and the perimeter of their premises, 

passenger terminals and vessels. 

2. Institute 100% checking of persons and/or passengers and their baggage entering the 

premises. Entry should be denied to anyone who refuses to submit to a security check 

prior to entry into passenger terminals and embarkation to a ship. 

3. Immediately inform any of the following government agencies of any suspicious person(s)/ 

activity(ies)/ movement(s) in your premises/ships and/or their immediate vicinity. 

METRO MANILA 

DOTC Action Center 7890/727-17-10/723-82-35 

MARINA 521-01-07/521-65-27/524-27-46 

PNP Maritime Group 722-12-15 

PNP Bomb Disposal Group 721-85-44 

PCG Special Operations Group 527-38-70/527-38-80 

PCG Bomb Detection (K-9) 243-04-60 

MARINA REGIONAL OFFICES 

Batangas City (043) 723-82-59/(043) 723-13-65 

Cagayan de Oro City (088) 856-91-04/(088) 856-91-05 

Cebu City (032) 232-60-52/(032) 232-64-25 

Cotabato City (064) 421-36-13/(064) 421-97-68


Davao City (082) 221-13-92/(082) 227-95-37 

Iloilo City (033) 329-41-80/(033) 329-64-90 

Legaspi City (052) 214-37-32/(052) 480-63-53 

San Fernando City, La Union (072) 242-70-52/(072) 888-01-54 

Tacloban City (053) 325-51-33/(053) 321-62-64 

Zamboanga City (062) 991-25-14/(062) 991-88-76 

4. Provide a bulletin board for each of your vessels posting therein all safety-related certificates. 

5. Post notices at strategic locations regarding the strict enforcement of security measures. 

6. Implement other safety precautionary measures as may be deemed necessary. 

7. Submit to the MARINA within five (5) days from date hereof measures undertaken by 

your company in compliance with this Advisory. 






--o0o-- 

Flag State Administration Advisory No. 35, s. 2003 

Additional Security Measures to Ensure the Safety and Security of 

Filipino Seafarers/On Board Ships within the Vicinity of the War Area 

In compliance with the directive issued today by her Excellency, President Gloria 

Macapagal Arroyo to ensure the safety and security of our Filipino seafarers on board ships 

irrespective of flag plying the vicinity of the war zone, and in order to avoid unwarranted 

confusion and disarray in the evacuation, the following precautionary measures are hereby 

adopted. 

1. Filipino seafarers on board ships (regardless of Flag) which are within the vicinity of 

the war zone shall be advised to take all necessary precautions and shall accordingly advise 

the nearest Philippine Embassy/Consulate of their need for assistance as may be warranted. 

2. All Filipino seafarers on board Philippine-flagged ships who are within the war zone 

shall when requested for assistance by OFWs render such assistance including evacuation 

taking into consideration the safety and welfare of both crew and OFWs. 


Adopted: 20 March 2003

478 





--o0o-- 

Flag State Administration Advisory No. 36 

Contingency Measures in Case of the Outbreak of War in Iraq 






METRO MANILA DEVELOPMENT AUTHORITY 


MMDA Resolution No. 02-49, s. 2002 

Authorizing the Metropolitan Manila Development Authority to Adopt 

a ìNo Physical Contact Policyî in Apprehending Traffic Violators in 

Metro Manila thru the Use of Digital Camera 

WHEREAS, the present system of apprehending traffic violators sometimes causes 

traffic build up which aggravates the traffic problem in Metro Manila; 

WHEREAS, physical contact between the traffic enforcer and the driver during 

apprehension is an open invitation for graft and corruption; 

WHEREAS, to provide better services to the motorists and the riding public, there is a 

need to introduce some technologies in Metro Manila; 

WHEREAS, Republic Act No. 7924 empowers the MMDA to formulate, coordinate 

and monitor policies, standards and programs relating to traffic and transport management 

to rationalize the existing transport operations and to administer and implement all traffic 

enforcement operations, traffic engineering services, traffic education programs including 

the institution of a single ticketing system in Metro Manila; 

WHEREAS, the Metro Manila Council (Council) recognizes the need to improve the 

system of apprehending traffic violators by way of adopting a ìNo Physical Contact Policyî 

in apprehending traffic violators thru the use of digital camera;


WHEREAS, the use of digital camera in apprehending traffic violators will ensure 

efficiency in traffic enforcement and avoid traffic build up in areas where violations are 

committed. 

NOW, THEREFORE, be it resolved as it is hereby resolved, pursuant to Section 6 of 

RA 7924, that the Council hereby authorizes the MMDA to adopt a ìNo Physical Contact 

Policyî in apprehending traffic violators in Metro Manila thru the use of digital camera. 

RESOLVED FURTHER, that the ìNo Physical Contact Policyî be strictly observed by 

traffic enforcers who are issued digital cameras in apprehending traffic violators. 

RESOLVED FURTHERMORE, that the use of digital camera shall complement the present 

system of apprehending traffic violators. 

RESOLVED FINALLY, that the MMDA Chairman shall prepare the necessary 

implementing guidelines to ensure efficient and effective implementation of this undertaking. 

This Resolution shall take effect upon approval. 


(SGD.) BAYANI F. FERNANDO 

Chairman 

(SGD.) BENJAMIN C. ABALOS, JR. (SGD.) VERGEL A. AGUILAR 

Mayor, City of Mandaluyong Mayor, City of Las PiÒas 

(SGD.) FELICIANO R. BELMONTE, JR. (SGD.) ROSENDO T. CAPCO 

Mayor, Quezon City Mayor, City of Pateros 

(SGD.) BOBBIT L. CARLOS, M.D. (SGD.) JOSEPH VICTOR G. EJERCITO 

Mayor, Valenzuela City Mayor, San Juan 

(SGD.) SOLEDAD C. EUSEBIO (SGD.) MA. LOURDES C. FERNANDO 

Mayor, Pasig City Mayor, Marikina City 

(SGD.) JAIME R. FRESNEDI (SGD.) REYNALDO O. MALONZO 

Mayor, City of Muntinlupa Mayor, Caloocan City 

(SGD.) JOEY P. MARQUEZ (SGD.) TOBIAS M. TIANGCO 

Mayor, ParaÒaque City Mayor, Navotas 

(SGD.) SIGFRIDO R. TINGA (SGD.) WENCESLAO B. TRINIDAD 

Mayor, Taguig Mayor, Pasay City 

(SGD.) MARK ALAN JAY G. YAMBAO (SGD.) JESUS C. CRUZ 

Acting Mayor, City of Malabon President 

Metro Manila Vice Mayors League 

(SGD.) PERPETUO F. CAMILA 

President 

Metro Manila Councilors League 

óo0oó

480 




Amending Section 5 Subsection 3 of the MMDA Guidelines on 

Towing and Impounding Operations in Metro Manila Approved by 

the Metro Manila Council thru MMDA Resolution No. 02-33, s. 2002 

WHEREAS, on August 29, 2002, MMDA Resolution No. 02-33 entitled ìApproving and 

Adopting the Revised MMDA Guidelines for Towing and Impounding Operations in Metro 

Manilaî was approved by the Metro Manila Council (Council) to address the urgent need to 

implement uniform procedures and guidelines on towing and impounding operations in Metro 

Manila; 

WHEREAS, Section 5 subsection 3 of the approved MMDA Guidelines on Towing and 

Impounding Operations provides that: 

ìTowing companies must submit a surety bond for each tow truck requested 

for accreditation to answer for any loss or damage incurred in towing vehicles. 

Towing company/agency shall be required to pay a surety bond of P100,000.00 

per tow truckî; 

WHEREAS, the Council in session duly assembled, proposed and agreed to require a 

lower surety bond for each tow truck to be accredited. 

NOW, THEREFORE, pursuant to Section 6 of R.A. 7924, this Resolution is hereby 

adopted and promulgated by the Council that Section 5 subsection 3 of the MMDA guidelines 

on towing and impounding operations in Metro Manila be amended to read as follows: 

ìTowing company/agency shall be required to post a surety bond of P10,000.00 

per tow truck. The surety bond shall be pooled together to pay for any claim 

against any tow truck. The said claim shall be reimbursed to the MMDA by the 

concerned towing companyî. 



Chairman 




Mayor, Quezon City Mayor, City of Pateros 




Mayor, Pasig City Mayor, Marikina City






(SGD.) MARK ALAN JAY G. YAMBAO (SGD.) JESUS C. CRUZ 

Mayor, City of Malabon President 




President 


óo0oó 


Authorizing the Metropolitan Manila Development Authority to Call on 

the Local Government Unit Officials and Employees and Where Necessary 

Secure their Assistance and Cooperation in the Conduct of Research, 

Data Gathering and other Activities for the Purpose of Developing Policies, 

Programs, Setting of Standards and Guidelines for the Various Public 

Services for the Use of the Local Government Units of 

Metro Manila and the Authority 





Chairman 



(SGD.) JOSE L. ATIENZA, JR. (SGD.) FELICIANO R. BELMONTE, JR. 

Mayor, City of Manila Mayor, Quezon City 

(SGD.) JEJOMAR C. BINAY (SGD.) ROSENDO T. CAPCO 

Mayor, City of Makati Mayor, Pateros 






Mayor, City of Muntinlupa Mayor, Caloocan City

482 






(SGD.) AMADO S. VICENCIO (SGD.) JESUS C. CRUZ 





President 


óo0oó 


Authorizing the Traffic Operations Center of the Metropolitan Manila 

Development Authority to Reassess the Implementation of MMDA 

Regulation No. 96-005 Entitled ìUnified Vehicular Volume Reduction Program 

Regulating the Operations of Certain Motor Vehicles in Metro Manilaî 





Chairman 














Mayor, ParaÒaque City Mayor, Navotas









President 


óo0oó 


Supporting the Designation of Some Courts as Special Courts for 

Cases Involving Tourists by the Honorable Supreme Court of the 

Republic of the Philippines 

WHEREAS, based on the Philippine National Police (PNP) report from January to May 

2002, there is an alarming increase in crimes committed particularly those crimes involving 

tourists; 

WHEREAS, hostage taking, kidnapping and robbery incidents nationwide particularly 

in Metro Manila are mostly committed against foreign and local tourists; 

WHEREAS, to address the aforesaid problems, the PNP launched a project entitled 

ìProject Turistaî aimed to protect the tourists in the country; 

WHEREAS, the Honorable Secretary Richard J. Gordon of the Department of Tourism 

(DOT) in his letter dated May 4, 2001 requested the Honorable Supreme Court of the 

Philippines for the designation of Special Courts for cases involving tourists; 

WHEREAS, in consonance with the request of the DOT, the Honorable Supreme Court 

in its resolution en banc dated 7 August 2001 designated some courts as Special Courts for 

cases involving tourists and ordered that: 

ìcases involving tourists arising within their respective territorial jurisdictions 

shall be tried and decided by the (b-1) Executive Judges in multiple sala 

stations; (b-2) RTC Judges in single sala stations; and (b-3) judges of the first 

level courts.î 

WHEREAS, the Metro Manila Council (Council) in its special session dated 26 June 

2002, likewise supported the creation of a Tourist Court that will immediately investigate, hear 

and decide cases involving tourists in Metropolitan Manila; 

WHEREAS, pursuant to the foregoing premises, the Council strongly supports the 

Honorable Supreme Court of the Philippines in designating some courts as Special Courts 

for the speedy administration of justice for cases involving tourists.

484 


NOW THEREFORE, be it resolved as it is hereby resolved, pursuant to Section 6 of 

Republic Act No. 7924, that the Council hereby supports the designation of some courts as 

Special Courts for cases involving tourists by the Honorable Supreme Court of the Republic 

of the Philippines. 




Chairman 






















President 


óo0oó 


Authorizing the MMDA Chairman to Implement Policies and Programs 

on Bus Lanes/Public Utility Vehicle Lanes along Major Thoroughfares 

of Metro Manila


WHEREAS, R.A. 7924 empowers the Metropolitan Manila Development Authority to 

coordinate, monitor and formulate policies, standards, programs and projects concerning 

transport and traffic management in Metro Manila, which involve among other things, the 

administration and implementation of all traffic enforcement operations, traffic engineering 

services and traffic education programs, including the institution of a system to regulate road 

users and the institution of a single ticketing system; 

WHEREAS, there is an urgent need to alleviate the traffic congestion along major 

thoroughfares of Metro Manila; 

WHEREAS, in order to ease the flow of traffic, Public Utility Vehicle (PUV) lanes 

identified by yellow lane markings on the pavements have been accordingly designated and 

installed at certain strategic thoroughfares in the metropolis; 

WHEREAS, the use of the existing capacity of Epifanio De Los Santos Avenue (EDSA) 

and other road routes in Metro Manila has been rationalized with the adoption of some traffic 

improvement measures such as designation of PUV lanes aimed to reduce pedestrian and 

vehicle conflict, minimize interaction of PUVs with other vehicles and improve the existing 

capacity of congested locations; 

WHEREAS, to effect a continuous traffic flow in Metro Manila, there is a need to assign 

additional lane for PUVs along its major thoroughfares; 

WHEREAS, pursuant to Section 7 (d) of RA 7924, the MMDA Chairman is empowered 

to execute policies and measures approved by the Council and be responsible for the efficient 

and effective day-to-day management of the operations of the MMDA. 

WHEREAS, the Metro Manila Council (Council), in session duly assembled, recognizes 

the need to implement new policies and programs on bus lanes/PUV Lanes along major 

thoroughfares of Metro Manila in order to ease the traffic problem along these routes; 


Republic Act No. 7924, that the Council hereby authorizes the MMDA Chairman to implement 

policies and programs on bus lanes/PUV lanes along major thoroughfares of Metro Manila. 




Chairman 






Mayor, City of Makati Mayor, Pateros

486 


















President 


óo0oó 


Urging the Local Government Units of Metro Manila to 

Allocate Six Percent (6%) of the Infra Fund Budget for 

Sidewalk Clearing and Sidewalk Construction 




Chairman 








Mayor, Valenzuela City Mayor, San Juan















President 


óo0oó 


Authorizing the MMDA Chairman to Implement Policies on Parking Discipline 

for all Public and Private Utility Vehicles in Metro Manila 

WHEREAS, the Metropolitan Manila Development Authority (MMDA) is mandated by 

law under R.A. 7924 to set policies concerning traffic in Metro Manila, to regulate the 

implementation of all programs and projects concerning traffic management and to fix, impose 

and collect fines and penalties; 

WHEREAS, there is a need to improve the present traffic situation to ensure free and 

convenient movement of public and private transportations along major thoroughfares and 

along other road routes in Metro Manila; 

WHEREAS, illegal parking of vehicles is rampant even along interior roads and streets 

which continue to cause obstruction and hinder the free flow of traffic and therefore 

necessitates the adoption and implementation of other measures including the parking area 

for vehicles; 

WHEREAS, there is an urgent need to strictly enforce parking ordinance, laws, rules 

and regulations and identify and designate parking zones on streets and off-street, both for 

public and private vehicles to attain efficient parking thereof; 



and effective day-to-day management of the operations of the MMDA.

488 


WHEREAS, the Metro Manila Council (Council), in session duly assembled, recognized 

the urgency to implement parking discipline for all public and private utility vehicles in Metro 

Manila in order to ease the traffic problem along major and secondary thoroughfares including 

along other road routes in Metro Manila; 



parking discipline for all public and private utility vehicles in Metro Manila. 




Chairman 






















President 


óo0oó



Authorizing the MMDA Chairman to Implement Vehicle Tagging by 

Painting the License Plate Number on the Roof of all Registered and 

Franchised Public Utility Vehicles (PUVs) Plying Along Major and 

Secondary Thoroughfares of Metro Manila 

WHEREAS, R.A. 7924 empowers the Metropolitan Manila Development Authority to 

coordinate, monitor and formulate policies, standards, programs and projects concerning 

transport and traffic management in Metro Manila, which involve among other things, the 

administration and implementation of all traffic enforcement, operations, traffic engineering 

services and traffic education programs, including the institution of a system to regulate 

road users and the institution of a single ticketing system; 

WHEREAS, some drivers of Public Utility Vehicles (PUVs) continue to violate traffic 

laws especially during rush hours; 

WHEREAS, traffic laws require the attachment and display of license plate and its 

number of designated body portion of the vehicle; 

WHEREAS, the aforesaid system is one way of identifying vehicles especially those 

that are involved in accidents; 

WHEREAS, there is a need to adopt a measure that could help in easily identifying out 

of route/colorum vehicles operating along the major and secondary thoroughfares of Metro 

Manila; 



and effective day-to-day management of the operations of the MMDA. 

WHEREAS, the Metro Manila Council (Council) deems it necessary to implement vehicle 

tagging by painting the same plate number on the roof of all registered and franchised PUVs 

for immediate identification and at the same time be of help in the enforcement of traffic rules 

and regulations; 

WHEREAS, there is an urgent necessity to implement and achieve the above traffic 

improvement measure as the current situation warrants. 



vehicle tagging by painting the license plate number on the roof of all registered and franchised 

PUVs plying along major and secondary thoroughfares of Metro Manila. 


Adopted: 25 July 2002

490 



Chairman 











(SGD.) JAIME R. FRESNEDI AMADO S. VICENCIO 

Mayor, City of Muntinlupa Mayor, City of Malabon 





(SGD.) JESUS C. CRUZ (SGD.) PERPETUO F. CAMILA 

President President 

Metro Manila Vice Mayors League Metro Manila Councilors League 


óo0oó 


Deputizing Owners and Security Guards of Buildings to Deter 

Illegal Vendors/Peddlers from Selling/Vending Goods within the 

Building and its Immediate Premises 

WHEREAS, Metropolitan Manila is besieged with the problem of illegal vendors/peddlers 

not only along the sidewalks but also in front of buildings and commercial establishments; 

WHEREAS, these vendors/peddlers do not only contribute to the problem of traffic but 

also generate wastes in their own place of work; 

WHEREAS, it is the duty of every citizen and residents to keep its environment or 

surrounding clean and wholesome in accordance with the provisions of P.D. 825; 

WHEREAS, there is an urgent need to prevent the proliferation of illegal vendors/ 

peddlers to ease the traffic flow in Metro Manila and at the same time restore the use of 

sidewalks to pedestrians;


WHEREAS, R.A. 7924 empowers MMDA to deputize non-government organizations/ 

owners of buildings and duly licensed security guards to enforce traffic and solid waste 

management laws, rules and regulations; 

NOW, THEREFORE, be it resolved as it is hereby resolved that the Metro Manila 

Council, pursuant to Section 6 of R.A. 7924, that the Council hereby deputizes the owners 

and security guards of buildings to deter illegal vendors/peddlers from selling/vending goods 

within the building and its immediate premises. 

Let copies of this resolution be furnished to the Local Government Units of Metropolitan 

Manila. 




Chairman 





(SGD.) AMADO S. VICENCIO (SGD.) ROSENDO T. CAPCO 

Mayor, City of Malabon Mayor, Pateros 












(SGD.) JESUS C. CRUZ 

President 



President 


óo0oó

492 


MMDA Resolution No. 02-34, s, 2002 

Prescribing Rules and Procedures for the Disposition of Towed and 

Impounded Vehicles in Violation of MMC Ordinance No. 78-03 entitled 

ìAuthorizing Traffic Law Enforcement Agencies to Tow and Impound 

Stalled Motor Vehicles and/or Attachments Thereof in any Public Road, 

Street or Thoroughfare Within Metropolitan Manila and Providing Penalties 

Thereofî As Amended 

WHEREAS, MMC Ordinance No. 78-03 as amended by MMA Ordinance No. 3, Series 

of 1992 and MMDA Regulation No. 96-003, authorizes traffic law enforcement agencies to 

impound stalled vehicles and take such other measures or actions as may be necessary to 

minimize traffic congestion in Metro Manila; 

WHEREAS, the maintenance and custody of impounded and abandoned vehicles in 

accordance with MMC Ordinance No. 78-03 as amended, have been causing unnecessary 

expenses to the MMDA, hence the need to dispose of these vehicles in order to recover said 

expenses; 

WHEREAS, there is a need to prescribe rules and procedures implementing MMC 

Ordinance No. 78-03 as amended, particularly on the disposition of towed and impounded 

vehicles. 


Republic Act 7924, that the Council hereby prescribed the following rules and procedures 

for the disposition of towed and impounded vehicles in violation of MMC Ordinance No. 78- 

03 as amended: 

Section 1. It shall be the duty of the MMDA, through the Traffic Operations Center to 

verify the registered owner thereof, if not known, at the Land Transportation Office. 

Section 2. In all cases before any public sale is done, the owners of the impounded 

and abandoned vehicles, shall be given one (1) written notice, through registered mail with 

return card, giving them the option to redeem the said property after paying all the necessary 

charges within a period of fifteen (15) days from the receipt of such notice or to participate 

in the public bidding to be set and conducted by the MMDA Auction Committee. 

Section 3. The MMDA shall not be liable for any loss, damages that may be incurred as 

an incident or result of such apprehensions by the officer-in-charge thereof. 

Section 4. The MMDA Auction Committee which shall administer the auction of 

impounded motor vehicles shall be composed of the following: 

a. Executive Director of the MMDA Traffic Operations Center or his representative, as chairman. 

b. Director III of the Legal Service or his/her representative, as member.


c. Representative from the Office of the Assistant General Manager for Finance and Administration, 

as member. 

d. Chief of Staff, Office of the AGM for Operations, as member 

A representative from COA-MMDA and the Internal Control Service (ICS) shall be 

present in all proceedings. 

Section 5. The Auction Committee shall observe the following rules and procedures for 

the disposition of impounded or abandoned motor vehicles. 

a. The Committee shall hold auction of vehicles every first Monday of the month and fix the 

place of the public sale where all concerned and interested parties may participate in the 

bidding and shall post notice of auction in all Local Government Units in Metro Manila and 

other places identified by the Committee. 

b. No prospective bidder shall be allowed to participate unless he first register with the 

Auction Committee who shall in turn provide him with a bidding number at least two (2) 

hours prior to the scheduled bidding. 

c. The minimum bid price shall not be less than or equivalent to the total fees and other 

charges as may be ascertained by the Auction Committee, in addition to the fines and 

penalties provided for under MMC Ordinance No. 78-03 as amended. 

d. There must be at least two (2) bidders. In case only one (1) bidder participated, the same 

shall be considered as failed bidding. Where failed bidding has occurred twice, the MMDA 

shall have the right to take possession of all vehicles and shall dispose of the same 

accordingly. 

e. During the auction, the auctioneer shall declare the bidding open and all bidders present 

shall be furnished with a list of vehicles that are offered for bidding. 

f. The auctioneer will indicate that he has accepted the final and highest offer by announcing 

ìDone!î, thereby closing the bidding to all other offfers or bids. 

g. Winning bidders shall immediately deposit twenty (20%) percent of the amount that was 

bid and shall have three (3) days to perfect the auction sale by paying the balance. Bids 

not perfected after three (3) days shall be cancelled and the initial deposit shall be forfeited 

in favor of the MMDA. 

Section 6. Vehicles sold at public auction shall be taken out at the impounding area by 

the winning bidders within seven (7) days from date of auction. Failure to take out such 

vehicle within the prescribed period shall render the bidding null and void. The payment 

made by the buyer is forfeited and the bid shall be considered imperfect. After the public 

sale, the proceeds shall be applied to all liens, fines, fees, penalties and such other charges 

such as the cost of publication of notice. Provided, that whatever is the remainder this shall 

be returned to the former owners.

494 


Section 7. All vehicles, which are unsold, or vehicles covered by failed bidding, imperfect 

or nullified bids, shall be disposed of accordingly pursuant to MMC Ordinance No. 78-03 as 

amended. Usable vehicles may be appropriated and used by the MMDA. 

Section 8. The auctioned vehicles shall be auctioned on an ìas-is-where-isî basis and 

neither the auctioneer nor the MMDA may be held liable for any defect on the vehicles which 

may be sold. If for any reason whatsoever, after the vehicles have been bid and sold, the 

auctioneer is unable to make available of the same because of natural or fortuitous event, the 

auctioneerís only liability, if any, is to return the money actually paid thereof. 

Section 9. After payment of the amount of the bid by the highest bidder, the Auction 

Committee shall issue a Certificate of Award in his favor duly signed by the members and a 

copy to be furnished to the MMDA. The Certificate of Award shall serve as an evidence of 

ownership and shall be the basis for registration with the Land Transportation Office. 

Section 10. All MMDA issuances contrary to or inconsistent with any provision of this 

Resolution are hereby repealed. 

Section 11. If, for any reason or reasons, any part or provision of this Resolution shall 

be held to be unconstitutional or invalid, other parts or provisions hereof which are not 

affected thereby shall continue to be in full force and effect. 

Section 12. Effectivity Clause ñ These rules and procedures shall take effect fifteen 

(15) days after its publication in a newspaper of general circulation in Metropolitan Manila. 



Chairman 

(SGD.) VERGEL A. AGUILAR (SGD.) ROSENDO T. CAPCO 

Mayor, City of Las PiÒas Mayor, Pateros 













President 


óo0oó




Urging the Local Government Units of Metropolitan Manila thru their 

Respective City/Municipal Councils to Enact a Uniform Ordinance Adopting 

Guidelines and Procedures for a Unified Approach on Solid Waste 

Management in their Areas of Jurisdiction 





Chairman 






















President 


óo0oó

496 



Urging the Local Government Units of Metropolitan Manila to Implement 

a Moratorium on the Granting of Franchise to New Two ñStroke Motorized 

Tricycles in Metro Manila Starting January 1, 2003 





Chairman 






















President 


óo0oó 


Requiring the Local Government Units of Metro Manila to Remit to the 

Metropolitan Manila Development Authority the Amount Required for 

the Collection of Garbage at the Pumping Stations






Chairman 




Mayor, Quezon City Mayor, Pateros 







(SGD.) TOBIAS M. TIANGCO (SGD.) WENCESLAO B. TRINIDAD 

Mayor, Navotas Mayor, Pasay City 

(SGD.) MARK ALLAN JAY G. YAMBAO (SGD.) JESUS C. CRUZ 





President 


óo0oó 


Urging the Local Government Units of Metro Manila to Enact an Ordinance 

Requiring all Establishments and Institutions in their Respective Jurisdiction 

to Pave and Maintain their Front Easements for Parking Purposes 





Chairman 


Mayor, City of Mandaluyong Mayor, City of Las PiÒas

498 

















President 


óo0oó 



Prohibiting the Construction, Use and/or Maintenance of Wingwalls, 

Partition Walls, Party Walls and any other Wall on the Ground Floors of all 

Establishments in their Areas of Jurisdiction 





Chairman 








Mayor, Pasig City Mayor, Marikina City











President 


óo0oó 


Prescribing Rules and Procedures for the Disposition of Items 

Confiscated in Connection with the Sidewalk Clearing Operation of 

the Metropolitan Manila Development Authority 

WHEREAS, MMDA Resolution No 02-28, series of 2002 authorizes the Metropolitan 

Manila Development Authority (MMDA) and the Local Government Units (LGUs) of Metro 

Manila to clear the sidewalks, streets, avenues, alleys, bridges, parks and other public places 

in Metro Manila of all illegal structures and obstructions; 

WHEREAS, among the measures adopted by the MMDA to promote the safety and 

convenience of the public is the regulation of the use of sidewalks within Metro Manila 

through the disposition of items confiscated and the dismantling of structures and other 

obstructions found thereon in order to effect the smooth movement of pedestrian traffic; 

WHEREAS, there is a need to dispose the accumulated items confiscated as a result 

of the Metro Manila Clearing Operations of the MMDA and the LGUs which were not immediately 

disposed of during the operations. 

NOW THEREFORE, be it resolved as it is hereby resolved, pursuant to Section 6 of 

Republic Act 7924, that the Council hereby prescribes the following rules and procedures for 

the disposition of the duly confiscated items in accordance with MMDA Resolution No. 02- 

28, series of 2002. 

Section 1. Any person caught committing any of the acts prohibited under MMDA 

Resolution No. 02-28, series of 2002, shall be fined for ONE HUNDRED FIFTY (P150.00) 

PESOS, in addition to confiscation/forfeiture of the items and the dismantling of illegal structures 

obstructing pedestrian movement. 

Such prohibited acts include but not limited to the following:

500 


1. Vending or selling of foods, magazines, newspapers, cigarettes, brooms, watches or 

jewelries, shoes and other footwear, and/or any other items; 

2. Conduct of shoe-shine occupation; 

3. Conduct of ìreligiousî activities, such as preaching and seeking alms; 

4. Doing house chores such as washing clothes, hanging clothes, and bathing; 

5. Vehicle garage and/or vehicle repair; 

6. Dumping garbage; 

7. Setting up of basketball court/goal; 

8. Use of sidewalk to install pens of animals or keep animals in chains; 

9. Storing softdrinks or wine/liquor bottles and cases; drinking liquor and 

beverages and holding picnics/gatherings; 

10. Storing of junks and recyclable materials; 

11. Use of sidewalk for storage of construction materials for sale (pipes, tubings, lumber, 

cement, and the like); 

12. House extension or stall/store extension including installation of roofs or awnings; 

13. Installation of permanent or picket fence; 

14. Use of sidewalks for plants, trees and plant boxes; and, 

15. Signs or signboards on or above sidewalks and detached from the business establishment. 

Confiscated items, for the purpose of this provision, shall include non-perishable goods, 

commodities, merchandise, vending paraphernalia, equipment and facilities, pedicabs, 

pushcarts, steel railings and the like, among others. 

Section 2. The fines shall be paid within seven (7) days from the date of apprehension. 

Provided, that if after 7 days, the fines has not been paid by the owner, the confiscated item 

shall be disposed of in a public sale, the proceeds of which shall be applied to the fine, costs 

incurred in conducting public auction including other administrative expenses, and the excess, 

if any, shall be returned to the owner. 

Section 3. The MMDA Auction Committee shall administer the disposal of the confiscated 

items through public auction, as follows: 

a. To appraise the items to be disposed of which shall be considered as the floor price in the 

public auction; 

b. To fix the time, date and place of the public sale where all concerned and interested parties 

may participate in the auction, and to cause such notice of time and place to be published 

once a week for three (3) consecutive weeks in newspaper of general circulation and to 

be posted in at least three (3) accessible and conspicuous places; and, 

c. To conduct the regular actual public auction where at least two (2) bidders shall participate. 

In case only one (1) bidder participate, the same shall be considered failed bidding. 

Provided, that were failed bidding has occurred twice, the MMDA shall have the right to 

dispose of the items through negotiated sale at such price as may be determined by 

Auction Committee. 

Section 4. The winning bidder shall have to make a deposit equivalent to 20% of the 

bidded amount, and shall have to pay the balance within three (3) days from the date of the


sale. Bids not perfected after three (3) days shall be cancelled and the deposit shall be 

forfeited in favor of the MMDA. 

Section 5. Items sold thereat shall be taken out from the storage by the winning bidder 

within seven (7) days from date of auction. Failure to take out such items within the prescribed 

period shall render the sale null and void. The payment made by the buyer shall then be 

forfeited in favor of the MMDA. 

Section 6. All MMDA issuances contrary to or inconsistent with any provision of this 

Resolution are hereby repealed accordingly. 

Section 7. Effectivity Clause. This resolution shall take effect fifteen (15) days after its 

publication in two (2) newspaper of general circulation in Metro Manila. 



Chairman 


















President 


óo0oó 



Penalizing any Person Caught Marring/Defacing/Destroying and Removing 

and/or Stealing Traffic Signages, Traffic Railings and other Traffic Equipment 

Installed Along Major Thoroughfares, Avenues, Roads and Streets in 

their Areas of Jurisdiction

502 






Chairman 


















President 


óo0oó 


Requiring the Local Government Units of Metro Manila to Remit to 

MMDA the Amount required for the Collection of Garbage along 

Major Thoroughfares Located in their Areas of Jurisdiction 





Chairman


(SGD.) VERGEL A. AGUILAR (SGD.) ROSENDO T. CAPCO 

Mayor, City of Las PiÒas Mayor, Pateros 






Mayor, Navotas Mayor Pasay City 


Acting Mayor, City of Malabon President 




President 


óo0oó 


Approving and Adopting the Meralco Standards on Streetlighting for 

Application by the Metropolitan Manila Development Authority and Local 

Government Units of Metro Manila 

WHEREAS, in 1996, the Manila Electric Company (MERALCO) and the Department of 

Public Works and Highways (DPWH) formulated the Standards Engineering Specification 

on Streetlighting Facilities and Appurtenances; 

WHEREAS, said Standards have been strictly followed by contractors through the 

DPWH-Bureau of Design; 

WHEREAS, said Standards were designed to achieve the following objectives: (1) help 

minimize road accidents; (2) promote peace and order; (3) stimulate economic activities; (4) 

attract tourist and foreign investors; and (5) support the various projects of the government; 

WHEREAS, said Standards conform with the requirements of the Philippine Electrical 

Code; 

WHEREAS, the MERALCO Standards ensure adequate and efficient lighting, safety 

conformity and savings in maintenance over long-terms; 

WHEREAS, the Metro Manila Council (Council) in session duly assembled, have been 

fully convinced that said Standards are necessary to ensure peace and order, spur economic 

development and support government infrastructure programs which are essential components 

in building a strong republic in the premiere region.

504 


NOW, THRERORE, be it resolved as it is hereby resolved, pursuant to Section 6 of 

Republic Act No. 7924, that the Council hereby approves and adopts the MERALCO Standards 

on Streetlighting for application by the MMDA and Local Government Units (LGUs) of Metro 

Manila. 

This resolution shall take effect upon approval. 



