ACT NO.

2137 - THE WAREHOUSE RECEIPTS LAW

I — THE ISSUE OF WAREHOUSE RECEIPTS

Section 1. Persons who may issue receipts. — Warehouse receipts may be issued by any warehouseman.

Sec. 2. Form of receipts; essential terms. — Warehouse receipts need not be in any particular form but
every such receipt must embody within its written or printed terms:

(a) The location of the warehouse where the goods are stored,

(b) The date of the issue of the receipt,

(c) The consecutive number of the receipt,

(d) A statement whether the goods received will be delivered to the bearer, to a specified person or to a
specified person or his order,

(e) The rate of storage charges,

(f) A description of the goods or of the packages containing them,

(g) The signature of the warehouseman which may be made by his authorized agent,

(h) If the receipt is issued for goods of which the warehouseman is owner, either solely or jointly or in
common with others, the fact of such ownership, and

(i) A statement of the amount of advances made and of liabilities incurred for which the warehouseman
claims a lien. If the precise amount of such advances made or of such liabilities incurred is, at the
time of the issue of, unknown to the warehouseman or to his agent who issues it, a statement of the
fact that advances have been made or liabilities incurred and the purpose thereof is sufficient.

A warehouseman shall be liable to any person injured thereby for all damages caused by the omission from
a negotiable receipt of any of the terms herein required.

Sec. 3. Form of receipts. — What terms may be inserted. — A warehouseman may insert in a receipt
issued by him any other terms and conditions provided that such terms and conditions shall not:

(a) Be contrary to the provisions of this Act.

(b) In any wise impair his obligation to exercise that degree of care in the safe-keeping of the goods
entrusted to him which is reasonably careful man would exercise in regard to similar goods of his
own.

Sec. 4. Definition of non-negotiable receipt. — A receipt in which it is stated that the goods received will be
delivered to the depositor or to any other specified person, is a non-negotiable receipt.

Sec. 5. Definition of negotiable receipt. — A receipt in which it is stated that the goods received will be
delivered to the bearer or to the order of any person named in such receipt is a negotiable receipt.

No provision shall be inserted in a negotiable receipt that it is non-negotiable. Such provision, if inserted
shall be void.

Sec. 6. Duplicate receipts must be so marked. — When more than one negotiable receipt is issued for the
same goods, the word "duplicate" shall be plainly placed upon the face of every such receipt, except the
first one issued. A warehouseman shall be liable for all damages caused by his failure so to do to any one
who purchased the subsequent receipt for value supposing it to be an original, even though the purchase
be after the delivery of the goods by the warehouseman to the holder of the original receipt.
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Sec. 7. Failure to mark "non-negotiable." — A non-negotiable receipt shall have plainly placed upon its face
by the warehouseman issuing it "non-negotiable," or "not negotiable." In case of the warehouseman's
failure so to do, a holder of the receipt who purchased it for value supposing it to be negotiable, may, at his
option, treat such receipt as imposing upon the warehouseman the same liabilities he would have incurred
had the receipt been negotiable.

This section shall not apply, however, to letters, memoranda, or written acknowledgment of an informal
character.

II — OBLIGATIONS AND RIGHTS OF WAREHOUSEMEN UPON THEIR RECEIPTS

Sec. 8. Obligation of warehousemen to deliver. — A warehouseman, in the absence of some lawful excuse
provided by this Act, is bound to deliver the goods upon a demand made either by the holder of a receipt
for the goods or by the depositor; if such demand is accompanied with:

(a) An offer to satisfy the warehouseman's lien;

(b) An offer to surrender the receipt, if negotiable, with such indorsements as would be necessary for
the negotiation of the receipt; and

(c) A readiness and willingness to sign, when the goods are delivered, an acknowledgment that they
have been delivered, if such signature is requested by the warehouseman.

In case the warehouseman refuses or fails to deliver the goods in compliance with a demand by the holder
or depositor so accompanied, the burden shall be upon the warehouseman to establish the existence of a
lawful excuse for such refusal.

Sec. 9. Justification of warehouseman in delivering. — A warehouseman is justified in delivering the goods,

subject to the provisions of the three following sections, to one who is:

(a) The person lawfully entitled to the possession of the goods, or his agent;

(b) A person who is either himself entitled to delivery by the terms of a non-negotiable receipt issued for
the goods, or who has written authority from the person so entitled either indorsed upon the receipt
or written upon another paper; or

(c) A person in possession of a negotiable receipt by the terms of which the goods are deliverable to
him or order, or to bearer, or which has been indorsed to him or in blank by the person to whom
delivery was promised by the terms of the receipt or by his mediate or immediate indorser.

Sec. 10. Warehouseman's liability for misdelivery. — Where a warehouseman delivers the goods to one
who is not in fact lawfully entitled to the possession of them, the warehouseman shall be liable as for
conversion to all having a right of property or possession in the goods if he delivered the goods otherwise
than as authorized by subdivisions (b) and (c) of the preceding section, and though he delivered the goods
as authorized by said subdivisions, he shall be so liable, if prior to such delivery he had either:

(a) Been requested, by or on behalf of the person lawfully entitled to a right of property or possession in
the goods, not to make such deliver; or

(b) Had information that the delivery about to be made was to one not lawfully entitled to the
possession of the goods.

Sec. 11. Negotiable receipt must be cancelled when goods delivered. — Except as provided in section
thirty-six, where a warehouseman delivers goods for which he had issued a negotiable receipt, the
negotiation of which would transfer the right to the possession of the goods, and fails to take up and cancel
the receipt, he shall be liable to any one who purchases for value in good faith such receipt, for failure to

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deliver the goods to him, whether such purchaser acquired title to the receipt before or after the delivery of
the goods by the warehouseman.

Sec. 12. Negotiable receipts must be cancelled or marked when part of goods delivered. — Except as
provided in section thirty-six, where a warehouseman delivers part of the goods for which he had issued a
negotiable receipt and fails either to take up and cancel such receipt or to place plainly upon it a statement
of what goods or packages have been delivered, he shall be liable to any one who purchases for value in
good faith such receipt, for failure to deliver all the goods specified in the receipt, whether such purchaser
acquired title to the receipt before or after the delivery of any portion of the goods by the warehouseman.

Sec. 13. Altered receipts. — The alteration of a receipt shall not excuse the warehouseman who issued it
from any liability if such alteration was:

(a) Immaterial,

(b) Authorized, or

(c) Made without fraudulent intent.

If the alteration was authorized, the warehouseman shall be liable according to the terms of the receipt as
altered. If the alteration was unauthorized but made without fraudulent intent, the warehouseman shall be
liable according to the terms of the receipt as they were before alteration.

Material and fraudulent alteration of a receipt shall not excuse the warehouseman who issued it from
liability to deliver according to the terms of the receipt as originally issued, the goods for which it was issued
but shall excuse him from any other liability to the person who made the alteration and to any person who
took with notice of the alteration. Any purchaser of the receipt for value without notice of the alteration shall
acquire the same rights against the warehouseman which such purchaser would have acquired if the
receipt had not been altered at the time of purchase.

Sec. 14. Lost or destroyed receipts. — Where a negotiable receipt has been lost or destroyed, a court of
competent jurisdiction may order the delivery of the goods upon satisfactory proof of such loss or
destruction and upon the giving of a bond with sufficient sureties to be approved by the court to protect the
warehouseman from any liability or expense, which he or any person injured by such delivery may incur by
reason of the original receipt remaining outstanding. The court may also in its discretion order the payment
of the warehouseman's reasonable costs and counsel fees.

The delivery of the goods under an order of the court as provided in this section, shall not relieve the
warehouseman from liability to a person to whom the negotiable receipt has been or shall be negotiated for
value without notice of the proceedings or of the delivery of the goods.

Sec. 15. Effect of duplicate receipts. — A receipt upon the face of which the word "duplicate" is plainly
placed is a representation and warranty by the warehouseman that such receipt is an accurate copy of an
original receipt properly issued and uncanceled at the date of the issue of the duplicate, but shall impose
upon him no other liability.

Sec. 16. Warehouseman cannot set up title in himself . — No title or right to the possession of the goods,
on the part of the warehouseman, unless such title or right is derived directly or indirectly from a transfer
made by the depositor at the time of or subsequent to the deposit for storage, or from the warehouseman's
lien, shall excuse the warehouseman from liability for refusing to deliver the goods according to the terms of
the receipt.

Sec. 17. Interpleader of adverse claimants. — If more than one person claims the title or possession of the
goods, the warehouseman may, either as a defense to an action brought against him for non-delivery of the
goods or as an original suit, whichever is appropriate, require all known claimants to interplead.

Sec. 18. Warehouseman has reasonable time to determine validity of claims. — If someone other than the
depositor or person claiming under him has a claim to the title or possession of goods, and the
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warehouseman has information of such claim, the warehouseman shall be excused from liability for
refusing to deliver the goods, either to the depositor or person claiming under him or to the adverse
claimant until the warehouseman has had a reasonable time to ascertain the validity of the adverse claim or
to bring legal proceedings to compel claimants to interplead.