Chairman 




Mayor, Quezon City Mayor , Pateros 











(SGD.)MARK ALLAN JAY G. YAMBAO (SGD.) JESUS C. CRUZ 





President 


óo0oó 


Urging the Local Government Units of Metro Manila to Require All 

Garbage Contractors in their Territorial Jurisdiction to Equip their 

Garbage Trucks with Eight Inches Diameter Brass Bells 






Chairman 




Mayor, Quezon City Mayor , Pateros 











(SGD.)MARK ALLAN JAY G. YAMBAO (SGD.) JESUS C. CRUZ 





President 


óo0oó 


Urging the Local Government Units of Metro Manila to Enact 

An Ordinance Regulating the Installation and Display of 

Billboards and Advertising Signs Along Major and Secondary 

Thoroughfares, Streets, Roads, Avenues, Parks and Open Spaces 

in their Areas of Jurisdiction 




506 



Chairman 


















President 


óo0oó 



Creating Animal Control and Protection Unit and Dog Pound in their 

Areas of Jurisdiction 





Chairman 




Mayor, Quezon City Mayor, Pateros















President 


óo0oó 

MMDA Regulation No. 03-001, s. 2003 

Providing for the Disposition of Unretrieved and 

Abandoned Vehicles, Further Amending MMC Ordinance No. 78-03, 

Entitled ìAuthorizing Traffic Law Enforcement Agencies to Tow and 

Impound Stalled Motor Vehicles and/or Attachments Thereof in 

Any Public Road, Street or Thoroughfare Within Metropolitan Manila 

and Providing Penalties Thereforî As Amended 

WHEREAS, MMC Ordinance No. 78-03 as amended, provides that impounded vehicles, 

not redeemed by the operator or owner within a period of six (6) months from date of 

apprehension shall be sold at public auction; 

WHEREAS, the limited areas currently maintained by the MMDA for impounding purposes 

can hardly accommodate the volume of vehicles towed daily by the MMDA accredited towing 

companies from the streets and thoroughfares within Metro Manila, and that the maintenance 

and custody of these impounded and abandoned vehicles have been causing unnecessary 

expenses to the MMDA; 

WHEREAS, in order to properly dispose of the said impounded and abandoned vehicles 

within a shorter period of time to accommodate more vehicles, and likewise, recover the 

expenses incurred in the maintenance and custody of the same, there is a need to further 

amend MMC Ordinance No. 78-03. 

Section 1. Section 4 of MMC Ordinance No. 78-03 as amended by MMA Ordinance 

No. 3 Series of 1992, the period from which an impounded vehicle can be sold at public 

auction, is hereby amended to read as follows:

508 


ìThe fines and towing fees shall be paid within three (3) days from the date the 

vehicle was towed and impounded. Provided, however, that if the operator or 

owner of the vehicle fails to pay the fines and/or towing fees within the said 

period, an impounding fee of P80.00/day shall be imposed. Provided further, that 

if the vehicle is not redeemed by the operator or owner within a period of 

one (1) month from date of apprehension, the same shall be sold at public 

auction on the first Monday of the succeeding month. The proceeds of which 

shall be applied to the accumulated charges (fine, towing and impounding fees) 

and the excess, if any, shall be returned to the operator or owner.î 

Sec. 1-a Auction of abandoned vehicles shall be held every first Monday of the month. 

Sec. 1-b Auctioned vehicles must be paid by the winning bidder within one week from 

the date of auction. Said vehicles must be pulled out/retrieved within the same week, otherwise 

it will be considered as an abandoned vehicle and shall again be included in the next auction. 

SECTION 2. Effectivity Clause ñ This Regulation shall take effect fifteen (15) days 

after publication in two (2) newspapers of general circulation in Metropolitan Manila. 



Chairman 

MINES AND GEOSCIENCES BUREAU 


IN RE: STOPPAGE OF THE DIWALWAL MINING OPERATIONS 

O R D E R 

WHEREAS, Executive Order No. 192 mandates that the Department of Environment 

and Natural Resources (DENR) shall be the primary government agency responsible for the 

conservation, management, development and proper use of the countryís environment and 

natural resources, as well as the licensing and regulation of all natural resources as may be 

provided for by law in order to ensure equitable sharing of the benefits derived therefrom for 

the welfare of the present and future generations of the Filipinos; 

WHEREAS, Section 4 of Republic Act (R.A.) No. 7942, otherwise known as the 

Philippine Mining Act of 1995, provides that mineral resources are owned by the State and 

that the exploration, development, utilization and processing thereof shall be under its full 

control and supervision; 

WHEREAS, Section 8 of R.A. No. 7942 also provides that the DENR shall be the 

primary agency responsible for the conservation, management, development and proper


use of the Stateís mineral resources including those in reservations, watershed areas and 

lands of the public domain; 

WHEREAS, the authority over small-scale mining and enforcement of certain environment 

laws by the Provincial Government concerned are subject to the supervision, control 

and review of the DENR Secretary pursuant to the pertinent provisions of Republic Act No. 

7160 or the Local Government Code of 1991; 

WHEREAS, the DENR Secretary, as Chairman of the Pollution Adjudication Board, 

may issue cease and desist orders in cases of extreme urgency involving national interests; 

WHEREAS, the Diwalwal gold-rush area in Mt. Diwata, Monkayo, Compostela Valley 

Province has been the site of unpermitted subsistence small-scale mining operations to 

labor-intensive medium-scale mining operations since 1983, involving thousands of miners, 

local entrepreneurs and service providers; 

WHEREAS, comprehensive studies on the extent of pollution and siltation resulting 

from the Diwalwal mining operations undertaken by the DENR, the United Nations Industrial 

and Development Organization (UNIDO), and other entities have confirmed the elevated 

levels of mercury and serious siltation incidents in the area, indicating an emergency situation 

that needs immediate intervention by Government; 

WHEREAS, the above situation has been aggravated by peace and order problems, 

notably the recent killing of a judge in Compostela Valley, the alleged burning of tires and 

toxic chemicals in the underground working areas causing the suffocation of forty-four (44) 

miners and one (1) fatality; blockade of the Bincungan Bridge in Davao del Norte and 

Tagmanok Bridge in Compostela Valley; and fatal ambuscades, which now call for immediate 

positive action by Government; 

NOW, WHEREFORE, the foregoing premises considered, all concerned offices/units 

of the DENR, in coordination with the Department of the Interior and Local Government, 

including the Philippine National Police, Department of National Defense, including the Armed 

Forces of the Philippines, Department of Social Welfare and Development, and the Regional 

Development Council and Regional Peace and Order Council Region XI, are hereby ordered 

to undertake the following emergency measures; 

1. Stoppage of mining and mineral processing operations in the Diwalwal mining areas; 

2. Prevention of the transport of minerals and/or mineral products from the Diwalwal mining 

areas without Ore Transport Permits; 

3. Prevention of the transport, storage and/or use of explosives and explosiveís accessories, 

and chemical substances covered by Sections 13.a to 13.d of Republic Act No. 6969 and 

its implementing rules and regulations; and 

4. Creation and deployment of a technical working group to undertake a technical assessment 

of the situation and formulate a mine management plan for the sustainable of mineral 

resources in the area. 

SO ORDERED.

510 


Adopted: 12 August 2002 



(SGD.) HEHERSON T. ALVAREZ 

Secretary 

óo0oó 

DENR Administrative Order No. 2000-98 

Mine Safety and Health Standards 





(SGD.) ANTONIO H. CERILLES 

Secretary 

Recommended for Approval by: 

(SGD.) HORACIO C. RAMOS 

Director, Mines and Geosciences Bureau 

óo0oó 

MGB Memorandum Circular No. 2000-38 

Guidelines in the Denial of Mining Applications Pursuant to 

DENR Memorandum Order Nos. 99-10 and 2000-03 






óo0oó 

MGB Memorandum 

Clarification on Section 12 of DAO No. 99-57 

re: Maximum Areas for Large-Scale Quarry Operations


Adopted: 28 Feb. 2000 






óo0oó 

Resolution 

Re: Roving Regional Panel of Arbitrators 

Whereas, with the enactment of the Philippine Mining Act of 1995, (R.A. No. 7942) and 

its Implementing Rules and Regulations (DAO No. 96-40), mining cases have grown into 

great height. 

Whereas, the Panel of Arbitrators that were formed in the fourteen (14) Regions were 

either undermanned or clogged with numerous cases and these Panels could not act expeditiously 

on these cases. 

Whereas, under Sections 202 and 207 of DAO No. 96-40, the rules and regulations 

governing the litigation and disposition of cases before the Panel of Arbitrators shall be 

promulgated by the Mines Adjudication Board. 

Whereas, on the 22 nd day of May 1997, the Mines Adjudication Board (MAB) promulgated 

a Resolution on Rules on Pleading, Practice and Procedure of the Panel of Arbitrators 

and the Mines Adjudication Board. 

Whereas, Section 3, paragraph 3 of the said rules, states that ìIn the absence or inoperation 

of a Panel in a Region, the Panel in the region nearest to the area of conflict shall 

acquire jurisdiction over the case.î 

Whereas, almost all of these Panels are clogged with numerous cases such that the 

nearest Panel in the Region supposed to assume jurisdiction over a case filed in a Panel 

which has jurisdiction but is unable to hear and decide either due to legal or technical 

obstacles, cannot also hear these cases. 

Whereas, it is imperative that a Roving Regional Panel of Arbitrators be created to hear 

and decide cases which affects national interest, and in cases which cannot be heard by the 

Original Panel because of legal obstacle such as being the subject of injunction, motion for 

inhibition, conflict of interest or members have voluntarily inhibited themselves. 

Whereas, it is hereby resolved as it is resolved that a Roving Regional Panel of Arbitrators 

be created and shall assume cases that may be referred to it or assigned to them by the 

MAB.

512 





Chairman 

(SGD.) PEDRO C. CALEON 


Members 

óo0oó 

RESOLUTION 

Rules on Pleading, Practice and Procedure Before 

the Panel of Arbitrators and Mines Adjudication Board 

Whereas, with the passage of the Philippine Mining Act of 1995 (R.A. 7942) and its 

Implementing Rules and Regulations (IRR), the influx of mining cases/conflict have grown 

into a great proportion: 

Whereas, the Panel of Arbitrators and the Members of the Mines Adjudication Board 

found it rather difficult to address technical matters which call for a basis of its rulings in the 

absence of a procedural rules in the hearings, submission of pleadings, documents and 

evidences; 

Whereas, the Mines Adjudication Board, in order to address the problem prepared the 

final draft of the Rules on Pleading, Practice and Procedure before the Panel of Arbitrators 

and the Mines Adjudication Board; 

Be it Resolved, therefore, as it is hereby resolved by the Mines Adjudication Board, 

after its due deliberation, that the Rules on Pleading, Practice and Procedure before the 

Panel of Arbitrators and the Mines Adjudication Board be approved. 

Resolved, further, that a signed copy of the said Rules on Pleading, Practice and 

Procedure before the Panel of Arbitrators and the Mines Adjudication Board be published 

once a week for two consecutive weeks in a newspaper of general circulation. 


(SGD.) VICTOR O. RAMOS 

Chairman 

(SGD.) VIRGILIO Q. MARCELO 


Members 

Attested: 

(SGD.) ADORACION M. MENDOZA 

Chief-MAB- Secretariat


RULES ON PLEADING, PRACTICE AND PROCEDURE 

Before the PANEL OF ARBITRATORS and the 

MINES ADJUDICATION BOARD 

The Mines Adjudication Board, pursuant to its powers and functions under Section 79 

of Republic Act No. 7942, otherwise known as the Philippine Mining Act of 1995 (the ìActî) 

and Sections 202 and 207 of Department Administrative Order No. 96-40: the Revised Implementing 

Rules and Regulations of the Act (the ìIRRî), RESOLVES to promulgate and adopt 

the following Rules on Pleading, Practice and Procedure in the adjudication of mining cases. 

RULE I 

TITLE AND CONSTRUCTION 

Section 1. Title of the Rules. These rules shall be known as the Rules on Pleading, 

Practice and Procedure before the Panel of Arbitrators and the Mines Adjudication Board. 

Section 2. Applicability of the Rules. These Rules shall apply to all mining cases as 

delineated under Section 77 of the Act and Section 202 of the IRR. 

Section 3. Construction of the Rules. These Rules shall be liberally construed in 

order to promote the public interest and to assist the parties in obtaining just, speedy and 

inexpensive disposition of mining cases. 

Section 4. Nature of the Proceedings. Subject to the basic requirements of due 

process, processingís before the Panel of Arbitrators and the Mines Adjudication Board shall 

be summary in nature. The technical rules on evidence obtaining in courts of law shall not be 

binding upon the same. In the absence of any applicable provision in these Rules and in 

order to effectuate the objectives of the Mining Act, the pertinent provisions of the Rules of 

Court may, in the interest of expeditious justice and only whenever practical and convenient, 

be applied by analogy or in a suppletory manner. Representation of a party in mining cases 

by legal counsel shall be optional. 

RULE II 

DEFINITION OF TERMS 

Section 1. Definition of Terms. As used in these Rules: 

a) ìBoard ì refers to the Mines Adjudication Board created pursuant to Section 79 of the Act 

and Section 207 of the IRR; 

b) ìBureauî refers to the Mines and Geosciences Bureau ; 

c) ìDepartmentî or ìDENRî refers to the Department of Environment and Natural Resources; 

d) ìDirectorî refers to the Director of the Bureau; 

e) ìPanelî refers to any of the regional Panels of Arbitrators created pursuant to Section 77 

of the Act and Section 201 of the IRR; 

f) ìSecretariatî means the administrative support staff of the Board created pursuant to 

Section 208 of the IRR, and 

g) ìSecretaryî refers to the Secretary of the Department.



The other terms and phrases defined in Section 3 of the Act and Section 5 of the IRR 

shall be given the same meanings when used herein, unless the context or intent clearly 

indicates otherwise. 

RULE III 

PROCEEDINGS BEFORE THE PANEL 

Section 1. Composition. There shall be a Panel of Arbitrators in the Legal Staff of the 

Regional Office of the MGB composed of three (3) members, two (2) of whom must be 

members of the Philippine Bar in good standing and one (1) licensed Mining Engineer, 

Geologist or a professional in related fields, all duly designated by the Secretary as recommended 

by the Director. Those designated as members of the Panel shall serve as such in 

addition to their work in the Department without additional compensation. The Regional Office 

shall provide administrative support and structure to the Panel. 

As far as practicable, the members of the Panel shall come from the different bureaus 

of the Department in the region the presiding officer thereof shall be selected by the drawing 

of lots. His/her tenure as presiding officer shall be on a yearly basis. The members of the 

Panel shall perform their duties and obligations in hearing and deciding cases until their 

designation is withdrawn or revoked by the Secretary. 

Section 2. Jurisdiction. The Panel of Arbitrators shall have exclusive and original 

jurisdiction to hear and decide on the following: 

a) Disputes involving rights to mining areas ; 

b) Disputes involving mining permits, mineral agreements, financial or technical assistance 

agreement. 

c) Disputes involving surface owners, occupants, and claimholders/ concessionaires; and 

d) Disputes pending before the Regional Office and the Department at the date of the effectivity 

of the Act: Provided, That appealed cases before the Department shall be under the 

jurisdiction of the Board. 

The litigation and disposition of cases before the Panel shall be governed by these 

Rules; Provided, that cases pending before the different Panels at the date of effectivity of 

these Rules may proceed in accordance with the rules individually promulgated thereby; 

Provided, further, that these Rules shall govern subsequent appeals from such cases, if any. 

Section 3. Venue. All cases which the Panel has authority to hear and decide may be 

filed in the Regional Office of the Bureau having jurisdiction over the area subject of the 

case. 

Where two or more regional Panels have administrative jurisdiction over the area subject 

of a mining dispute, the Panel of the Regional Office where the disputed agreement or 

permit was filed, processed and/or issued shall acquire jurisdiction over the case to the 

exclusion of all others. 

When improper venue is not objected to before or at the time of the filing of appropriate 

pleadings, such question shall be deemed waived. In the absence or in-operation of a Panel 

in a Region, the Panel in the region nearest to the area of conflict shall acquire jurisdiction 

over a case.


Section 4. Quorum and Vote. The presence of a majority of the Panel members shall 

be necessary to constitute a quorum to deliberate on and decide any matter before it. The 

vote or concurrence of majority of the Panel members shall be required for the adoption of a 

decision or resolution by the Board. 

Section 5. Parties. Any person who has an interest in the subject of the action may be 

a party to a case or proceeding before the Panel. Depending on the nature of the action, the 

party initiating the same shall be called the Complainant, Petitioner, Oppositor or Protestant, 

while the party against whom the action is commenced shall be called the Respondent or 

Protestee. 

The full names of all the real parties in interest, whether natural or juridical persons or 

entities authorized by law, shall be stated in the caption of the complaint or petition as well as 

in the decisions, awards or judgments. 

A party having more than one cause of action against the other party, arising out of the 

same relationship, shall join all of them in one complaint or petition. 

Section 6. When Action is Deemed Commenced. An action is deemed commenced 

upon the filing of an adverse claim, protest or opposition. 

a) directly with the Panel; 

b) with the concerned Regional Office for endorsement and transmittal to the appropriate 

Panel; or 

c) with any concerned Provincial Environment and Natural Resources Office (PENRO) or 

Community Environment and Natural Resources Office (CENRO) of the Department for 

referral to the concerned Regional Office for the endorsement and transmittal to the 

appropriate Panel. 

Section 7. Form and Contents of Adverse Claim, Protest or Opposition. No adverse 

claim, petition, protest or opposition involving mining rights shall be accepted for filing 

unless verified and accompanied by the prescribed docket fee and proof of service to the 

respondent(s), either personally or by registered mail, Provided, That the requirement for 

the payment of docket fees shall not be imposed on pauper litigants. 

Likewise, no adverse claim, protest or opposition shall be entertained unless it contains 

a detailed statement in clear and concise language, whether in Filipino or English, of the 

ultimate facts relied upon, the grounds therefor, and an exhaustive discussion of the issues 

and arguments raised and the remedy or relief sought together with all supporting plans, 

documents, data and other documentary evidence and affidavits of all witnesses. 

Section 8. Docket Number and Calendar of Cases. All cases filed before the Panel 

shall be numbered and docketed consecutively and entered into an appropriate docket book 

in accordance with a system of numbering and docketing of cases adopted by the Panel or 

Regional Office. 

Section 9. Disposition of Cases. As far as practicable, the members of the Panel 

shall have equivalent case loads as assigned to the Presiding Officer. When a case is 

assigned to the Presiding Officer or either of the members, the entire case and any or all 

incidents thereto shall be considered assigned to him.

516 


Section 10. Issuance of Summons. Immediately after receipt of an adverse claim, 

petition, protest or opposition, the Panel shall issue the required notification and summons, 

attaching thereto a copy of the adverse claim, protest or opposition. 

Section 11. Filing and Service of Pleadings. All pleadings in connection with the 

case shall be filed with the appropriate docketing unit of the Panel. Copies of subsequent 

pleadings shall be furnished by the party filing the same to the opposing party or parties in a 

manner provided for in these Rules with proof of service thereof. 

Section 12. Service of Notices and Resolutions. Notices or summons and copies of 

orders, resolutions or decisions shall be served on the parties to the case personally by the 

bailiff or duly authorized public officer within three (3) days from receipt thereof or by 

registered mail; provided, that where a party is represented by counsel or authorized representative, 

service shall be made on such counsel or authorized representative. The bailiff 

serving the notice, order, resolution or decision shall submit his return within two (2) days 

from date of service thereof, stating legibly in his return his name, the names of the persons 

served and the date of receipt, which return shall immediately be attached and shall form part 

of the records of the case. If no service was effected, the serving officer shall state the 

reason therefor in the return. 

The return is prima facie proof of the facts indicated therein. Service by registered mail 

is complete upon receipt by the addressee or his agent; but if the addressee fails to claim his 

mail from the post office within five (5) days from the date of first notice of the postmaster, 

service shall take after such time. 

For purposes of computing the period of appeal, the same shall be counted from 

receipt of such decision, award or order by the counsel of record. 

Section 13. Appearances Authority to Bind Party. An attorney appearing for a 

party is presumed to be properly authorized for that purpose. Appearance may be made 

orally or in writing. In both cases, the complete name and office address of both parties shall 

be made of record. The Panel shall be formally notified in writing of any change in the 

address of counsel or representative. 

Attorneys and other representatives of parties shall have authority to bind their clients 

in all matters of procedure but they cannot, without a special power of attorney, enter into a 

compromise agreement with the opposing party in full or partial discharge of a partyís claim. 

Section 14. Consolidation of Cases. When there are two or more cases pending 

before different Panels from different regions involving the same parties, the subsequent 

case or cases shall, as far as practicable, be consolidated with the first to avoid unnecessary 

costs or delay. Such consolidated cases shall be disposed of by the Panel to whom the first 

case was assigned. In case of objection to the consolidation, the same shall be summarily 

resolved by the Presiding Officer of said Panel. 

Section 15. Mandatory Conference/Conciliation. Within seven (7) days from receipt 

of a case, the Panel shall summon the parties to a conference for the purpose of 

amicably settling the case upon a fair compromise or determining the real parties in interest, 

defining and simplifying the issues in the case, entering into admission and/or stipulations of


facts and threshing out all other preliminary matters. The notice or summons shall specify the 

date, time and place of the preliminary conference/pre-trial and shall be accompanied by a 

copy of the complaint. 

Should the parties arrive at any agreement as to the whole or any part of the dispute, 

the same shall be reduced to writing and signed by the parties and their respective counsels, 

if any, before the Panel. The settlement shall be approved by the Panel after being satisfied 

that it was voluntarily entered into by the parties and after having explained to them the terms 

and consequences thereof. 

A compromise agreement entered into by the parties not in the presence of the Panel 

before which the case is pending shall be approved by it if, after confronting the parties, 

particularly the complainants, it is satisfied that they understand the terms and conditions of 

the settlement and that the same was entered into freely and voluntarily by them and is not 

contrary to law, morals and public policy. 

A compromise agreement duly entered into in accordance with this Section shall be 

final and binding upon the parties, and the Order approving it shall have the effect of a 

judgment rendered by the Panel in the final disposition of the case. 

The number of conferences shall not exceed three (3) settings and shall be terminated 

within thirty days from the date of the first conference. 

Section 16. Submission of Position Papers/Memoranda. Should the parties fail to 

agree upon an amicable settlement, either in whole or in part during the conferences, the 

Panel shall issue an order stating therein the matters taken up and agreed upon during the 

conferences and directing the parties to simultaneously file their respective verified position 

papers. 

These verified position papers shall cover only those claims and causes of action 

raised in the complaint excluding those that may have been amicably settled, and shall be 

accompanied by all supporting documents including the affidavits of their respective witnesses 

which shall take the place of the latterís direct testimony. The parties shall thereafter 

not be allowed to allege facts or present evidence to prove facts, not referred to any cause or 

causes of action not included in the complaint or position papers, affidavits and other documents. 

Unless otherwise requested in writing by both parties, the Panel shall direct them to 

submit simultaneously the position papers/memoranda with the supporting documents and 

affidavits within fifteen (15) calendar days from the date of the last conference, with proof of 

having furnished each other copies thereof. 

Section 17. Determination of Necessity of Hearing. Immediately after the submission 

by the parties of their position papers or memoranda as provided in the immediately 

preceding section, the Panel shall, motu proprio, determine whether there is a need for a 

formal trial or hearing. At this stage, it may, at its discretion and for the purpose of making 

such determination ask classificatory questions to further elicit facts or information including 

but not limited to the subpoena of relevant documentary evidence, if any, from any party or 

witness. 

Section 18. Period to Decide Case.

518 


a) Should the Panel find it necessary to conduct a hearing, it shall issue an order to that 

effect setting the date or dates for the same which shall be terminated within ninety (90) 

days from initial hearing, at which time the parties shall be given ten (10) days to submit 

their respective Draft Decisions to the Panel. The Panel shall render its decision within 

thirty (30) working days, without extension, after receipt of the Draft Decisions and submission 

of the case by the parties for decision even in the absence of stenographic notes. 

b) If the Panel finds no necessity of further hearing after the parties have submitted their 

position papers and supporting documents, it shall issue an Order to that effect informing 

the parties, stating the reasons therefor, and requiring them to file their respective Draft 

Decisions within ten (10) days from receipt of such Order. The Panel shall render its 

decision in the case within the same period provided in paragraph (a) hereof. 

Section 19. Conciliation. In all cases and at any stage of the proceedings, the Panel 

shall exert all efforts and take positive steps toward resolving the dispute through conciliation. 

Section 21. Conduct of Proceedings. The Panel shall collegially conduct the conferences/hearing. 

The Presiding Officer shall determine the order of presentation of evidence 

by the parties, subject to the requirements of due process and reasonableness. He shall 

take full control of the proceedings, examine the parties and their witnesses to satisfy the 

Panel with respect to the matters at issue and may allow the parties or their counsel to ask 

question only for the purpose of clarifying points of law or fact involved in the case. He shall 

limit the presentation of evidence to matters relevant to the issues before him which are 

necessary for a just and speedy disposition of the case. Notwithstanding the foregoing, the 

Party initiating the case shall be the first to present his evidence to support his case. In the 

cross-examination of witnesses, only relevant, pertinent and material questions necessary to 

enlighten the Panel shall be allowed. 

Section 22. Non-Appearance of Parties at Conference/Hearings. Two (2) successive 

absences at a conference or hearing by the complainant, petitioner, protestant or oppositor 

who was duly notified thereof may be sufficient cause to dismiss the case without prejudice. 

Where proper justification is shown, however, by proper motion to warrant the reopening of 

the case, the Panel shall call a second hearing and continue the proceedings until the case 

is finally decided. Dismissal of the case for the second time due to the unjustified nonappearance 

of the complainant who was duly notified thereof shall be with prejudice. 

In case of two (2) successive non-appearances by the respondent despite due notice, 

the complainant shall be allowed to present evidence ex-parte, subject to cross-examination 

by the respondent, where proper, at the next hearing. Upon completion of such presentation 

of evidence for the complainant, another notice of hearing for the receipt of the respondentís 

evidence shall be issued with a warning that failure of the respondent to appear shall be 

construed as submission by him of the case for resolution without presenting his evidence. 

In case two (2) successive unjustified non-appearances by the respondent during his 

turn to present evidence, despite due notice, the case shall be considered submitted for 

decision on the basis of the evidence presented thus far. 

Section 23. Revival/Reopening of Dismissed Case. A party may file with the Panel a 

petition to revive or reopen a case dismissed without prejudice within ten (10) calendar days


from receipt of notice of the order dismissing the same; otherwise his only remedy shall be to 

re-file the case. 

Section 24. Postponement or Continuances of Hearing. The parties and their counsels 

or representatives appearing before a Panel shall be prepared for continuous hearings. 

Postponements or continuances of hearing shall be allowed only upon meritorious grounds 

and subject always to the requirement of expeditious disposition of cases and the termination 

of hearings within ninety (90) days from the initial hearing. In the event of such postponements 

or continuances, the Panel shall set two or more dates for hearings in advance. 

Section 25. Records of Proceedings. The proceedings before the Panel need not be 

recorded by stenographers. The Panel may make a written summary of the proceedings 

including the substance of the evidence presented, in consultation with the parties. The 

written summary shall be signed by the parties and shall form part of the records. 

Section 26. Motion to Dismiss; Other Motions. On or before the date set for the 

conference, the respondent may file a motion to dismiss. Any motion to dismiss on the 

ground of lack of jurisdiction, improper venue or that the cause of action is barred by prior 

judgment or by prescription shall be summarily resolved by the Panel by a written order 

within ten (10) days from receipt of the same. An order denying the motion to dismiss or 

suspending its resolution until the final determination of the case is not appealable. 

Oppositions to a motion of one party may not be filed by the adverse party beyond five 

(5) days from receipt of the same. All other motions shall likewise be summarily resolved by 

the Panel by a written order within ten (10) days from receipt of the same. 

Section 27. Contents of Decision. The decision of the Panel shall be clear and 

concise and shall include a brief statement of the facts of the case, the issues involved, the 

applicable law or rules, conclusions and the reasons therefor, and the specific remedy or 

relief granted. 

In case involving monetary awards the decisions or orders of the Panel must contain 

the amount rewarded. 

Section 28. Motions for Reconsideration. The filing of a motion for reconsideration 

of any order or decision of the Panel shall be allowed only once within fifteen (15) days from 

receipt of such order or decision. 

The implementation of any order issued by the Panel other than a final order, decision 

or resolution which disposes of the main case, shall not be stayed by the filing of a motion for 

reconsideration by the party aggrieved thereby. 

The filing of such motion for reconsideration of a final order, decision or resolution 

shall interrupt the running of the period within which to file an appeal. In the event of denial of 

the same, the aggrieved party may file an appeal within the remainder of the original fifteen 

(15)-day period. 

RULE IV 

APPEAL

520 


Section 1. Period of Appeal. The decision of the Panel of Arbitrators shall become 

final and executory after the lapse of fifteen (15) days from receipt of the notice of decision 

by the aggrieved party, unless the latter appeals to the Board within the same period. Where 

an appeal is filed, the concerned Panel shall transmit the notice thereof together with the 

records of the case within five (5) days from notice of such filing to the Board. 

Upon the finality of the decision of the Panel, no appeal having been taken therefrom, 

the Presiding Officer of the Panel of Arbitrators shall issue a writ of execution directing the 

Sheriff of the Regional Trial Courts, with jurisdiction over the area, to implement and execute 

the writ 

Section 2. Grounds. The appeal may be entertained only on any of the following 

grounds: 

a) If there is prima facie evidence of abuse of discretion on the part of the Panel: 

b) If the Decision, Order or Award was secured through fraud, coercion including graft and 

corruption, and the appellant has the necessary evidence to support such allegation; 

c) If made purely on questions of law; and 

d) If serious errors in the finding of facts are raised which, if not corrected, would cause 

grave or irreparable damage or injury to the appellant. 

Section 3. Requisites for Perfection of Appeal. The appeal shall be filed within the 

reglementary period as provided in Section 1 of this Rule with the Executive Officer of the 

Secretariat at the Central Office of the MGB, copy furnished the concerned Panel and 

opposing party/ies. It shall be under oath stating the date when appellant received the 

decision or order appealed from with proof of payment of the required appeal fee, proof of 

service on the party and, where applicable, the posting of a cash or surety bond as provided 

in Section 5 of this Rule. It shall be accompanied by a memorandum of appeal which shall 

state the grounds relied upon, the arguments in support thereof and the relief prayed for. 

A mere notice of appeal without complying with the aforestated requisites shall not stop 

the running of the period for perfecting the appeal. 

The appellee may file with the Board, copy furnished the concerned Panel, his/her 

answer or reply to appellantís Memorandum not later than ten (10) calendar days from 

receipt thereof. Failure on the part of the appellee who was properly furnished with a copy of 

the appeal to file his answer or reply within the said period may be construed as a waiver on 

his part to file the same. 

Once the appeal is perfected in accordance with these Rules, the Board may limit itself 

to reviewing and deciding specific issues that were elevated on appeal. For this purpose, the 

Board may require the parties to submit such pleadings and memoranda as may be deemed 

necessary. 

Section 4. Appeal Fee. The appellant shall pay an appeal fee at the Central Office of 

the MGB and the official receipt of such payment shall be attached to the records of the 

case. 

Section 5. Bond. In case the decision of the Panel involves a monetary award, an 

appeal by the aggrieved party shall be perfected only upon the posting of a cash or surety


bond issued by a reputable bonding company duly accredited by the Board or the Supreme 

Court in an amount equivalent to the monetary award. 

The Board may, in meritorious cases and upon motion of the appellant, reduce the 

amount of the bond. Nothing herein, however, shall be construed as extending the period of 

appeal. 

Section 6. No Extension of Period. No motion or request for extension of the period 

within which to perfect an appeal shall be allowed. 

Section 7. Immediate Transmittal of Records. Within five (5) days after the filing of 

the reply or opposition of the appellee, or after the expiration of the period to file the same, 

the entire records of the case shall be transmitted by the Presiding Officer of the concerned 

Panel to the Secretariat. 

Records of the case shall contain, among others, a complete narration of what transpired 

before the Panel in the form of minutes including all original pleadings, notices, 

transcript of stenographic notes, if any, proof of service of the decision, order or award and 

other document which shall be chronologically arranged and appropriately paged. 

Section 8. Frivolous or Dilatory Appeals. To discourage, frivolous or dilatory appeals, 

the Board may impose a reasonable penalty including fine or censure upon the erring 

parties, in cases where it is reasonably apparent from the circumstances that a party is 

committing the prescribed mischief. 

RULE V 

PROCEEDINGS BEFORE THE BOARD 

Section 1. Composition. The Board shall be composed of three (3) members. The 

Secretary shall be the Chairman with the Director and the DENR Undersecretary for Field 

Operations as members thereof. 

The Chairman shall preside over all sessions of the Board. In case of the effective 

absence or incapacity of the Chairman, the Director shall be the Acting Chairman. 

The Chairman, aided by the Executive Officer of the Secretariat, shall have administrative 

supervision over the Board and the various regional Panels. 

Section 2. Jurisdiction, Powers and Functions. The Board shall have exclusive 

appellate jurisdiction over all cases decided by the Panel. It shall have the following powers 

and functions: 

a) To promulgate rules and regulations governing the hearing and disposition of cases before 

the Panel and the Board, as well as those pertaining to the Boardís internal functions, 

and such rules and regulations as may be necessary to carry out its functions ; 

b) To administer oaths, summon the parties to a controversy, issue subpoenas requiring the 

attendance and testimony of witnesses or the production of such books, papers, contracts, 

records, statements of account, agreements and other documents as may be 

material to a just determination of the matter under investigation and to testify in any 

investigation or hearing conducted ;

522 


c) To conduct hearing on all matters within its jurisdiction, proceed to hear and determine the 

disputes in the absence of any party thereto who has been summoned or served with 

notice to appear, conduct its proceedings or any part thereof in public or in private, 

adjourn its hearing at any time and place, refer technical matters or accounts to an expert 

and to accept his/her report as evidence after hearing of the parties upon due notice, 

direct parties to be joined in or excluded from the proceedings, correct, amend or waive 

any error, defect or irregularity, whether in substance or in form, give all such directions 

as it may deem necessary or expedient in the determination of the dispute before it and 

dismiss the mining dispute as part thereof, where it is trivial or where further proceedings 

by the Board are not necessary or desirable; 

d) To hold any person in contempt, directly or indirectly, and impose appropriate penalties 

therefor; and 

e) To enjoin any or all acts involving or arising from any case pending before it which, if not 

restrained forthwith, may cause grave or irreparable damage to any of the parties to the 

case or seriously affect social and economic stability. 

Section 3. Venue. The hearing or deliberation of cases by the Board shall be held at 

the main office of the Department or in such other place as may be fixed by the Board. 

Section 4. Quorum and Vote. The presence of a majority of the members of the 

Board shall be necessary to constitute a quorum to deliberate on and decide any matter 

before it. The vote or concurrence of the majority of the members of the Board shall be 

required for the adoption of a decision or resolution by the Board. 

To ensure a quorum in meetings of the Board, the Secretary may designate officials of 

the Department who shall take the place of members of the Board during their absence. 

Such designated officials shall have the same power and authority as the regular members 

during their period of designation. 

Section 5. Inhibition. Any member of the Board may inhibit himself from the consideration 

and resolution of any case or matter before the Board and shall so state in writing the 

legal or justifiable grounds therefor. 

Section 6. Consolidation of Cases. Appealed cases involving the same parties, issues 

or related questions of facts or of law shall be consolidated. Notice of the consolidation 

shall be given by the Executive Officer to all the parties concerned. 

Section 7. Technical Rules Not Binding. The rules of procedure and evidence prevailing 

in courts of law and equity shall not be controlling and it is the spirit and intention of 

these Rules that the Board shall use every and all reasonable means to ascertain the facts in 

each case speedily and objectively and without regard to technicalities of law or procedure, 

all in the interest of due process. 

Section 8. Period to Resolve Appeal. Upon the filing of the last pleading or memorandum 

required, the Board shall issue an order instructing the parties to submit their respective 

draft decisions within thirty (30) calendar days from receipt of such order. Upon receipt by 

the Board of such draft decisions, the case shall be deemed submitted for resolution by the 

Board.


Section 9. Form of Decision/Resolution/Order. The Decision, Resolution or Order 

shall state clearly and distinctly the findings of facts, issues and conclusions of law on which 

it is based and the relief granted, if any. If the Decision, Resolution or Order involves a 

monetary award, the same shall contain the specific amount awarded as of the date the 

Decision, Resolution or Order is rendered. 

Section 10. Finality of Decisions of the Board. The decisions, resolutions or orders 

of the Board shall become final and executory after thirty (30) calendar days from receipt of 

the same. 

The Board, in cases involving monetary awards, shall embody in its decision or Order 

the detailed and full amount awarded. 

Section 11. Motions for Reconsideration. Motions for reconsideration of any order, 

resolution or decision of the Board shall not be entertained except when based on palpable 

or patent errors, provided that the motion is under oath and filed within ten (10) days from 

receipt of the Decision, Resolution or Order with proof of service that a copy of the same has 

been furnished the adverse party within the reglementary period and provided further, that 

only one such motion from the same party shall be entertained. 

Section 12. Effect of the Filing of a Motion for Reconsideration. Should there be a 

motion for reconsideration entertained pursuant to Section 11 of the Rule, the decision shall 

become final and executory after thirty (30) days from receipt of the resolution on such 

motions. 

Section 13. Petition for Review by Certiorari. A decision, resolution or award of the 

Board may be reviewed by filing a petition for review with the Supreme Court within thirty 

(30) days from receipt of the same. 

RULE VI 

EXECUTION 

Section 1. Issuance of Writ. Execution shall issue only upon an order, resolution or 

decision that finally disposes of the action or proceedings after the counsels of record and 

the parties have been furnished with copies of such order, decision or resolution in accordance 

with these Rules but only after the expiration of the period of appeal, if no appeal has 

been duly perfected. 

If an appeal has been perfected, execution shall issue only upon an order, resolution or 

decision that finally disposes of the action or proceedings with the Board after the counsels 

of record and the parties have been furnished with copies of such order, decision or resolution 

in accordance with these Rules. 

The Panel of origin shall, motu proprio or upon motion of any interested party, issue a 

writ of execution on a judgment within five (5) days from the date it becomes final and 

executory, so requiring the sheriff or a duly deputized officer to execute the same. No motion 

for execution shall be entertained nor a writ be issued unless the Panel is in possession of 

the records of the case which shall include an entry of judgment. 

Section 2. Execution Pending Appeal. On motion of the prevailing party with notice 

to the adverse party and the concerned Panel, the Board may, in its discretion, order execu-

524 


tion to issue even during the pendency of an appeal, upon good reasons to be stated in an 

order issued for that purpose. 

Section 3. Stay of Execution Pending Appeal. Execution issued pending appeal 

may be stayed upon approval by the Board of a sufficient supersedes bond filed by the 

appellant, conditioned upon the performance of the judgment or order appealed from in case 

it be affirmed wholly or in part. The bond thus given may be proceeded against on motion, 

with notice to the surety. 

Section 4. Designation of Special Sheriffs and Imposition of Fines. The Chairman 

of the Board may designate special sheriffs and take any measure under existing laws to 

ensure compliance with their decisions, orders or awards and those of the Panel, the imposition 

of administrative fines and penalties; the fine shall not be less than One Thousand 

Pesos (P1,000.00) for every day of non-compliance, while the penalty shall be a declaration 

of indirect contempt against the offender in accordance with the procedure under the Revised 

Rules of Court. 

RULE VII 

CONTEMPT 

Section 1. Direct Contempt. The Chairman of the Board or the Presiding Officer of 

the Panel may summarily adjudge guilty of direct contempt any person committing any act of 

misbehavior in the presence or so near the Chairman or any Panel as to obstruct or interrupt 

the proceedings before the same, including disrespect toward said officials, offensive acts 

towards others, or refusal to be sworn or to answer as a witness or to subscribe to an 

affidavit or deposition when lawfully required to do so. If the offense is committed against the 

Board or any member thereof, the same shall be punished by a fine not exceeding Five 

Thousand Pesos (P5,000.00) or imprisonment not exceeding five (5) days, or both. If the 

offense is committed against a Panel or any member thereof, the same shall be punished by 

a fine not exceeding One Thousand Pesos (P1,000.00) or imprisonment not exceeding one 

(1) day, or both. 

Any person adjudged guilty of direct contempt by a Panel may, within a period of five 

(5) calendar days from notice of judgment, appeal the same to the Board and the execution 

of the said judgement shall be suspended pending resolution of the appeal upon the filing by 

said person of a bond on condition that he will abide by and perform the judgment should the 

appeal be decided against him. A judgment of the Board on direct contempt shall be immediately 

executory and unappealable. 

Section 2. Indirect Contempt. The Board or any Panel may also cite any person for 

indirect contempt upon grounds and in the manner prescribed under the Revised Rules of 

Court. 

RULE VIII 

INJUNCTION 

Section 1. Preliminary Injunction/Restraining Order. A preliminary injunction or a 

restraining order may be granted by the Board when it is established on the basis of the 

sworn allegations in the petition supported by testimony under oath or affidavits of the petitionersí 

witnesses that the act or acts complained of involving or arising from any appealed


case before the Board which, if not restrained or performed forthwith, may cause grave or 

irreparable damage to any party or render ineffectual any decision in favor of such party. 

The foregoing ancillary power may be exercised by the Panel only as an incident to the 

cases pending before them in order to preserve the rights of the parties during the pendency 

of the cases. 

Section 2. Effectivity of a Temporary Restraining Order. A temporary restraining 

order shall be effective for no longer than twenty (20) days. During the said period, the 

parties shall be required to present evidence to substantiate their respective positions in the 

main petition. 

Section 3. Permanent Injunction. A permanent injunction may be granted by the 

Board only after hearing the testimony of witnesses and with opportunity for cross-examination 

in support of the allegations of the petition made under oath and testimony by way of 

opposition thereto, if offered, and only after a finding of fact by the Board that: 

a) prohibited or unlawful acts have been threatened and will be committed unless restrained, 

but no injunction or temporary restraining order shall be issued by reason of any threat, 

prohibited or unlawful act if the petitioner actually authorized or ratified the same after 

knowledge thereof; 

b) substantial and irreparable injury to petitionerís property will follow; 

c) acts which, if not restrained forthwith, will seriously after social and economic stability; 

d) as to each item of relief to be granted, greater injury will be inflicted upon the petitioner 

by the denial of relief than will be inflicted upon defendants by the granting of relief; 

e) petitioner has no adequate remedy at law; and/or 

f) the public officers charged with the duty to protect petitionerís property are unable or 

unwilling to furnish adequate protection; and 

Section 4. Hearing; Notice Thereof. Such hearing shall be held after due and personal 

notice thereof has been served, in such manner as the Board shall direct to all known 

persons against whom relief is sought and also to the Chief Executive and other public 

officials of the province or city within which the unlawful acts have been threatened or 

committed, and such public officials are charged with the duty to protect petitionerís property. 

Section 5. Surety Bond. No temporary restraining order or injunction shall be issued 

except on condition that complainant shall first file an undertaking with adequate security in 

an amount to be fixed by the Board, which in no case shall be less than ten thousand pesos 

to recompense those enjoined for any loss, expense or damage caused by the improvident 

or erroneous issuance of such order or injunction including all reasonable costs, together 

with a reasonable attorneyís fees, and expense of defense against the order or against the 

granting of any injunctive relief sought in the same proceeding and subsequently denied by 

the Board. 

The undertaking herein mentioned shall be understood to constitute an agreement 

entered into by the petitioner and the surety upon which an order may be rendered in the 

same suit or proceeding against said complainant and surety, upon a hearing to assess 

damages, of which hearing petitioners and surety shall have reasonable notice, the said 

petitioner and surety submitting themselves to the jurisdiction of the Board for the purpose.

526 


Section 6. Ordinary Remedy in Law or in Equity. Nothing herein contained in these 

Rules shall deprive any party having a claim or cause of action under or upon such undertaking 

from electing to pursue his ordinary remedy by suit at law or in equity. 

Section 7. Reception of Evidence Delegation. The reception of evidence for application 

of a writ of injunction may be delegated by the Board, in which case such hearing in 

such places as may be determined to be accessible to the parties and their witnesses. A 

report to the Board shall be submitted within fifteen (15) days from such delegation. 

Section 8. Ocular Inspection. The Chairman of the Board, Presiding Officer of the 

Panel or their duly authorized representatives may, at any time during working hours, conduct 

an ocular inspection on any property or establishment and ask any employee, laborer 

or person as the case may be, for any information or data concerning any matter or question 

relative to the object of the petition. 

The ocular inspection report shall be submitted to the Board or concerned Panel, as 

the case may be, within twenty-four hours from the conduct thereof. 

Section 9. Effects of Defiance. In case of non-compliance with an Order or Resolution 

of the Board enjoining the commission of illegal acts, the Board shall impose such 

sanction and/or issue such orders as may be necessary to implement the said Order or 

Resolution, including the enlistment of law enforcement agencies having jurisdiction over the 

area for the purpose of enforcing the same. 

RULE VIII 

SEAL AND RECORDS OF THE BOARD 

AND DUTIES OF THE SECRETARIAT 

Section 1. Seal of the Commission. The seal of the Board shall be a standard size, 

circular, with the inscription, running from left to right on the upper outside edge, of the 

words ìMINES ADJUDICATION BOARDî, and the lower outside edge, the words ìRepublic 

of the Philippines,î with a design at the center containing the coat of arms of the Department. 

Section 2. Secretariat. The Board shall appoint the members of the Secretariat, at 

least half of whom shall come from the MGB. The Secretariat members must posses the 

necessary legal, technical and administrative skills to assist the Board in the exercise of its 

powers and functions. The Executive Officer of the Secretariat shall be designated from 

among those staff members originating from the MGB. The Secretariat of the Board shall be 

provided with permanent and full time administrative support with sufficient funding in its 

annual budget appropriation. 

Section 3. Duties and Functions of the Secretariat. 

a) Custody of Seal and Books - It shall in its care and custody the Seal of the Board 

together with all the books necessary for the recording of the proceedings of the Board, 

including the records, files and exhibits; 

b) Filing of Pleadings - It shall receive and file all cases/pleadings and documents indicating 

thereon the date and time filed. All pleadings shall be filed in four (4) legibly typewritten 

copies in legal size; 

c) Service of Processes, Orders, Decisions - It shall serve all parties and counsels processes, 

notices of hearings, copies of Decisions/Resolutions/Orders issued by the Board 

by mail or by personal service and immediately attach the returns thereof to the records;


d) Board Calendar/Minutes Book ñ It shall prepare the Board calendars of sessions, 

attend such sessions and immediately prepare the Minutes thereof, for which purpose a 

Minutes Book shall be kept; 

e) General Docket ñ The Executive Officer of the Secretariat shall keep a General Docket 

for the Board, each page of which shall be numbered and prepare for receiving all the 

entries in single page, and shall enter therein all appealed cases before it, numbered 

consecutively in the order in which they were received and under the heading of each 

case, the date and hour of each pleading filed, or each order, decision or resolution 

entered, and of each other step or action taken in the case; so that, by reference to any 

single page, the history of the case may be known; 

f) Promulgation Book ñ the Executive Officer of the Secretariat shall promulgate decisions 

or final resolutions on the same date it is filed and indicate the date and time of promulgation 

and attest the same by his signature on the first page thereof. He shall immediately 

furnish the Chairman of the Board with a copy of such decision/resolution/order with a 

summary of the nature thereof and the issue involved therein. He shall keep a Promulgation 

Book which indicates the date and time of promulgation, the case number, title of the 

case, the nature of the decision and the action taken by the Board by quoting the dispositive 

portion thereof. Notices of said Decisions/Resolutions/Orders shall be sent in sealed 

envelopes to parties/counsels within forty-eight (48) hours from promulgation; 

g) Entry of Judgment ñ the Executive Officer of the Secretariat shall keep a Book of Entry 

of Judgment, Orders, Resolutions, and Decisions containing in chronological order the 

entries of all final Orders, Decisions and Resolutions of the Board. No entry of judgment 

shall be made in case the Decision is appealed to the Supreme Court; 

h) Disposition/Remand of Records ñ Upon entry of judgment, the records of the case 

shall be immediately remanded to the Panel of origin. The Records Section shall immediately 

post said records without delay within two (2) working days; 

i) Quarterly Accomplishment Reports ñ The Executive Officer of the Secretariat shall 

submit a Quarterly Accomplishment Report of the Board not later than the 10 th day of the 

month following the end of each quarter; and 

j) Other Functions ñ The Secretariat shall perform other functions as directed by the 

Chairman of the Board. 

RULE IX 

FINAL PROVISIONS 

Section 1. Separability Clause. If any section or provision of these Rules, or any part 

thereof, is declared unconstitutional or invalid, the other sections or provisions thereof which 

are not affected thereby shall continue in full force and effect. 

Section 2. Effectivity. These Rules shall take effect fifteen (15) days after their publication 

in two (2) newspapers of general circulation. 

(SGD.) VICTOR O. RAMOS 

Chairman 


(SGD.) VIRGILIO Q. MARCELO 

Members

528 


NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY 


Implementing Rules and Regulations of Executive Order No. 40, 

Series of 2001, Consolidating Procurement Rules and Procedures for 

All National Government Agencies, Government-Owned or ñControlled 

Corporations and Government Financial Institutions, and Requiring the 

Use of the Government Electronic Procurement System 

Adopted: 8 Feb. 2002 




(SGD.) DANTE B. CANLAS 

Director-General, NEDA 

Chair, Committee on Infrastructure 


Secretary, DBM 

Chair, Procurement Policy Board 

óo0oó 

Implementing Rules and Regulations of Presidential Decree No. 1594, 

ìPrescribing Policies, Guidelines, Rules and Regulations for Government 

Infrastructure Contractsî as Amended on 24 May 2000 and 05 July 2000 




óo0oó 

Implementing Rules and Regulations of Republic Act No. 6957, 

ìAn Act Authorizing the Financing, Construction, Operation and 

Maintenance of Infrastructure Projects by the Private Sector and 

For Other Purposesî, as Amended by Republic Act No. 7718 

Adopted: March 1999 



(SGD.) H.E. PRES. JOSEPH E. ESTRADA 

As Concurrent Secretary of Interior and Local Government 

Member



(SGD.) GREGORIO R. VIGILAR 

Secretary of Public Works and Highways 

Member 

(SGD.) JOSE T. PARDO 

Secretary of Trade and Industry 

Member 

(SGD.) MARIO V. TIAOQUI 

Secretary of Energy 

Member 

(SGD.) WILLIAM D. DAR 

Secretary of Agriculture 

Member 

(SGD.) VICENTE C. RIVERA, JR. 

Secretary of Transportation and Communication 

Member 


Secretary of Environment and Natural Resources 

Member 

(SGD.) EDGARDO B. ESPIRITU 

Secretary of Finance and 

Chairman, Coordinating Council for the Philippine Assistance Program 

Member 

(SGD.) FELIPE M. MEDALLA 

Secretary of Socio-Economic Planning 

Chairman, BOT-IRR Committee 

óo0oó 

Implementing Rules and Regulations on the Procurement 

of Consulting Services for Government Projects 



APPROVED BY THE NEDA BOARD ON 07 OCTOBER 1998 

NATIONAL FOOD AUTHORITY 


License Fees of Farmersí Associations and Other Sectors 

Participating in the Rice Importation Program for Year 2003

530 






(SGD.) ARTHUR C. YAP 

NFA Administrator 

óo0oó 

Amended Letter Circular No. AO-2K2-12-001 

Rules and Regulations Governing the Participation of 

Farmersí Organizations in the Importation of Rice for Year 2003 

Pursuant to the powers granted to the National Food Authority (NFA) under Presidential 

Decree No. 4, as amended, to establish rules and regulations governing the importation of 

rice, and by virtue of NFA Council Resolution No. 14-2K2 dated 23 October 2002, this 

Amended Letter-Circular is hereby issued for the information and compliance of all concerned. 

A. General Principles for 2003 Rice Importation 

Rice importations under this Circular shall be undertaken under a regime with Quantitative 

Restrictions in place. However, instead of NFA issuing import permits, all rice importations 

other than NFAís shall be covered by Letters of Credit (LCs) to be opened initially only 

with Land Bank of the Philippines (LBP), or such other financial instruments to be agreed 

upon by NFA, LBP and the Bureau of Customs (BOC). 

With the aim of assisting palay-based farmersí organizations (those whose members 

are predominantly palay farmers) to become agri-entrepreneurs, the privilege to import non- 

NFA rice volumes is granted to them exclusively. Any unavailed volume, which the farmersí 

organization fail to import out of their allocation, shall be imported by NFA when necessary. 

Any farmersí organization intending to avail of the privilege to engage in the business 

of importing rice in 2003 shall first secure a license from NFA as an importer. All importations 

shall be subject to payment of tariff and other fees that may be required. However, NFA shall 

not impose an equalization fee for the year 2003 importation. 

B. Opening of Letters of Credit, or Use of Other Financial Instruments for Importation 

Interested farmersí organizations licensed as rice importers shall open their LCs or 

other financial instruments with the LBP head office only. Other financial instruments may be 

allowed subject to NFA, LBP and BOC agreement. 

1. For the first quarter volume which is hereby set at 150,000 metric tons, the LCs or other 

financial instruments shall be opened with or coursed through the LBP head office up to 

March 31, 2003.


2. For the second quarter volume, the LCs or other financial instrument shall be opened with 

or coursed through the LBP head office on April 1-30, 2003. 

Licensed farmersí organizations using LCs and other financial instruments must undertake 

the following minimum requirements: 

a. Submit an accomplished Import Entry Declaration (IED) to the LBP head office; 

b. Deposit in advance with the LBP an amount corresponding to the duties to be paid 

for the importation, not later than March 31, 2003, for the first quarter volume; and not 

later than April 30, 2003, for the second quarter volume; 

c. Provide NFA and BOC advance information (at least 10 days before the cargo 

arrives) on the quantity, quality (complete specifications), origin, supplier, price on C&F 

basis, expected date of arrival, name of carrier/vessel, and discharging port of the rice 

being imported, plus a copy of the sales contract; and 

d. Use load port and discharge port surveyor/s to be chosen from a list prescribed by 

NFA. 

Failure to undertake any of the above will subject the importer to 10% penalty of the 

landed cost of the cargo, which may be effected with the withholding (non-release) of the 

corresponding percentage of the imported rice. 

C. Arrival of Importation 

The first quarter volume should arrive on or before April 30, 2003. The second quarter 

volume should arrive on or before June 30, 2003. All legally imported rice that arrive beyond 

the dates prescribed above shall be subject to a penalty of fifty percent (50%) of the landed 

cost of the rice, payable to NFA. Half of the amount to be collected from the penalty shall be 

set aside in behalf of the BOC as (partial) payment to be applied to NFAís outstanding 

account. 

Rice cargoes must be inspected both at the load port and discharge port by surveyor/ 

s to be appointed by the importer from a list to be provided by NFA. The surveyorís services 

shall be for the account of the exporter and/or importer. 

The discharge ports for the 2003 rice importation are the Port of Manila, the Manila 

International Container Port, the Port of Batangas, the Port of Cebu, and the Port of Cagayan 

de Oro. 

D. Distribution of Importation 

In the event that NFA is unable to domestically procure its required rice buffer stocks, it 

will source the needed volume from imports. 

The volume of rice to be imported by farmersí organizations (i.e., those licensed as 

rice importers) for the first quarter of 2003 shall be limited to 150,000 metric tons. The 

volume for the succeeding quarter will be announced by NFA three (3) weeks prior to the first 

day of opening of LCs or other financial instruments for the quarter. 

E. Priority of Importation

532 


The balance of the first quarter volume, and the whole of the second quarter volume 

allowed for importation by FOs, shall be allocated using a system that will allow more FOs to 

participate under the program. The NFA reserves the right to change the allocation system 

without a notice. 

Each licensed FO may import a maximum of Five Hundred Metric Tons (500 MT) per 

quarter, but not to exceed One Thousand Metric Tons (1,000 MT) for the whole year of 2003. 

Those which have already exceeded the maximum volume are no longer entitled to import for 

the current year. 

F. Penalties 

Aside from the penalties stipulated above, non-compliance with this circular shall subject 

the offender, upon conviction, to an imprisonment or fine, or both such fine and imprisonment 

at the discretion of the court, pursuant to Section 29 of Presidential Decree No. 4, as 

amended. The offender shall also be subject to administrative proceedings where the penalty 

of suspension and/or cancellation of its NFA license shall be imposed. The NFA may issue a 

cease and desist order pending the termination of the administrative case. 

If the violation is committed by a corporation, partnership, cooperative or association, 

the penalty shall be imposed upon the Chairman, President, Directors and/or Managers, as 

the case may be, or other officials thereof responsible for such violation. 

Authorized representatives of licensed farmersí organizations opening LCs or other 

financial instruments with the LBP under this Amended Letter-Circular shall sign certifications 

that they have read and understood this Amended Letter-Circular, and are voluntarily 

binding themselves to abide by this Amended Letter-Circular and all other related rules and 

regulations regarding rice importation. 

This Amended Letter-Circular shall take effect fifteen (15) days following its publication 

once in a newspaper of general circulation, and filing with the Office of the National Administrative 

Register of the UP Law Center. 


(SGD.) ARTHUR C. YAP 


NATIONAL POLICE COMMISSION 



Amending Napolcom Memorandum Circular No. 2002-005, 

Relative to the Relentless and All-Out Campaign of the PNP to 

Stop and Eradicate Jueteng and Other Illegal Gambling Activities


WHEREAS, the Commission in the exercise of its constitutional mandate and statutory 

powers under R.A. No. 6975 as amended, had issued Memorandum Circular No. 2002-005 

directing the Chief, Philippine National Police, Police Regional Directors, Police Provincial 

Directors, Police District Directors, City Police Directors, Chief of Police and Station Commanders 

to immeditely undertake an all out campaign to stop and eradicate jueteng and 

other illegal gambling activities to expunge public perception that jueteng and other illegal 

gambling activities will not thrive and flourish within a province, city or municipality without 

the connivance, protection, or tolerance of our law enforcement officers; 

WHEREAS, in light of the issuance by the PNP of Letter of Instruction (LOI) 36/02 

(Roulette-Milenyo) dated 26 August 2002 by the Chief, PNP with the end-in-view of setting 

forth the operational guidelines, concepts of operation, fundamental thrust and specific tasks 

to be undertaken and performed by all PNP units in the fight against all forms of illegal 

gambling and further laying down the concept of ìCommand Responsibilityî among others 

as integral part of the campaign against illegal gambling, this Commission deems it proper to 

amend portions of NAPOLCOM Memorandum Circular No. 2002-005 specifically the application 

of the doctrine of Command Responsibility, by adopting the provision of the said LOI 

on Command Responsibility with minor modifications to further reinforce its campaign against 

jueteng and other forms of illegal gambling activities. 

NOW, THEREFORE, the Commission, in the exercise of its administration and control 

function over the Philippine National Police has resolved to amend, as it hereby amends, 

Napolcom Memorandum Circular No. 2002-005, relative to the relentless and all-out campaign 

of the PNP to stop and eradicate jueteng and other illegal gambling activities as follows: 

1. All PNP units shall be the primary and principal law enforcement arm in the national 

campaign against jueteng and other illegal gambling activities. For operational effectiveness, 

they are enjoined to closely liaison and directly coordinate with their local Peace and Order 

Councils, Law Enforcement Coordinating Councils and other public and private organizations 

actively involved in the campaign. 

2. To ensure a more efficient, sustained, vigorous and resolute campaign against jueteng 

and other illegal gambling activities, it is imperative that the ìDoctrine of Command Responsibilityî 

be strictly applied at all levels of commands in the PNP. For ready reference in the 

application of this Doctrine, quoted hereunder are Sections 1 and 2 of Executive Order No. 

226 dated February 17, 1995, on the subject ìINSTITUTIONALIZATION OF THE DOCTRINE 

OF COMMAND RESPONSIBILITY IN ALL LEVELS OF COMMAND IN THE PHILIPPINE 

NATIONAL POLICE AND OTHER LAW ENFORCEMENT AGENCIESî thus; 

ìSection1. Neglect of Duty Under the Doctrine of Command Responsibility. 

Any government official or supervisor or officer of the Philippine National Police 

or that of any other law enforcement agency shall be held accountable for ìNeglect 

of Dutyî under the doctrine of ìcommand responsibilityî if he has knowledge 

that a crime or offense shall be committed, is being committed, or has been 

committed by his subordinates, or by others within his area of responsibility and 

despite such knowledge, he did not take preventive or corrective action either 

before, during or immediately after its commission. 

Section 2. Presumption of Knowledge - A government official or supervisor, or 

PNP Commander, is presumed to have knowledge of the commission of irregularities 

or criminal offense in any of the following circumstances:

534 


1. When the irregularities or illegal acts are widespread within his area of jurisdiction; 

2. When the irregularities or illegal acts have been repeatedly or regularly committed 

within his area of responsibility; or 

3. When members of his immediate staff or office personnel are involved.î 

3. Accordingly, in the campaign against jueteng and other illegal gambling activities, any 

PNP official or unit chief who fails to take preventive or corrective actions or refuses to stop 

and eradicate this illegal gambling activities in his area of responsibility shall be administratively 

charged for Serious Neglect of Duty under the Doctrine of Command Responsibility 

pursuant to Executive Order No. 226 of February 17, 1995 without prejudice to his or her 

criminal prosecution when applicable under the Revised Penal Code and special laws, and 

shall also be relieved from his position under any of the following circumstances: 

3.a For Regional Police Offices: 

3.a.1 Municipal Chiefs of Police 

Three (3) successful raids by non-organic PNP/DILG units proving the existence 

of illegal gambling operations within the municipality, shall cause the relief of 

the Chief of Police of that Municipality. 

The Responsible Chief of Police shall be informed accordingly of the results of 

each anti-illegal gambling operation conducted in his AOR, and shall be advised 

to step up his own campaign. 

3.a.2 Provincial Directors 

The relief of three (3) Municipal Chiefs of Police due to inefficiency in the 

conduct of anti-illegal gambling operations in his AOR as proven and documented 

by operations of non-organic PNP/DILG units, shall cause the relief of the Provincial 

Directors. 

The Provincial Director shall be advised accordingly about the results of the 

operations conducted by non-organic PNP/DILG units within his AOR. 

3.a.3 City Police Offices 

3.a.3.1 Precinct Commanders of City Police Offices 

Three (3) successful anti-illegal gambling operations conducted by non-organic 

PNP/DILG units within the AOR of precinct commanders of City Police 

Offices shall cause the relief of the said precinct commander. 

The said commander shall be accordingly advised of the results of each operation 

conducted within his AOR.


3.a.3.2 City Directors 

The relief of three (3) Precinct Commanders due to inefficiency in the conduct 

of anti-illegal gambling operations as proven and documented by the operations 

of non-organic PNP/DILG units within the AOR shall cause the relief of the City 

Director of the said city police office. 

The City Director shall be advised accordingly about the results of the operation 

conducted by non-organic PNP/DILG units within his AOR. 

3.a.3.3 Regional Directors 

The relief of at least two (2) Police Provincial Directors and/or City Directors 

for inefficiency in the conduct of anti-illegal gambling operations as proven by the 

results of operations conducted by non-organic units of the PNP/DILG within the 

Regional AOR shall cause the relief of the Police Regional Director. 

The said Regional Director shall be duly informed of the results of each operations 

conducted within the regional AOR. 

3.b National Capital Regional Police Office 

3.b.1 Police Communit y Precincts 

The successful anti-illegal gambling operations conducted by non-organic PNP/ 

DILG units in the AOR of any PCP shall cause the relief of the PCP Commander. 

The PNP commander shall be duly advised of the results of operations conducted 

within his AOR. 

3.b.2 Station Commanders 

The relief of three (3) PCP Commanders for inefficiency of the conduct of 

anti-illegal gambling operations as reported and documented by non-organic PNP/ 

DILG units within the AOR of the concerned police station shall cause the relief 

of the Station Commander. 

3.b.3 District Commanders 

The relief of three (3) Station Commanders for inefficiency in the conduct of 


DILG units shall cause the relief of the District Director. 

3.b.4 RD, NCRPO 

The relief of at least two (2) District Directors for inefficiency in the conduct of 


DILG units shall cause the relief of the RD, NCRPO.

536 


4. It is to be impressed that operations/raids conducted by non-organic PNP/DILG units 

which were coordinated with and jointly undertaken by the PNP officials mentioned in paragraph 

three (3) hereof in his area of responsibility shall not be considered against subject 

police officer. However, any support, aid or assistance extended by the concerned police 

officer during or after the operation/raid has been conducted by the non-organic PNP/DILG 

units shall not in any way exculpate or mitigate his/her liability under this Circular. 

5. The concerned PNP officials mentioned in paragraph 3 above are enjoined to take preventive 

or corrective actions within one (1) week from receipt of the following: 

5.a Report of the operations conducted by a raiding team that, among other 

things, shall detail the raid conducted, the arrest made, the confiscated gambling 

paraphernalia and other related items that would establish the existence of illegal 

gambling in the area. The refusal or failure on the part of the PNP official, to 

whom the report was submitted, to initiate the necessary measure appropriate 

under the premises is also a ground for his relief and prosecution, both criminal 

and administrative, as evidence may warrant. 

5.b Monitoring report and a certification submitted by the Regional Multi-Sectoral 

Team (RMMT) on Anti-Gambling duly signed by its chairman and the members 

regarding the existence in a particular city/municipality of illegal gambling for two 

(2) consecutive months. The refusal or failure on the part of the PNP official, to 

whom the report and certification were submitted, to initiate the necessary measure 

appropriate under the premises is also a ground for his relief and prosecution, 

both criminal and administrative, as evidence may warrant on the part of the 

PNP official, to whom the report and certification were submitted, to initiate the 

necessary measure appropriate under the premises is also a ground for his relief 

and prosecution, both criminal and administrative, as evidence may warrant. 

5.c Affidavit or sworn statement of two (2) or more individuals of known probity 

and integrity in the community, along with relevant data or documents, attesting to 

the existence and continuing operation of illegal gambling in his area of responsibility. 

The refusal or failure on the part of the PNP official to whom the affidavit or 

sworn statement was submitted, to initiate the necessary measure appropriate 

under the premises is also a ground for his relief and prosecution, both criminal 

and administrative, as evidence may warrant. 

5.d In all cases, the PNP officials concerned shall, in writing, acknowledge receipt 

of the report/certification/sworn statement and shall, one (1) week thereafter, 

inform in writing the person who submitted the report/certification/sworn statement 

of the action taken thereon. 

6. Pre-Charge investigation and formal hearing shall be conducted either by the PNP in 

accordance with NAPOLCOM Memorandum Circular No. 96-10 or by the Commission in the 

exercise of its summary authority in consonance with NAPOLCOM Memorandum Circular 

No. 98-14 in relation to MC No. 99-14. 

7. The Chief, PNP, pursuant to his authority in Section 26, RA 6975, can, on his own relieve 

and reassign any PNP officials mentioned in paragraph 3 above who may not be capable or


willing to carry out or implement this Circular to its fullest extent, without prejudice to the 

observance of due process of law. 

8. Henceforth, as a matter of policy, the Commission, before recommending or approving 

any promotion of a PNP officer, both in rank and assignment, shall assess and evaluate the 

performance of said recommendee in the campaign against jueteng and other illegal gam 

bling activities. 

9. All other Napolcom issuances or portions thereof which are contrary to, or inconsistent 

herewith, are hereby modified or repealed accordingly. 

This Memorandum Circular shall take effect fifteen (15) days from date of publication 

in a newspaper of general circulation and a copy of the same filed with the UP Law Center in 

consonance with the Administrative Code of 1987. 




Chairperson 

(SGD.) LINDA L. MALENAB-HORNILLA 

Commissioner 


(SGD.) CELIA V. SANIDAD-LEONES 

Commissioner 

--o0o-- 


Directing the Philippine National Police to Undertake an Intensified 

and Unrelenting Campaign and Operation Against Bank Robbery 

WHEREAS, Her Excellency President GLORIA MACAPAGAL-ARROYO, in her State 

of the Nation Address (SONA) on July 22, 2002 before the Joint Session of Congress, 

declared war on all criminal syndicates targeting particularly bank robbery with the unequivocal 

declaration that ìCriminal Syndicates will be treated as what they are, direct threat to national 

securityî; 

WHEREAS, on the same occasion, the President announced her policy on the principle 

of Command Responsibility with the statement that ìYou have seen political will in the harsh 

interpretation of command responsibility with regard to illegal gambling. That draconian 

application was a dress rehearsal for enforcing command responsibility in the even more 

difficult challenges of kidnapping, drug-dealing and smugglingî; 

WHEREAS, the continuing assault on the rights of citizenry, occasioned by the unabated 

commissions of crimes with impunity, particularly in the commercial and urban areas of the

538 


community, has resulted not only in the loss of human lives and wanton destruction of properties 

but has severely affected development and prosperity, and at the same time, has undermined 

the peopleís faith in the Government and the latterís ability to maintain peace and order in the 

country; 

WHEREAS, the Philippine National Police, being the premier law enforcement agency 

of the government, is mandated, among others, to ìEnforce all laws and ordinances relative 

to the protection of lives and propertiesî and to ìMaintain peace and order and take all 

necessary steps to ensure public safetyî; 


functions over the Philippine National Police has resolved to direct, as it hereby directs, the 

PNP leadership from the Chief PNP to the lowest officer or unit commander, to undertake an 

intensified and relentless campaign and operation against bank robbery and accordingly 

prescribes the following rules and policies: 

1. Police presence or police visibility is an accepted deterrent to the commission of crime. A 

uniformed police officer patrolling his beat gives peace of mind to every individual for his 

or her freedom of movement and engage in commerce. To a malefactor, such presence of 

a police officer discourages him to perpetrate his criminal and evil design. 

Henceforth, there is an urgent need to increase police visibility by intensified foot and 

mobile patrols along thickly populated areas and busy commercial districts. When necessary, 

control points shall be established. 