Sec. 19. Adverse title is no defense except as above provided. — Except as provided in the two preceding
sections and in sections nine and thirty-six, no right or title of a third person shall be a defense to an action
brought by the depositor or person claiming under him against the warehouseman for failure to deliver the
goods according to the terms of the receipt.

Sec. 20. Liability for non-existence or misdescription of goods. — A warehouseman shall be liable to the
holder of a receipt for damages caused by the non-existence of the goods or by the failure of the goods to
correspond with the description thereof in the receipt at the time of its issue. If, however, the goods are
described in a receipt merely by a statement of marks or labels upon them or upon packages containing
them or by a statement that the goods are said to be goods of a certain kind or that the packages
containing the goods are said to contain goods of a certain kind or by words of like purport, such
statements, if true, shall not make liable the warehouseman issuing the receipt, although the goods are not
of the kind which the marks or labels upon them indicate or of the kind they were said to be by the
depositor.

Sec. 21. Liability for care of goods. — A warehouseman shall be liable for any loss or injury to the goods
caused by his failure to exercise such care in regard to them as reasonably careful owner of similar goods
would exercise, but he shall not be liable, in the absence of an agreement to the contrary, for any loss or
injury to the goods which could not have been avoided by the exercise of such care.

Sec. 22. Goods must be kept separate. — Except as provided in the following section, a warehouseman
shall keep the goods so far separate from goods of other depositors and from other goods of the same
depositor for which a separate receipt has been issued, as to permit at all times the identification and
redelivery of the goods deposited.

Sec. 23. Fungible goods may be commingled if warehouseman authorized. — If authorized by agreement
or by custom, a warehouseman may mingle fungible goods with other goods of the same kind and grade.
In such case, the various depositors of the mingled goods shall own the entire mass in common and each
depositor shall be entitled to such portion thereof as the amount deposited by him bears to the whole.

Sec. 24. Liability of warehouseman to depositors of commingled goods. — The warehouseman shall be
severally liable to each depositor for the care and redelivery of his share of such mass to the same extent
and under the same circumstances as if the goods had been kept separate.

Sec. 25. Attachment or levy upon goods for which a negotiable receipt has been issued. — If goods are
delivered to a warehouseman by the owner or by a person whose act in conveying the title to them to a
purchaser in good faith for value would bind the owner, and a negotiable receipt is issued for them, they
can not thereafter, while in the possession of the warehouseman, be attached by garnishment or otherwise,
or be levied upon under an execution unless the receipt be first surrendered to the warehouseman or its
negotiation enjoined. The warehouseman shall in no case be compelled to deliver up the actual
possession of the goods until the receipt is surrendered to him or impounded by the court.

Sec. 26. Creditor's remedies to reach negotiable receipts. — A creditor whose debtor is the owner of a
negotiable receipt shall be entitled to such aid from courts of appropriate jurisdiction, by injunction and
otherwise, in attaching such receipt or in satisfying the claim by means thereof as is allowed at law or in
equity in these islands in regard to property which can not readily be attached or levied upon by ordinary
legal process.

Sec. 27. What claims are included in the warehouseman's lien. — Subject to the provisions of section thirty,
a warehouseman shall have a lien on goods deposited or on the proceeds thereof in his hands, for all
lawful charges for storage and preservation of the goods; also for all lawful claims for money advanced,
interest, insurance, transportation, labor, weighing, coopering and other charges and expenses in relation

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to such goods, also for all reasonable charges and expenses for notice, and advertisements of sale, and for
sale of the goods where default had been made in satisfying the warehouseman's lien.

Sec. 28. Against what property the lien may be enforced. — Subject to the provisions of section thirty, a
warehouseman's lien may be enforced:

(a) Against all goods, whenever deposited, belonging to the person who is liable as debtor for the
claims in regard to which the lien is asserted, and

(b) Against all goods belonging to others which have been deposited at any time by the person who is
liable as debtor for the claims in regard to which the lien is asserted if such person had been so
entrusted with the possession of goods that a pledge of the same by him at the time of the deposit
to one who took the goods in good faith for value would have been valid.

Sec. 29. How the lien may be lost. — A warehouseman loses his lien upon goods:

(a) By surrendering possession thereof, or

(b) By refusing to deliver the goods when a demand is made with which he is bound to comply under
the provisions of this Act.

Sec. 30. Negotiable receipt must state charges for which the lien is claimed. — If a negotiable receipt is
issued for goods, the warehouseman shall have no lien thereon except for charges for storage of goods
subsequent to the date of the receipt unless the receipt expressly enumerated other charges for which a
lien is claimed. In such case, there shall be a lien for the charges enumerated so far as they are within the
terms of section twenty-seven although the amount of the charges so enumerated is not stated in the
receipt.

Sec. 31. Warehouseman need not deliver until lien is satisfied. — A warehouseman having a lien valid
against the person demanding the goods may refuse to deliver the goods to him until the lien is satisfied.

Sec. 32. Warehouseman's lien does not preclude other remedies. — Whether a warehouseman has or has
not a lien upon the goods, he is entitled to all remedies allowed by law to a creditor against a debtor for the
collection from the depositor of all charges and advances which the depositor has expressly or impliedly
contracted with the warehouseman to pay.

Sec. 33. Satisfaction of lien by sale. — A warehouseman's lien for a claim which has become due may be
satisfied as follows:

(a) An itemized statement of the warehouseman's claim, showing the sum due at the time of the notice
and the date or dates when it becomes due,

(b) A brief description of the goods against which the lien exists,

(c) A demand that the amount of the claim as stated in the notice of such further claim as shall accrue,
shall be paid on or before a day mentioned, not less than ten days from the delivery of the notice if it
is personally delivered, or from the time when the notice shall reach its destination, according to the
due course of post, if the notice is sent by mail,

(d) A statement that unless the claim is paid within the time specified, the goods will be advertised for
sale and sold by auction at a specified time and place.

In accordance with the terms of a notice so given, a sale of the goods by auction may be had to satisfy any
valid claim of the warehouseman for which he has a lien on the goods. The sale shall be had in the place
where the lien was acquired, or, if such place is manifestly unsuitable for the purpose of the claim specified
in the notice to the depositor has elapsed, and advertisement of the sale, describing the goods to be sold,
and stating the name of the owner or person on whose account the goods are held, and the time and place
of the sale, shall be published once a week for two consecutive weeks in a newspaper published in the
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place where such sale is to be held. The sale shall not be held less than fifteen days from the time of the
first publication. If there is no newspaper published in such place, the advertisement shall be posted at
least ten days before such sale in not less than six conspicuous places therein.

From the proceeds of such sale, the warehouseman shall satisfy his lien including the reasonable charges
of notice, advertisement and sale. The balance, if any, of such proceeds shall be held by the
warehouseman and delivered on demand to the person to whom he would have been bound to deliver or
justified in delivering goods.

At any time before the goods are so sold, any person claiming a right of property or possession therein may
pay the warehouseman the amount necessary to satisfy his lien and to pay the reasonable expenses and
liabilities incurred in serving notices and advertising and preparing for the sale up to the time of such
payment. The warehouseman shall deliver the goods to the person making payment if he is a person
entitled, under the provision of this Act, to the possession of the goods on payment of charges thereon.
Otherwise, the warehouseman shall retain the possession of the goods according to the terms of the
original contract of deposit.

Sec. 34. Perishable and hazardous goods. — If goods are of a perishable nature, or by keeping will
deteriorate greatly in value, or, by their order, leakage, inflammability, or explosive nature, will be liable to
injure other property , the warehouseman may give such notice to the owner or to the person in whose
names the goods are stored, as is reasonable and possible under the circumstances, to satisfy the lien
upon such goods and to remove them from the warehouse and in the event of the failure of such person to
satisfy the lien and to receive the goods within the time so specified, the warehouseman may sell the goods
at public or private sale without advertising. If the warehouseman, after a reasonable effort, is unable to
sell such goods, he may dispose of them in any lawful manner and shall incur no liability by reason thereof.

The proceeds of any sale made under the terms of this section shall be disposed of in the same way as the
proceeds of sales made under the terms of the preceding section.

Sec. 35. Other methods of enforcing lien. — The remedy for enforcing a lien herein provided does not
preclude any other remedies allowed by law for the enforcement of a lien against personal property nor bar
the right to recover so much of the warehouseman's claim as shall not be paid by the proceeds of the sale
of the property.

Sec. 36. Effect of sale. — After goods have been lawfully sold to satisfy a warehouseman's lien, or have
been lawfully sold or disposed of because of their perishable or hazardous nature, the warehouseman shall
not thereafter be liable for failure to deliver the goods to the depositor or owner of the goods or to a holder
of the receipt given for the goods when they were deposited, even if such receipt be negotiable.