2. Parallel to increased police visibility is the need to improve intelligence and counterintelligence 

capabilities. It is desired always that law enforcement officers must be way 

ahead or one step ahead over the criminal elements in gathering information, monitoring 

their every movement and their activities. 

In this regard, there is a need to create and maintain a database for every specific 

crime, such as carnapping. 

Moreover, there should be published and printed at conspicuous places the name, 

pictures and other personal circumstances of notorious individuals involved in illegal activities. 

3. Community support and involvement must be developed, cultivated and encouraged. The 

community must be made aware of positive strategies of the law enforcement agencies in 

the campaign against syndicated crimes. 

For this reason, information and educational campaign must be initiated including the 

organization of community-based and anti-crime fronts, movements or associations. 

4. To ensure a more efficient, sustained, vigorous and resolute campaign against bank 

robbery, it is imperative that the, ìDoctrine of Command Responsibilityî be strictly applied 

at all levels of command in the PNP. For ready reference in the application of this Doctrine, 

quoted hereunder are Sections 1 and 2 of Executive Order No. 226 dated February 

17, 1995, on the subject, ìINSTITUTIONALIZATION OF THE DOCTRINE OF COMMAND


RESPONSIBILITY IN ALL LEVELS OF COMMAND IN THE PHILIPPINE NATIONAL PO- 

LICE AND OTHER LAW ENFORCEMENT AGENCIESî thus: 

ìSection 1. Neglect of Duty Under the Doctrine of Command Responsibility. 


or that any other law enforcement agency shall be held accountable for ìNeglect 

of Dutyî under the doctrine of ìCommand Responsibilityî if he has knowledge that 

a crime or offense shall be committed or has been committed by his subordinates 

or by others within his area of responsibility and despite such knowledge, he did 

not take preventive or corrective action either before, during or immediately after 

its commission. 

Section 2. Presumption of Knowledge. A government official or supervisor, or 


or criminal offense in any of the following circumstances: 

1. When the irregularities or illegal acts are widespread within his area of jurisdiction; 

2. When the irregularities or illegal acts have been repeatedly or regularly committed 

within his area of responsibility; and 

3. When members of his immediate staff or office personnel are involved.î 

5. Accordingly, in the campaign against Bank Robbery, the principle of command responsibility 

shall be observed not only when there is failure on the part of the commander or 

chief of office to act under the circumstances enumerated under E.O. No. 226 but for 

failure to perform his mandated tasks herein enumerated, to wit: 

a. Command Responsibility of the PNP Regional Director of the National Capital Regional 

Police Office. 

The Regional Director (RD) of the National Capital Regional Police Office (NCRPO) 

shall have command responsibility over the District Directors and the Commanders of the 

Regional Mobile Group in his jurisdiction. 

There shall be a presumption of negligence on the part of the Regional Director when 

two (2) or more of the Districts in his AOR have been determined to have six (6) or more 

unsolved incidents of bank robbery each per quarter. 

b. Command Responsibility of the PNP NCR District Director 

The District Director shall have command responsibility over the Chiefs of Police or 

Station Commanders of Numbered Stations of NCR Police Stations under his AOR. 

There shall be a presumption of negligence on the part of the District Director when two 

(2) or more unsolved incidents of bank robbery each per quarter. 

c. Command Responsibility of the Chief of Police of NCR City/Municipal Police Station or 

Commander of Numbered Station.

540 


The Chief of Police of the City/Municipality or Station Commander of NCRPO shall 

exercise command responsibility over the commanders of the Sub-Stations/PCPs in his 

AOR. 

There shall be a presumption of negligence on the part of the Chief of Police or Station 

Commander of the Police Station when two (2) or more of Sub-stations/Police Community 

Precincts within his AOR have been determined to have two (2) or more unsolved 

incidents of bank robbery each in a period of one (1) month. 

d. Command Responsibility of the Police Community Precinct or Sub-Station Commander 

The Police Community Precinct or Sub-Station Commander shall exercise command 

responsibility over Police Community Precinct or Sub-Station members. 

There shall be a presumption of negligence on the part of the Police Community Precinct 

Commander or Sub-Station Commander when his AOR has been determined to 

have at least one (1) unsolved incident of bank robbery in a period of one (1) month. 

e. Command Responsibility of the Other PNP Regional Directors 

Police Regional Directors shall have command responsibility over the Provincial/District/City 

Directors and the Commanders of the Regional Mobile groups in their respective 

jurisdiction. 

There shall be a presumption of negligence on the part of the Regional Directors when 

two (2) or more provinces or Highly Urbanized Cities in his AOR have been determined to 

have six (6) or more unsolved incidents of bank robbery each per quarter. 

f. Command Responsibility of the PNP Provincial Director and City Director of Highly 

Urbanized City 

The PNP Provincial Director or City Director shall exercise command responsibility 

over the Chiefs of Police or Station Commanders of Police Stations in his area of responsibility. 

There shall be a presumption of negligence on the part of the Provincial or City Director 

when two (2) or more Stations within his AOR have been determined to have three (3) 

or more unsolved incidents of bank robbery each per quarter. 

g. Command Responsibility of the Chief of Police of a Component City or Municipal Police 

Station 

The Chief of Police of the City or Police Station shall exercise command responsibility 

over commanders of the Sub-Stations or Police Community Precincts in his area of 

responsibility. 

There shall be presumption of negligence on the part of the Chief of Police Stations if 

his AOR has been determined to have two (2) or more unsolved incidents of bank robbery 

in a period of one (1) month.


h. Command responsibility of the Police Community Precinct (PCP)/Sub-Station Commanders 

The Police Community Precinct Commanders and the Sub-Station Commander shall 

have command responsibility over Sub-Sations or Police Community Precinct in his AOR. 

There shall be presumption of negligence on the part of the Sub-Station/Police Community 

Precinct Commander when his AOR has been determined to have at least one (1) 

unsolved incident of bank robbery in a period of one (1) month. 

GENERAL PROVISIONS: 

1. If any of the above officers fail to exercise command responsibility in the manner and 

standard set forth herein he/she shall be relieved from his/her assignment. Forthwith, precharge 

investigation will be conducted which shall be terminated within ten (10) days. 

Upon finding of a probable cause, subject police officer shall be placed under preventive 

suspension pending formal investigation by the PNP in accordance with NAPOLCOM 

Memorandum Circular No. 96-010 or by NAPOLCOM under Memorandum Circular No. 

98-014. 

2. The PNP personnel who fails to respond in the absence of justifiable cause within thirty 

(30) minutes following the activation of alarm warning device connected from the subject 

bank to the police station and/or a report from an identified bank personnel and/or any 

identified concerned citizen, shall be subjected to administrative proceeding for Serious 

Neglect of Duty and if found guilty shall be meted the appropriate penalty as provided in 

the schedule of penalty under Memorandum Circular No. 93-024. 

3. The PNP personnel who shall be charged either as principal, accomplice or an accessory 

in the crime of bank robbery shall be administratively charged in accordance with 

the applicable provision of RA 6975 as amended by RA 8551 and be meted the penalty of 

dismissal from the service if evidence so warrants without prejudice to his/her criminal 

prosecution under the Revised Penal Code and/or Special Laws. 

4. The PNP personnel who shall be instrumental in the apprehension of bank robbers shall 

receive an appropriate recognition from his/her superior which will be duly noted, considered 

and appreciated in his or her application for promotion. 

5. Henceforth, as a matter of policy, the Commission before recommending or approving 

any promotion of a PNP officer, both in rank and assignment, shall assess and evaluate 

the performance of said recommendee in the campaign against bank robbery. 

6. All other NAPOLCOM issuances or portions thereof which are contrary to, or inconsistent 





Adopted: 06 March 2003

542 



Chairperson 


Commissioner 

Officer-In-Charge 

(SGD.) HERMOGENES E. EBDANE, JR. (SGD.) CELIA V. SANIDAD-LEONES 

Commissioner Commissioner 


Attested by: 

(SGD.) ADELMALYN A. MUNIEZA 

Acting Chief, Secretariat 

--o0o-- 



and Unrelenting Campaign and Operation Against Carnapping 



declared war on all criminal syndicates targeting particularly carnapping with the equivocal 

declaration that ìCriminal Syndicates will be treated as what they are, direct threat to national 

securityî; 







commission of crimes with impunity, particularly in the commercial and urban destruction of 

properties but has severely affected development and prosperity, and at the same time, has 

undermined the peopleís faith in the government and the latterís ability to maintain peace and 

order in the country. 




necessay steps to ensure public safetyî; 


functions over the Philippine National Police has resolved to direct, as it hereby directs, the



intensified and relentless campaign and operation against carnapping and accordingly 




or her freedom of movement and to engage in commerce. To a malefactor, such presence 

of a police officer discourages him to perpetrate his criminal and evil design. 



control points shall be established. 

2. Parallel to increased police visibility is the need to improve intelligence and counterintelligence 

capabilities. It is desired always that law enforcement officers must be way 

ahead or one step ahead over the criminal elements in gathering information, monitoring 

their every movement and their activities. 


crime, such as carnapping. 

Moreover, there should be published and printed at conspicuous places the name, 

picture and other personal circumstances of notorious individuals involved in illegal activities. 






4. To ensure a more efficient, sustained, vigorous and resolute campaign against carnapping, 

it is imperative that the, ìDoctrine of Command Responsibilityî be strictly applied at all 

levels of command in the PNP. For ready reference in the application of this Doctrine, 

quoted hereunder are Sections 1 and 2 of Executive Order No. 226 dated February 17, 

1995, on the subject, ìINSTITUTIONALIZATION OF THE DOCTRINE OF COMMAND RE- 

SPONSIBILITY IN ALL LEVELS OF COMMAND IN THE PHILIPPINE NATIONAL POLICE 

AND OTHER LAW ENFORCEMENT AGENCIESî thus: 



or that any other law under the doctrine of ìCommand Responsibilityî if he has 

knowledge that a crime or offense shall be committed, is being committed or has 

been committed by his subordinates or by others within his area of responsibility 

and despite such knowledge, he did not take preventive or corrective action either 




or criminal offense in any of the following circumstances:

544 


a. When the irregularities or illegal acts are widespread within his area of jurisdiction; 

b. When the irregularities or illegal acts have been repeatedly or regularly committed 

within his area of responsibility; and 

c. When members of his immediate staff or office personnel are involved. 

5. Accordingly, in the campaign against Carnapping, the principle of command responsibility 

shall be observed not only when there is failure on the part of the commander or chief 

of office to act under the circumstances enumerated under E.O. No. 226 but for failure to 

perform his mandated tasks herein enumerated, to wit: 

a. Command Responsibility of the PNP Regional Director of the National Capital Region 

Police Office. 

The Regional Director (RD) of the National Capital Regional Police Office (NCRPO) 

shall have command responsibility over the District Directors and the Commanders of the 

Regional Mobile Group in his jurisdiction. 


two (2) or more of the Districts in his AOR have been determined to have eighteen (18) or 

more unsolved incidents of carnapping each per quarter. 

b. Command Responsibility of the PNP NCR District Director 

The District Director shall have command responsibility over the Chiefs of Police or 

Station Commanders of Numbered Stations of NCR Police Stations under his area of 



(2) or more Police Stations within his AOR have been determined to have six (6) or more 

unsolved incidents of carnapping each per quarter. 

c. Command Responsibility of the Chief of Police of NCR City/Municipal Police Station 

or Commander of Numbered Station. 


exercise command responsibility over the commanders of the Sub-Stations/PCPs in his 

area of responsibility. 

There shall be a presumption of negligence on the part of the Chief of Police or Station 

Commander when two (2) or more of his Sub-station/Police Community Precinct within 

his AOR have been determined to have three (3) or more unsolved incidents of carnapping 

each per quarter. 

d. Command Responsibility of the Police Community Precinct or Sub-Station Commander


The Police Community Precinct or Sub-Station Commander shall exercise command 


There shall be a presumption of negligence on the part of the Police Community Precinct 

or Sub-Station Commander when his AOR has been determined to have three (3) or 

more unsolved incidents of carnapping per quarter. 

e. Command Responsibility of the other PNP Regional Directors. 

Police Regional Directors shall have command responsibility over the Provincial/City 

Directors and the Commanders of the Regional Mobile Groups in their respective jurisdiction. 


two (2) or more provinces or Highly Urbanized Cities in his AOR have been determined to 

twelve (12) or more unsolved incidents of carnapping each per quarter. 

f. Command Responsibility of the PNP Provincial Director and City Director of Highly 

Urbanized City 

The PNP Provincial Director or City Director shall exercise command responsibility 

over the Chiefs of Police or Station Commanders of Police Stations in his area of responsibility. 

There shall be a presumption of negligence on the part of the Provincial or City Director 

when two (2) or more Police Stations within his AOR have been determined to have 

four (4) or more unsolved incidents of carnapping each per quarter. 

g. Command Responsibility of the Chief of Police of a Component City or Municipal 

Police Station 

The Chief of Police of the City or Police Stations shall exercise command responsibility 

over commanders of the Sub-Stations or Police Community Precincts in his area of 


There shall be a presumption of negligence on the part of the Chief of Police of a 

Police Station when his AOR has been determined to have three (3) or more unsolved 

incidents of carnapping each per quarter. 

h. Command Responsibility of the Police Community Precinct (PCP)/Sub-Station Commander 

The Police Community Precinct or Subs-Station Commander shall have command 


There shall be presumption of negligence on the part of the Police Community Precinct 

Commander or Sub-Station Commander when his AOR has been determined to have two 

(2) or more unsolved incidents of carnapping per quarter.

546 


6. For purposes of this Memorandum Circular, the term carnapping shall be understood to 

mean the taking, with intent to gain, of a motor vehicle belonging to another without the 

latterís consent, or by means of violence against or intimidation of persons, or by using 

force upon things. 

Corrolarily, motor vehicle shall be understood to mean as any vehicle propelled by any 

power other than muscular power using the public highways, but excepting road rollers, 

trolley cars, street-sweepers, sprinklers, lawn mowers, bulldozers, graders, fork-lifts, amphibian 

trucks, and cranes if not used on public highways, vehicles, which run only on 

rails or tracks, and tractors, trailers and traction engines of all kinds used exclusively for 

agricultural purposes. Trailers having any number of wheels, when propelled or intended 

to be propelled by attachment to a motor vehicle, shall be classified as separate motor 

vehicle with no power rating. 1 

GENERAL PROVISION 

1. If any of the above officers fail to exercise command responsibility in the manner and 

standard set forth herein he/she shall be relieved from his/her assignment, together with 

his counterpart from the Traffic Management Group. Forthwith, a pre-charge investigation 

will be counducted which shall be terminated within ten (10) days. Upon finding of a 

probable cause, subject police officer shall be placed under preventive suspension pending 

formal investigation by the PNP in accordance with NAPOLCOM Memorandum Circular 

No. 96-010 or by the NAPOLCOM under Memorandum Circular 98-014. 

2. The PNP personnel who shall be charged either as principal, accomplice or an accessory 

in the crime of carnapping shall be administrative charged in accordance with the 

applicable provision of RA 6975, as amended by RA 8551 and be meted the penalty of 


prosecution under the Revised Penal Code and/or Special Laws. 

3. The PNP personnel who shall be instrument in the apprehension of carnappers shall 


and appreciated in his or her application for promotion. 

4. Henceforth, as a matter of policy the Commission, before recommending or approving 


the performance of said recommendee in the campaign against carnapping. 

5. All other NAPOLCOM issuances or portions thereof which are contrary to, or inconsistent 







Chairperson 

1 Sec. 2 RA 6539 or the Anti-Carnapping Act of 1972



Commissioner 





Attested by: 



--o0o-- 


Directing the Chief, Philippine National Police, Regional Directors, 

Police Provincial Directors, Police District Directors, City Police Directors, 

Chiefs of Police and Station Commanders and all PNP Officers Assigned in 

Illegal Drugs Operations to Undertake an Intensified and Continuous 

Campaign Against Illegal Drugs 

WHEREAS, Section 5, Article II of the Philippine Constitution mandates that ì(T)he 

maintenance of peace and order, the protection of life, liberty and property, and the promotion 

of the general welfare are essential for the enjoyment by all the people of the blessings of 

democracyî; 

WHEREAS, Republic Act 9165 otherwise known as the Comprehensive Dangerous 

Drug Act of 2002, states that: ìIt is the policy of the State to safeguard the integrity of its 

territory and the well being of its citizenry particularly the youth, from the harmful effects of 

dangerous drugs on their physical and mental well-being, and to defend the same against 

acts or omissions detrimental to their development and preservationî; 

WHEREAS, towards this end, the government shall pursue an intensive unrelenting 

campaign against the trafficking and use of dangerous drugs and other similar substances 

through an integrated system of planning, implementation and enforcement of anti-drug 

abuse policies, programs and projects; 

WHEREAS, Her Excellency, President Gloria Macapagal-Arroyo in her message to the 

National Anti-Drug Summit and Kilos Laya Laban sa Droga National convention, emphasized 

that ì(T)he presence of illegal drugs in our country has caused serious damage to our 

society and remains a recurring problem that we must address with the fullest strength of the 

lawî consistent with the thrust of her administration to uplift the morals of our people; 

WHEREAS, per statistics, it is shown that the number of drugs users, both regular and 

occasional, have increased by about 300% per annum, that is, from 20,000 in 1972 to 

around 3.4 million, with the notation that approximately 70% of heinous crimes are drugrelated;

548 


WHEREAS, the Philippine National Police pursuant to Presidential Letter of 

Instructions No. 1 dated July 4, 2001 vis-a-vis Executive Order No. 61 creating the National 

Drug Law Enforcement and Prevention Coordinating Center, has been designated as the 

ìpremier and overall drug law enforcement and prevention operating arm of the government 

nationwideî; 

WHEREAS, mindful of the pernicious consequence of illegal drugs which destroys 

precious lives, erodes the moral fiber of the people especially the young; corrupts public 

servants; and induces individuals to commit dastardly acts and heinous crimes, it is urgently 

necessary that the PNP should now focus its initiatives on measures to control and eradicate 

this menace or scourge in society. 


functions over the PNP has resolved to direct, as it hereby directs, the PNP leadership from 

the Chief, PNP to the lowest officers or unit commander to immediately undertake an all-out 

campaign to stop and eradicate the proliferation of illegal drugs in the country: and further 

prescribes the following rules to govern the same: 

1. To ensure a more efficient, sustained, vigorous and resolute campaign against illegal 

drugs, it is imperative that the ìDoctrine of Command Responsibilityî be strictly applied at 

all levels of commands in the PNP. For ready reference in the application of this Doctrine, 



SPONSIBILITYî IN ALL GOVERNMENT OFFICES, PARTICULARLY AT ALL LEVELS OF 

COMMAND IN THE PHILIPPINE NATIONAL POLICE AND OTHER LAW ENFORCEMENT 

AGENCIESî thus: 

Section 1. Neglect of Duty Under the Doctrine of Command Responsibility. Any 

government official or supervisor, or officer of the Philipine National Police or that 

of any other law enforcement agency shall be held accountable for ìNeglect of 

Dutyî under the doctrine of ìcommand responsibilityî if he has knowledge that a 

crime or offense shall be committed, is being committed, or has been committed 

by his subordinates, or by others within his area of responsibility and, despite 

such knowledge, he did not take preventive or corrective action either before, 

during or immediately after its commission. 




a. When the irregularities or illegal acts are widespread within his area of jurisdiction; 

b. When the irregularities or illegal acts have been repeatedly or regularly committed 

within his area of responsibility; or 

c. When members of his immediate staff or office personnel are involved.î 

2. Accordingly, in the campaign against illegal drugs, any PNP officer or unit chief shall be 

administratively charged for Serious Neglect of Duty under the Doctrine of Command


Responsibility pursuant to Executive Order No. 226 of February 17, 1995 without prejudice 

to criminal prosecution when proper under the Revised Penal Code and Special 

Laws, under any of the following circumstances: 

I. National Capital Regional Police Office (NCRPO) 

a. Command Responsibility of the PNP NCRPO Regional Director 

The PNP Regional Director (RD) shall have command responsibility over the NCR 

District Directors and the Battalion Commander (Force Commander) of the NCR Regional 

Mobile Force Battalion (NCR RMF Bn). 

There shall be presumption of Negligence on the part of the Regional Director when two 

(2) or more of the Districts in his area of responsibility (AOR) have been determined to 

have widespread incidence of illegal drugs within a period of three (3) months. For this 

purpose the incidence of illegal drugs shall be considered widespread, when in a period 

of three (3) months, eighteen (18) or more separate buy-bust operations, saturation drives 

and/or raid of drug den, dive or resort conducted in any part of a District in his AOR by a 

PNP unit not organic to the region or any authorized law enforcement agency resulted in 

the arrest of violators of RA 6425 as amended by RA 9165 and/or confiscation of dangerous 

drugs including any and all species of opium poppy regardless of the quantity and 

purity involved and/or equiment, instrument, apparatus and other paraphernalia for dangerous 

drugs and/or controlled precursors and essential chemicals. 

b. Command Responsibility of the PNP District Director 

The PNP NCR District Director shall have command responsibility over the Chiefs of 

Police or Station Commanders of Numbered Stations of NCR Police Stations under his 

AOR. 


(2) or more Police Stations in his AOR have been determined to have widespread incidence 

of illegal drugs within a period of three (3) months, eighteen (18) or more separate 

buy-bust operations, saturation drives and/or raid of drug den, dive or resort conducted in 

any part of the municipality or city within the AOR of the District Director by a PNP unit 

not organic to the region or any authorized law enforcement agency resulted in the arrest 

of violators of RA 6425 as amended by RA 9165 and/or confiscation of dangerous drugs 

including any and all species of opium poppy regardless of the quantity and purity involved 

and/or equipment, instrument, apparatus and other paraphernalia for dangerous 


c. Command Responsibility of the Chief of Police of NCR City/Municipal Police Stations 

or Commander of Numbered Station. 


exercise command responsibility over the commanders of the Sub-Stations/Police Community 

Precincts in his area of responsibility. 

There shall be presumption of negligence on the part of the Chief of Police or Station 

Commander when two (2) or more Sub-Stations or Police Community Precincts within his

550 


AOR have been determined to have a widespread incidence of illegal drugs within a 

period of three (3) months. For this purpose, the incidence of illegal drugs shall be considered 

widespread when, in a period of three (3) months, eighteen (18) or more separate 

buy-bust operations, saturation drives and/or raid of drug den, dive or resort conducted in 

any part of the municipality or city within the jurisdiction of the Police Community Precinct 

or Sub-Station which is under the AOR of the Chief of Police by a PNP unit not organic to 

the region or any authorized law enforcement agency resulted in the arrest of violators of 

RA 6425 as amended by RA 9165 and/or confiscation of dangerous drugs including any 

and all species of opium poppy regardless of the quantity and purity involved and/or 

equipment, instrument, apparatus and other paraphernalia for dangerous drugs and/or 

controlled precursors and essential chemicals. 

II. Regional Offices 

a. Command Responsibility of the other PNP Regional Directors. 

The PNP Regional Director (RD) shall have command responsibility over the Provincial, 

District Directors, City Directors and the Commanders of the Regional Mobile Force 

Batallion Groups in his AOR. 

There shall be presumption of negligence on the part of the Regional Director when two 

(2) or more of the provinces in his AOR has been determined to have widespread incidence 

of illegal drugs within a period of three (3) months. For this purpose, the incidence 

of illegal drugs shall be considered widespread when, in a period of three (3) months, 

eighteen (18) or more separate buy-bust operations, saturation drives and/or raid of drug 

den, dive or resort conducted in any part of the region within the AOR of the Regional 

Director by a PNP unit not organic to the region or any authorized law enforcement 

agency resulted in the arrest of violators of RA 6425 as amended by RA 9165 and/or 

opium poppy regardless of the quantity and purity involved and/or equipment, instrument, 

apparatus and other paraphernalia for dangerous drugs and/or controlled precursors and 

essential chemicals. 

b. Command Responsibility of the PNP Provincial Directors and City Police Directors 

of Highly Urbanized Cities. 

The PNP Provincial or City Director shall exercise command responsibility over the 

Chiefs of Police or Station Commander of Police Stations under his AOR. 

There shall be presumption of negligence on the part of the Provincial Director or City 

Police Director when two (2) or more Police Stations or Sub-Stations within his AOR have 

been determined to have widespread incidence of illegal drugs within a period of three (3) 

months. For this purpose, the incidence of illegal drugs shall be considered widespread 

when, in a period of three (3) months, eighteen (18) or more separate buy-bust operations, 

saturation drives and/or raid of drug den, dive or resort conducted in any part of 

municipality or city within the jurisdiction of the Police Stations which is within the AOR of 

the Provincial Director/City Chief of Police by a PNP unit not organic to the region or any 

authorized law enforcement agency resulted in the arrest of violators of RA 6425 as 

amended by RA 9165 and/or confiscation of dangerous drugs including any and all 

species of opium poppy regardless, of the quantity and purity involved and/or equipment, 

instrument, apparatus and other paraphernalia for dangerous drugs and/or controlled 

precursors and essential chemicals.


c. Command Responsibility of the Chiefs of Police of Component City/Municipal Police 

Stations. 

The Chief of Police of Component City/Municipal Police Station shall have command 

responsibility over the Commanders of the Police Sub-Stations or Police Community 

Precincts in his AOR. 

There shall be presumption of negligence on the part of the Chief of Police of the 

Police Station when at least two (2) or more sub-stations within his AOR had been determined 

to have widespread incidence of illegal drugs. For this purpose, the incidence of 

illegal drugs shall be considered widespread when, in a period of three (3) months, 

eighteen (18) or more separate buy-bust operations, saturation drives and/or raid of drug 

den, dive or resort conducted in any part of municipality or component city as the case 

may be within the jurisdiction of the Police Sub-Stations or Police Community precincts 

which is within the AOR of the Chief of Police by a PNP unit not organic to the region or 

any authorized law enforcement agency resulted in the arrest of violators of RA 6425 as 

amended by RA 9165 and/or confiscation of dangerous drugs and/or controlled precursors 

and essential chemicals. 

Provided that, in case of Municipal Police Station which has no Sub-Station or Police 

Community Precinct in his AOR the Chief of Police of said Police Station shall be presumed 

negligent when in a period of three (3) months, nine (9) or more separate buy bust 

operations, saturation drives and/or raid of drug den, dive or resort conducted in any part 

of municipality or component city as the case may be within the jurisdiction of the Police 

Sub-Stations or Police Community Precincts which is within the AOR of the Chief of 

Police by a PNP unit not organic to the region or any authorized law enforcement agency 

resulted in the arrest of violators of RA 6425 as amended by RA 9165 and/or confiscation 

of Dangerous Drugs including any and all species of opium poppy regardless of the 

quantity and purity involved and/or equipment, instrument, apparatus and other paraphernalia 

for dangerous drugs and/or controlled precursors and essential chemicals. 

d. Command Responsibility of the PNP Police Community Precincts/Sub-Station Commanders 

The Sub-Station Commander or Police Community Precinct Commander shall exercise 

command responsibility over Sub-Station or Police Community Precinct members. 

There shall be presumption of negligence on the part of the Sub-Station Commanders 

or Police Community Precinct Commanders if his AOR has been determined to have 

widespread incidence of illegal drugs. For this purpose, the incidence of illegal drugs shall 

be considered widespread when, in a period of three (3) months, eighteen (18) or more 

separate buy-bust operations, saturation drives and/or raid of drug den, dive or resort 

conducted in any part of town or city as the case maybe within the AOR of the Sub- 

Station Commanders or Police Community Precinct Commanders by a PNP unit not 

organic to the region or any authorized law enforcement agency resulted in the arrest of 

violators of RA 6425 as amended by RA 9165 and/or confiscation of dangerous drugs 

including any and all species of opium poppy regardless of the quantity and purity involved 

and/or equipment, instrument apparatus and other paraphernalia for dangerous 


3. In addition to the foregoing, the principle of Command Responsibility shall likewise apply 

in any of the following:

552 


3.a When a separate raid conducted in any part of the AOR of the PNP Regional 

Director, Provincial Director, District Director, City Director, City/Municipal Chief of Police 

and Block/Sub-Station Commander by a PNP unit not organic to the region, province, 

city or municipality, respectively or any authorized law enforcement agency resulted in 

the confiscation of dangerous drugs in the following quantity: 

(1)1 kilogram or more of opium; 

(2)1 kilogram or more of morphine; 

(3)1 kilogram or more of heroin; 

(4)1 kilogram or more of cocaine or cocaine hydrochloride; 

(5)500 grams or more of methamphetamine hydrochloride or ìshabuî; 

(6)1 kilogram or more of marijuana resin or marijuana resin oil; 

(7)2 kilograms or more of marijuana; and 

(8)1 kilogram or more of other dangerous drugs such as, but not limited to, 

methylenedioxymethamphetamine (MDMA) or ìecstacyî, 

paramethoxyamphetamine (PMA), trimethoxyamphetamine (TMA), lysergic acid 

diethylamine (LSD), gamma hydroxybutyrate (GHB), and those similarly designed 

or newly introduced drugs and their derivatives, without having any therapeutic 

value or if the quantity possessed is far beyond therapeutic requirements, as 

determined and promulgated by the Dangerous Drug Board in accordance to 

Section 93, Article XI of RA 9165. 

3.b Failure of the PNP Regional Director, Provincial Director, District Director and City 

Director, City/Municipal Chief of Police to intensify intelligence effort. For purposes of 

this Circular, it is presumed that there is failure to intensify intelligence effort when through 

the effort of PNP Unit not organic to the region, province, district, or city/municipality it is 

established and proven the existence of: a.) clandestine laboratory for manufacturing 

illegal drugs and/or b.) marijuana plantation in the area of responsibility of the officer 

concerned. 

3.c For the PNP Regional Director, Provincial Director, District Director, City Director 

and City/Municipal Chief of Police concerned, when a report on the buy-bust operations, 

saturation drives and/or raid of drug den, dive or resort had been forwarded to him/her by 

the raiding or operating team detailing the arrest and/or confiscation of dangerous drugs 

and/or equipment, instrument, apparatus and other paraphernalia for dangerous drugs 

and/or controlled precursors and essential chemicals, the official concerned did not take 

preventive or corrective action within one (1) week from the receipt of the report of the 

raiding team. 

3.d Complementary to the conduct of raids/operations and submission of reports by 

raiding/operating teams to the concerned PNP Regional Director, Provincial Director, 

District Director, City Director or City/Municipal Chief of Police, when the Philippine Drug 

Enforcement Agency (PDEA) has furnished the concerned PNP Officer of copies of its


monitoring report and certifications duly signed by its authorized signatories on the existence 

of illegal drugs operations on their area of responsibility but the concerned PNP 

Officer for two (2) consecutive times fails or refuses to take preventive or corrective action 

within one (1) week from the receipt of the said report: 

3.e When two or more individuals of known probity and integrity execute an affidavit or 

sworn statement, attesting to the existence of drug dens, dive or resort, pot sessions, 

manufacture of dangerous drugs and/or controlled precursors and essential chemicals, 

and the sale, trading, dispensation, delivery, distribution and transportation of dangerous 

drugs and/or controlled precursors and essential chemicals, and the sale, trading, dispensation, 

delivery, distribution and/or controlled precursors and essential chemicals in 

his area of responsibility and attaching therewith documents or items proving the same. 

4. It is to be impressed that operations/raids conducted by the PDEA and other law enforcement 

agencies which were coordinated with, and jointly undertaken by the PNP officials 

mentioned in paragraph 2, sub-paragraphs I and II hereof in his area of responsibility 

shall not be considered against subject officer. However, any support, aid or assistance 

extended by the concerned police officer during or after the operation/raid has been 

conducted by the PDEA shall not in any way exculpate or mitigate his/her liability under 

this Circular. 

5. Without prejudice to the authority of the Chief PNP to exercise his power of command 

prerogative under Sec. 26 of RA No. 6975 as amended, any PNP Regional Director, 

Provincial Director or City/Municipal Chief of Police who falls under any of the foregoing 

circumstances, shall be relieved of his/her assignment and forthwith pre-charge investigation 

will be conducted which shall be terminated within ten (10) days. Upon finding of a 

probable cause, subject police officer shall be placed under preventive suspension pending 

formal investigation by the PNP in accordance with Napolcom Memorandum Circular 

No. 96-010 or by NAPOLCOM under Memorandum Circular No. 98-014. 

6. The immediate superior of the PNP personnel who fails or refuses intentionally or negligently 

to appear as witness for the prosecution involving violations of this Act without any 

valid reason shall be punished in accordance with the provisions of Section 91 of RA 

9165. 

7. Any PNP personnel shall be administratively charged in accordance with the applicable 

provisions of RA 6975 as amended by RA 8551 and be meted the penalty of dismissal 

from the service if evidence so warrants without prejudice to his/her criminal prosecution 

under RA 9165 under the following acts: 

7.a Importation of dangerous drugs and/or controlled precursors and essential chemicals; 

7.b Trading, administration, dispensation, delivering, distribution and transportation of 

dangerous drugs and/or controlled precursors and essential chemicals; 

7.c Maintaining a den, dive or resort; 

7.d Possession of dangerous drugs (regardless of quantity and purity) such as 

7.d.1 opium 

7.d.2 morphine 

7.d.3 heroin 

7.d.4 cocaine or cocaine hydrochloride

554 


7.d.5 methampetamine hydrochloride or ìshabuî 

7.d.6 marijuana resin or marijuana resin oil 

7.d.7 marijuana 

7.d.8 MDMA or ìecstacyî 

7.d.9 PMA 

7.d.10 TMA 

7.d.11 LSD 

7.d.12 GHB 

7.d.13 and those similarly designed or newly introduced drugs and their derivatives 

without having any therapeutic value or if the quantity possessed is far 

beyond therapeutic requirements as determined by the Board in accordance to 

Section 93 Art. XI of RA 9165. 

7.e Misappropriation, misapplication or failure to account for confiscated, seized or 

surrendered processes and essential chemicals, instruments/paraphernalia and/or laboratory 

equipment including the proceeds or properties obtained from the unlawful act as 

provided for by RA 9165. 

7.f Planting of evidence which is defined in RA 9165 as ìany willful act of maliciously 

and surreptitiously inserting, placing, adding or attaching directly or indirectly through 

any overt or covert act, whatever quantity of any dangerous drug and/or controlled precursor 

and essential chemical in the person, house, effects or in the immediate vicinity of 

an innocent individual for the purpose of implicating, incriminating or imputing the commission 

of any violation of RA 9165.î 

7.g Protecting or coddling violators of RA 9165 which is defined in the aforesaid law as 

ìknowingly and willfully consenting to the unlawful acts provided for in RA 9165 and using 

influence, power or position in shielding, harboring, screening or facilitating the escape of 

any person he/she knows or has reasonable grounds to believe on or suspects, has 

violated the provisions of this Act in order to prevent the arrest, prosecution and conviction 

of the violator.î 

7.h Any PNP personnel who after due notice fails or refuses intentionally or negligently, 

to appear as a witness for the prosecution in any proceedings involving violations of RA 

9165 without any valid reason. 

7.i Any PNP personnel who is assigned in illegal drugs operations who, through patent 

laxity, inexcusable neglect, unreasonable delay or deliberately causes the pre-mature 

termination of the investigation to favor the violator of the provisions of RA 9165. 

8. Any PNP personnel who will be instrumental in the apprehension of violator of RA 6425 as 

amended by RA 9165 shall receive commendation from his/her superior which will be duly 

noted, considered and appreciated in his or her application for promotion. 



the performance of said recommendee in the campaign against illegal drugs. 

10. All other Napolcom issuances or portions thereof which are contrary to, or inconsistent 

herewith, are hereby modified or repealed accordingly.



in a newspaper of general circulation, and a copy of the same filed with the UP Law Center 

in consonance with the Administrative Code of 1987. 



Chairperson 


Commissioner 





Attested by: 



--o0o-- 



and Unrelenting Campaign and Operation Against Kidnapping 



declared war on all criminal syndicates targeting particularly kidnapping with the unequivocal 

declaration that îCriminal Syndicates will be treated as what they are, direct threat to national 

securityî; 







commission of crimes with impunity, particularly in the commercial and urban areas of the 

community, has resulted not only in the loss of human lives and wanton destruction of properties 

but has severely affected development and prosperity, and at the same time, has undermined 

the peopleís faith in the Government and the latterís ability to maintain peace and order in the 

country;

556 





necessary steps to ensure public safetyî; 


functions over the Philippine National Police has resolved to direct, as it hereby directs, the 


intensified and relentless campaign and operation against kidnapping and accordingly 




or her freedom of movement and to engage in commerce. To a malefactor, such presence 

of a police officer discourages him to perpetrate his criminal and evil design. 



control points shall be established, and this should be the primary responsibility in 

particular of the Chief of Police/PCP Commander. 

2. Parallel to increased police visibility is the need for all field commanders concerned to 

improve intelligence and counter-intelligence capabilities. It is desired always that law 

enforcement officers must be way ahead or one step ahead over the criminal elements in 

gathering information, monitoring their every movements and their activities. 


crime, such as kidnapping. 

Moreover, there should be published and printed at conspicuous places the names, 

pictures and other personal circumstances of notorious individuals involved in illegal activities. 






4. To ensure a more efficient, sustained, vigorous and resolute campaign against kidnapping, 

it is imperative that the, ìDoctrine of Command Responsibilityî be strictly applied at 

all levels of command in the PNP. For ready reference in the application of this Doctrine, 



SPONSIBILITY IN ALL LEVELS OF COMMAND IN THE PHILIPPINE NATIONAL POLICE 

AND OTHER LAW ENFORCEMENT AGENCIESî thus: 


Any government official or supervisor or officer of the Philippine National


Police or that any other law enforcement agency shall be held accountable for 

ìNeglect of Dutyî under the doctrine of ìCommand Responsibilityî if he has knowledge 

that a crime or offense shall be committed, is being committed or has been 

committed by his subordinates or by others within his area of responsibility and 

despite such knowledge, he did not take preventive or corrective action either 


Section 2. Presumption of Knowledge. A government official or supervisor, 

or PNP Commander, is presumed to have knowledge of the commission of irregularities 


a. When the irregularities or illegal acts are widespread within his area of 

jurisdiction; 

b. When the irregularities or illegal acts have been repeatedly or regularly 

committed within his area of responsibility; and 

c. When members of his immediate or office personnel are involved. 

5. Accordingly, in the continuing campaign against Kidnapping, the principle of command 

responsibility shall be observed not only when there is failure on the part of the commander/chief 

of office to act under the circumstances enumerated under E.O. No. 226 

but for failure to do his mandated tasks herein enumerated, to wit: 

A. Kidnap-for-Ransom committed within the municipality, city, province and region. 

A1. Kidnap-for-Ransom wherein victim and perpetrators are still in the Area of Responsibility 

1) City/Municipal Chief of Police/Station Commander 

a. Within one (1) hour after receipt of information whether or not the police 

station is located within or outside Metro Manila, the Chief of Police should form 

and send tracker and investigating teams to the scene of the alleged kidnap-forransom 

incident and activate designated check points. 

b. Within thirty (30) minutes after receipt of information of the alleged kidnap-forransom 

incident to inform Police Provincial Office (PPO) and Local Chief Executives 

(LCEs) 

c. Institute proper handling of information 

d. Initially conduct discreet coordination/liaisoning with the victims family to prevent 

media exposure and turn over to PACER all pieces of evidence and information 

gathered. 

e. Release information only upon proper clearance from higher authority. 

2) Provincial Director/District Director

558 


a. Take over the responsibility and inform the LCEs and Police Regional Office 

(PROs) then coordinate with the Police Anti-Crime & Emergency Response 

(PACER) within thirty (30) minutes after receipt of information of the alleged 

kidnap-for-ransom incident. 

b. Direct dragnet within thirty (30) minutes after receipt of information of the 

alleged kidnap-for-ransom incident. 

c. Assist the investigation of the concerned stations in pursuit operations. 

3) Regional Director 

a. Alert all units within (30) minutes after receipt of the information of the alleged 

kidnap-for-ransom incident. 

b. Inform the PNP Central Operation Center 

c. Directly coordinate with leadership of the PACER within thirty (30) minutes 

after receipt of the information of the alleged kidnap-for-ransom incident. 

4) Anti-Kidnap for Ransom Body (PACER) 

a. Assume lead role 

b. Coordinate/unify all operations 

A2. Kidnap-for-ransom incident where the victim and perpetrator are no longer in the 

Area of Responsibility. 


a. Within thirty (30) minutes after receipt of information form and send investigating 

teams and simultaneously conduct pursuit operation. 

b. Within thirty (30) minutes after receipt of information of the said incident to 

inform PPO and LCEís of the kidnap-for-ransom incident 

c. Institute proper handling of information 

d. Initially conduct discreet coordination/liaisoning with the victims family to prevent 

media exposure and turn over to PACER all pieces of evidence and information 

gathered. 

e. release information only upon proper clearance from higher authority. 

2) Provincial Director/District Director (Victim and perpetrator outside of the province) 

a. Inform the LCEís and PROís within thirty (30) minutes after receipt of information 

of the alleged kidnap-for-ransom incident.


b. Conduct dragnet in provincial boundary within thirty (30) minutes after receipt 

of information of the alleged kidnap-for-ransom incident 

c. Assign a dedicated intelligence and investigation tracker teams per KFR case 

in coordination with PACER and other anti-KFR special units. 

3) Regional Director 

a. Alert all units. 

b. Report the incident to Chief, PNP thru Central Operational Center and directly 

coordinate with PACER within thirty (30) minutes after receipt of the information 

of the alleged kidnap-for-ransom incident. 

c. Personally supervise the activities of the trackers team 

d. In coordination with PACER dispatch tracker for recovery of the victim 

4) Anti-Kidnap-for Ransom Body (PACER) 

a. Assume lead role 

b. Coordinate/unify all operations 

c. Render report directly to the Chief, PNP 

A3. Kidnap-for-ransom resulted in a crisis situation/hostage negotiation. 


a. Implement the necessary Police Operational Procedures (POP) applicable on 

the situation 

b. Activate the crisis management team and act as the first response team commander 

2) Provincial Director/District Director 

Assume as the on-scene commander and organize a crisis management committee. 

B. Kidnap-for-ransom reported directly to Anti-Kidnap-for-Ransom Body 

1. City/Municipal Chief of Police, District Director, Provincial Director and Regional Director 

Provide full support to PACER 

2. Anti-Kidnap-for-Ransom Body (PACER) 

Assume the lead role.

560 


GENERAL PROVISIONS: 

1. Without prejudice to the authority of the Chief, PNP to exercise his power of command 

prerogative under Sec. 26 of RA No. 6975 as amended, any PNP Regional Director, 

Provincial Director/District Director or City/Municipal chief of Police Station who fails to 

undertake his responsibility as set forth herein, shall be relieved from his/her assignment 

and forthwith a pre-charge investigation will be conducted which shall be terminated within 

ten (10) days. Upon finding of a probable cause, subject police officer shall be placed 

under preventive suspension pending formal investigation by the PNP in accordance with 

NAPOLCOM Memorandum Circular No. 96-010 or by the NAPOLCOM under Memorandum 

Circular No. 98-014. 

2. The PNP personnel who shall be charged either as principal accomplice or an accessory 

in the crime of Kidnapping shall be administratively charged in accordance with the applicable 

provisions of RA 6975 as amended by RA 8551 and be meted the penalty of 


prosecution under Revised Penal Code and/or Special Laws 

3. The PNP personnel who shall be instrumental in the apprehension of kidnappers shall 


as appreciated in his or her application for promotion. 

4. For Presidential appointees, MalacaÒang clearance shall be obtained prior to any investigation. 



the performance of said recommendee in the campaign against kidnapping, bank robbery 

and other heinous crime. 

All other NAPOLCOM issuances or portions thereof which are contrary to, or inconsistent 







Chairperson 


Commissioner 



Commissioner Commissioner


Attested by: 



NATIONAL TELECOMMUNICATIONS COMMISSION 



Prescribing a Quality Standard System (QSS) in the Processing of 

Certificates of Competency (COC) of Marine Radio Personnel and 

Endorsement of Holders of Radio Electronic Certificates (REC) 




(SGD.) ARMI JANE R. BORJE 

Commissioner 

(SGD.) KATHLEEN G. HECETA (SGD.) JORGE V. SARMIENTO 

Deputy Commissioner Deputy Commissioner 


--o0o-- 


Prescribing a Quality Standard System (QSS) on Radio Training Centers 

(RTC) Offering Short-term GMDSS Radio Communications Courses 





Commissioner 



--o0o--

562 




Rules and Regulations Governing Radio Training Centers (RTC) 

Offering Short-term GMDSS Radio Communications Courses 





Commissioner 




--o0o-- 

Memorandum Circular No. 02-02-2003 

Addendum to Memorandum Circular No. 17-12-2002 Re: Rules and 

Regulations Governing Radio Training Centers (RTC) Offering Short-Term 

GMDSS Radio Communications Courses 

Pursuant to Act 3846, as amended, E.O. No. 546, Chapter NIX Article 55 of the Radio 

Regulations of International Telecommunications Union (ITU), and Regulations I/6 and I/8 of 

the 1978 STCW Convention, as amended, the Memorandum Circular No. 17-12-2002 dated 

December 20, 2002 is hereby amended to include a new provision, item ìdî of Section VI, 

6.1, as follows: 

ìdî. If applicant is not a deck/radio officer or ECE, he/she may be allowed to 

attend the training, provided, it shall only be issued a ìCertificate of Attendanceî 

upon completion of the course. The Certificate of Attendance shall not be considered 

as a basis for qualifying in the GOC or ROC examination. 

All other provisions of Memorandum Circular No. 17-12-2002 remain in force. 


(SGD.) ARMI JANE R. BROJE 

Commissioner


OFFICE OF THE PRESIDENT 


Administrative Order No. 53 

Imposing the Penalty of Perpetual Disqualification from Re-Employment 

in the Government Service on Respondents Ernest F.O. Villareal, 

Benjamin V. CariÒo, Joemari D. Gerochi, Sulficio O. Tagud, Jr., Martin S. 

Sanciego, Jr., Rodolfo T. Tuazon, and Angelito M. Villanueva 

Quoted hereunder are the findings of facts and law by the Presidential Anti-Graft 

Commission (PAGC) embodied in its Resolution dated 28 November 2002: 

ìTHE CASE 

This resolves the case against the members of the Board of Directors and 

some employees of the Public Estates Authority to the alleged irregularities 

surrounding the construction of the President Diosdado Macapagal Boulevard 

(PDMB). 

On 25 September 2002, Chief Presidential Legal Counsel Avelino ìNonongî J. 

Cruz, Jr. referred 1 to the Presidential Anti-Graft Commission the complaints against 

Public Estates Authority (PEA) and JD Legaspi Construction relating to the Central 

Boulevard Project, popularly known as the President Diosdado Macapagal 

Boulevard. 

The President Diosdado Macapagal Boulevard (PDMB) is a 5.123-kilometer, 8 

lane road starting from Buendia to Pacific Avenue, with 3 bridges. Three contractors, 

namely, Shoemart Incorporated (SM), R-I Consortium, and JD Legaspi Construction 

(JDLC), developed the PDMB. Each contractor was assigned a portion 

of the road and a bridge to construct. The approximate total cost of the PDMB is 

ONE BILLION ONE HUNDRED THIRTY-FOUR MILLION SIX HUNDRED SIX 

THOUSAND FOUR HUNDRED ONE PESOS AND SEVENTY-SEVEN CENTAVOS 

(P1,134,606,401.77). 

The 73.80% of the total cost is the total contract price amount for the JDLC 

portion of the PDMB, a 2.229-kilometer road and 42-meter inland bridge, in the 

amount of P837,317,343.77. The actual payment made to JDLC as of 31 August 

2002, is P816,006,251.93. 

The JDLC still has a collectible of P21,311,091.84 due it from the PEA. Of the 

total project cost of P1,134,606,401.77, 14.52% of the total cost in the amount of 

P164,798,866.00 was paid to R-I Consortium for the 1.186-kilometer road and 

55-meter bridge, and 11.68% of the total cost in the amount P132,490,192.00 

was paid to SM Inc. for the 1.426-kilometer road and 100-meter bridge, all components 

of the PDMB.

564 


For the completion of the PDMB, the PEA entered into a Joint Venture Agreement 

with SM 2 dated 9 August 1994; a Memorandum of Agreement 3 with R-I 

Consortium with Implementing Agreement No. 5 dated 21 December 2001, and a 

Construction Agreement 4 with JDLC dated 10 April 2000. The PDMB was inaugurated 

on 5 April 2002 and was opened to the public in July 2002. 

Below is the sequence of events in the implementation of the President Diosdado 

Macapagal Boulevard(PDMB) Project: 

On 24 September 1998, pursuant to Administrative Order No. 224 5 ordering 

the PEA to implement plans, programs and the projects in the Boulevard 2000, 

the PEA Board issued Resolution No. 1895, Series of 1998, ordering the construction 

of the Central Boulevard/PDMB and adopting the proposed action plan 

of the PEA Management to borrow money from various financial institutions in an 

estimated amount of P1 billion to fund the construction of the Central Boulevard/ 

PDMB with an estimated project cost of P731,443,700.00 6 . 

The members of the Old PEA Board of Directors 7 then were: 

NAME POSITION TERM 

1. Frisco F. San Juan Chairman 3 July 1998 to 30 April í01 

2. Carlos P. Doble General Manager 3 July 1998 to 30 June 

í01 

3. Carmelita De Leon-Chan Board Member 3 July 1998 to 30 June í01 

4. Daniel T. Dayan Board Member 3 July 1998 to 30 June í01 

5. Salvador P. Malbarosa Board Member 3 July 1998 to 30 June í01 

6. Leo V. Padilla Board Member 3 July 1998 to 30 June í01 

7. Elpidio G. Damaso Board member 3 July 1998 to 29 Aug. í01 

On 22 April 1999, the PEA requested the Office of the President for authority 

to bid and award contract packages thru Simplified Bidding. On the same date, 

GM Carlos P. Doble of PEA issued Office Order No. 070 8 creating the Ad Hoc 

Committee tasked to handle the bid and award of the Central Boulevard Project 

and the Ombudsman Building. 

On 2 July 1999, the Office of the President approved 9 the request of the PEA 

to bid and award contract packages through Simplified Bidding. 

The simplified bidding was conducted by the Ad Hoc Committee from 8 July 

1999 to 23 September 1999 based on the list of ten contractors provided by the 

Department of Public Works and Highways (DPWH). The following were the five 

prequalified bidders: 

Bidders of the Proposed Central Boulevard Road Project 10 

(Approved Agency Estimate: P549,713,194.00) 

BIDDER BID PRICE 

1.JD Legaspi Construction 

P584,365,885.05 

2. D.L. Cervantes Construction P631,588,119.00


3. Tokwing Construction P642,404,794.19 

4. W. Red Construction and Development Corporation 

P652,999,429.18 

5. Egapol Construction P656,373,738.03 

On 3 November 1999, the PEA Board through Resolution No. 2032 11 , approved 

the award of the contract to JDLC and the appropriation of the total contract 

amount of P584,365,885.05 chargeable against the proceeds of the P1 

billion loan from Land Bank of the Philippines (LBP)/All Asia Capital. The Notice 

of Award to JDLC was subsequently issued on 26 November 1999. 

On 15 December 1999, the PEA Board through Resolution No. 2057 12 , approved 

the Construction Agreement executed between PEA and JDLC. The same 

was approved by the Office of the President 13 on 29 January 2000 with the 

condition that any price adjustment or variation orders should first be approved 

by the Office of the President before the changes could be effected. 

On 10 April 2000, the Construction Agreement was signed by the PEA and 

JDLC; and the Notice to Proceed 14 subsequently issued to JDLC. 

On 5 July 2000, the PEA Board through Resolution No. 3017 15 approved the 

Variation Order No. 1 (Additional Works) in favor of JDLC in the amount not 

exceeding P117,454,756.71, for the detailed design and construction of the Proposed 

Seaside Drive Extension and the proposed bridge connecting CBP II and 

CBP I B & C. 

On 29 January 2001, the PEA Board through Resolution No. 3089 16 , confirmed 

the approved Variation Order No. 1 involving the realignment of items of 

work with no additional cost and additional time to the original Construction Agreement 

to suit actual field conditions. The previously approved Variation Order No. 1 

was changed to realignment of additional works at no cost to PEA. 

On 19 March 2001, Ernest F.O. Villareal was appointed as Chairman of the 

PEA Board of Directors 17 . 

On 26 April 2001, the PEA Board through Resolution No. 3099, confirmed the 

time extension of 37 days granted to JDLC. On the same date, Resolution No. 

3102 18 was issued approving the updated cost of Variation Order No. 2, previously 

designated as Variation Order No. 1, in the total amount of P126,440,810.20. 

The appropriation of additional funds in the amount of P8,986,053.49 was charged 

against the balance of the P1 Billion loan proceeds from LBP. 

The following are the members of the new PEA Board of Directors 19 : 

NAME POSITION APPOINTMENT 

Ernest F.O. Villlareal Chairman 1 March 2001 

Benjamin V. CariÒo General Manager 1 July 2001 

Joemari D. Gerochi Board Member 1 July 2001 

Sulficio O. Tagud, Jr. Board Member 1 July 2001 

Angelito M. Villanueva Board Member 1 July 2001

566 


Salvador D. Sarabia, Jr. Board Member 1 July 2001 to 18 March í02 

Martin S. Sanciego, Jr. Board Member 29 August 2001 to Present 

Rodolfo T. Tuazon Board Member 18 March 2002 

On 5 December 2001, the PEA Board deferred confirmation of the Board 

Resolution No. 3153 20 series of 2001, since Dir. Sulficio O. Tagud, Jr. questioned 

the Boardís authority to approve the contract price adjustment in favor of JDLC, 

considering that the amount involved was P42,418,493.64 21 . DGM Manuel BeriÒa 

informed the Board that the said contract price adjustment was allowed under 

Items C1 12.1 par. 5 and IB 10.10 par. 2 of PD 1594. The confirmation of the said 

contract price adjustment was likewise deferred on 14 December 2001 meeting 22 

of the Board, pending the submission by Management of the basic justifications 

on the increase in the general prices of construction materials. 

On 18 March 2002, Rodolfo T. Tuazon was appointed to office as member of 

the Board of Directors vice Salvador D. Sarabia, Jr. Rodolfo T. Tuazon assumed 

office on 19 April 2002 23 . 

On 19 April 2002, the PEA Board through Resolution No. 3203 24 , confirmed 

the approved Contract Price Adjustment to JDLC in the total amount of 

P42,418,493.64. 

On 23 July 2002, BeriÒa requested the Board for confirmation of Variation 

Order No. 3 (Landscaping Works-Central Boulevard), Variation order No. 4 (Additional 

Items of Work) and Variation Order No. 5 Landscaping Works-Seaside 

Drive), amounting to P13,357,005.00, P4,759,630.80 and P1,244,949.00, respectively 

as well as the final bill of quantities in the total amount of 

P79,332,524.08. 25 

On 13 August 2002, upon motion of Director Rodolfo T. Tuazon, the PEA 

Board through Resolution No. 3272 26 series of 2002 approved Variation Order 

No. 4 and the Final Bill of Quantities. In the minutes of the said meeting, Director 

Tagud stated that he was abstaining and withholding comment for or against the 

motion for approval, pending clarification on the project components. Nonetheless, 

the Board confirmed Variation Order No. 4 (Additional Items of Work) and 

the Final Bill of Quantities (Overruns/Underruns) for the CBRP, with the approximate 

amount of P4,759,630.80 and P79,332,524.08, respectively . The said amount 

was to be charged against the proceeds of the P1 billion GSIS loan. 

On 10 September 2002, Director Tagud registered his negative vote on the 

motion for approval of Variation Order No. 4 (Additional Items of Work) and the 

Final Bill of Quantities (Overruns/Underruns) for the CBRP, in the approximate 

amount of P4,759,630.80 and P79,332,524.08, respectively. 27 

On 16 September 2002, Dir. Tagud sent a letter-complaint 28 to Her Excellency 

President Gloria Macapagal-Arroyo alleging irregularities surrounding the construction 

of the PDMB. 

On 25 September 2002, the Office of the President referred to the PAGC the 

letter-complaint of Dir. Tagud against PEA officials and the reply of the PEA


officials to said complaint. 

On 12 November 2002, the Investigation Office of the PAGC, as a nominal 

complainant, filed a Formal Charge against the members of the PEA Board of 

Directors and some PEA employees involved in the alleged irregularities surrounding 

the construction of the PDMB. 

On 22 November 2002, the Preliminary Conference was conducted wherein 

respondents were given the chance to raise clarificatory questions. The Commission 

denied respondent Tagudís Motion to Refer Administrative Case to the Ombudsman 

by virtue of the letter from the Ombudsman dated 17 October 2002, 

quoted herein: 

This has reference to your letter dated 14 October requesting for authority to conduct 

administrative disciplinary proceedings against the presidential appointees at the Pubic Estates 

Authority (PEA) named respondents in the case involving the construction of the President 

Diosdado Macapagal Boulevard (PDMB). 

It is our humble view that the authority is not necessary. 

The Office takes the opportunity to confirm the fact that the case filed with this Office 

on 3 October 2002, involving the subject controversy, is criminal in nature. It now bears the 

docket number OMB-C-C-02-0667-J, entitled ìSulficio Tagud, Jr., et al. versus Ernest Villareal, 

et al.î The basic complaint has not been further docketed as an administrative case. Thus, 

the same did not preclude the subsequent filing with the PAGC of an administrative complaint 

against the concerned PEA officials. (underscoring provided) 

In the same hearing of 22 November 2002, the Commission granted the request 

of the counsel of respondent Tagud to file an Answer/Counter-Affidavit on 

25 November 2002. 

Upon agreement of the parties, the preliminary conference on 22 November 

2002 was terminated. Immediately thereafter, the Commission issued an Order 29 

directing the parties to file their Position Paper and/or Memorandum not later than 

26 November 2002, after which the case shall be deemed submitted for resolution. 

THE CHARGE 

Among the members of the PEA Board of Directors charged are the following: 

1. Ernest F.O. Villareal, Chairman 

2. Benjamin V. CariÒo, General Manager and Ex-officio Member 

3. Joemari D. Gerochi, Board Member 

4. Sulficio O. Tagud, Jr., Board Member 

5. Martin S. Sanciego, Jr., Board Member 

6. Rodolfo T. Tuazon, Board Member 

7. Angelito M. Villanueva, Board Member 

The employees of the PEA (non-presidential appointees) included in the For-

568 


mal Charge are the following: 

1. Jaime R. Millan, Assistant General Manager 

2. Manuel R. BeriÒa, Jr., Deputy General Manager 

3. Theron V. Lacson, Deputy General Manager 

4. Bernardo T. Viray, Deputy Manager 

5. Ernesto L. Enriquez, Senior Corporate Attorney 

The respondents were charged for violation of the following: 

1. Item IB2 of IRR of Presidential Decree No. 1594 am. 30 

2. Section 3 (I) (g) (e) of Republic Act No. 3019 31 

3. Article 217 Chapter 4 Title 7 of the Revised Penal Code 32 

4. Section 46 (b) (3) (4) (9) (27) of Executive Order No. 292 or the Administrative 

Code of the Philippines, 33 and 

5. Article 8 of the Construction Agreement 34 signed on 10 April 2000, between the 

Public Estates Authority and J.D. Legaspi Construction; 

For the following acts committed: 

1. On 22 April 1999, notwithstanding the existence of a duly constituted PBAC, 

former Public Estates Authority General Manager Carlos P. Doble, created an AD 

HOC Committee, through Office Order No. 070, composed of the following: Deputy 

General Manager Manuel R. BeriÒa, Jr., Chairman; with members, Deputy General 

Manager Theron V. Lacson; Deputy Manager Bernardo T. Viray; and Senior 

Corporate Attorney Ernesto L. Enriquez. This Ad Hoc Committee is responsible 

for the bidding and award of the construction contract for the Central Boulevard 

Road Project. 

2. On 21 October 1999, the Ad Hoc Committee recommended to the PEA Board 

of Directors, for approval, the contract for the construction of the proposed Central 

Boulevard Road Projects (Package 1) to J.D. Legaspi Construction. 

3. On 3 November 1999, the PEA Board of Directors approved the award of 

contract for the construction of the proposed Central Boulevard Road Project 

(Package 1), in the amount of P584,365,885.05. 

4. On 26 November 1999, the Notice of Award was issued to J.D. Legaspi Construction. 

Subsequently, a notice to proceed was likewise issued to Engr. Jesusito 

D. Legaspi, General Manager, J.D. Legaspi Construction, on 10 April 2000, and 

the same was received on 11 April 2000. 

5. On 10 April 2000, the Agreement for the Construction of the Central Boulevard 

Road Project (Package 1) was signed between JDL Construction and the PEA, 

represented by then General Manager, Carlos P. Doble. 

6. JDL Construction agreed to perform and complete the Project, in strict compliance 

with the approved plans, specifications, contract documents, relevant government 

laws, codes, regulations and ordinances. The works in the Contract 

included the furnishing by the JDL Construction of all labor, materials equipment


and supplies. (Article I, 1.1; 1.2), for a total contract price of P584,365,885.05. 

7. On 26 April 2001, notwithstanding his personal knowledge of the fixed contract 

price of the said Project, Deputy General Manager Manuel R. BeriÒa, Jr. requested 

PEA Board of Directors for the approval of the updated cost of Variation 

Order No. 2, in the total amount of P126,440,810.20. PEA Board of Directors 

approved Variation Order No. 2 through its Board Resolution No. 3102. 

8. On 24 August 2001, Assistant General Manager Jaime R. Millan and Deputy 

General Manager Manuel R. BeriÒa, Jr. recommended to General Manager Benjamin 

V. CariÒo, for approval, the contract price adjustment in the amount of 

P42,418,493.64 to JDL Construction, and the appropriation of funds chargeable 

to the project for the said adjustment; which the latter approved. 

9. On 16 April 2002, despite personal knowledge that the contract price of the 

Central Boulevard Road Project was fixed at P584,365,885.05, Deputy General 

Manager Manuel R. BeriÒa, Jr. recommended, and noted by GM Benjamin V. 

CariÒo, for the Boardís approval the contract price adjustment of P42,418,493.64 

to JDL Construction; which was subsequently approved by the Board on 19 April 

2002 per resolution No. 3203. 

10. On 13 August 2002, PEA Board Member Rodolfo Tuazon, despite having 

personal knowledge that the Central Boulevard Road Projects has a fixed contract 

price of P584,365,885.05 moved for the approval of Variation Order No. 4 (Additional 

Items of Work) and the Final Bill of Quantities (Overruns/Underruns) by the 

PEA Board of Directors. The same was approved by the PEA Board of Directors 

in its 13 August 2002 meeting, with the approximate amount of P4,759,630.80 for 

Additional Items of Work and P79,332,524.08, for the Final Bill of Quantities. 

11. PEA authorized payment and has actually paid J.D.L. Construction the total 

amount of P816,006,251.93, as of 31 August 2002. The total amount of the contract 

escalated to P837,317,343.77 which is 43.29% escalation from the original 

contract price of P584,365,885.05. 

All the respondents, both the Presidential and the Non-Presidential Appointees, 

are within the jurisdiction of the Presidential Anti-Graft Commission (PAGC) 

pursuant to Section 4 and 4 (b) 35 of Executive Order No. 12 dated 16 April 2001. 

ISSUES 

1. WHETHER OR NOT THE AD HOC COMMITTEE HAD THE AUTHORITY TO 

CONDUCT THE BIDDING AND AWARD OF THE CONSTRUCTION CONTRACT 

FOR THE CENTRAL BOULEVARD/PDMB; 

2. WHETHER OR NOT PRIOR APPROVAL FROM THE OFFICE OF THE PRESI- 

DENT OF THE PHILIPPINES IS REQUIRED FOR THE CONTRACT PRICE AD- 

JUSTMENTS, OVERRUNS, AND/OR VARIATION ORDERS; 

3. WHETHER OR NOT THE PRICE ADJUSTMENTS, OVERRUNS, AND/OR 

VARIATION ORDERS ARE VALID AND JUSTIFIED; AND

570 


4. WHETHER OR NOT THE RESPONDENTS ARE GUILTY OF VIOLATION OF 

PERTINENT PROVISIONS OF P.D. 1594; REPUBLIC ACT NO. 3019; THE 

REVISED PENAL CODE; EXECUTIVE ORDER NO. 292; AND THE 

CONSTRUCTION AGREEMENT SIGNED ON 10 APRIL 2000 BETWEEN PEA 

AND JDLC. 

DISCUSSION 

Presidential Decree No. 1084, creating the Public Estates Authority (PEA), 

provides in its First Whereas, the Purpose of the agency which is for the economical 

and efficient administration of lands and real estate managed and/or 

operated by the government. The case at bar shows how the members of the 

Board of Directors and some employees of the Public Estates Authority miserably 

failed to uphold agencyís mandate resulting to the damage and injury of the 

government. 

The Ad Hoc Committee Had No 

Authority To Conduct the Bidding And 

Award Of The Construction Contract 

For The Central Boulevard or PDMB 

---------------------------------------------------------- 

The irregularity surrounding the construction of the PDMB started when the 

former General Manager Carlos R. Doble created an Ad Hoc Committee, through 

Office Order No. 070 36 dated 22 April 1999, for the bidding and award of the 

construction contract of the Central Boulevard now referred to as the President 

Diosdado Macapagal Boulevard, notwithstanding the fact that there was an existing 

Pre/Post Qualification, Bidding and Awards Committee or PBAC constituted 

in 9 July 1996, through Office Order 125 pursuant to PD 1084, PD 1594, EO 164, 

and the approval of the PEA Board of Directors. 

Respondents BeriÒa as Chairman, and Lacson, Viray, and Enriquez as members 

of the illegally constituted AD HOC Committee participated in the opening of 

bids for the construction of the Central Boulevard as evidenced by the Abstract of 

Bids dated 16 September 1999. Respondents then awarded the contract to the 

JD Legaspi Construction and requested for Board Approval for the said award. 

In their Counter-Affidavits, respondents Lacson, Viray, and Enriquez aver that 

they only performed their duties and responsibilities by virtue of the Office Order 

No. 070 issued by former GM Carlos P. Doble. They argued that being a member 

of the said committee could not be considered as unlawful. They aver that they 

performed in the conduct of the Simplified Bidding up to the Award of the Contract. 

Respondent Lacson and Enriquez further stated that there is nothing in Item IB 

2 of the IRR of PD 1594 which prohibits the creation of an Ad Hoc Committee for 

bids and awards nor a proscription that there should only be one (1) PBAC in an 

agency. Further, they stated that the Ad Hoc Committee substantially conformed 

to the composition indicated in the said IRR of PD 1594. In addition, respondents


aver that the government did not suffer any undue injury because the bid of JDLC 

was the lowest among the responsive bids submitted by the bidders. Neither could 

it be said, according to the respondents, that this is grossly and manifestly disadvantageous 

to the government. 

The Commission finds the contentions of respondents Lacson, Viray, and 

Enriquez to be without merit. The IRR of PD 1594, specifically IB 2-1, directs 

each agency to constitute a PBAC that should have a total of seven (7) members. 

The required composition is specified herein: 

IB 2 ñ ORGANIZATION OF THE PBAC 

1. Each office/agency/corporation shall have in its head office or in its implementing 

offices a Prequalification, Bid and Award Committee (PBAC) which shall be responsible 

for the conduct of prequalification, bidding, evaluation of bids and recommending award of 

contracts, Each committee shall be composed of the following: 

a. Chairman (regular) ñ At least third ranking official of the office/agency/corporation. 

b. Executive Officer and Secretary (regular) ñ Legal Officer of the office/agency/corp. 

c. Member (regular) ñ Technical member designated by the head of office/agency/ 

corporation 

d. Member (provisional) ñ At least two, with experience in the type of project to be bid and 

in project management, duly designated by the head of the office/agency/corporation on a 

project to project basis. 

e. Members from the private sector ñ To ensure the transparency of bidding process, one 

qualified representative from a constructorsí association DULY RECOGNIZED BY THE 

CONSTRUCTION INDUSTRY AUTHORITY OF THE PHILIPPINES (CIAP) and one qualified 

representative from any of the following organizations: 

(1) End-user group or non-governmental organization to be designated by the 

head of the office/agency/corporation concerned. 

(2) Associations of Certified Public Accountants or Civil Engineers duly recognized 

by the Professional Regulations Commission (PRC). 

Both representatives shall be non-voting members. 

Furthermore, Section 2 of IB2 IRR of PD 1594 states that: 

IB2.2. Government owned or controlled corporations shall organize their own PBACs, the 

members of which shall be appointed by their respective boards preferably along the 

same line as other government offices. (underscoring supplied) 

It is therefore clear that the Ad Hoc Committee composed of only four (4) 

members chosen by Doble did not conform at all with the requirements indicated 

in the IB2, IRR of PD 1594. In addition there was no Board approval of the said 

Office Order creating the Ad Hoc Committee, Respondents could have taken all 

the necessary steps/measures to protect the interest of the government to ensure 

that everything is in accordance with the pertinent existing laws, rules and regulations. 