III — NEGOTIATION AND TRANSFER OF RECEIPTS

Sec. 37. Negotiation of negotiable receipt of delivery. — A negotiable receipt may be negotiated by
delivery:

(a) Where, by terms of the receipt, the warehouseman undertakes to deliver the goods to the bearer, or

(b) Where, by the terms of the receipt, the warehouseman undertakes to deliver the goods to the order
of a specified person, and such person or a subsequent indorsee of the receipt has indorsed it in
blank or to bearer.

Where, by the terms of a negotiable receipt, the goods are deliverable to bearer or where a negotiable
receipt has been indorsed in blank or to bearer, any holder may indorse the same to himself or to any other
specified person, and, in such case, the receipt shall thereafter be negotiated only by the indorsement of
such indorsee.

Sec. 38. Negotiation of negotiable receipt by indorsement. — A negotiable receipt may be negotiated by
the indorsement of the person to whose order the goods are, by the terms of the receipt, deliverable. Such
indorsement may be in blank, to bearer or to a specified person. If indorsed to a specified person, it may
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be again negotiated by the indorsement of such person in blank, to bearer or to another specified person.
Subsequent negotiation may be made in like manner.

Sec. 39. Transfer of receipt. — A receipt which is not in such form that it can be negotiated by delivery may
be transferred by the holder by delivery to a purchaser or donee.

A non-negotiable receipt can not be negotiated, and the indorsement of such a receipt gives the transferee
no additional right.

Sec. 40. Who may negotiate a receipt. — A negotiable receipt may be negotiated:

(a) By the owner thereof, or

(b) By any person to whom the possession or custody of the receipt has been entrusted by the owner,
if, by the terms of the receipt, the warehouseman undertakes to deliver the goods to the order of the
person to whom the possession or custody of the receipt has been entrusted, or if, at the time of
such entrusting, the receipt is in such form that it may be negotiated by delivery.

Sec. 41. Rights of person to whom a receipt has been negotiated. — A person to whom a negotiable
receipt has been duly negotiated acquires thereby:

(a) Such title to the goods as the person negotiating the receipt to him had or had ability to convey to a
purchaser in good faith for value, and also such title to the goods as the depositor or person to
whose order the goods were to be delivered by the terms of the receipt had or had ability to convey
to a purchaser in good faith for value, and

(b) The direct obligation of the warehouseman to hold possession of the goods for him according to the
terms of the receipt as fully as if the warehouseman and contracted directly with him.

Sec. 42. Rights of person to whom receipt has been transferred. — A person to whom a receipt has been
transferred but not negotiated acquires thereby, as against the transferor, the title of the goods subject to
the terms of any agreement with the transferor.

If the receipt is non-negotiable, such person also acquires the right to notify the warehouseman of the
transfer to him of such receipt and thereby to acquire the direct obligation of the warehouseman to hold
possession of the goods for him according to the terms of the receipt.

Prior to the notification of the warehouseman by the transferor or transferee of a non-negotiable receipt, the
title of the transferee to the goods and the right to acquire the obligation of the warehouseman may be
defeated by the levy of an attachment or execution upon the goods by a creditor of the transferor or by a
notification to the warehouseman by the transferor or a subsequent purchaser from the transferor of a
subsequent sale of the goods by the transferor.

Sec. 43. Transfer of negotiable receipt without indorsement. — Where a negotiable receipt is transferred
for value by delivery and the indorsement of the transferor is essential for negotiation, the transferee
acquires a right against the transferor to compel him to indorse the receipt unless a contrary intention
appears. The negotiation shall take effect as of the time when the indorsement is actually made.

Sec. 44. Warranties of a sale of receipt. — A person who, for value, negotiates or transfers a receipt by
indorsement or delivery, including one who assigns for value a claim secured by a receipt, unless a
contrary intention appears, warrants:

(a) That the receipt is genuine,

(b) That he has a legal right to negotiate or transfer it,

(c) That he has knowledge of no fact which would impair the validity or worth of the receipt, and

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 (d) That he has a right to transfer the title to the goods and that the goods are merchantable or fit for a
particular purpose whenever such warranties would have been implied, if the contract of the parties
had been to transfer without a receipt of the goods represented thereby.

Sec. 45. Indorser not a guarantor. — The indorsement of a receipt shall not make the indorser liable for any
failure on the part of the warehouseman or previous indorsers of the receipt to fulfill their respective
obligations.

Sec. 46. No warranty implied from accepting payment of a debt. — A mortgagee, pledgee, or holder for
security of a receipt who, in good faith, demands or receives payment of the debt for which such receipt is
security, whether from a party to a draft drawn for such debt or from any other person, shall not, by so
doing, be deemed to represent or to warrant the genuineness of such receipt or the quantity or quality of
the goods therein described.

Sec. 47. When negotiation not impaired by fraud, mistake or duress. — The validity of the negotiation of a
receipt is not impaired by the fact that such negotiation was a breach of duty on the part of the person
making the negotiation or by the fact that the owner of the receipt was induced by fraud, mistake or duress
or to entrust the possession or custody of the receipt to such person, if the person to whom the receipt was
negotiated or a person to whom the receipt was subsequently negotiated paid value therefor, without notice
of the breach of duty, or fraud, mistake or duress.

Sec. 48. Subsequent negotiation. — Where a person having sold, mortgaged, or pledged goods which are
in warehouse and for which a negotiable receipt has been issued, or having sold, mortgaged, or pledged
the negotiable receipt representing such goods, continues in possession of the negotiable receipt, the
subsequent negotiation thereof by the person under any sale or other disposition thereof to any person
receiving the same in good faith, for value and without notice of the previous sale, mortgage or pledge,
shall have the same effect as if the first purchaser of the goods or receipt had expressly authorized the
subsequent negotiation.

Sec. 49. Negotiation defeats vendor's lien. — Where a negotiable receipt has been issued for goods, no
seller's lien or right of stoppage in transitu shall defeat the rights of any purchaser for value in good faith to
whom such receipt has been negotiated, whether such negotiation be prior or subsequent to the notification
to the warehouseman who issued such receipt of the seller's claim to a lien or right of stoppage in transitu.
Nor shall the warehouseman be obliged to deliver or justified in delivering the goods to an unpaid seller
unless the receipt is first surrendered for cancellation.

IV — CRIMINAL OFFENSES

Sec. 50. Issue of receipt for goods not received. — A warehouseman, or an officer, agent, or servant of a
warehouseman who issues or aids in issuing a receipt knowing that the goods for which such receipt is
issued have not been actually received by such warehouseman, or are not under his actual control at the
time of issuing such receipt, shall be guilty of a crime, and, upon conviction, shall be punished for each
offense by imprisonment not exceeding five years, or by a fine not exceeding ten thousand pesos, or both.

Sec. 51. Issue of receipt containing false statement. — A warehouseman, or any officer, agent or servant of
a warehouseman who fraudulently issues or aids in fraudulently issuing a receipt for goods knowing that it
contains any false statement, shall be guilty of a crime, and upon conviction, shall be punished for each
offense by imprisonment not exceeding one year, or by a fine not exceeding two thousand pesos, or by
both.

Sec. 52. Issue of duplicate receipt not so marked. — A warehouse, or any officer, agent, or servant of a
warehouseman who issues or aids in issuing a duplicate or additional negotiable receipt for goods knowing
that a former negotiable receipt for the same goods or any part of them is outstanding and uncanceled,
without plainly placing upon the face thereof the word "duplicate" except in the case of a lost or destroyed
receipt after proceedings are provided for in section fourteen, shall be guilty of a crime, and, upon
conviction, shall be punished for each offense by imprisonment not exceeding five years, or by a fine not
exceeding ten thousand pesos, or by both.

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Sec. 53. Issue for warehouseman's goods or receipts which do not state that fact. — Where they are
deposited with or held by a warehouseman goods of which he is owner, either solely or jointly or in
common with others, such warehouseman, or any of his officers, agents, or servants who, knowing this
ownership, issues or aids in issuing a negotiable receipt for such goods which does not state such
ownership, shall be guilty of a crime, and, upon conviction, shall be punished for each offense by
imprisonment not exceeding one year, or by a fine not exceeding two thousand pesos, or by both.

Sec. 54. Delivery of goods without obtaining negotiable receipt. — A warehouseman, or any officer, agent,
or servant of a warehouseman, who delivers goods out of the possession of such warehouseman, knowing
that a negotiable receipt the negotiation of which would transfer the right to the possession of such goods is
outstanding and uncanceled, without obtaining the possession of such receipt at or before the time of such
delivery, shall, except in the cases provided for in sections fourteen and thirty-six, be found guilty of a
crime, and, upon conviction, shall be punished for each offense by imprisonment not exceeding one year,
or by a fine not exceeding two thousand pesos, or by both.

Sec. 55. Negotiation of receipt for mortgaged goods. — Any person who deposits goods to which he has
no title, or upon which there is a lien or mortgage, and who takes for such goods a negotiable receipt which
he afterwards negotiates for value with intent to deceive and without disclosing his want of title or the
existence of the lien or mortgage, shall be guilty of a crime, and, upon conviction, shall be punished for
each offense by imprisonment not exceeding one year, or by a fine not exceeding two thousand pesos, or
by both.

V — INTERPRETATION

Sec. 56. Case not provided for in Act. — Any case not provided for in this Act shall be governed by the
provisions of existing legislation, or in default thereof, by the rule of the law merchant.

Sec. 57. Name of Act. — This Act may be cited as the Warehouse Receipts Act.

Sec. 58. Definitions. — (a) In this Act, unless the content or subject matter otherwise requires:

"Action" includes counterclaim, set-off, and suits in equity as provided by law in these islands.

"Delivery" means voluntary transfer of possession from one person to another.

"Fungible goods" means goods of which any unit is, from its nature by mercantile custom, treated as the
equivalent of any other unit.

"Goods" means chattels or merchandise in storage or which has been or is about to be stored.

"Holder" of a receipt means a person who has both actual possession of such receipt and a right of
property therein.

"Order" means an order by indorsement on the receipt.

"Owner" does not include mortgagee.

"Person" includes a corporation or partnership or two or more persons having a joint or common interest.

To "purchase" includes to take as mortgagee or as pledgee.

"Receipt" means a warehouse receipt.

"Value" is any consideration sufficient to support a simple contract. An antecedent or pre-existing

obligation, whether for money or not, constitutes value where a receipt is taken either in satisfaction thereof
or as security therefor.

"Warehouseman" means a person lawfully engaged in the business of storing goods for profit.
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 (b) A thing is done "in good faith" within the meaning of this Act when it is in fact done honestly,
whether it be done negligently or not.

Sec. 59. Application of Act. — The provisions of this Act do not apply to receipts made and delivered prior
to the taking effect hereof.

Sec. 60. Repeals. — All acts and laws and parts thereof inconsistent with this Act are hereby repealed.

Sec. 61. Time when Act takes effect. — This Act shall take effect ninety days after its publication in the
Official Gazette of the Philippines shall have been completed.

10
 ACT NO. 3893 - AN ACT TO REGULATE THE BUSINESS OF RECEIVING RICE FOR STORAGE,
GIVING THE DIRECTOR OF COMMERCE AND INDUSTRY THE DUTY TO ENFORCE IF, PROVIDING
PENALTIES FOR VIOLATION OF THE PROVISIONS, EXEMPTING COOPERATIVE MARKETING
ASSOCIATIONS OF RICE PRODUCERS FROM APPLICATION THEREOF, REPEALING ACT
NUMBERED THIRTY-FOUR HUNDRED AND SIXTY-NINE AND FOR OTHER PURPOSES

Section 1. This Act shall be known by the short title of "BONDED WAREHOUSE ACT."

Sec. 2. As used in this Act, the term "warehouse" shall be deemed to mean every building, structure, or
other protected inclosure in which rice is kept for storage. The term "rice" shall be deemed to mean either
palay in bundles, or in grains, or clean rice, or both. "Person" including corporation or partnership or two or
more persons having joint or common interest; "warehouseman" means a person engaged in the business
receiving rice for storage; and "receipt" means any receipt issued by a warehouseman for rice delivered to
him. For the purpose of this Act, the business of receiving rice for storage shall include (1) any contract or
transaction wherein the warehouseman is obligated to return the very same rice delivered to him or pay its
value;(2) any contract or transaction wherein the rice delivered is to be milled for and on account of the
owner thereof; (3) any contract or transaction wherein the rice delivered is commingled with the rice
delivered by or belonging to other persons and the warehouseman is obligated to return the rice of the
same kind or pay its value.

Sec. 3. No person shall engage in the business of receiving rice for storage without first securing a license
therefore from the Director of the Bureau of Commerce and Industry. Said license shall be annual and shall
expire on the thirty-first day of December.

Sec. 4. Any person applying for a license to engage in the business of receiving rice for storage shall set
forth in the application the place or places where the business and warehouse are to be established or
located and the maximum quantity of rice to be received. The application shall be accompanied by a cash
bond or a bond secured by real estate or signed by a duly authorized bonding company, the amount of
which shall be fixed by the Director of the Bureau of Commerce and Industry at not less than thirty-three
and one third percent of the market value of the maximum quantity or rice to be received. Said bond shall
be so conditioned as to respond for the market value of the rice actually delivered and received at any time
the warehouseman is unable to return the rice or to pay its value. The bond shall be approved by the
Director of the Bureau of Commerce and Industry before issuing a license under this Act, to satisfy himself
concerning the sufficiency of such bond, and to determine whether the warehouse for which such license is
applied for is suitable for the proper storage of rice.

Sec. 5. Whenever the Director of the Bureau of Commerce and Industry shall determine that a bond
approved by him, is or any cause, has become insufficient, he may require an additional bond or bonds to
be given by the warehouseman concerned, conforming with the requirements of the preceding section, and
unless the same be given within the time fixed by a written demand therefor the license of such warehouse
may be suspended or revoked.

Sec. 6. Every person licensed under this Act to engage in the business of receiving rice for storage shall
insure the rice so received and stored against fire.

Sec. 7. Any person injured by the breach of any obligation to secure which a bond is given, under the
provisions of this Act, shall be entitled to sue on the bond in his own name in any court of competent
jurisdiction to recover the damages he may have sustained by such breach. Nothing contained herein shall
except any property of assets of any warehouseman from being sued on in case the bond given is not
sufficient to respond for the full market value of the rice received by such warehouseman.

Sec. 8. Every warehouseman licensed under this Act shall receive for storage, so far as his license and the
capacity of his warehouse permit, any rice, of the kind customarily stored therein by him, which may be
tendered to him in a suitable condition for warehousing, in the usual manner and in the ordinary and usual
course of business, without making any discrimination between persons desiring to avail themselves of
warehouse facilities.

11
Sec. 9. Every warehouseman licensed under this Act shall keep a complete record of the rice received by
him, of the receipts issued therefor of the withdrawals, of the liquidations and of all receipts returned to and
cancelled by him. He shall make reports to the Director of Bureau of Commerce and Industry concerning
his warehouse and the conditions, contents, operations, and business thereof in such form and at such
time as the said Director may require, and shall conduct said warehouse in all other respects in compliance
with this Act and the rules and regulations made in accordance therewith.

Sec. 10. The Director of Bureau of Commerce and Industry shall from time to time make such rules and
regulations as he may deem necessary for the efficient execution of the provisions of this Act.

Sec. 11. Any person engaging in the business of receiving rice for storage in violation of Section three of
this Act shall be deemed guilty of misdemeanor, and upon conviction thereof shall be punished by
imprisonment of not less than one month or by a fine of not more than five thousand pesos, or both, in the
discretion of the court.

Sec. 12. Any warehouseman licensed under this Act receiving a quantity of rice greater than that specified
in his application and license, shall, upon conviction, be fined double the market value of the rice so
received in excess of the quantity of rice he is authorized to receive.

Sec. 13. Any person entering into connivance or combination with any warehouseman that is not licensed
under this Act, with the purpose of evading the provisions of section three of this Act, shall be deemed
guilty of misdemeanor, and upon conviction thereof, shall be fined not more than two hundred pesos or
imprisonment for not more than one months, or both, in the discretion of the court.

Sec. 14. The Director of the Bureau of Commerce and Industry may, after opportunity for hearing has been
afforded to the license concerned, suspend or revoke any license issued to any warehouseman, conducting
a warehouse under this Act, for any violation or failure to comply with any provision of this Act or of the
rules and regulations made by virtue thereof.

Sec. 15. This Act shall not be applicable to cooperative marketing associations of rice producers organized
under Act Numbered Three Thousand Four Hundred and Twenty-five known as the "Cooperative Marketing
Law," provided such associations shall not receive, for storage, rice from non-members which is greater in
quantity than one-half of the total quantity of rice received from members, at any time.

Sec. 16. If any clause, sentence, or paragraph, or part of this Act shall, for any reason, be adjusted by any
court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the
remainder thereof, but shall be confined in his operation to the clause, sentence, paragraph or part thereof
directly involved in the controversy in which such judgment shall have been rendered.

Sec. 17. This Act shall take effect on January First, nineteen hundred and thirty-two.