They failed to act with the diligence of a good father of a family and thus 

prejudiced the interest of the government.

572 


Respondentsí argument that being members of the said Ad Hoc Committee is 

not illegal is bereft of merit. Performing the functions of the PBAC as members of 

the Ad Hoc Committee without any color of authority is patently against the law. 

The acts of the respondents as members of the Ad Hoc Committee taint with 

irregularity the bidding and award of the construction contract of the PDMB, 

which to date, has cost the government more than a billion pesos. The duly 

constituted PBAC is composed of the following: Theron V. Lacson as Chairman, 

and members Atty. Jaime T. De Veyra, Engr. Rodolfo C. Hernandez, Architect 

Jorge L. Regala, Mrs. Cristeta Q. Catral, and a Representative from a Professional 

Organization. 

The argument of the respondents that there is nothing in Item IB 2 of the IRR of 

PD 1594 which prohibits the creation of an Ad Hoc Committee for bids and 

awards nor a proscription that there should only be one (1) PBAC in an agency is 

devoid of merit. The IB 2 of the IRR of PD 1594 sets the composition of the PBAC 

which, in effect, prohibits the constitution of any other committee to be formed 

that is not in conformity with the guidelines set in the IRR of PD 1594. 

One of the objectives of PD 1594 in adopting a set of rules and regulations 

covering government contracts for infrastructure is to bring about maximum efficiency 

in project implementation and minimize project cost and contract variations 

through sound practices in contract management. 37 To depart from prescribed 

rules and regulations will most often result in anomalies sought to be 

avoided by the government in infrastructure projects. This is precisely what happened 

in the PDMB project. 

Respondent members of the Ad Hoc Committeeís actions have accused undue 

injury to the government. 

Prior Approval From The Office Of The President 

Of The Philippines Is Required For The Contract 

Price Adjustments, Overruns, And/Or Variation 

Orders 

------------------------------------------------------------------------- 

Below is the Summary of the contract price adjustments, overruns, and variation 

orders approved by both the old and present members of the PEA Board of 

Directors. 

Board Resolution No. and Date Nature Amount 

Resolution No. 3102 Variation Order No. 2 P126,440,810.20 

26 April 2001 (42m. Bridge and Seaside Drive Extension) 

(OLD PEA BOARD) - originally Variation Order No. 1 in the amount 

of P117,454,756.71 per Board Res. 3089 but 

was later revised with the updated cost of 

P126,440,810.20 and became V.O. No. 2 per 

Board Res. No. 3102. 

Resolution No. 3203 Contract Price Adjustment P42,418,493.64 

19 April 2002 (7.26% of Orig. Price) 

(NEW PEA BOARD)


Resolution No. 3272 Variation Order No. 4 (Additional Items P4,759,630.80 

13 August 2002 of Work 

(NEW PEA BOARD) Final Bill of Quantities (Overruns/Underruns) P79,332,524.08 

TOTAL P252,951,458.72 

Respondents Villareal, CariÒo, Gerochi, Tuazon, and Villanueva contend that 

by virtue of the repeal of Administrative Order No. 7 by Executive Order 109, the 

requirement of prior Presidential Approval is no longer needed for the contract 

price adjustments and/or variation orders. Likewise, said respondents contend 

that nothing in CI 1, 2, 3, IRR of PD 1594 requires prior Presidential Approval for 

the issuance of change orders, extra work orders, supplemental agreement, overruns/underruns 

as along as the total aggregate amount does not exceed 100% of 

the original contract. The Commission finds this contention of the above respondents 

to be without merit. 

First and foremost, the Construction Agreement or contract between the JDLC 

and the PEA is the primary law between the parties, as in the case of every 

contract. And Article 8 of the Construction Agreement was more than emphatic in 

requiring the parties to first secure the approval of the President before any 

change order could be effected. The pertinent portion of the contract is quoted 

herein: 

Article 8 

Change Order and/or Additional Work 

8.1 The PEA, may at any time, by written order, make changes in the schedule and work 

required under this Agreement. if any such change/s causes an increase or decrease in the 

work or the time required for performing the work, an equitable adjustment shall be made of 

the contract price and completion date upon mutual agreement of the parties reflecting such 

adjustments by way of written order subject to the provisions of the IRR of PD 1594, as last 

amended and the approval of the President. 

8.2 Should the PEA find it necessary to have any additional work carried out for purposes 

of the Project in addition to the contracted work, such additional work will be carried out 

immediately by the CONTRACTOR upon receiving written approval from the President, 

provided that the amount of the change order is within the limitations and in accordance 

with conditions set forth in PD 1594 and its IRR. (underscoring supplied) 

Respondent Tuazon opines that the Presidentís approval, taking into consideration 

governmental hierarchy, should come after, not before, the approval by the 

PEA Board. There is no logic at all in this argument. The condition stated in the 

approval of the President of the Construction Agreement between PEA and JDLC 

on 29 January 2000, is self-explanatory, to wit: ì any price adjustment or variation 

orders should first be approved by the Office of the President before 

the changes could be effected.î This statement does not require any interpretation 

from any sources, especially from the respondents. 

Nothing in the records shows that the Presidentís approval was secured before 

the PEA Board approved the Variation Order No. 2, Contract Price Adjustment, 

Variation Order No. 4, and Final Bill of Quantities. Former President Joseph 

Estrada clearly did not approve Variation Order No. 2. Neither did President 

Gloria Macapagal-Arroyo approve the Contract Price Adjustment, Variation Order 

No. 4, and Final Bill of Quantities. The members of the Old and New Board

574 


of Directors were therefore clearly remiss in their duty to protect the interest of 

the government as manifested in their refusal to follow the directive from the 

Office of the President and the stipulations in the Construction Agreement. 

The contention of the respondents that the Presidentís approval is no longer 

required in EO 109 is not correct, because Section 9 of EO 109 states the 

following: 

a. All Government Contracts required by law to be acted upon and/or approved by the 

President, and any subsequent amendments or supplements thereto, shall not be signed 

until after the NEDA Board, which is chaired by the President of the Philippines, has 

favorably acted upon or approved the same. 

What is now required under EO 109 is not only the Presidentís approval but 

also that of the NEDA Board which is chaired by the President. Legally, the 

Presidentís approval is still required for contracts. Moreover, there is nothing in 

the records which shows that approval from the NEDA Board was secured by the 

respondents with respect to the price adjustments and/or variation orders. Nor 

was there any attempt to secure such approval from the President. 

Respondents Gerochi and Tuazon contend that if there was failure to secure 

Presidential Approval, the PEA Board may not be held answerable for such administrative 

lapse because the Board acts mainly on policy matters. The respondents 

argue that it was incumbent upon management to secure such Presidential 

Approval after Board action on the matter. 

The Commission finds the contention of respondent Gerochi and Tuazon 

unmeritorious. The absence of a Presidential Approval for the contract price 

adjustments, overruns, and/or variation orders is not a mere administrative lapse 

but rather a reflection of utter disregard of the very basic requirement before any 

contract price adjustments, overruns, and/or variation orders should be approved 

and implemented. 

The Board Members were chosen and appointed by Her Excellency President 

Gloria Macapagal-Arroyo for their competence and good judgment in always 

upholding national interest cannot simply pass the buck to the Management or its 

subordinates otherwise the Board itself becomes useless. 

Whether Or Not The Contract Price Adjustments, 

Overruns, And/Or Variation Orders Are Valid And 

Justified 

--------------------------------------------------------------------- 

Respondents Millan, BeriÒa, and Viray contend that as employees of the PEA, 

they were just following the instructions from their superiors and that their actions 

were only recommendatory. Respondent Millan avers that as the designated Project 

Director of Construction Task Force (CTF) for the Central Boulevard Road Project 

(CBRP), he made sure that each and every segment of the contract were all 

approved by COA. Respondent BeriÒa avers that because of the delay in issuing 

Notice to Proceed which took seven (7) months, the contractor requested for a


contract price adjustment in the amount of P42,418,493.64 on the basis of IB 

10.10 of IRR PD 1594. 

Respondent also contends that the 42-meter inland bridge was an additional 

work to the JDLC because R-I Consortium declined to construct it because it was 

outside its coverage area. The Commission noted that there was no evidence 

presented to support this contention. 

Respondents further contend that in every project, the overruns/underruns are 

inevitable because there are no perfect plans nor perfect estimates. Respondents 

also maintain that until actual excavation and implementation of the design and the 

plans, there is no absolute means of determining the soil condition or actual work 

to be done or the precise amount of materials used. 

Respondents Villareal, CariÒo, Gerochi, Tuazon, and Villanueva contend that 

the contract was not a ìfixed priceî contract , but a ìunit pricedî contract. Respondents 

contend that Article 8 of the Construction Agreement between PEA 

and JDLC allows for Change Order and/or Additional Work. 

Article 8 of the Construction Agreement providing for possible change orders 

and/or additional work does not change the nature of the contract to a ìunitpriced 

contract.î What is rather provided for in Article 8 if the requirement needed 

for a change order to be effected, that is, the Presidentís Approval. 

What is apparent in the arguments of the respondents is the utter disregard of 

the very nature of the Construction Agreement entered into by the PEA and 

JDLC, which is a fixed-price contract. Pertinent provisions of the Construction 

Agreement is quoted herein: 

Construction Agreement 

Article I Scope of Work 

1.2 The works to be done in this contract shall include the furnishing by the contractor of 

ALL labor, materials, equipment and supplies, and the performance by the Contractor 

of all operations necessary for the complete construction of the project. 

Article 3 Contract Price 

3.1 As consideration for the full and faithful performance and accomplishment of all 

obligations specified in Article I above, which the Contractor agrees to undertake, perform, 

and accomplish under this Agreement. PEA shall pay the Contractor the Total Contract 

Price of FIVE HUNDRED EIGHTY FOUR MILLION, THREE HUNDRED SIXTY FIVE 

THOUSAND AND EIGHT HUNDRED EIGHTY-FIVE & 05/100 PESOS (594,365,885.05) 

inclusive of Value Added Tax (VAT), as well as fees and taxes for obtaining the necessary 

licenses and clearances from the Department of Environment and Natural Resources, City 

of ParaÒaque, Pasay City and other government agencies. (underscoring supplied). 

While it is true that there are no perfect plans, as argued by the respondents, 

the Commission noted that the Construction Agreement itself provides for a fixed 

contract price. Since the Construction Agreement was not entered into at the 

price for each unit of work or materials, but rather is a fixed price, lump sum

576 


contract, then there can be no justified increase or decrease of the price. It 

follows that any increase in the cost of constructing and completing the project 

work must, under the Construction Agreement, be borne by the contractor. 

Furthermore, the Supreme Court in the case of BAYLEN Corporation, et.al. 

vs. CA 38 , ruled that the contractor can and commonly does, build into its bid or 

negotiated price a realistic contingency factor to protect its expected profit from 

erosion by drastic cost increases, pertinent portion is quoted herein: 

It is also perhaps well to note that there is nothing exotic about a contractor 

assuming the risk of the costs of construction moving up before completion of a 

project. Fixed price, lump sum contracts are quite common in the construction 

industry. The contractor can, in the first place, and commonly does, build 

into its bid or negotiated price a realistic contingency factor to protect its 

expected profit from erosion by drastic cost increases. In the second place, 

the well-organized, credit-worthy contractor should be able substantially 

to mitigate the impact of expected or possible increases in construction 

costs. It is open to such a contractor to take advantage of economies of scale by 

buying construction materials in bulk and thus availing of bulk discounts, and to 

anticipate price increases by buying such materials forward. The contractor can, 

furthermore, reduce its effective costs by increasing the productivity and efficiency 

of its work force and by keeping its administrative and other overhead 

costs down. There is thus nothing unfair about holding a contractor to its 

fixed price, lump sum contract even in an environment of rising prices. 

(underscoring supplied) 

The Commission believes that Article 4, Section 4.5 39 (Price Escalation) of the 

Construction Agreement is a provision in the contract inconsistent to Articles 1 

and 3 of the Construction Agreement and to the very nature of the contract that is 

ìfixed priceî. To conclude otherwise would render the bidding an exercise in 

futility if the Contractor will just be allowed to escalate the contract price later in 

the guise of overruns and variation orders. Precisely, JDLC won the bid over the 

other bidders on its contract price. 

Respondent CariÒo and Villareal contend that it is not appropriate to compare 

the cost incurred by SM and R-I Consortium to that of the JDLC because based 

on the studies of PEA Technical Management, the scope of work, time factor, as 

well as materials used, contributed to increased costs in the construction costs of 

the subject contract. Respondents aver that with the limited time given to JDLC, 

the latter was constrained to make use of stronger materials for the construction 

of the roads and that need to finish the project as soon as possible left JDLC no 

choice but to get A1 quality material and resort to extra safety measures to ensure 

the strength and quality of the roads. 

This contention is bereft of merit. At the risk of being repetitious, the three 

contractors, namely, SM, R-I, and JDLC, worked on the same PDMB project. 

Therefore, it cannot be justified that only JDLC seemed to have exerted more 

work and encountered more difficulties than the two other contractors. The Commission 

takes judicial notice of the fact that the land where the PDMB is located is


a reclaimed portion of the Manila Bay, and the reclamation had long been completed 

as early as the 1970ís. 

Since all three contractors, namely, SM, R-I Consortium, and JDLC, worked 

on the same land, it is extremely unlikely that the soil condition of the area assigned 

to the JDLC is unstable (as it claimed) whereas the areas assigned to the 

SM and R-I Consortium were stable. JDLCís justification for the price adjustments 

and/or variation orders borders on the realm of impossible. As such, it 

deserved to be ignored. 

Records and the facts of the case belie the contention of respondents CariÒo 

and Villareal as to the extra works that the JDLC needed to undertake, considering 

that neither the SM nor R-I Consortium requested for any price adjustments 

as evidenced by the CERTIFICATION dated 15 October 2002 issued by Dominador 

C. Villanueva, Manager of PEA Construction Management Department, for the R- 

I Consortium 40 , to wit: 

This is to certify that as of today (15 October 2002) the R-I Consortium 

who constructed the Roxas Canal West Bridge under Implementing Agreement 

No. 5 and the Central Boulevard (PDMB) road portion from sta. 2+400 to 

3+620 under Implementing Agreement No. 6 has not requested any price adjustment 

in the construction of the abovementioned road and bridge. 

and a CERTIFICATION dated 15 October 2002 from Cristina A. Catral, Manager 

of PEA Legal Department, for the SM 41 , to wit: 

Therefore, any price adjustment resulting from increases 

in construction costs cannot be given due course and has no basis in our 

Joint Venture Agreement with SM. 

The other two (2) contractors (SM, Inc. and R-I Consortium), as shown in the 

above CERTIFICATIONS, did not ask for any price adjustments, and yet all three 

(3) contractors worked on the same stretch of road. In addition, the contract 

price of the two other contractors, SM and R-I Consortium, is much lower than 

that of the JDLC. The price per kilometer for SM is P86,821,882.04; and for R-I 

Consortium P132,795,218.27 per kilometer. Compare this with the price per 

kilometer of JDLC which is P262,165,045.09 as stipulated in the original contract 

that was signed on 10 April 2000. This shows that indeed variation orders 

and price adjustments granted to the JDLC amounting to P252,951,458.72 over 

and above the original contract price, have absolutely no justification. 

Looking at the price difference between JDLC and the other two contractors 

(SM and R-I Consortium), the thing speaks for itself (res ipsa loquitor) that indeed 

there was an overprice in the construction of the JDLC portion of the PDMB. It is 

even safe to conclude that the PDMB can qualify as the most expensive road in 

the Philippines. And come to think of it, the road is not even made of cement 

but of asphalt. 

Respondent Tuazon contends that there is no basis to say JDLC contract is 

grossly disadvantageous to the Philippine Government; citing the case of Marcos

578 


vs. Sandiganbayan, where it was ruled that the lease contract that provided for a 

monthly rental of P100,000.00, standing alone, was not found grossly disadvantageous 

to the government even if the sublease provided for a monthly rental of 

P700,000.00 monthly. 

The Commission takes exception to the contention of respondent Tuazon that 

contract price for the JDLC is not disadvantageous to the government. The 43.20% 

escalation of the contract price, standing alone and unexplained, is more than 

enough basis to conclude that the variation orders and contract price adjustments 

are grossly disadvantageous to the Filipino people and the Philippine Government. 

Respondents Tagud avers that he questioned the contract price adjustment 

amounting to P42 Million in the December 5 and 14, 2001 meetings of the PEA 

Board. What respondent Tagud failed to aver, however, is that on 19 April 2002 

the PEA Board approved the said contract price adjustment through Resolution 

No. 3203, where he was present and raised no objection to the said resolution. 

Respondent aver that they relied on the recommendations of their subordinates 

and on utmost good faith that they enjoy the legal presumption of regularity 

in the performance of their official functions, which presumption should prevail in 

the absence of sufficient proof to the contrary. Respondents cited the case of 

Arias vs. Sandiganbayan and Magsuci v. Sandiganbayan, in contention that the 

members of the Board of Directors had only to rely on the executive officers to 

guide them in their actions and decisions. They contend that they had no reason 

to doubt information of the PEA management. 

The Commission finds the above contentions of the respondents unacceptable. 

The Board of Directors is the directing and controlling body of the corporation, 

PD 1084 vests in the Board of Directors of PEA the power to control and 

direct the affairs of the PEA. The Board of Directors occupies a position of 

trusteeship in relation to the stockholders in the sense that the Board should 

exercise not only care and diligence, but utmost good faith in the management of 

corporate affairs. 42 Therefore the ultimate responsibility for all the manifestly unlawful, 

inequitable, or irregular transactions pertaining to the construction of the 

PDMB rests on the shoulders of the respondents as members of the PEA Board 

of Directors. 

Respondents are expected to observe strict integrity and moral responsibility 

as members of the Board of Directors of the PEA. They should at all times protect 

the interest of the government and perform acts not repugnant to law. Sadly, they 

failed in this mission! 

Other Issues Raised 

Resignation of Respondent Does Not 

Divest The PAGC Jurisdiction 

-----------------------------------------------------


Respondent Gerochiís resignation was accepted by the Office of the President 

on 26 September 2002. Respondent Sanciego resigned on 29 October 

2002, followed by Tuazon on 30 October 2002, then Tagud on 7 November 2002. 

Respondents Villareal, CariÒo, and Villanueva filed their resignation on 14 November 

2002. 

By virtue of their resignation, respondent, argue that they are no longer within 

the jurisdiction of the PAGC. They contend that there is no more reason for the 

Commission to continue with the proceedings, considering that the remaining 

steps to take, based on the rules of this Honorable Office, are either to recommend 

to the President administrative actions against all the respondents, the 

worst of which is dismissal from the service, or to refer the matter to the Ombudsman. 

Respondents also contend that the Commission is effectively barred from taking 

either of the above courses of action. According to respondents, the submission 

of PAGCís report and recommendation to the President would obviously be 

useless and any penalty to be imposed would be ineffectual as they no longer 

occupy their respective offices. Respondents also allege that the referral of this 

case to the Office of the Ombudsman would be a superfluity since the said Office 

has already commenced preliminary investigation of criminal charges (docketed 

as OMB-C-C-02-0667-J) against them for the same subject matter. Therefore, 

according to the respondents, the instant investigation has already rendered moot 

and academic. 

Records show that the Office of the President referred the complaints on the 

irregularity surrounding the construction of the PDMB to the PAGC, for appropriate 

action, on 25 September 2002. It is thus clear that this Commission had 

already acquired jurisdiction over the subject matter of the complaint before any 

of the respondentsí resignation was accepted by the President. The PAGC does 

not only have jurisdiction over the respondents but is duty bound to investigate the 

irregularities in the contruction of the PDMB, pursuant to Section 7 of Executive 

Order 12 (PAGCís Charter), as quoted herein: 

Section 7, Resignation/Retirement of Respondent ñ The resignation or retirement 

of the public officer under investigation shall not divest the Commission of 

jurisdiction to continue the investigation or hearing and submit its recommendations to 

the President as to the imposition of accessory penalties or such other action be taken. 

Furthermore, no less than the Supreme Court En Banc ruled in the 1975 case 

of Perez vs. Abiera 43 , reiterated in the cases of People of the Philippines vs. 

Valenzuela and Lai Man 44 , Zarate and Chaves vs. Romanillos 45 , and Navarro, Jr. 

vs. Romanillos, that retirement from the service does not warrant the dismissal of 

the administrative complaint which was filed against the respondent while still in 

the service; quoted herein is the pertinent portion of the decision: 

The Courtís jurisdiction, acquired at the time of the filing of the administrative 

complaint, is not lost by the mere fact that the respondent public official had ceased 

to be in office during the pendency of his case. The Court retains its jurisdiction either to 

pronounce him innocent of the charges or declare him guilty thereof. A contrary rule would

580 


be fraught with injustices and pregnant with dreadful and dangerous 

implications.î(underscoring supplied) 

There is likewise no merit to the contention of the respondents that the PAGC 

can no longer recommend any sanctions since they have already resigned and 

therefore cannot be dismissed from service anymore. It is incorrect to state that 

the PAGC can no longer impose sanctions on the respondents who have already 

resigned. The PAGC can still impose the accessory penalties in an administrative 

investigation of a respondent. We would like to bring to the attention of the respondents 

Section 7 of the EO 12, which states that: 

Section 7. Resignation/Retirement of Respondents. ñ The resignation or retirement 

of the public officer under investigation shall not divest the Commission of jurisdiction 

to continue the investigation or hearing and submit its recommendations to the President 

as to the imposition of accessory penalties or such other action be taken. 

Precisely the purpose of this investigation is the possible imposition of accessory 

penalties in the event that substantial evidence will establish the liability of the 

resondents. 

PAGC Observed Due Process 

Respondent Tuazon contends that the charges are vague, ambiguous, broad 

and sweeping, cover not just one but tons of offenses, and virtually deny herein 

respondent his right to be informed of the nature and cause of the accusations 

against him and thus his fundamental right to due process. 

Due process, as ruled by the Supreme Court En Banc in the case of National 

Development Company, et.al. vs. Collector of Customs of Manila 46 , to wit: 

Indeed, our Constitution provides that ìNo person shall be deprived of life, liberty, or 

property without due process of lawî, which clause epitomizes the principle of justice 

which hears before it condemns, which proceeds upon inquiry and renders judgment 

only after trial. That this principle applies with equal force to administrative proceedings 

xxx. (underscoring supplied) 

In addition, the Supreme Court ruled in the case of Mark Roche International 

vs. NLRC 47 , to wit: 

The requirements of due process are satisfied when the parties are given the opportunity 

to submit position papers wherein they are supposed to attach all the documents that 

would prove their claim in case it be decided that no hearing should be conducted or was 

necessary. 

Records will show that the Commission has observed the basic requirements 

of due process throughout the whole proceedings of the case. In fact, a preliminary 

conference was conducted to give the parties a chance to raise clarificatory 

questions of other issues related to the case. Respondents were allowed to submit 

Position Papers, which they did. 

DECISION


After thorough evaluation of the evidence in possession of the Commission 

and that submitted by the parties, the Commission finds substantial evidence 

against respondents Villareal, CariÒo, Gerochi, Tagud, Jr., Sanciego, Jr., Tuazon, 

and Villanueva, for violation of Section 3 (i) (g) (e) of Republic Act No. 3019î. The 

Commission recommends the penalty of removal or dismissal for all the respondents. 

However, In light of the respondentsí resignation and the acceptance by 

H.E. President Gloria Macapagal-Arroyo of the respondentsí resignation, this 

Commission recommends the imposition of the accessory penalties which are 

inherent in the imposable penalty pursuant to Section 7 of EO 12. 

In the case at bar, one of the disabilities inherent in the penalty of DISMISSAL 

is perpetual disqualification of reemployment in the government service, as provided 

for in Sec. 58 EO 292 49 . 

Likewise the Commission finds substantial evidence against respondents Millan, 

BeriÒa, Jr., Lacson, Viray, and Enriquez, who are non-presidential appointees 

but who are involved with the presidential appointees in violating Executive Order 

No. 292, to wit: (9) Committing Acts Punishable under the Anti-Graft Laws and 

(27) Conduct Prejudicial to the Best Interest of the Service. As provided for in 

Sec. 52 A (9) (20) of CSC Resolution No. 991936 50 , the imposable penalty for 

violation of Sections 9 and 27 of EO 292 is Dismissal from the government service. 

The evidence also shows that the irregularities surrounding the construction of 

the PDMB started with the Old Board of Directors composed of Carlos P. Doble, 

General Manager and Ex-Officio Member; Frisco F. San Juan, Chairman; and 

Board Members Carmelita De Leon-Chan, Daniel T. Dayan, Salvador P. Malbarosa, 

Leo V. Padilla, and Elpidio G. Damaso.î 

After a careful review of the records of the case, this Office affirms in toto the 

findings of the Commission and holding the respondents GUILTY AS CHARGED for VIOLATION 

OF SECTION 3 (E) (G) (I) OF R.A. 3019 AS AMENDED. 

WHEREFORE, premises considered and as recommended by the Presidential Anti- 

Graft Commission (PAGC), the penalty of PERPETUAL DISQUALIFICATION FROM RE- 

EMPLOYMENT IN THE GOVERNMENT SERVICE IS IMPOSED ON RESPONDENTS 

ERNEST F.O. VILAREAL, BENJAMIN V. CARI—O, JOEMARI D. GEROCHI, SULFICIO O. 

TAGUD, JR., MARTIN S. SANCIEGO, JR., RODOLFO T. TUAZON, and ANGELITO M. 

VILLANUEVA. 

SO ORDERED. 


1 Records, p. 224. 



By Authority of the President: 

(SGD.) ALBERTO G. ROMULO 

Executive Secretary

582 


4Records, p. 9. 






10Records, p. 32. Abstract of Bids dated 16 September 1999. 




14Records, p. 689. 














28Records, p.226. 

29Records, p. 3272 

30Item IB2 - Organization of the Prequalification, Bid and Award Committee (PBAC), IRR of Presidential 

Decree No. 1594, as amended: ìIB 2 - ORGANIZATION OF THE PBAC - 1. Each office/agency/corporation 

shall have in its head office or in its implementing offices a Prequalification, Bid and Award Committee 

(PBAC) which shall be responsible for the conduct of prequalification, bidding, evaluation of bids and 

recommending award of contracts. xxx.2. Government-owned or controlled corporations shall organize 

their own PBACs, the members of which shall be appointed by their respective boards preferably along 

the same line as other government offices.î 

31Republic Act No. 3019, as amended, in particular, Section 3 (i) Directly or indirectly becoming interested, 

for personal gain, or having a material interest in any transaction or act requiring the approval of a 

board, panel or group of which he is a member and which exercises discretion in such approval even if 

he votes against the same or does not participate in the action of the board, committee, panel or group. 

Interest for personal gain shall be presumed against those public officers responsible for the approval of 

manifestly unlawful, inequitable, or irregular transactions or acts by the board, panel or group to which 

they belong. 

Section 3(g) entering, on behalf of the government, into any contract or transaction manifestly and grossly 

disadvantageous to the same, whether or not the public officer profited or will profit thereby. 

Section 3 (e) Causing any undue injury to any party, including the goverment, or giving any private party 

any unwarranted benefits, advantage or preference in the discharge of his official administrative or judicial 

functions through manifest partiality, evident bad faith or gross inexcusable negligence. This provision 

shall apply to officers and employees of offices or government corporations charged with the grant 

of licenses or permits or other concessions. 

32Revised Penal Code. Article 217 - Malversation of public funds or property. Presumption of malversation. 

- Any public officer who, by reason of the duties in his office, is accountable for public funds or 

property, shall appropriate the same, or shall take or misappropriate or shall consent, or through abandonment 

or negligence, shall permit any other person to take such public funds or property, wholly or 

partially, or shall otherwise be guilty of the misappropriation of malversation of such fund or property, x x 

x. 

33Executive Order No. 292 Section 46 (b) (3) Neglect Of Duty; (4) Misconduct; (9) Committing Acts 

Punishable under the Anti-graft Laws; and (27) Conduct Prejudicial to the Best Interest of the Service.


34 Construction Agreement. Article 8. Change Order And/Or Additional Work, 8.1. The PEA, may at any 

time, by written order, make changes in the schedule and work required under this Agreement. If any 

such change/s causes an increase or decrease in the work or the time required for performing the work, 

an equitable adjustments shall be made of the contract price and completion date upon mutual agreement 

of the reflecting such adjustments by way of written order subject to the provisions of the IRR of PD 

1594, as last amended and the approval of the President. 8.2. Should the PEA find it necessary to have 

any additional work carried out for purposes of the Project in addition to the contracted work, such 

additional work will be carried out immediately by the CONTRACTOR upon receiving written approval 

from the President, provided that the amount of change order is within the limitations and in accordance 

with conditions set forth in PD 1594 and its IRR. 

35 Section 4. Jurisdiction, Powers and Functions - (b) xxx. In the same manner, the Commission shall 

have jurisdiction to investigate a non-presidential appointee who may have acted in conspiracy or may 

have been involved with a presidential appointee or ranking officer mentioned in this subsection. xxx. 

36 Records, page 39. 

37 Section 1 (b), PD 1594. 

38 Baylen Corporation, Reynaldo M. Reyes, Edna L. Reyes and Emmanuel I. Astillero, Petitioners, vs, 

Hon.Court of Appeals (14th Division) and Jose Rizal College, Respondents [G.R. No. 76787. December 

14, 1987.] SC Third Division 

39 4.5 Price Escalation. Adjustment of contract price due escalation shall be effected in accordance with 

P.D. 1594 and its IRR, upon written agreement of the parties and subject to availability of funds. 


41 Records, p. 88 

42 Sec. 28, Corporation Law; Angeles vs. Santos [1937], 36 Off. Gaz. 921 

43 SC En Banc, Atty. Romeo S. Perez vs. Hon. Judge Carlos Abiera [Adm. Case No. 223-J. June 11, 

1975.] 

44 SC En Banc, People of the Philippines vs. Hon. Manuel E. Valenzuela and George Lai Man [G.R. Nos. 

L-63950-60. April 19, 1985.] 

45 SC En Banc, Atty. Noe Cangco Zarate and Atty. Rosendo Chaves vs. Judge Roberto B. Romanillos 

[A.M. No. TJ-941140. March 23, 1995] and Police Superintendent Marcelo E. Navarro, Jr. vs. Judge 

Roberto B. Romanillos [A.M. No. RTJ-94-1218] 

46 NDC vs. Collector of Customs of Manila [G.R. No. L-19180. October 31, 1963.] 

47 Mark Roche International vs. NLRC, G.R. No. 123825, 31 August 1999. 

48 Republic Act No. 3019, as amended, in particular, Section 3 (i) Directly or indirectly becoming interested, 

for personal gain, or having a material interest in any transaction or act requiring the approval of a 

board, panel or group of which he is a member and which exercises discretion in such approval even if 

he votes against the same or does not participate in the action of the board, committee, panel or group. 

Interest for personal gain shall be presumed against those public officers responsible for the approval of 

manifestly unlawful, inequitable, or irregular transactions or acts by the board, panel or group to which 

they belong. 

Section 3(g) Entering, on behalf of the government, into any contract or transaction manifestly and grossly 

disadvantageous to the same, whether or not the public officer profited or will profit thereby. 

Section 3 (e) Causing any undue injury to any party, including the Government, or giving any private party 

any unwarranted benefits, advantage or preference in the discharge of his official administrative or judicial 

functions through manifest partiality, evident bad faith or gross inexcusable negligence. This provision 

shall apply to officers and employees of offices or government corporations charged with the grant 

of licenses or permits or other concessions. 

49 EO 292. Section 58. Administrative Disabilities Inherent in Certain Penalties. (a) The penalty of DIS- 

MISSAL shall carry with it that of cancellation of eligibility, forfeiture of retirement benefits, and the perpetual 

disqualification of reemployment in the government service, unless otherwise provided in the 

decision. 

50 EO 292, Section 52 Classification of Offenses. A. The following are grave offenses with their corresponding 

penalties: (9) xxx committing acts punishable under the anti-graft laws. (20) Conduct prejudicial 

to the best interest of service. 

--o0o--

584 



Executive Order No. 152 

Designating the Presidential Commission for the Urban Poor as the Sole 

Clearing House for the Conduct of Demolition and Eviction Activities 

Involving the Homeless and Underprivileged Citizens and Establishing for 

the Purpose a Mechanism to Ensure Strict Compliance with the Requirements 

of Just and Humane Demolition and Eviction Under the Urban Development 

and Housing Act of 1992, and for other Purposes 

WHEREAS, Section 10 of Article XIII of the Constitution provides that ìUrban and 

rural poor dwellers shall not be evicted nor their dwellings demolished, except in accordance 

with law and in a just and humane mannerî; 

WHEREAS, pursuant to such additional mandate, Section 28 of Republic Act No. 

7279 or the Urban Development and Housing Act (UDHA) of 1992 prescribes the instances 

where evictions may be undertaken as well as imposes certain requirements that must be 

met for an eviction involving homeless and underprivileged citizens to become valid; 

WHEREAS, the provisions of the said law notwithstanding, it has been observed that 

several evictions and demolitions affecting the homeless and underprivileged citizens have 

been conducted in utter disregard of the above legal requirements; 

WHEREAS, there is an urgent need for the government to take steps to ensure strict 

implementation of the said law and its related rules and regulations and thus uphold the 

constitutionally guaranteed rights of the disadvantaged sectors of the society; and 

WHEREAS, Section 31, Chapter 10, Title III, Book III of Executive Order No. 292 or 

the Administrative Code of 1987 provides for the continuing authority of the President to 

reorganize the administrative structure of the Office of the President. 

NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Philippines, 

by virtue of the powers vested in me by law and the Constitution, do hereby order: 

SECTION 1. Clearing House for Demolition and Eviction ñ The Presidential 

Commission for the Urban Poor (PCUP) is hereby designated as the sole clearing house for 

the conduct of demolition and eviction activities involving the homeless and underprivileged 

citizens. In pursuit of its mandate under this order, the PCUP shall exercise, among others, 

the following powers and functions: 

1. Monitor all evictions and demolitions, whether extra-judicial or court-ordered, involving 

homeless and underprivileged citizens; 

2. Require the concerned departments, and agencies, including concerned local government 

units (LGUs), proposing to undertake demolition and eviction activities to secure first 

from either the PCUP Central Office (in the case of regional or local projects) or from the 

checklist, guidelines and compliance certificates on demolition and eviction prior to the 

actual implementation thereof and thereafter, submit to the PCUP the completed checklist, 

attested to under oath by the proponent and indicating that:


a. Adequate consultations with the affected families have already been undertaken; 

b. Adequate resettlement site and relocation facilities are available; and 

c. The provisions of Section 3, paragraph 1 of the Implementing Rules and Regulations of 

Section 28 of RA 7279 (Pre-Relocation) have been complied with. 