12
 MALACAÑANG
Manila

PRESIDENTIAL DECREE No. 115 January 29, 1973

PROVIDING FOR THE REGULATION OF TRUST RECEIPTS TRANSACTIONS

WHEREAS, the utilization of trust receipts, as a convenient business device to assist importers and
merchants solve their financing problems, had gained popular acceptance in international and domestic
business practices, particularly in commercial banking transactions;

WHEREAS, there is no specific law in the Philippines that governs trust receipt transactions, especially the
rights and obligations of the parties involved therein and the enforcement of the said rights in case of
default or violation of the terms of the trust receipt agreement;

WHEREAS, the recommendations contained in the report on the financial system which have been
accepted, with certain modifications by the monetary authorities included, among others, the enactment of
a law regulating the trust receipt transactions;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers
vested in me by the Constitution, as Commander-in-Chief of all the Armed Forces of the Philippines, and
pursuant to Proclamation No. 1081, dated September 21, 1972, and General Order No. 1, dated
September 22, 1972, as amended, and in order to effect the desired changes and reforms in the social,
economic, and political structure of our society, do hereby order and decree and make as part of the law of
the land the following:

Section 1. Short Title. This Decree shall be known as the Trust Receipts Law.

Section 2. Declaration of Policy. It is hereby declared to be the policy of the state (a) to encourage and
promote the use of trust receipts as an additional and convenient aid to commerce and trade; (b) to provide
for the regulation of trust receipts transactions in order to assure the protection of the rights and
enforcement of obligations of the parties involved therein; and (c) to declare the misuse and/or
misappropriation of goods or proceeds realized from the sale of goods, documents or instruments released
under trust receipts as a criminal offense punishable under Article Three hundred and fifteen of the Revised
Penal Code.

Section 3. Definition of terms. As used in this Decree, unless the context otherwise requires, the term

(a) "Document" shall mean written or printed evidence of title to goods.

(b) "Entrustee" shall refer to the person having or taking possession of goods, documents or
instruments under a trust receipt transaction, and any successor in interest of such person for the
purpose or purposes specified in the trust receipt agreement.

(c) "Entruster" shall refer to the person holding title over the goods, documents, or instruments
subject of a trust receipt transaction, and any successor in interest of such person.

(d) "Goods" shall include chattels and personal property other than: money, things in action, or
things so affixed to land as to become a part thereof.

(e) "Instrument" means any negotiable instrument as defined in the Negotiable Instrument Law; any
certificate of stock, or bond or debenture for the payment of money issued by a public or private
corporation, or any certificate of deposit, participation certificate or receipt, any credit or investment
instrument of a sort marketed in the ordinary course of business or finance, whereby the entrustee,
after the issuance of the trust receipt, appears by virtue of possession and the face of the instrument
to be the owner. "Instrument" shall not include a document as defined in this Decree.

13
 (f) "Purchase" means taking by sale, conditional sale, lease, mortgage, or pledge, legal or equitable.

(g) "Purchaser" means any person taking by purchase.

(h) "Security Interest" means a property interest in goods, documents or instruments to secure
performance of some obligations of the entrustee or of some third persons to the entruster and
includes title, whether or not expressed to be absolute, whenever such title is in substance taken or
retained for security only.

(i) "Person" means, as the case may be, an individual, trustee, receiver, or other fiduciary,
partnership, corporation, business trust or other association, and two more persons having a joint or
common interest.

(j) "Trust Receipt" shall refer to the written or printed document signed by the entrustee in favor of
the entruster containing terms and conditions substantially complying with the provisions of this
Decree. No further formality of execution or authentication shall be necessary to the validity of a
trust receipt.

(k) "Value" means any consideration sufficient to support a simple contract.

Section 4. What constitutes a trust receipt transaction. A trust receipt transaction, within the meaning of
this Decree, is any transaction by and between a person referred to in this Decree as the entruster, and
another person referred to in this Decree as entrustee, whereby the entruster, who owns or holds absolute
title or security interests over certain specified goods, documents or instruments, releases the same to the
possession of the entrustee upon the latter's execution and delivery to the entruster of a signed document
called a "trust receipt" wherein the entrustee binds himself to hold the designated goods, documents or
instruments in trust for the entruster and to sell or otherwise dispose of the goods, documents or
instruments with the obligation to turn over to the entruster the proceeds thereof to the extent of the amount
owing to the entruster or as appears in the trust receipt or the goods, documents or instruments themselves
if they are unsold or not otherwise disposed of, in accordance with the terms and conditions specified in the
trust receipt, or for other purposes substantially equivalent to any of the following:

1. In the case of goods or documents, (a) to sell the goods or procure their sale; or (b) to
manufacture or process the goods with the purpose of ultimate sale: Provided, That, in the case of
goods delivered under trust receipt for the purpose of manufacturing or processing before its
ultimate sale, the entruster shall retain its title over the goods whether in its original or processed
form until the entrustee has complied fully with his obligation under the trust receipt; or (c) to load,
unload, ship or tranship or otherwise deal with them in a manner preliminary or necessary to their
sale; or

2. In the case of instruments,

a) to sell or procure their sale or exchange; or

b) to deliver them to a principal; or

c) to effect the consummation of some transactions involving delivery to a depository or

register; or

d) to effect their presentation, collection or renewal

The sale of goods, documents or instruments by a person in the business of selling goods,
documents or instruments for profit who, at the outset of the transaction, has, as against the buyer,
general property rights in such goods, documents or instruments, or who sells the same to the buyer
on credit, retaining title or other interest as security for the payment of the purchase price, does not
constitute a trust receipt transaction and is outside the purview and coverage of this Decree.

14
Section 5. Form of trust receipts; contents. A trust receipt need not be in any particular form, but every
such receipt must substantially contain (a) a description of the goods, documents or instruments subject of
the trust receipt; (2) the total invoice value of the goods and the amount of the draft to be paid by the
entrustee; (3) an undertaking or a commitment of the entrustee (a) to hold in trust for the entruster the
goods, documents or instruments therein described; (b) to dispose of them in the manner provided for in
the trust receipt; and (c) to turn over the proceeds of the sale of the goods, documents or instruments to the
entruster to the extent of the amount owing to the entruster or as appears in the trust receipt or to return the
goods, documents or instruments in the event of their non-sale within the period specified therein.

The trust receipt may contain other terms and conditions agreed upon by the parties in addition to those
hereinabove enumerated provided that such terms and conditions shall not be contrary to the provisions of
this Decree, any existing laws, public policy or morals, public order or good customs.

Section 6. Currency in which a trust receipt may be denominated. A trust receipt may be denominated in
the Philippine currency or any foreign currency acceptable and eligible as part of international reserves of
the Philippines, the provisions of existing law, executive orders, rules and regulations to the contrary
notwithstanding: Provided, however, That in the case of trust receipts denominated in foreign currency,
payment shall be made in its equivalent in Philippine currency computed at the prevailing exchange rate on
the date the proceeds of sale of the goods, documents or instruments held in trust by the entrustee are
turned over to the entruster or on such other date as may be stipulated in the trust receipt or other
agreements executed between the entruster and the entrustee.

Section 7. Rights of the entruster. The entruster shall be entitled to the proceeds from the sale of the
goods, documents or instruments released under a trust receipt to the entrustee to the extent of the amount
owing to the entruster or as appears in the trust receipt, or to the return of the goods, documents or
instruments in case of non-sale, and to the enforcement of all other rights conferred on him in the trust
receipt provided such are not contrary to the provisions of this Decree.

The entruster may cancel the trust and take possession of the goods, documents or instruments subject of
the trust or of the proceeds realized therefrom at any time upon default or failure of the entrustee to comply
with any of the terms and conditions of the trust receipt or any other agreement between the entruster and
the entrustee, and the entruster in possession of the goods, documents or instruments may, on or after
default, give notice to the entrustee of the intention to sell, and may, not less than five days after serving or
sending of such notice, sell the goods, documents or instruments at public or private sale, and the entruster
may, at a public sale, become a purchaser. The proceeds of any such sale, whether public or private, shall
be applied (a) to the payment of the expenses thereof; (b) to the payment of the expenses of re-taking,
keeping and storing the goods, documents or instruments; (c) to the satisfaction of the entrustee's
indebtedness to the entruster. The entrustee shall receive any surplus but shall be liable to the entruster for
any deficiency. Notice of sale shall be deemed sufficiently given if in writing, and either personally served
on the entrustee or sent by post-paid ordinary mail to the entrustee's last known business address.

Section 8. Entruster not responsible on sale by entrustee. The entruster holding a security interest shall
not, merely by virtue of such interest or having given the entrustee liberty of sale or other disposition of the
goods, documents or instruments under the terms of the trust receipt transaction be responsible as
principal or as vendor under any sale or contract to sell made by the entrustee.

Section 9. Obligations of the entrustee. The entrustee shall (1) hold the goods, documents or instruments
in trust for the entruster and shall dispose of them strictly in accordance with the terms and conditions of
the trust receipt; (2) receive the proceeds in trust for the entruster and turn over the same to the entruster to
the extent of the amount owing to the entruster or as appears on the trust receipt; (3) insure the goods for
their total value against loss from fire, theft, pilferage or other casualties; (4) keep said goods or proceeds
thereof whether in money or whatever form, separate and capable of identification as property of the
entruster; (5) return the goods, documents or instruments in the event of non-sale or upon demand of the
entruster; and (6) observe all other terms and conditions of the trust receipt not contrary to the provisions of
this Decree.