3. Based on the completed checklist, and subject to further verification, issue demolition and 

eviction compliance certificates to proposed demolitions and evictions involving the homeless 

and underprivileged citizens; 

4. Investigate motu proprio or upon complaint by any party, any violation of the provisions of 

Section 28 of RA 7279 or its implementing rules and regulations; 

5. File motu proprio or by way of assistance to any aggrieved party, the appropriate criminal, 

civil or administrative case against any person or persons found to have violated the 

provisions of Section 28 of RA 7279 or its implementing rules and regulations; 

6. Recommend to the President appropriate measures for the implementation and enforcement 

of Section 28 of RA No. 7279 and its implementing rules and regulations, including 

possible administrative sanctions against national or local government officials who have 

violated the said law, rules and regulations; 

7. Request any government agency for assistance and necessary information in the discharge 

of their respective functions under this Order; 

8. Publicize matters covered by its investigation of violations of the provisions of Section 28 

of RA 7279 or its implementing rules and regulations, when circumstances so warrant and 

with due prudence: Provided, however, that the PCUP shall, under the rules and regulations 

it shall hereafter promulgate, determine what cases may not be made public: Provided, 

further, that any publicity issued by the PCUP shall be balanced, fair and true; 

9. Administer oaths, issue subpoena and subpoena duces tecum, and take the testimonies 

of witnesses in the course of its investigation; 

10. Adopt its own operational guidelines and rules of procedures, as well as rules and 

regulations, not otherwise inconsistent with existing laws and regulations to effectively 

carry out its mandate; and 

11. Perform such other functions as may hereafter be provided by law or executive issuance. 

SEC. 2. Delegation of Functions to PCUP Regional Officials ñ The PCUP shall properly 

delegate to its regional officials the performance of any of the functions mentioned in the 

preceding Section insofar as they relate to purely regional or local concerns. 

SEC. 3. Monitoring Support from NUPSC ñ The National Urban Poor Sectoral Council 

(NUPSC), one of the sectoral organizations represented in the National Anti-Poverty 

Commission (NAPC), is hereby deputized as the civilian arm of the PCUP in the conduct of 

monitoring activities at the local level relative to the implementation of the provisions of this 

Order. The NUPSC shall report directly to the PCUP Central or concerned Regional Office 

regarding compliance with or violations of any of such provisions.


!"#$%&'(')('*%(+,+-.+#-.-'/()0(1%2)"1&%23('*%(4564(2*+..(.-7%8-2%(91),-:%('*%(;%&%22+1/ 

'%&*;-&+.3(+:()0(2'1"&'"1%2(*+2(#%%;(+>1%%:("9);(-; 

81-'-;>(#/('*%(9+1'-%2(&);&%1;%:(+;:(+991),%:(#/('*%(45643()1(8*%1%(9).-&%(+22-2'+;&% 

2*+..(#%(;%&%22+1/(')(91%2%1,%(9%+&%(+;:()1:%1R 

GA(Q;(&+2%2()0(.)&+.(-;01+2'1"&'"1%(91)$%&'23(91),-:%:(*)8%,%13('*+'('*%(:"./(+"'*)1-?%:()00-&-+. 

)0('*%(4564(+'('*%(1%>-);+.()1(.)&+.(.%,%.(*+2(+991),%:('*%(2+


SEC. 8. Cooperation of Concerned Agencies(B(J..(&);&%1;%:(>),%1;%'()0('*%(4564(";:%1('*%(E%;%1+.(J991)91-+'-);2(J&'A 

SEC. 11 Separability Clause B(!*)".:(+;/(91),-2-);()0('*-2(@1:%1(#%(:%&.+1%:(-;,+.-:3 

'*%(,+.-:-'/()0('*%()'*%1(91),-2-);2(*%1%)0(2*+..(#%(";+00%&'%:('*%1%#/A 

SEC. 12. Effectivity(B(C*-2(]U%&"'-,%(@1:%1(2*+..('+7%(%00%&'("9);(-'2(9"#.-&+'-);(-;(+ 

;+'-);+.(;%829+9%1()0(>%;%1+.(&-1&".+'-);A 

J:)9'%:O(PW(X%&A(LWWL 


^/('*%(41%2-:%;'O 

Y!EXAZ(JD^]IC@(EA(I@_6D@ 

Executive Secretary 

`)W)` 


Instituting the National Drive to Suppress and Eradicate Professional 

Squatting and Squatting Syndicates, Amending Executive Orders Nos. 

178, s. 1999 and 129, s. 1993, and For Other Purposes 

[\]I]J!3( ,+1-)"2( -;2'1"


[\]I]J!3(!%&'-);(GP3(5*+9'%1(PW3(C-'.%(QQQ3(^))7(QQQ()0(]U%&"'-,%(@1:%1(=)A(LML()1 

'*%(J:(+;:(2F"+''-;>(2/;:-&+'%2(-2 

*%1%#/(-;2'-'"'%:A 

SEC. 2. HUDCC and DOJ as Lead Agencies N(C*%(\)"2-;>(+;:(61#+;(X%,%.)9(5)";&-.(Y\6X55Z(-2(*%1%#/(:-1%&'%:(')('+7%('*%(.%+:(-;('*%(-:%;'-0-&+'-);()0 

91)0%22-);+.(2F"+''%12(+;:(2F"+''-;>(2/;:-&+'%23(%;&/()1(#):/3(')(&"1'+-.('*%-1(+&'-,-'-%2A 

C*%(X%9+1''*%;%:A(Q'(2*+..(2%1,%(+2 

'*%()9%1+'-);+.(+1 

2/;:-&+'%2A


C*%(4*-.-99-;%(=+'-);+.(4).-&%(Y4=4Z(-2(*%1%#/(:-1%&'%:(')(:%2->;+'%(0"..N'-(1%F"-1%%'2A 

SEC. 7. Reporting to the Executive Secretary(B(C*%(\6X55(+;:('*%(X@b(2*+.. 

2"#%;&-%2(+;:()'*%1(2'+7%*).:%123(2*+..($)-;'./(0)1




Creating an Anti-Smuggling Intelligence and Investigation Center to 

Investigate and Interdict Smuggling and Other Acts Contrary to the 

Tariff and Customs Code of the Philippines Committed on a Large 

Scale or by Criminal Syndicates and for Other Purposes 

J:)9'%:O(PP(X%&A(LWWL 




^/('*%(41%2-:%;'O 



`)W)` 


Providing for a Comprehensive Industrial Policy and Directions for 

the Motor Vehicle Development Program and its Implementing Guidelines 

J:)9'%:O(PL (X%&A(LWWL 



Dated Filed: 21 January 2003 

^/('*%(41%2-:%;'O 



`)W)` 


Imposing Upon Velma Daluping, then Bureau Director of the Defunct 

Office for Northern Cultural Communities, the Penalties of Cancellation 

of Civil Service Eligibility, Forfeiture of Leave Credits and Retirement 

Benefits, if any, as well as Perpetual Disqualification for 

Re-Employment/Reinstatement in the Government Service, 

as Accessory Penalties to Dismissal from the Service for a Cause


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0+&%(+;:(*%1(&*%%7#);%2(+1%(F"-'%(91)(+;: 

'*%(9%12);(8*)(0-..%:("9('*%(4%12);+.(X+'+(!*%%'(+1%();%(+;:('*%(2+


@;(J91-.(GW3(LWWP3('*%(5J(2%'(+2-:%(5!5(I%2)."'-);(=)2A(MHPMVV(+;:(MKSdHG(0)1(8+;' 

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Y%(:%2%1,%2('*% 

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-;;)&%;'()0('*%(&*+1>%2()1(:%&.+1%(*-"-.'/('*%1%)0A((J(&);'1+1/(1".%(8)".:(#%(01+">*'(8-'* 

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&);:"&'(+;:(";2&1"9".)"2(-2'1+'%(01)


:-2F"+.-0-&+'-);(0)1(1%%3(#"'(;)'(.-



J:)9'%:O(PW(b+;A(LWWG 



`)W)` 


Modifying the Nomenclature and the Rates of Import Duty on 

Various Products Under Section 104 of the Tariff and Customs 

Code of 1978 (Presidential Decree No. 1464, As Amended) 


Text Available at Office of the National Administrative, 

U.P. Law Center, Diliman, Quezon City 

^/('*%(41%2-:%;'O 



`)W)` 

Memorandum Order No. 81 

Further Enhancing the Speedy Resolution of Appealed Cases in the 

Office of the President and Increasing the Number of Authorized 

Officials to Sign ìBy Authority of the Presidentî for this Purpose 

[\]I]J!3(_A@A(=)A(dK(8+2(-22"%:();(_+1&*(PH3(LWWL(:-1%&'-;>('*%(29%%:/(1%2)."N 

'-);()0(+99%+.%:(&+2%2(-;('*%(@00-&%()0('*%(41%2-:%;'R 

[\]I]J!3('*%1%(-2(;%%:(')(0"1'*%1(%;*+;&%(2"&*(%00)1'(+;:(-;&1%+2%('*%(;"


C*%(]U%&"'-,%(!%&1%'+1/(2*+..(:%2->;+'%(01)(#%0)1%('*%(@00-&%()0('*%(41%2-:%;'(8-'*-;(+(9%1-): 

%;:-;>(b";%(GW3(LWWGA 

GA(T)1('*-2(4"19)2%3('*%()00-&-+.2(2)(:%2->;+'%:(-;(!%&'-);(P(*%1%)0(2*+..(*+,%('*%(+"'*)1-'/(') 

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C*%(0)1%>)-;>(+"'*)1-'/(2*+..(#%(0)1(+(9%1-):(%;:-;>(b";%(GW3(LWWGA 

SA(\)8%,%13(1%&)+.(5)";2%.A 

dA(C*%(]U%&"'-,%(!%&1%'+1/(2*+..(-22"%(>"-:%.-;%2(+;:('+7%(2"&*(+'-);()0(+"'*)1-'/(+;:(%;2"1%(+;()1:%1./(:-2'1-#"'-);(+;:(:-29)2-'-);()0 

&+2%2A 

VA(C*%(0)1%>)-;>(:%.%>+'-);()0(+"'*)1-'/(2*+..(;)'(91%&.":%('*%(]U%&"'-,%(!%&1%'+1/(01)< 

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C-'.%(QQQ3(^))7(Qf()0('*%(J:




Modifying the Rates of Duty on Certain Imported Articles as Provided for 

Under the Tariff and Customs Code of 1978, As Amended, in Order to 

Implement the 2002 Philippine Schedule of Tariff Reduction Under the Bold 

Economic Measure Initiatives of the Accelerated Common Effective 

Preferential Tariff (CEPT) Scheme for the ASEAN Free Trade Area 

(AFTA) and the Transfer of Products from Agricultural Product 

Sensitive List (SL) to the CEPT Inclusion List (CEPT-IL) 



(Text Available at Office of the National Administrative, 


^/('*%(41%2-:%;'O 



`)W)` 


Modifying the Rates of Import Duty of Certain Articles Under the 

Tariff and Customs Code of 1978 (Presidential Decree No. 1464, 

As Amended), In Order to Implement the Asean Integration System 

of Preferences (AISP) Package of the Philippines 





^/('*%(41%2-:%;'O 



`)W)` 


Adjusting the Dividend Rates of Selected Government-Owned and/or 

Controlled Corporations on their 2001 Net Earnings Pursuant to 

Section 5 of Republic Act No. 7656


J:)9'%:O(PG(b+;A(LWWG 




^/('*%(41%2-:%;'O 



`)W)` 


Assigning the Power Sector Assets and Liabilities Management 

Corporation as an Attached Agency of the Department of Energy 

[\]I]J!3(I%9"#.-&(J&'(=)A(MPGV3()'*%18-2%(7;)8;(+2(i].%&'1-&(4)8%1(Q;:"2'1/(I%N 

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:%9+1'


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J:)9'%:O(PV(b+;A(LWWG 


^/('*%(41%2-:%;'O 



`)W)` 


Promoting Private Sector Participation and Investment in the Development 

and Operation of the Road Roll-On/Roll-Off Terminal System 

J:)9'%:O(LL(b+;A(LWWG 



^/('*%(41%2-:%;'O 



NN)W)NN




Imposing the Penalty of Dismissal from Service with Forfeiture of Retirement 

Benefits and Perpetual Disqualification for Re-employment in the Government 

Service on Burt B. Favorito, Director, Administrative Manpower and 

Management Service; Emily M. Tanquintic, Director, Comptrollership and 

Financial Management Service; Florendo B. Arias, Asst. Bureau Director, 

Bureau of Equipment; Oscar D. Abundo, Director, Legal Service; and, 

Abraham S. Divina, Jr., Director, Bureau of Equipment, all of the 

Department of Public Works and Highways (DPWH) 

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ppp 

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'-);2(%;";+'"1%2(-;('*%('1+;2N 

+&'-);2(-2(9"1%./(+(;%:(#/('*%(%;:N"2%12()0('*%('*1%%(YGZ(2%1,-&%(,%*-&.%2A 

C*%(1%29);:%;'2(+1%(.-+#.%A 

C*%1%(-2(+(;%%:(0)1(+(&%1'-0-&+'-);e1%F"%2'(#/('*%(%;:N"2%1()0(+(2%1,-&%(,%*-&.% 

#%0)1%( +;/( +&'-);(


%U&%9'-);+../("1>%;'()1(+#2)."'%./(-;:-29%;2+#.%(')(91%,%;'(-(91),-2-);2()0(5@J(5-1&".+1(=)A(MLNGHM(:+'%:(=),%(:)&";%:(#/('*%(%;:N 

"2%13(:"./(+991),%:(#/('*%(\%+:()0(@00-&%(&);&%1;%:(Y8-'*('*%(1+;7(*->*%1('*+;(X-,-2-); 

5*-%0ZR 

PAS C*%(I%F"-2-'-);(0)1(!"99.-%2()1(]F"-9(:%.%>+'-);()0(+"'*)1-'-%2R 

PAV 5%1'-0-&+'%()0(J&&%9'+;&%(8*-&*(2*+..(#%(2->;%:(#/('*%(%;:("2%1()0(2+-:(,%*-&.%A 

J..(:)&"(+;:(+":-'-;>(1".%2(+;:(1%>".+'-);23(2*+..(#%(2->;%:(#/('*% 

)00-&-+.(+;:e)1(2"99.-%1(&);&%1;%:(),%1('*%-1(1%29%&'-,%(91-;'%:(;+-);+.(X-1%&')1(I%/%23(%U%&"'%:(+;(+00-:+,-'('*+'(ìI state that I have no personal 

knowledge on the said documented transactions since I have no participation 

whatsoever, direct or indirect, in any of the attendant processes of documentation 

regarding the repairs of the vehicle.î \%(&);'-;"%:3(ìthat I learned the 

details of the supposed ten (10) repair transactions only upon being furnished 

photocopies of the accounting records and documents by the office of Atty. 

Sulaik and to which I state lack of knowledge thereof.î \%(%,%;(%


transactions show that my signature or initial does not appear anywhere therein.î 

Y%;%:(#/('*%(%;:N"2%1R 

+;:(Y&Z('*%(&%1'-0-&+'%()0(+&&%9'+;&%(2->;%:(#/('*%(%;:N"2%1(i91-)1(')(0";:-;> 

+;:e)1(91)&%22-;>()0(9+/*N9)8%1%:e;-0/-;>(.%;2A(C*%(-;:-,-:"+. 

+00-:+,-'2()0('*%('*1%%(%;:N"2%12(+''%2'-;>(')('*%(0+&'('*+'('*%1%(8%1%(;)(+&'"+. 

1%9+-12(:);%3(2).-:-0-%2('*%(&);&."2-);()0(01+":(+>+-;2'('*%(1%29);:%;'2A 

C*%(+99.-&+'-);()0('*%(1".-;>(-;('*%(&+2%()0(!-2')?+(,2A(X%2-%1')3(%'A(+.3(YEAIA 

=)A(PSSKHS3(!%9'%


T"1'*%1"-:%.-;%23(9.+;23(+;:(91)>1+)):(0+-'*(2*+..(.-7%8-2%(0+-.A(E)):(0+-'*(1%0%12(')(+(2'+'%()0('*% 

(-0('*%1%(-2(+(9)2-'-,%(+&'('*+'(2*)82('*% 

&);'1+1/(-;'%;'-);A(C*%(9)2-'-,%(+&'(1%0%11%:(')(-2('*%(2->;-;>e+00-U-;>()0('*%-1(2->N 

;+'"1%2();('*%(1%&).%&'(+2(+99.-%:(')(9"#.-&()00-&%12(i()0('1+;2+&'-);23(#%>-;;-;>(01);-;>e&)";'%12->;-;>()0(&*%&72(-;(9+/.->%;&%A 

\%1%-;(1%29);:%;'2(*+,%(2*)8;('*%-1(-;'%1%2'(0)1(9%12);+.(>+-;(+2(;-;>e&)";'%12->;-;> 

)0(&*%&72(0)1('*%(


+;:(.+&7()0(-;'%>1-'/3(+(:-29)2-'-);(')(.-%3(&*%+'3(:%&%-,%3(#%'1+/A(C*-2(&%;2"1+#.% 

&);:"&'(+22"1%+'%1((8*%;('*%()00%;:%1(-2(+(9"#.-&()00-&%1(8*)(-2 

&-1&"%:A 

41%"-.'/()0(:-2*);%2'/3(>1+,% 


J1-+23( @2&+1( XA(J#";:)3( +;:(J#1+*++'-,%3(U(U(U(:-1%&'%:(_2A(X%.+ 

51"?(lU(U(U((')(#)11)8('*%(+%;-)(U(U(U((') 

>-,%(')(&%1'+-;(%;-)3(8*)(%2(+;:()9%1+'%2 

'*%(T)1'(!+;'-+>)(4+17-;>(J1%+3(&+..%:(U(U(U(();(2+


9%12);+../(:%.-,%1%:(')(_2A(X%.+(51"?(-;('*%(@00-&%()0('*%(QJ(J:3(5*-%03(C)"1-2>%2'-);(%+1.-%1(>-,%;(')(+:(&%1%(2"00-&-%;'(#+2-2(')(&)%;-)(8*%; 

*%(81)'%(-;(*-2(i%;-)(') 

#%(>-,%;(')('*%(%;-)j3(1%29);:%;'(i1%."&'+;'./(>-,%(:%.+(51"?(('*%(4G3WWWAWWj 

+;:(').:(*%1(')(9+/(]">%;-)(-


iC*%(91)2%&"'-);(91%2%;'%:('8)(YLZ(8-';%22%23(;+1%%3(-;(*-2()00-&-+.(&+9+&-'/(+2('*%('*%;(J:();(*%1()8;(+&&)";' 

0)1('*%(.)+;(01)*(_2A(X%.+(51"?3(01)< 

*-2()8;(9)&7%'()1(9%12);+.(0";:23(%U9.+-;-;>(*%(8+;'%:(')(+,)-:(+;/(%


I%29);:%;'(T%11%1(+99%+12(')(#%(.%22('*+;(&+;:-:(8*%;(*%(:%;-%2();(*-2 

J00-:+,-'(U(U(U('*+'(*%(i:-:(;)'(7;)8(+#)"'('*%(&)(9+-:('*%(2+-:(2()0(+:%;&-%2(+&'-;>(8-'*-; 

'*%-1(+1%+()0(&)


[\]I]J!3(+(;"+'%(&1--2'1+'-);(+;:(.-&%;2-;>()0(.))2%(0-1%+1(.+82(8-'*-;();%(YPZ(/%+1(01)('*%(2+-:(0-1%+1

614 National Administrative Register Volume 14/1 

SEC. 5.(C*%(T-1%+1".+'-);2(YQIIZ('*+'(8-.. 

%00%&'-,%./(&+11/()"'('*%(91),-2-);2()0('*-2(]U%&"'-,%(@1:%1(2"#$%&'(')('*%(+991),+.e&);&"11%;&% 

)0('*%(!%&1%'+1/()0('*%(Q;'%1-)1(+;:(D)&+.(E),%1;e&);2).-:+'-);()0 

1%2".'2()0('*%(;+'-);+.(+;:(.)&+.(%.%&'-);2(YSec. 6, RA No. 8436Z3("'-.-?-;>(+991)91-+'%('%&*;).)>/ 

0)1(,)'-;>(+;:(%.%&'1);-&(YSec. 6, RA No. 8436Z3("'-.-?-;>(+991)91-+'%('%&*;).)>/(0)1(,)'-;> 

+;:(%.%&'1);-&(:%,-&%2(0)1(&)";'-;>()0(,)'%2(+;:(&+;,+22-;>()0(1%2".'2(YSec. 7, RA No. 

8436Z3(+;:(0)1('*-2(9"19)2%3('*%(5@_]D]5(-2(


=@[3(C\]I]T@I]3(Q3(ED@IQJ(_J5J4JEJDNJII@a@3(41%2-:%;'()0('*%(4*-.-99-;%23 

#/(,-1'"%()0('*%(9)8%12(,%2'%:(-;(()0(,)'%2R(+;: 

&A(5+;,+22-;>e&);2).-:+'-);()0(1%2".'2()0('*%(;+'-);+.(+;:(.)&+.(%.%&'-);2 

SECTION 2. Exclusive Use for Automated Election System Prescribed Under RA 

No. 8436(B(C*%(X^_(2*+..(%;2"1%('*+'('*%(+0)1%


I%29);:%;'(]U%&"'-,%(X-1%&')1(T%1;+;:)(JA(_%.%;:1%2()0('*%(D";>(5%;'%1()0('*% 

4*-.-99-;%2(YD54Z(-2('*%(2"#$%&'()0(+(&) 

1".%2();('*%(:1+8-;>()0(9%''/(&+2*((+:,+;&%2(')(&-1&"+;-?+'-);(9.+;(8-'*)"' 

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C*%((0+&'N0-;:-;>(&)()0(0)1%2(+>+-;2'(*-('*%(9%;:%;&/()0('*%(-;,%2'->+'-);(+>+-;2'(*-+-;2'(*-%2(+>+-;2'(1%29);:%;'(]U%&"'-,%(X-1%&')1(_%.%;:1%2(+2(0)..)82O 

iQ 

41)&"1%(&)


PAG(@;%()0('*%(&)"-.'/()0(-..%>+../(91)&"1-;>('*%(91%2%;'+'-);(#+;;%1(#/(&);N 

0)1(')(+(F")'+'-);(:+'%:(LV(=),%('*+'(-' 

8+2(2->;%:(+;:(%U%&"'%:();(GW(b"./(LWWP(+;:(;)'(WP(b+;"+1/(LWWPA


QQQA 

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D543('*%(1%29);:%;'(&1%+'%:(29%&-+.(9%''/(&+2*(+:,+;&%2('*1)">*('*%(-22"+;&%()0(2%,%1+. 

5%;'%1(@1:%12A(C*%2%(5%;'%1(@1:%12(+1%(,-).+'-);2()0(2%&'-);(PKS(Y>Z()0('*%(E),%1;(+;:(J":-'(_+;"+.(YiEJJ_jZA(C*%(91),-2-);(1%+:2O(i=)(&+2*(+:,+;&%(2*+..(#% 

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GAL(C*%(1%29);:%;'("2%:('*%2%(&+2*(+:,+;&%2(+;:(29%&-+.(9%''/(&+2*(0";:2(0)1('*%(&);N 

2'1"&'-);()0('*%(L ;: (0.))13(CN^.)&7(^"-.:-;>(-;(,-).+'-);()0('*%(EJJ_A(C*%(+('*%(&%-.-;>(+%(+),%1;+;-N


?+'-);e9%12);;%.(+;-?+'-);A 

SAL(C*%(1%29);:%;'(*+:(9.+&%:(*)29-'+.(2'+00('*+'(*%(&+;(&);'1).(+'('*%(91)9%1(9.+&%(') 

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1%29);:%;'(:-:(-'(+(2%&);:('-


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fQQA 

KAP(I%29);:%;'3();(#%*+.0()0('*%(D543(%U%&"'%:(+(5);'1+&'()0(D%+2%(:+'%:(WP(T%#1"+1/ 

LWWL3(8*%1%-;(*%(+&&)1:%:(')(*-1%%(8*+'2)N 

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QpA 

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I)#%1')(_);'%,-1>%;(+;:();%(')('*%(4.+;'-..+(5*-%0(4*+1


pQA 

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1%29);2-#-.-'-%2(+;:(0";&'-);2(:%'+-.%:(')(&)(%U&%9'(0)1('*%(2"&&%22-,%(:-)-;>(&);2'-'"'%2(+&'2()0(


PLAL(J0'%1('*%(+99)-;'(&)


4%;:-;>(&+2%2(8-'*('*%(@('*%(+&'r2s(-;(1%.+'-);(')(*-2(@00-&%3(8*-&*(*+,%(#%%;(:%%(J:(J:(Q;,%2'->+'-); 

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*Attachment not filed with ONAR. 

pfQA 

X1">(J#"2%(YX]_]I@DZ


PVAP(C*%(1%29);:%;'(+2-:%(01)(+;)(:%9%;:%;'(+#"2-;>('*%(:1">(X]_]I@DA(\%(*+2(&)%1&%: 

&)(8+/(#%/);:('*%(;)1('*%(X@\(T+&'(T-;:-;>(5) 

'*%(:1">(:%2()0('*%(T+&'(T-;:-;> 

5)+'-);3(4JE5(-22"%:(+; 

)1:%13(:+'%:(=),%"2')(_A(_+&+"1+'-);()0(+(D";>(5%;'%1(#"-.:-;>A 

C*%("99%1(9)1'-);(8+2(+(9+-;'%:(9-&'"1%()0('*%(41%2-:%;'(+;:(-2*-9(91)$%&'()0(\%1(]U&%..%;&/(41%2-:%;'(E.)1-+(_+&+9+>+.(J11)/)(8-'*(.),N 

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Loquitor(.-7%8-2%(-('*%(:)&'1-;%(%;";&-+'%:(-;(5+;+:+(,2A(C",%1+3(PSV(!5IJ 

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!"&*(+.'%1;+'-,%2(8+2(Y2-&Z( 

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;)(:%+-;3(-'(-2 

91%


TA @;('*%(9+/(D54(0";:2 

EA @;('*%(+8+1:-;>()0(+(5);'1+&'()0(D%+2%(0)1(1%29);:%;'c2()8;(+;:(:-1%&'(#%;%0-' 

\A T)1(";.+80".(+8+1:()0('*%(!9)1'2(5);2".'+;'((!%1,-&%2(J>1%%(-;F"-1/(:"1-;>('*%(+'-);(')('*%(!%&1%'+1/()0(\%+.'*();(b";%(LH3(LWWL(YJ;;%U(iLjv3(2"91+Z3(8*-&*('*% 

1%29);:%;'(-2(-;&)19)1+'-;>3('*%(2+('*% 

-;,%2'->+'-);A 

5);0)1


'-);()0('*%(91)&%%:-;>2()0('*%(5)2(+;:(4)2-'-);(4+9%12(')(#%(2"#+'-);Z(+;:('*%(_)'-);(0)1(Q;*-#-'-);(+1%(*%1%#/(X]=Q]X(0)1(.+&7()0(


@;(X%&%%(')(2)+>%(-;(91-,+'% 

91+&'-&%()0(


AS TO THE FIRST ISSUEO 

Whether or not Executive Director 

Dr. Fernando A. Melendres has caused 

undue injury to the Lung Center of the 

Philippines, including the Government, 

in the procurement of the presentation 

banner without public bidding complexed 

with falsification of documents. 

C*%(91)&"1%('*1)">*('*%(91)&%22()0('*%(1%F"-1%:((9"#.-&(#-::-;>A 

C*%(&);'%;'-);()0(1%29);:%;'(T%1;+;:)(JA(_%.%;:1%2('*+'('*%(&)),%1;('*%(D";> 

5%;'%1()0('*%(4*-.-99-;%2(+'('*%(#)'')(_+;"+.(YEJJ_Z3(f).A(P3(-'(-2(2)(91),-:%:('*+'(i;%>)'-+'%:(9"1N 

&*+2%(+1%((+'(.)8%1(91-&%2 

+;:(0)1(8*-&*(;)(2"-'+#.%(2"#2'-'"'%2()0('*%(2"99.-%2e%F"-9%)"2('%1),%1;


C*%(-11%>".+1-'/(-2(%,-:%;'(+2(2*)8;(#/('*%(0+&'('*+'('*%(&+;,+22(0)1('*%(2+-: 

";:%1'+7-;>(8+2(('*% 

91)9%1(1%;'+.(0%%2(0)1('*%(.%+2%()0(+(1))),%1;%(+;:(8-'*)"'(%,%; 

'*%(+"'*)1-'/(01)(5%;'%1()0('*%(4*-.-99-;%23("2-;>(2"&*(9)8%1 

0)1(*-),%1;


C*%(+..%>+'-);('*+'(1%29);:%;'(T%1;+;:)(JA(_%.%;:1%2(%;'%1%:(-;')(+(!9)1'2 

5);2".'+;'(!%1,-&%2(J>1%%(5%;'%1()0('*%(4*-.-99-;%2 

-2('*%(#):/('*+'(1%,-%8%:('*%(F"+.-0-&+'-);2()0(_1A(E):01%/(_);2):(+;:('*%1%+0'%1 

:"./(*-1%:(*-(5%;'%1()0('*%(4*-.-99-;%2('*+' 

'*%(]U%&"'-,%(5)


C*%(0-12'(&);'1+&'(:+'%:(b";%(P3(LWWW(*+2('*%(:"1+'-);()0(2%,%;(YKZ(


[)1'*/(')(;)'%(0"1'*%1('*+'('*%(2%&);:(J1&*-'%&'"1+.(!%1,-&%(J>1%%;+'"1%(')(+(:)&"-&+../('*%(9+1'/N 

2->;+')1/(*+2(;)'(/%'(2->;(Y2-&Z('*%(2"#$%&'(:)&";+')1-%2('*%1%')3(;)'();./ 

#/('*%(1%29);:%;'(T%1;+;:)(JA(_%.%;:1%2(#"'('*+'(-;&.":%2(&).->%;&%3(*+,-;>(2->;%: 

'*%('8)(J1&*-'%&'"1+.(!%1,-&%(J>1%%(&-1&"(-


[*-.%( '*%( ^)+1:( )0(C1"2'%%2( 1%F"-1%:( *-+;-?+'-);+.(2'1"&'"1%(8+2 

2"#;+;-?+'-);(-;('*% 

1%+.(2%;2%()0('*%(8)1:A 

I%29);:%;'(T%1;+;:)(JA(_%.%;:1%2(%,%;(+:+;-?+'-);+.(2'1"&'"1%(-;(>-,-;>(:%2->;+'-);2 

')('*%(:-00%1%;'(9*/2-&-+;2()0(D543(8*-&*(8+2(;)'(/%'(+991),%:(#/('*%(^)+1:()0 

C1"2'%%2A 

\%;&%3(-'(&+;(#%(>.%+;%:('*%1%N01)(&);:"&'%:(+(1%)1>+;-?+'-); 

2+;2('*%(1%F"-1%:(91-)1(+991),+.()0('*%(^)+1:()0(C1"2'%%23(:%29-'%('*%(0+&'('*+' 

'*%1%(8%1%(;)(:%


-;(:"'-%23(1%29);2-#-.-'-%23(2'+'"2()1(1+;7(8*-&*(".+'-);2 

)0('*%(5)


On the issue that respondent unlawfully/ 

excessively availed of gasoline expenses: 

C*%(1%&)1:2()0('*%(&+2%(0+-.%:(')(2"00-&-%;'./(2"#2'+;'-+'%(2"&*(+..%>+'-);A 

_)1%),%13('*%(;);N2"#(-;')(&);2-:%1+'-);((%,%1/(:%'+-.(91%2%;'%:(#/(#)'*(9+1'-%2();('*%(#+2-2()0 

'*%(.+82(+..%>%:./('1+;2>1%22%:('*%1%')3('*%(5)


T-12'3(-;('*%(91)&"1%)-;>('*1)">* 

'*%(9"#.-&(#-::-;>(1%F"-1%('*%(>),%1;.->%;&%A 

I%29);:%;'(T%1;+;:)(JA(_%.%;:1%23(+2(+(&);2%F"%;&%()0(*-2(+&'-);23(0+-.%: 

')(9%10)1%(*-2(:"'-%2(8-'*('*%(*->*%2'(:%>1%%()1(%U&%..%;&%(+;: 

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>-,%;('*%()99)1'";-'/(')(#%(*%+1:(#/(%23(')(8-'O


i=)($":>%()1($":-&-+.()00-&%1(2*+..(2-'(-;(%,%1/(&+2%(-;(8*-&*(*%3()1(*-2(8-0%()1 

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&)";2%.(8-'*-;('*%(0)"1'*(:%>1%%3(&)1)";:2(;)'(29%&-0-%:('*%1%-;(Yf%.%?(,A(5)"1'()0 

J99%+.23(GS(!5IJ(PWMR(4-+.(91)&"1%%()0(*-2(9)2-'-);(')(+&&)1:(";')(*-%(-;('*%(91-,+'%(91+&'-&%()0(1+,%(1+,%(


01)()0('*-2(&+2%(:%29-'%(1%&%-9'()0(+(&)9/()0('*%(+:%(+;:(;)'-&%()0 

*%+1-;>A( C*"23( '*-2( &+2%( 8+2( 1%2).,%:( );( '*%( #+2-2( )0( '*%( %,-:%;&%( 91%2%;'%:( #/( '*% 

&)


C*%(-;,%;')1/(#/('*%(@00-&%()0('*%(5-'/(41)2%&"')1()0(h"%?);(5-'/(-;(J91-.(PMMK()0('*% 

&+2%2(+22->;%:(')(1%29);:%;'(0)1(91%.-+'-);2 

+2(91),-:%:(0)1(";:%1(!%&'-);(G3(I".%(PPL()0('*%(I%,-2%:(I".%2(-;(51-),%1;A(\%1(&)3(>1+,%('*1%+'23(>1+,%(&)%1&-); 

+;:(


+;:('*%(2"#2%F"%;'(


[\]I]J!3('*%(@00-&%()0('*%(41%2-:%;'(-2('*%(2%+'()0(9)8%1()0(>),%1;),%1;1+


SECTION 2. Organizational Set-up and Staff Complement. C*%(@45!(2*+..(#%(";:%1 

'*%(:-1%&'(2"9%1,-2-);()0('*%(41%2-:%;'A(Q'(2*+..(#%(*%+:%:(#/('*%(41%2-:%;'-+.(5*-%0()0(!'+003 

8*)(2*+..(*+,%('*%(1+;7(+;:(%(/%+12(2*+..(#%(-;&.":%:(-;('*%(#":>%'()0('*%(@00-&%()0('*%(41%2-:%;'A 

SECTION 6. Repealing Clause.(J..(-22"+;&%23()1:%123(1".%2(+;:(1%>".+'-);2()1(9+1'2 

'*%1%)0(8*-&*(+1%(-;&);2-2'%;'(8-'*('*%(91),-2-);2()0('*-2(J:



â(C\](4I]!QX]=CO 



`)W)` 


Imposing the Penalty of Dismissal from the Service with the Accessory 

Penalties of Forfeiture of all Financial Benefits and Disqualification from 

the Government Service on Atty. Edgar Santos, 

Register of Deeds, Marikina City 

C*-2(1%2).,%2('*%(&)-2'%1()0(X%%:2()0(_+1-7-;+(5-'/(0)1(*-2(-;,).,%('*%1%);3('*%(41%2-:%;'-+.(J;'-NE1+0'(+;:(5)11"9'-);(Y4JE5Z(2"#


+A(C*%(9+1&%.2()0(.+;:(&),%1%:(+1%(+..(2-'"+'%:(-;(^+11-)(5"9+;>3(J;'-9).)3 

I-?+.A 

#A((C*%('-'.%2(8%1%(+..(:%1-,%:(01)-2'1+'-);(+2(0)..)82O 

lQ'(-2(0"1'*%1(&%1'-0-%:('*+'(2+-:(.+;:(8+2()1->-;+../(1%>-2'%1%:();('*% 

PL'*(:+/()0(_+/(-;('*%(/%+1(;-;%'%%;(*";:1%:(+;:(2%,%;'/('8)(-;('*% 

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=)A(=NPGMWKW3(-22"%:(-;(DI5(=)A(KSdG(I%&)1:(=)A(=NSWdPKAc 

C*%(-2'%1()0(X%%:2()0(_+1-7-;+(5-'/(+;:(+22"1%:(*-2(-; 

1%29);:%;'c2(91%2%;&%((#%'8%%;(&)%:(1%91%2%;'+'-,%3();% 

];>-;%%1(_-..+3()0('*%()'*%1(-;'%1%2'%:(9+1'/3(2"99)2%:./(+(C+-8+;%2%(>1)"93(') 

2%''.%('*%(:-29"'%(#/(9+/-;>(&)


iX%;/-;>('*%(&*+1>%(+>+-;2'(*-.->%;&%e-11%>".+1-'/(-;('*%(9%10)1".+1((5)"1'()0 

b"2'-&%Aj 

i69);(&+1%0".(%,+."+'-);()0('*%(1%&)1:23(-'(8+2(;)'%:('*+'(&)('*+' 

)0(b%2"2(=A(I+()0(C-'.%2(-2(;)'(8-'*)"'('*%(1%29);:%;'c2(7;)8.%:>%A(Q;(0+&'3 

*%(+:;%:


#/(@2&+1(DA(!%,-..+3(I%,%;"%(X-2'1-&'(@00-&%13(^QI3(0)1('*%(2+.%()0(T-12'(J..-+;&% 

2'+'%2('*+'(b%2"2(I+),%1;



â(C\](J6C\@IQCa(@T(C\](4I]!QX]=CO 

Y!EXAZ([JDX@(hA(TD@I]! 