15
Section 10. Liability of entrustee for loss. The risk of loss shall be borne by the entrustee. Loss of goods,
documents or instruments which are the subject of a trust receipt, pending their disposition, irrespective of
whether or not it was due to the fault or negligence of the entrustee, shall not extinguish his obligation to
the entruster for the value thereof.

Section 11. Rights of purchaser for value and in good faith. Any purchaser of goods from an entrustee with
right to sell, or of documents or instruments through their customary form of transfer, who buys the goods,
documents, or instruments for value and in good faith from the entrustee, acquires said goods, documents
or instruments free from the entruster's security interest.

Section 12. Validity of entruster's security interest as against creditors. The entruster's security interest in
goods, documents, or instruments pursuant to the written terms of a trust receipt shall be valid as against
all creditors of the entrustee for the duration of the trust receipt agreement.

Section 13. Penalty clause. The failure of an entrustee to turn over the proceeds of the sale of the goods,
documents or instruments covered by a trust receipt to the extent of the amount owing to the entruster or
as appears in the trust receipt or to return said goods, documents or instruments if they were not sold or
disposed of in accordance with the terms of the trust receipt shall constitute the crime of estafa, punishable
under the provisions of Article Three hundred and fifteen, paragraph one (b) of Act Numbered Three
thousand eight hundred and fifteen, as amended, otherwise known as the Revised Penal Code. If the
violation or offense is committed by a corporation, partnership, association or other juridical entities, the
penalty provided for in this Decree shall be imposed upon the directors, officers, employees or other
officials or persons therein responsible for the offense, without prejudice to the civil liabilities arising from
the criminal offense.

Section 14. Cases not covered by this Decree. Cases not provided for in this Decree shall be governed by
the applicable provisions of existing laws.

Section 15. Separability clause. If any provision or section of this Decree or the application thereof to any
person or circumstance is held invalid, the other provisions or sections hereof and the application of such
provisions or sections to other persons or circumstances shall not be affected thereby.

Section 16. Repealing clause. All Acts inconsistent with this Decree are hereby repealed.

Section 17. This Decree shall take effect immediately.

16
 MALACAÑANG
Manila

PRESIDENTIAL DECREE No. 679 April 2, 1975

AMENDING ACT NUMBERED THIRTY NINE HUNDRED AND THIRTY SIX, AN ACT REQUIRING
BANKS, TRUST CORPORATIONS, AND BUILDING AND LOAN ASSOCIATIONS, TO TRANSFER
UNCLAIMED BALANCES HELD BY THEM TO THE TREASURER OF THE PHILIPPINES AND FOR
OTHER PURPOSES.

WHEREAS, Act No. 3936 requires the publication of a sworn statement of unclaimed balances in banks
once a week of three consecutive weeks in at least two newspapers of general circulation in the locality
where the banks are situated, if there be any, and if there is none, in the City of Manila, one in English and
one in Spanish, the cost of which shall be paid by the Bureau of Treasury, which shall be reimbursed out of
the escheated funds;

WHEREAS, the law also provides for the publication of summons and a notice upon the commencement of
the prescribed judicial proceedings for the escheat of unclaimed balances;

WHEREAS, past experience has shown that the cost of publication required by law, the increase of which
has been substantial the past few years, is more than the aggregate amount of the unclaimed balances to
be escheated, the average amount of which is small;

WHEREAS, there is a felt need to simplify the procedure for the escheat of unclaimed balances for the
purpose of reducing the expenses therefor;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers in
me vested by the Constitution, do hereby decree and order:

Section 1. Sections 1, 2, 3, 4, and 5 of Act No. 3936 are hereby amended to read as follows:

"Sec. 1. "Unclaimed balances", within the meaning of this Act, shall include credits or deposits of money,
bullion, security or other evidence of indebtedness of any kind, and interest thereon with banks, buildings
and loan associations, and trust corporations, as hereinafter defined, in favor of any person known to be
dead or who has not made further deposits or withdrawals during the preceding ten years or more. Such
unclaimed balances, together with the increase and proceeds thereof, shall be deposited with the Treasurer
of the Philippines to the credit of the Government of the Republic of the Philippines to be used as the
National Assembly may direct.

"Banks", "building and loan associations" and "trust corporations", within the meaning of this Act, shall refer
to institutions defined under Section two, thirty-nine and fifty-six, respectively, of Republic Act Numbered
Three Hundred Thirty Seven, otherwise known as the General Banking Act, as amended, whether
organized under special charters or not.

"Sec. 2. Immediately after the taking effect of this Act and within the month of January of every odd year, all
banks, building and loan associations, and trust corporations shall forward to the Treasurer of the
Philippines a statement, under oath, of their respective managing officers, of all credits and deposits held
by them in favor of persons known to be dead, or who have not made further deposits or withdrawals
during the preceding ten years or more, arranged in alphabetical order according to the names of creditors
and depositors, and showing:

"(a) The names and last known place of residence or post office addresses of the persons in whose
favor such unclaimed balances stand;

"(b) The amount and the date of the outstanding unclaimed balance and whether the same is in
money or in security, and if the latter, the nature of the same;

17
 "(c) The date when the person in whose favor the unclaimed balance stands died, if known, or the
date when he made his last deposit or withdrawal; and

"(d) The interest due on such unclaimed balance, if any, and the amount thereof.

"A copy of the above sworn statement shall be posted in a conspicuous place in the premises of the bank,
building and loan association, or trust corporation concerned for at least sixty days from the date of filing
thereof: Provided, That immediately before filing the above sworn statement, the bank, building and loan
association, and trust corporation shall communicate with the person in whose favor the unclaimed balance
stands at his last known place of residence or post office address.

"It shall be the duty of the Treasurer of the Philippines to inform the Solicitor General from time to time the
existence of unclaimed balances held by banks, building and loan associations, and trust corporations.

"Sec. 3. Whenever the Solicitor General shall be informed of such unclaimed balances, he shall commence
an action or actions in the name of the People of the Republic of the Philippines in the Court of First
Instance of the province or city where the bank, building and loan association or trust corporation is located,
in which shall be joined as parties the bank, building and loan association or trust corporation and all such
creditors or depositors. All or any of such creditors or depositors or banks, building and loan association or
trust corporations may be included in one action. Service of process in such action or actions shall be made
by delivery of a copy of the complaint and summons to the president, cashier, or managing officer of each
defendant bank, building and loan association or trust corporation and by publication of a copy of such
summons in a newspaper of general circulation, either in English, in Filipino, or in a local dialect, published
in the locality where the bank, building and loan association or trust corporation is situated, if there be any,
and in case there is none, in the City of Manila, at such time as the court may order. Upon the trial, the
court must hear all parties who have appeared therein, and if it be determined that such unclaimed
balances in any defendant bank, building and loan association or trust corporation are unclaimed as
hereinbefore stated, then the court shall render judgment in favor of the Government of the Republic of the
Philippines, declaring that said unclaimed balances have escheated to the Government of the Republic of
the Philippines and commanding said bank, building and loan association or trust corporation to forthwith
deposit the same with the Treasurer of the Philippines to credit of the Government of the Republic of the
Philippines to be used as the National Assembly may direct.

"At the time of issuing summons in the action above provided for, the clerk of court shall also issue a notice
signed by him, giving the title and number of said action, and referring to the complaint therein, and
directed to all persons, other than those named as defendants therein, claiming any interest in any
unclaimed balance mentioned in said complaint, and requiring them to appear within sixty days after the
publication or first publication, if there are several, of such summons, and show cause, if they have any,
why the unclaimed balances involved in said action should not be deposited with the Treasurer of the
Philippines as in this Act provided and notifying them that if they do not appear and show cause, the
Government of the Republic of the Philippines will apply to the court for the relief demanded in the
complaint. A copy of said notice shall be attached to, and published with the copy of, said summons
required to be published as above, and at the end of the copy of such notice so published, there shall be a
statement of the date of publication, or first publication, if there are several, of said summons and notice.
Any person interested may appear in said action and become a party thereto. Upon the publication or the
completion of the publication, if there are several, of the summons and notice, and the service of the
summons on the defendant banks, building and loan associations or trust corporations, the court shall have
full and complete jurisdiction in the Republic of the Philippines over the said unclaimed balances and over
the persons having or claiming any interest in the said unclaimed balances, or any of them, and shall have
full and complete jurisdiction to hear and determine the issues herein, and render the appropriate judgment
thereon.

"Sec. 4. If the president, cashier or managing officer of the bank, building and loan association, or trust
corporation neglects or refuses to make and file the sworn statement required by this action, such bank,
building and loan association, or trust corporation shall pay to the Government the sum of five hundred
pesos a month for each month or fraction thereof during which such default shall continue.

18
"Sec. 5. Any bank, building and loan association or trust corporation which shall make any deposit with the
Treasurer of the Philippines in conformity with the provisions of this Act shall not thereafter be liable to any
person for the same and any action which may be brought by any person against in any bank, building and
loan association, or trust corporation for unclaimed balances so deposited with the Treasurer of the
Philippines shall be defended by the Solicitor General without cost to such bank, building and loan
association or trust corporation."

Section 2. This Decree shall take effect immediately.

19
 Republic of the Philippines
Congress of the Philippines
Metro Manila

Eighth Congress

Republic Act No. 7042 June 13, 1991

AN ACT TO PROMOTE FOREIGN INVESTMENTS, PRESCRIBE THE PROCEDURES FOR

REGISTERING ENTERPRISES DOING BUSINESS IN THE PHILIPPINES, AND FOR OTHER
PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::

Section 1. Title. - This Act shall be known as the, "Foreign Investments Act of 1991".

Section 2. Declaration of Policy. - It is the policy of the State to attract, promote and welcome productive
investments from foreign individuals, partnerships, corporations, and governments, including their political
subdivisions, in activities which significantly contribute to national industrialization and socioeconomic
development to the extent that foreign investment is allowed in such activity by the Constitution and
relevant laws. Foreign investments shall be encouraged in enterprises that significantly expand livelihood
and employment opportunities for Filipinos; enhance economic value of farm products; promote the welfare
of Filipino consumers; expand the scope, quality and volume of exports and their access to foreign
markets; and/or transfer relevant technologies in agriculture, industry and support services. Foreign
investments shall be welcome as a supplement to Filipino capital and technology in those enterprises
serving mainly the domestic market.

As a general rule, there are no restrictions on extent of foreign ownership of export enterprises. In domestic
market enterprises, foreigners can invest as much as one hundred percent (100%) equity except in areas
included in the negative list. Foreign owned firms catering mainly to the domestic market shall be
encouraged to undertake measures that will gradually increase Filipino participation in their businesses by
taking in Filipino partners, electing Filipinos to the board of directors, implementing transfer of technology to
Filipinos, generating more employment for the economy and enhancing skills of Filipino workers.

Section 3. Definitions. - As used in this Act:

a) The term "Philippine national" shall mean a citizen of the Philippines or a domestic partnership or
association wholly owned by citizens of the Philippines; or a corporation organized under the laws of
the Philippines of which at least sixty percent (60%) of the capital stock outstanding and entitled to
vote is owned and held by citizens of the Philippines; or a trustee of funds for pension or other
employee retirement or separation benefits, where the trustee is a Philippine national and at least
sixty (60%) of the fund will accrue to the benefit of the Philippine nationals: Provided, That where a
corporation and its non-Filipino stockholders own stocks in a Securities and Exchange Commission
(SEC) registered enterprise, at least sixty percent (60%) of the capital stocks outstanding and
entitled to vote of both corporations must be owned and held by citizens of the Philippines and at
least sixty percent (60%) of the members of the Board of Directors of both corporations must be
citizens of the Philippines, in order that the corporations shall be considered a Philippine national;

b) The term "investment" shall mean equity participation in any enterprise organized or existing
under the laws of the Philippines;

c) The term "foreign investment" shall mean as equity investment made by a non-Philippine national
in the form of foreign exchange and/or other assets actually transferred to the Philippines and duly

20
 registered with the Central Bank which shall assess and appraise the value of such assets other
than foreign exchange;

d) The praise "doing business" shall include soliciting orders, service contracts, opening offices,
whether called "liaison" offices or branches; appointing representatives or distributors domiciled in
the Philippines or who in any calendar year stay in the country for a period or periods totalling one
hundred eighty (180) days or more; participating in the management, supervision or control of any
domestic business, firm, entity or corporation in the Philippines; and any other act or acts that imply
a continuity of commercial dealings or arrangements, and contemplate to that extent the
performance of acts or works, or the exercise of some of the functions normally incident to, and in
progressive prosecution of, commercial gain or of the purpose and object of the business
organization: Provided, however, That the phrase "doing business: shall not be deemed to include
mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do
business, and/or the exercise of rights as such investor; nor having a nominee director or officer to
represent its interests in such corporation; nor appointing a representative or distributor domiciled in
the Philippines which transacts business in its own name and for its own account;

e) The term "export enterprise" shall mean an enterprise which produces goods for sale, or renders
services to the domestic market entirely or if exporting a portion of its output fails to consistently
export at least sixty percent (60%) thereof; and

g) The term "Foreign Investments Negative List" or "Negative List" shall mean a list of areas of
economic activity whose foreign ownership is limited to a maximum of forty ownership is limited to a
maximum of forty percent (40%) of the equity capital of the enterprise engaged therein.

Section 4. Scope. - This Act shall not apply to banking and other financial institutions which are governed
and regulated by the General Banking Act and other laws under the supervision of the Central Bank.

Section 5. Registration of Investments of Non-Philippine Nationals. - Without need of prior approval, a

non-Philippine national, as that term is defined in Section 3 a), and not otherwise disqualified by law may
upon registration with the Securities and Exchange Commission (SEC), or with the Bureau of Trade
Regulation and Consumer Protection (BTRCP) of the Department of Trade and Industry in the case of
single proprietorships, do business as defined in Section 3 (d) of this Act or invest in a domestic enterprise
up to one hundred percent (100%) of its capital, unless participation of non-Philippine nationals in the
enterprise is prohibited or limited to a smaller percentage by existing law and/or limited to a smaller
percentage by existing law and/or under the provisions of this Act. The SEC or BTRCP, as the case may
be, shall not impose any limitations on the extent of foreign ownership in an enterprise additional to those
provided in this Act: Provided, however, That any enterprise seeking to avail of incentives under the
Omnibus Investment Code of 1987 must apply for registration with the Board of Investments (BOI), which
shall process such application for registration in accordance with the criteria for evaluation prescribed in
said Code: Provided, finally, That a non-Philippine national intending to engage in the same line of
business as an existing joint venture in his application for registration with SEC. During the transitory period
as provided in Section 15 hereof, SEC shall disallow registration of the applying non-Philippine national if
the existing joint venture enterprise, particularly the Filipino partners therein, can reasonably prove they are
capable to make the investment needed for they are competing applicant. Upon effectivity of this Act, SEC
shall effect registration of any enterprise applying under this Act within fifteen (15) days upon submission of
completed requirements.

Section 6. Foreign Investments in Export Enterprises. - Foreign investment in export enterprises whose
products and services do not fall within Lists A and B of the Foreign Investment Negative List provided
under Section 8 hereof is allowed up to one hundred percent (100%) ownership.

Export enterprises which are non-Philippine nationals shall register with BOI and submit the reports that
may be required to ensure continuing compliance of the export enterprise with its export requirement. BOI
shall advise SEC or BTRCP, as the case may be, of any export enterprise that fails to meet the export ratio
requirement. The SEC or BTRCP shall thereupon order the non-complying export enterprise to reduce its
sales to the domestic market to not more than forty percent (40%) of its total production; failure to comply

21
with such SEC or BTRCP order, without justifiable reason, shall subject the enterprise to cancellation of
SEC or BTRCP registration, and/or the penalties provided in Section 14 hereof.

Section 7. Foreign Investments in Domestic Market Enterprises. - Non-Philippine nationals may own
up to one hundred percent (100%) of domestic market enterprises unless foreign ownership therein is
prohibited or limited by existing law or the Foreign Investment Negative List under Section 8 hereof.

A domestic market enterprise may change its status to export enterprise if over a three (3) year period it
consistently exports in each year thereof sixty per cent (60%) or more of its output.

Section 8. List of Investment Areas Reserved to Philippine Nationals (Foreign Investment Negative
List). - The Foreign Investment Negative List shall have three (3) component lists: A, B, and C:

a) List A shall enumerate the areas of activities reserved to Philippine nationals by mandate of the
Constitution and specific laws.

b) List B shall contain the areas of activities and enterprises pursuant to law:

1) Which are defense-related activities, requiring prior clearance and authorization from
Department of National Defense (DND) to engage in such activity, such as the manufacture,
repair, storage and/or distribution of firearms, ammunition, lethal weapons, military
ordnance, explosives, pyrotechnics and similar materials; unless such manufacturing or
repair activity is specifically authorized, with a substantial export component, to a non-
Philippine national by the Secretary of National Defense; or

2) Which have implications on public health and morals, such as the manufacture and
distribution of dangerous drugs; all forms of gambling; nightclubs, bars, beerhouses, dance
halls; sauna and steambath houses and massage clinics.

Small and medium-sized domestic market enterprises with paid-in equity capital less than
the equivalent of five hundred thousand US dollars (US$500,000) are reserved to Philippine
nationals, unless they involve advanced technology as determined by the Department of
Science and Technology. Export enterprises which utilize raw materials from depleting
natural resources, with paid-in equity capital of less than the equivalent of five hundred
thousand US dollars (US$500,000) are likewise reserved to Philippine nationals.