Senior Deputy Executive Secretary 

`)W)` 


Institutionalizing the ìIsang Bayan, Isang Produkto, Isang Milyong Pisoî 

Program to Stimulate Local Economic Activity 

[\]I]J!3(+(;%%:(%U-2'2(0)1(+(2'+#.%(+.'%1;+'-,%(2'1+'%>/(')(2'-1)8'*()0()"1(.)&+.(21+%;%1+'-;>($)#23(:%,%.)9-;>('*%(&)";'1/2-:%3 

+;:(2"2'+-;-;>('*%(+;'-N9),%1'/('*1"2'()0(>),%1;;+(5+1'+(0)1(!1-#"2-;%22( +;:e)1( 2%1,-&%23( 8*%'*%1( 2-;>.% 

91)91-%')12*-93(&))9%1+'-,%3(9+1';%12*-9()1(&)19)1+'-);(8*)2%(')'+.(+22%'23(-;&."2-,%(()0('*)2% 

+1-2-;>(01)(&+'%>)1-%2O 

(!)"1&%A


J(T";:-;>(!)"1&%(2*+..(>1+;'(.)+;2(')(%.->-#.%(!_]2(8*-&*(*+,%(&)1+),%1;),%1;1+%;&/( )0( '*%( 41)>1+1+O 

-A(5))1:-;+'%(8-'*(.)&+.(>),%1;-#.%(!_]2(') 

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[\]I]J!3('*%(=+'-);+.(!'":(T+11-&".'"1%3 

#/(,-1'"%()0(]U%&"'-,%(@1:%1(Y]A@AZ(=)A(LHP3(:+'%:(J">"2'(LL3(LWWW3(+;:(]A@A(=)A(LMV3(:+'%: 

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[\]I]J!3();%()0('*%(-,%;(+ 

&%1'+-;(:%>1%%()0(+"');)(5) 

+"'*)1-'/(')(1%)1>+;-?%('*%(+:;(5)



Providing for the Establishment of Greater 

Manila Mass Transport System 

[\]I]J!3(_%'1)(_+;-.+(&);'-;"%2(')(#%('*%(&%;'%1()0(%


+991)91-+'%(+>%;&-%23(-0(0)";:(2"-'+#.%(+;:(&);,%;-%;'A(!9%&-0-&+../3(__XJ(2*+..(*+,%('*% 

0)..)8-;>(0";&'-);2(+;:(1%29);2-#-.-'-%2O 

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&)2'-;>R 

#Z(5))1:-;+'%('*%("2%()0('*%(.+;:(+;:e)1(91)9%1'-%2(;%%:%:(0)1('*%(91)$%&'(8-'*('*%(1%N 

29%&'-,%(+>%;&-%2(+;:e)1(%;'-'-%2()8;-;>('*%%;&-%23(%;'-'-%23(+;:e)1(91-,+'%(9%12);23(-;(+&&)1:+;&%(8-'*(%U-2'-;>(.+82 

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#Z(The SOUTH Terminal(B(C*-2(&)+..+;%2(Q;'%1&*+;>%(+;:('*%(%+2%)-;>(')(+;:(&)(01)(4=I(1+-.1)+:A 

Q;('*%(


:Z(The SOUTHWEST Terminal(B(C*-2(&)%12(>)-;>(')(+;:(&)(01)%;&-%2( +;:e)1( %;'-'-%2( )0( '*%( >),%1;('*%(]X!J(+;:(!)"'*(]U91%228+/(&)11-:)12(-;:-&+'%:(-;(!%&'-);(S(*%1%)0 

+1%(*%1%#/(:-1%&'%:(')(&))1:-;+'%(8-'*(__XJ(+;:(-


[\]I]J!3( 9"12"+;'( ')( _%+'%:(')('*%(]U%&"'-,%(!%&1%'+1/R 

[\]I]J!3(+::-'-);+.(+'%2(')('*%(]U%&"'-,%(!%&1%'+1/('*%(0)..)8-;>(JT4((01)


MA5@__Q!!Q@=(@T(@TTQ5]I!(YI]E6DJI(J=X(I]!]If]Z(TI@_(!]5@=X 

DQ]6C]=J=Ce]=!QE=(C@(DQ]6C]=J=C(5@D@=]De5@__J=X]I 

PWA(X]CJQD(@T(@TTQ5]I!(J=X(]=DQ!C]X(4]I!@==]D(TI@_(DQ]6C]=J=C 

5@D@=]De5@__J=X]I(J=X(^]D@[ 

PPA(I]CQI]_]=C(@T(@TTQ5]I!(TI@_(DQ]6C]=J=C(5@D@=]De5@__J=X]I(J=X 

^]D@[ 

PLA(X]!QE=JCQ@=(@T(4\QDQ44Q=](X]T]=!](J=X(JI_]X(T@I5]!(JCCJ5\]! 

TI@_((DQ]6C]=J=C(5@D@=]De5@__J=X]I(J=X(^]D@[(J=X 

JX_Q=Q!CIJCQf](J!!Q!CJ=C! (TI@_(C]5\=Q5JD(!]IE]J=C(C@(5\Q]T 

_J!C]I(!]IE]J=C 

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C*"23("9);(1%&%-9'('*%1%)03(-'(#%*)),%2(*-%('*+'(-'2(.)&7(8+2(:%0%&'-,%A(41":%;&%(:-&'+'%2('*+'(*%(2*)".:(;)'(*+,% 

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&-+../(2)('*+'('*%(1))1+9*2()1(9-&'"1%2 

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91)2%&"'-);(2%1,-&%A([)12%3(-'(*'(2%'(+(:+;>%1)"2(91%&%:%;'('*+'(8)".:(";N 

:%1+-;2'(&1-%;&%()0(+(>)):(0+'*%1()0('*%(0+(+;:(91%2%1,-;>('*%(%,-:%;&%(%;'1"2'%:(')('*%1+;'-;> 

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91%2%;'+'-);(-;(&)"1'()0('*%(91)*-#-'%:(:1">3(#%-;>('*%(&)19"2(:%.-&'-()0('*%()0N 

0%;2%3(-2()0(,-'+.(;%&%22-'/A(Q'(#%+12(2'1%22-;>3('))3('*+'('*%(1+


\)8%,%13(-;(.->*'()0('*%(')'+.-'/()0('*%(&-1&"(-;('*-2(&+2%3 

1%29);:%;'(91)2%&"')13(8*)(8+2('*%;(+(;%8(91)2%&"')1(+;:(*+2(;)'(#%%;('*)1N 

)">*./(+991-2%:()0('*%(9).-&/()0('*%()00-&%(-;('*%(2+0%7%%9-;>()0('*%(%,-:%;&%(#/ 

*-2(-0".(-;'%;'-);(')(&)%1)"2(:1">2A 

[%(;)'%('*+'(1%29);:%;'(-2(1%.+'-,%./(;%8(-;(*-2(9)2-'-);(+;:(+99+1%;'./(*+2(;)'3(:"1-;> 

'*%(9%1-):3(#%%;(91)9%1./(+991-2%:(#/(*-2(- 

2+0%>"+1:-;>(+..(9*/2-&+.(%,-:%;&%(-;(*-2(9)22%22-);(+;:(&);'1).A(C*-2(0+&'3(*)8%,%13(&+;;)'3 

2'+;:-;>(+.);%3(1%.-%,%(*-


[\]I]J!3(-;(.-;%(8-'*('*%(>),%1;/ 

)0( %&);)*./(F"+.-0-%:(91)0%22-);+.2 

&);-?+;'()0('*%(;%%:(')(1%)1>+;-?%(+2(+;:(8*%;(-'(-2 

-+;-?+'-);R 

[\]I]J!3(9"12"+;'(')(]U%&"'-,%(@1:%1(=)A(PLS3('*%(X%9+1'%;&/3(-2(+"'*)1-?%:(')(


#A(J:)9'(+(>1%22-,%(:-,%2'),%1;),%1;(-'2(9%1N 

0)1(9+''%1;(+;: 

F"+.-0-&+'-);(2'+;:+1:2(0)1(+..(9)2-'-);2(";:%1('*%(;%8(2'1"&'"1%3(91),-:%:('*+'('*%(&)2'()0 

0"../(- 

9+''%1;(Y@!!4Z(2*+..(#%(2"#$%&'(')('*%(+991),+.()0('*%(X%9+1'%;-;> 

)0('*-2(@1:%1A 

SEC. 3. Personnel Selection Committee. J;( -;:%9%;:%;'( 4%12);;%.( !%.%&'-); 

5)1+'"-'-%2(+;:(#%;%0-'2(')(8*-&*('*%/(%2(+;:()9'(')(2'+1'('*%-1 

>),%1;


SEC. 8. J..( ]U%&"'-,%( )1:%123( -22"+;&%23( )1:%123( 1".%2( +;:( 1%>".+'-);2( 8*-&*( +1% 

-;&);2-2'%;'(8-'*('*%(]U%&"'-,%(@1:%1(+1%(*%1%#/(1%,)7%:3(+


=@[3(C\]I]T@I]3(Q3(ED@IQJ(_J5J4JEJDNJII@a@3(41%2-:%;'()0('*%(I%9"#.-&()0 

'*%(4*-.-99-;%23(#/(,-1'"%()0('*%(9)8%12(,%2'%:(-;(


]"+1:-+;(-2(;)'(+(1%.+'-,%()0 

'*%(&*-.:3(+;(+00-:+,-'()0(>"+1:-+;2*-9(#/(2+-:(>"+1:-+;(2*+..(#%(%U%&"'%:(#/('8)(YLZ(:-2-;'%1%2'%: 

9%12);2Aj 

LA(!%&);:(9+1+>1+9*()0(Q'%


iQ;('*%(+#2%;&%()0('*%(@T[c2(9+1%;'23(+;:(-0(+;/()0('*%(@T[c2(#1)'*%1()1(2-2'%1(-2(2'-.. 

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KA(!%&'-);(]A(f+.-:-'/()0(5.+-(4%1-):(0)1(%+&*(5+2%2(-2(*%1%#/(+"-:%.-;%2();(!%&1%'+1-+'(9+&7+>%()0(#%;%0-'2(+;:(2%1,-&%2A 

I]4]JDQ=E(5DJ6!] 

J..(!%&1%'+1-+'(-22"+;&%2()1(9+1'2('*%1%)0(-;&);2-2'%;'(8-'*('*%(91),-2-);2()0('*-2(_@Q 

+1%(*%1%#/(+


PALAWAN COUNCIL FOR SUSTAINABLE DEVELOPMENT 


PCSD Resolution No. 03-207 

A Resolution Reconstituting the PCSD Legal Committee, Delegating 

Thereto the Quasi-Judicial Power to Adjudicate Violations of PCSD 

Administrative Order No. 00-05 and Other Similar or Related Orders, 

and Providing the Procedural Guidelines Therefor 

[\]I]J!3(!%&'-);(PM()0(I%9"#.-&(J&'(=)A(KVPP(%()0(D-,%(T-2*(5+'&*-;>3(5".'"1%3(C1+;29)1'(+;:(C1+:-;>(-; 

4+.+8+;j3(-;&.":-;>('*%1%-;('*%(9%;+.'/()0(0-;%3(&);0-2&+'-);(+;:(0)10%-'"1%R 

[\]I]J!3('*%1%(-2(+(;%%:(')(&1%+'%(+(2


SECTION 1. The PCSD Legal Committee N(C*%(45!X(D%>+.(5)


SECTION 6. Original Jurisdiction - C*%(45!X(D%>+.(5);%:(#/('*%(&)


SECTION 15. Technical Rules in Administrative Investigations - J:2(#%0)1%('*%(45!X(D%>+.(5)+'%(-'2(:%&-2-);(-; 

81-'-;>3(2'+'-;>('*%1%-;('*%(0+&'2(+;:('*%(.+8("9);(8*-&*('*%(2++.(5)(.+82(+1%(*%1%#/(+"'*)1-?%:(') 

+991%*%;:(,-).+')12()0(45!X(J:


&+>%3(,%22%.2()1(+-1&1+0'3()1('*%(+1'-&.%()1(+;/(9+1+9*%1;+.-+("2%:(-;(&);;%&'-);(8-'*(2"&* 

,-).+'-);(-2(.-+#.%(')(0)10%-'"1%(')(()00-&%1Y2Z(+;:('*%(8-';%22%2A(C*%(9%12);(8*)(*+2('+7%;('*%(9*)')>1+9*()0 

2%-?%:(-'% 

&)9/(')('*%(8-';%22%2A 

Q;(&+2%(.-,%(0-2*(-2(&);0-2&+'%:('*%(+991%*%;:-;>()00-&%1Y2Z(()1(-;('*%(+#2%;&%('*%1%)0('*% 

9-.)'(-;('*%(&+2%()0(+;(+-1&1+0'()1('*%(&+9'+-;(-;('*%(&+2%()0(+(,%22%.()1(:1-,%1(-;('*%(&+2%()0(+ 

,%*-&.%(2*+..(#%(:%%(1%29);2-#.%(9)22%22-);()0('*% 

91)9%1'/(+'('*%('-%;'(-;(0+&'(-2(";7;)8;()1(&+;;)'(#% 

1%+&*%:A 

SECTION 27. Disposition and Custody - 5);0-2&+'%:(.-,%(0-2*(+2(0+1(+2(91+&'-&+#.% 


Q;( &+2%2( )0( &);0-2&+'-);( )0( .-,%( 0-2*3( '*%( 91-)1-'/(


PHILIPPINE NUCLEAR RESEARCH INSTITUTE 


PNRI Administrative Order No. 1, s. 2002 

Prescribed Fees and Charges for PNRI Regulatory Activities 



J2(9%1('*%(+991),%:(X@!C(_%


PHILIPPINE PORTS AUTHORITY 


PPA Memorandum Circular No. 01-2003 

Suspension of Previously Approved Increase in Domestic Port Charges 





J:)9'%:O(LP(@&'A(LWWL 

Y!EXAZ(JDT@=!@(EA(56!Q 

NN)W)NN 

PPA Administrative Order No. 03-2002 

Reactivation of the National Port Advisory Council 






NN)W)NN 

10% Output Value Added Tax (VAT) on Truckscale Fees 

C*%([%->*-;>(T+&-.-'-%2()1(C1"&72&+.%(2-'"+'%:(+'('*%(=)1'*(E+'%()0('*%(4)1'()0(E%;%1+. 

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dASAH 44J(C%1(9+/%2A


dAd 5+1>)(]U-'eI%.%+2% 

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J:)9'%:O(PK(T%#A(LWWG 




NN)W)NN 

PPA Operations Memorandum Order No. 01-2003 

PPA Approval of Rates for Pilotage and other Ancillary Services


5%1'+-;(9-.)'c2(+22)&-+'-);2(+;:(+;&-..+1/(2%1,-&%()9%1+')12(*+,%(1%9)1'%:./(-22"%:(;)'-&%2 

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Y!EXAZ(!QDf]IQ@(XA(_J=EJ@J=E3(bIA 

Port Manager, PMO-Limay 

J991),%:O 

Y!EXAZ(D]@4@DX@(TA(^6=E6^6=E 

District Manager, PDO Manila/Northern Luzon


PHIVIDEC INDUSTRIAL AUTHORITY 


J:)9'%:O(GW(b"./(LWWL 

Rules and Regulations to Implement the Intent and Provisions 

of Presidential Decree No. 538, as Amended 


U.P. Law Complex, Diliman, QuezonCity) 

Y!EXAZ(E]=A(DQ!J=XI@(5A(J^JXQJ(YI]CAZ 

Chairman 

Y!EXAZ(EJÎQ]D(Â(]fJ=E]DQ!CJ 

Vice-Chairman/Administrator 

Y!EXAZ(Ê]=A(CIQ6=T@(4A(JE6!CQ=(YI]CAZ 

Y!EXAZ(JCCaA(\]=Ia(bA(^J5JD 

Y!EXAZ(_JIQJ=@(fA(^JX]DD]!3(bIA 

Y!EXAZ(]TI]=(]A(X]J=E 

Y!EXAZ(Ê]=A(I@E]DQ@(TA(fQDDJ=6]fJ(YI]CAZ 

Directors 

Y!EXAZ(IXA(=Q=TJ(6A(JD@=E(JD^J=QJ 

Y!EXAZ(J!]5A(]D]J=@I(TA(X](DJ(5I6u 

Ex-Officio Directors 

JCC]!CO 

Y!EXAZ(JCCaA(IJ6D(XA(IJEJ=XJ=E 

Corporate Secretary 

POLLUTION ADJUDICATION BOARD 


RESOLUTION NO. 01, s. 2002 

Committee on Fines


[\]I]J!3('*%(4J^(1%&)>;-?%2('*%(;%%:(')(%U'%;2-,%./(1%,-%8(9).."'-);(&+2%2(8-'* 

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-;(4).."'-);(5+2%2Z(1%F"-1%2(1%29);:%;'(')(2"#1+


Y!EXAZ(b@!](fQ5]=C](Â(!JDJuJI 

Member 

J''%2'%:(#/O 

Y!EXAZ(J=E]DQCJ(CA(ÎJ^J=C] 


QUEDAN AND RURAL CREDIT GUARANTEE CORPORATION 


Circular No. 197, s. 2003 

Amendment to the Rules and Regulations Governing Subscription 

by Private Investors to the Capital Stock of Quedancor 

5-1&".+1(=)A(WWL3(!%1-%2()0(PMML3(-2(*%1%#/(+O 

U U U U 

SA(Minimum Subscription(B(_-;-


U U U U 

4. DEFINITION OF TERMS 

U (((((U ((((((((U 

4.15 Self-Reliant Team (SRT)(B(1%0%12(')(+(>1)"9()0('*1%%(YGZ(')(0-0'%%;(YPdZ(0+1+/(0)1 

+'(.%+2'();%(YPZ(/%+1()1(8-'*('*%(2+


U U U 

VAG ].->-#-.-'/(I%F"-1%),%1;%;&/(2"&*(+2(=TJ(0)1(1-&%e9+.+/3(5@XJ(0)1(&)'');(+;:(=@EI@5@_J(0)1 

);-);R 

&A(_"2'(#%(01+;&*-2%:(+;:e)1(+&&1%:-'%:(#/(h6]XJ=5@Ie=TJR(+;: 

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8+1%*)"2%(1%&%-9'2(+;:e)1(=TJc2(EQTC(5%1'-0-&+'%3(8-'*(+(( +&&)";'( ')( 0";:( '*%( &*%&7e2( -22"%:( -;( 0+,)1( )0 

h6]XJ=5@IA 

C*%(h6]XJ=5@I((5+2*-%1(2*+..(-22"%(+;(@00-&-+.(I%&%-9'(Y@IZ(')('*%(CD3(-;:-&+'-;> 

9+/


(((7.13 Incentive for TL 

C*%(CD()0('*%(!IC(2*+..(#%(%;'-'.%:(')(+;(-;&%;'-,%(%F"-,+.%;'(')(Ldo()0('*%(')'+.(1%>".+1 

-;'%1%2'(&)..%&'%:(01)1)"9c2(.+2'(+



J:)9'%:O(LG(b+;A(LWWG 

Y!EXAZ(=]D!@=(5A(^6]=JTD@I 

President & CEO 

NN)W)NN 


Implementing Guidelines on QUEDANCOR Corn 

Logistical Competitiveness Program 






NN)W)NN 


QUEDANCOR Implementing Guidelines for the Credit Entrepreneurship 

Assistance Program for Agricultural Engineers, Agricultural 

Engineering Student and Organizations 

J:)9'%:O(GW(b+;A(LWWL 






NN)W)NN 


Amendment to Implementing Guidelines on Quedancor Self-Reliant 

Financing Program For Small and Medium Enterprises (SRF-SMEs) 

(With respect to the SULONG Program) 




J:)9'%:O(WM(T%#A(LWWG 




NN)W)NN 


Quedancor-Philippine Business for Social Progress Program on Income 

Augmentation and Livelihood for the Urban and Rural Poor 

(QUEDANCOR-PBSP-IAL-URP) 

A Special Window under the GMA-CARES-IAL-URP* 

J:)9'%:O(LK(T%#A(LWWG 




J:)9'%:O(Pd(@&'A(LWWG 



NN)W)NN 

Circular No. 188, s. 2002 

Amendment to Implementing Guidelines on Quedancor 

Program for Coffee Rehabilitation and Development 






NN)W)NN 


Ginintuang Masaganang Ani-Countrywide Assistance for Rural Employment 

and Services Program for Fisheries Sector (GMA-CARES-FISHERIES)


J:)9'%:O(PH(=),A(LWWL 




J:)9'%:O(PM(=),A(LWWL 



NN)W)NN 


Amendments to Revised Guidelines for the Issuance of 

Quedancor Notes for Countryside Business 




J:)9'%:O(LP(=),A(LWWL 



NN)W)NN 


Amendment to the Implementing Guidelines on Quedancor 

Program for Inventory Financing (QPIF) 






NN)W)NN 


Implementing Guidelines on Quedancor Self-Reliant 

Financing for SMEs (SRF-SMEs)


J:)9'%:O(LK(=),A(LWWL 






NN)W)NN 


Quedancor Program for the Palm Oil Project (QUEDANCOR-PALM-OIL) 

A Special Window under the GMA-CARES-IAL-SRF (SRT Model) 

J:)9'%:O(LH(=),A(LWWL 






NN)W)NN 


Amendment to the Implementing Guidelines on the Charging of Notarial 

Services for Loan Documents Under Various Quedancor Programs 






NN)W)NN 


Implementing Guidelines on the Sale of Quedancor Promissory 

Notes (PNs) to Secondary Market* 




J:)9'%:O(WM(X%&A(LWWL 



SECURITIES AND EXCHANGE COMMISSION 


SEC Memorandum Circular No. 1, s. 2003 

Adoption of Statement of Financial Accounting Standards (SFAS) 

J:)9'%:O(PG(T%#A(LWWG 


U.P. Law Complex, Diliman Quezon City) 


Y!EXAZ(DQDQJ(IA(^J6CQ!CJ 

Chairperson 

NN)W)NN 

SEC Memorandum Circular No. 2, s. 2003 

Revised Scale of Fines 

C)(0"1'*%1(1+'-);+.-?%('*%(9%;+.'-%2(#%-;>(-(I".%2 

+;:(I%>".+'-);23(+;:('*%(Q;,%2'(1".%2(+;: 

1%>".+'-);23('*%(5)()0(&1-%2(+>+-;2'('*%(9%12);e2(1%29);2-#.%(0)1('*%(,-).+'-);A 

C*-2(5-1&".+1(2*+..('+7%(%00%&'(0-0'%%;(YPdZ(:+/2(01)



N O T I C E 

Amendments of SRC Rule 68 

=)'-&%( -2( *%1%#/( >-,%;( '*+'( '*%( 5)*'(+#)"'(#/('*%(!'+'%(!'+;N 

:+1:2(Y!TJ!2ZeQ;'%1;+'-);+.(J&&)";'-;>(!'+;:+1:2(YQJ!2Z('*+'('))7(%00%&'(#%>-;;-;>(b+;"N 

+1/(P3(LWWLA 

C*%(0)..)8-;>(:%0-;-'-);2(+1%(91),-:%:(";:%1(2%&'-);(PY#ZO 

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2'+'"'%()1(+;((+>1%%


Related parties(%U-2'2(8*%;();%(9+1'/(*+2('*%(+#-.-'/(')(&);'1).('*%()'*%1(9+1'/()1(%U%1&-2% 

2->;-0-&+;'(-;0."%;&%(),%1('*%()'*%1(9+1'/(-;((0-;+;&-+.(+;:()9%1+'-;>(:%&-2-);2A 

Significant influence(-2('*%(9+1'-&-9+'-);(-;('*%(0-;+;&-+.(+;:()9%1+'-;>(9).-&/(:%&-2-);2()0 

+;(%;'%191-2%3(#"'(;)'(-;(&);'1).()0('*)2%(9).-&-%2A(!->;-0-&+;'(-;0."%;&%(),%1;-;>(#):/()0('*% 

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5A _+'%1-+.(-;'%1&)


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#A(X%.%'-);()0('*%(0)..)8-;>O 

J;;%U(VHNb YE%;%1+.(=)'%2(')(T-;+;&-+.(!'+'%


SA X-2&.)2"1%()0('*%(0)..)8-;>(-;(X%&%%(.)22%2((&+9-'+.-?%:(+2(9+1'()0(91)9%1'/3(9.+;'(+;:(%F"-9O 

iC*%(%(&)


#A !->;+')1/();('*%(!'+'%(5.+"2%(+;:(]00%&N 

'-,-'/Z()0('*%(I".%O 

i---A J;/()00-&%1()1(:-1%&')1()0(+(&)('*%(0-;+;&-+.(2'+'%%2 

'*%(2"#


!%&'-);(G()0(!I5(I".%(VHAP(-2(+('*%(0-12'(F"+1'%1()0 

LWWGA(J..(91-)1(9%1-):(0-;+;&-+.(:+'+e-;0)1"-:%.-;%2O 

!%&A(PA(@;./(-;2'-'"'-);+.(+991+-2%12(+&&1%:-'%:(#/('*%(5)%: 

#/(&)()0(+;/(1%>-2'%1%:(+22)&-+'-);()0(+991+-2+.(&)


:Z C*%(&)


SUGAR REGULATORY ADMINISTRATION 


Circular Letter No. 16, s. 2002-2003 

Implementing Guidelines on Advance Refining of ìAî or U.S. Export 

Sugar Re: Sugar Order No. 4, series of 2002-2003 

J:)9'%:O(PK(X%&A(LWWL 




Y!EXAZ(bJ_]!(5A(D]X]!_J 


NN)W)NN 

Sugar Order No. 4, s. 2002-2003 

Advance Refining of the ìAî Export Sugar of Previous Crop Years 

by Sugar Mills with Refineries (Integrated Mills) 

J:)9'%:O(PK(X%&A(LWWL 




â(J6C\@IQCa(@T(C\](!6EJI(^@JIXO 



NN)W)NN 

Memorandum Circular No. 1, s. 2002-2003 

Fake Quedan Permits 

Q;(,-%8()0('*%(1%9)1'%:(0+7%(F"%:+;N9%1


4.%+2%(&);'+&'(-".+')1/(J:"-:+;&%A 

J:)9'%:O(WK(_+1&*(LWWG 




NN)W)NN 

Sugar Order No. 5, s. 2002-2003 

Strengthening the MDDC and Providing Guidelines for its Accreditation 

(Amendments to Sugar Order No. 8, s. of 1990-1991) 

[\]I]J!3(]U%&"'-,%(@1:%1(=)A(PH(:+'%:(LW(_+/(PMHV3(&1%+'-;>('*%(!">+1(I%>".+')1/ 

J:),%1;1%+'%1(+;:(2->;-0-&+;'(9+1'-&-9+'-);()0('*% 

91-,+'%(2%&')1A 

[\]I]J!3('*%(!">+1(I%>".+')1/(J:+'%:(!">+1(@1:%1(=)A(H3(!%1-%2()0(PMMWNPMMP(:+'%:(WL 

*Text Available at Office of the National Administrative Register, U.P. Law Complex, 

Diliman, Quezon City.

710 


_+/(PMMP(&1%+'-;>('*%(_-..(X-2'1-&'(X%,%.)9+1(-;:"2'1/ 

29%&-0-&+../(-;('*%(0-%.:()0(1%2%+1&*(+;:(:%,%.)9+;-?+'-);2(-;(:%.-,%1-;>(2%1,-&%2(+;:(0+1(-;;),+'-);(')(2">+1&+;%(2'+7%*).:%123('*%1%#/ 

#1-:>-;>('*%(9%1&%-,%:(>+9(#%'8%%;(1%2%+1&*3(%00%&'-,%(:-22%),%1;),%1;"-:%.-;%2(0)1('*%-1(+&&1%:-'+'-);(*+,%(') 

#%(2%'(-;(9.+&%R 

=@[3( (C\]I]T@I]3( 9"12"+;'( ')( '*%( 9)8%12( ,%2'%:( -;( '*%( !">+1( I%>".+')1/ 

J:(+;: 

+&&1%:-'+'-);()0('*%(_-..(X-2'1-&'(X%,%.)9%'*%1(8-'*(+..(9.+;'+'-);2(+:*%1%;' 

'*%1%')A(J(9.+;'+'-);(-2(:%%+1&+;%(#%-;>(:%.-,%1%:(')(+(+1:.%22()0(&);'1+&'(1%.+'-);(#%'8%%;('*%(+1&+;%(-;('*%(9.+;'+'-);(&);'->")"2(')('*%(1+


Section 3. Coverage 

!"#$%&'(')(&)+1 

@1:%1(=)A(H3(!%1-%2()0(PMMWNPMMP(1%O(51%+'-);()0(_-..(X-2'1-&'(X%,%.)9+1(%1()9%1+'-);+.(+2 

)0('*%(%00%&'-,-'/()0('*%2%(1".%2(+;:(1%>".+'-);2A 

GAG =%8./(&1%+'%:(_XX5((-;(+((_X55(91-)1(')('*% 

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'*%(&1%+'-);()0('*%(2+-:(_XX5(2*)".:(#%(:);%(8-'*-;();%(YPZ(/%+1(01)+1(-;:"2'1/(9+1'-&-9+;'2e2'+7%*).:%12(+2(0)..)82O 

SAPAP(@;%(YPZ(1%>".+1(1%91%2%;'+'-,%(01)+1&+;%(91):"&'-);('%&*;).)>-%2R 

dAL Q:%;'-0-&+'-);()0(91):"&'-,-'/(&);&%1;2(+;:(91)#.%

712 


dAG 41%9+1+'-);(+;:(-*('*%(!IJ(1%91%2%;'+'-,%R 

dAd T)1(+22-2'+;&%(0)1('*%(:%,%.)91+('*%(&);'-;"-;>(@"'1%+&*(41)$%&'(0)1('*%(!">+1(Q;:"2'1/(Y@4!QZ(2%% 

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VAdAP]U'%;2-);(2%1,-&%2R 

VAdAL="12%1/()9%1+'-);2R 

VAdAGA(@'*%1(91)$%&'2(-;-'-+'%:(#/('*%(!IJ3()1(0";:%:(#/('*%(>),%1;


VAV Q+1(I%>".+')1/(J:*'(')(,%1-0/('*%(+"'*%;'-&-'/()0('*%(2"99)1'-;>(:)&"



_XX5(2*+..(0)10%-'(-'2(91-,-.%>%(')(9+1'-&-9+'%(-;(+;/(91)$%&'e91)>1+),%1;),%1;


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^)+1:()0(X-1%&')12(:"1-;>((-'2(1%>".+1(%;%1+.(&-1&".+'-);Aj 

T)1(/)"1(-;0)13(')(8-'O 

iI]!@Df]X3( +2( -'( -2( *%1%#/( 1%2).,%:3( '*+'( '*%( ^)+1:( *%1%#/( 1%,)7%2( '*% 

-22"+;&%()0('%

716 


2*+..(&)".+1(.-&%;2%A 

C*-2(^)+1:(1%2)."'-);(*%1%#/(1%,)7%2(_%3(')(8-'O 

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iI]!@Df]X3(+2(-'(-2(*%1%#/(1%2).,%:3('*+'('*%(1%F"-1%*'%:(,-:%)>1+(.+#%.2e*).)>1+%( .%>-'-

Volume 14 Number 1 (January to March 2003) - University of the ...

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