Amendments to List B may be made upon recommendation of the Secretary of National Defense, or
the Secretary of Health, or the Secretary of Education, Culture and Sports, indorsed by the NEDA,
or upon recommendation motu propio of NEDA, approved by the President, and promulgated by
Presidential Proclamation.

c) List C shall contain the areas of investment in which existing enterprises already serve
adequately the needs of the economy and the consumer and do not require further foreign
investments, as determined by NEDA applying the criteria provided in Section 9 of this Act,
approved by the President and promulgated in a Presidential Proclamation.

The Transitory Foreign Investment Negative List established in Sec. 15 hereof shall be replaced at
the end of the transitory period by the first Regular Negative List to the formulated and
recommended by the NEDA, following the process and criteria provided in Section 8 and 9 of this
Act. The first Regular Negative List shall be published not later than sixty (60) days before the end
of the transitory period provided in said section, and shall become immediately effective at the end
of the transitory period. Subsequent Foreign Investment Negative Lists shall become effective
fifteen (15) days after publication in two (2) newspapers of general circulation in the Philippines:
Provided, however, That each Foreign Investment Negative List shall be prospective in operation
and shall in no way affect foreign investments existing on the date of its publication.

22
 Amendments to List B and C after promulgation and publication of the first Regular Foreign
Investment Negative List at the end of the transitory period shall not be made more often than once
every two (2) years.

Section 9. Determination of Areas of Investment for Inclusion in List C of the Foreign Investment
Negative List. - Upon petition by a Philippine national engage therein, an area of investment may be
recommended by NEDA for inclusion in List C of the Foreign Investment Negative List upon determining
that it complies with all the following criteria:

a) The industry is controlled by firms owned at least sixty percent (60%) by Filipinos;

b) Industry capacity is ample to meet domestic demand;

c) Sufficient competition exists within the industry;

d) Industry products comply with Philippine standards of health and safety or, in the absence of
such, with international standards, and are reasonably competitive in quality with similar products in
the same price range imported into the country;

e) Quantitative restrictions are not applied on imports of directly competing products;

f) The leading firms of the industry substantially comply with environmental standards; and

g) The prices of industry products are reasonable.

The petition shall be subjected to a public hearing at which affected parties will have the opportunity to
show whether the petitioner industry adequately serves the economy and the consumer, in general, and
meets the above stated criteria in particular. NEDA may delegate evaluation of the petition and conduct of
the public hearing to any government agency having cognizance of the petitioner industry. The delegated
agency shall make its evaluation report and recommendations to NEDA which retains the right and sole
responsibility to determine whether to recommend to the President to promulgate the area of investment in
List C of the Negative List. An industry or area of investment included in List C of the Negative List by
Presidential Proclamation shall remain in the said List C for two (2) years, without prejudice to re-inclusion
upon new petition, and due process.

Section 10. Strategic Industries. - Within eighteen (18) months after the effectivity of this Act, the NEDA
Board shall formulate and publish a list of industries strategic to the development of the economy. The list
shall specify, as a matter of policy and not as a legal requirement, the desired equity participation by
Government and/or private Filipino investors in each strategic industry. Said list of strategic industries, as
well as the corresponding desired equity participation of government and/or private Filipino investors, may
be amended by NEDA to reflect changes in economic needs and policy directions of Government. The
amended list of strategic industries shall be published concurrently with publication of the Foreign
Investment Negative List.

The term "strategic industries" shall mean industries that are characterized by all of the following:

a) Crucial to the accelerated industrialization of the country,

b) Require massive capital investments to achieve economies of scale for efficient operations;

c) Require highly specialized or advanced technology which necessitates technology transfer and
proven production techniques in operations;

d) Characterized by strong backward and forward linkages with most industries existing in the
country, and

23
 e) Generate substantial foreign exchange savings through import substitution and collateral foreign
exchange earnings through export of part of the output that will result with the establishment,
expansion or development of the industry.

Section 11. Compliance with Environmental Standards. - All industrial enterprises regardless of
nationality of ownership shall comply with existing rules and regulations to protect and conserve the
environment and meet applicable environmental standards.

Section 12. Consistent Government Action. - No agency, instrumentality or political subdivision of the
Government shall take any action on conflict with or which will nullify the provisions of this Act, or any
certificate or authority granted hereunder.

Section 13. Implementing Rules and Regulations. - NEDA, in consultation with BOI, SEC and other
government agencies concerned, shall issue the rules and regulations to implement this Act within one
hundred and twenty (120) days after its effectivity. A copy of such rules and regulations shall be furnished
the Congress of the Republic of the Philippines.

Section 14. Administrative Sanctions. - A person who violates any provision of this Act or of the terms
and conditions of registration or of the rules and regulations issued pursuant thereto, or aids or abets in any
manner any violation shall be subject to a fine not exceeding One hundred thousand pesos (P100,000).

If the offense is committed by a juridical entity, it shall be subject to a fine in an amount not exceeding ½ of
1% of total paid-in capital but not more than Five million pesos (P5,000,000). The president and/or officials
responsible therefor shall also be subject to a fine not exceeding Two hundred thousand pesos (P200,000).

In addition to the foregoing, any person, firm or juridical entity involved shall be subject to forfeiture of all
benefits granted under this Act.

SEC shall have the power to impose administrative sanctions as provided herein for any violation of this Act
or its implementing rules and regulations.

Section 15. Transitory Provisions. - Prior to effectivity of the implementing rules and regulations of this
Act, the provisions of Book II of Executive Order 226 and its implementing rules and regulations shall
remain in force.

During the initial transitory period of thirty-six (36) months after issuance of the Rules and Regulations to
implement this Act, the Transitory Foreign Investment Negative List shall consist of the following:

A. List A:

1. All areas of investment in which foreign ownership is limited by mandate of Constitution

and specific laws.

B. List B:

1. Manufacture, repair, storage and/or distribution of firearms, ammunitions, lethal weapons,

military ordinance, explosives, pyrotechnics and similar materials required by law to be
licensed by and under the continuing regulation of the Department of National Defense;
unless such manufacturing or repair activity is specifically authorized with a substantial
export component, to a non-Philippine national by the Secretary of National Defense;

2. Manufacture and distribution of dangerous drugs; all forms of gambling; nightclubs, bars,
beerhouses, dance halls; sauna and steam bathhouses, massage clinic and other like
activities regulated by law because of risks they may pose to public health and morals;

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 3. Small and medium-size domestic market enterprises with paid-in equity capital or less
than the equivalent of US$500,000, unless they involve advanced technology as determined
by the Department of Science and Technology, and

4. Export enterprises which utilize raw materials from depleting natural resources, and with
paid-in equity capital of less than the equivalent US$500,000.

C. List C:

1. Import and wholesale activities not integrated with production or manufacture of goods;

2. Services requiring a license or specific authorization, and subject to continuing regulations

by national government agencies other than BOI and SEC which at the time of effectivity of
this Act are restricted to Philippine nationals by existing administrative regulations and
practice of the regulatory agencies concerned: Provided, That after effectivity of this Act, no
other services shall be additionally subjected to such restrictions on nationality of ownership
by the corresponding regulatory agencies, and such restrictions once removed shall not be
reimposed; and

3. Enterprises owned in the majority by a foreign licensor and/or its affiliates for the
assembly, processing or manufacture of goods for the domestic market which are being
produced by a Philippine national as of the date of effectivity of this Act under a technology,
know-how and/or brand name license from such licensor during the term of the license
agreement: Provided, That, the license is duly registered with the Central Bank and/or the
Technology Transfer Board and is operatively in force as of the date of effectivity of this Act.

NEDA shall make the enumeration as appropriate of the areas of the investment covered in this Transitory
Foreign Investment Negative List and publish the Negative List in full at the same time as, or prior to, the
publication of the rules and regulations to implement this Act.

The areas of investment contained in List C above shall be reserved to Philippine nationals only during the
transitory period. The inclusion of any of them in the regular Negative List will require determination by
NEDA after due public hearings that such inclusion is warranted under the criteria set forth in Section 8 and
9 hereof.

Section 16. Repealing Clause. - Articles forty-four (44) to fifty-six (56) of Book II of Executive Order No.
226 are hereby repealed.

All other laws or parts of laws inconsistent with the provisions of this Act are hereby repealed or modified
accordingly.

Section 17. Separability. - If any part or section of this Act is declared unconstitutional for any reason
whatsoever, such declaration shall not in any way affect the other parts or sections of this Act.

Section 18. Effectivity. - This Act shall take effect fifteen (15) days after approval and publication in two
(2) newspaper of general circulation in the Philippines.

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REPUBLIC ACT No. 6426. AN ACT INSTITUTING A FOREIGN CURRENCY DEPOSIT SYSTEM IN THE
PHILIPPINES, AND FOR OTHER PURPOSES.

Section 1. Title.– This act shall be known as the "Foreign Currency Deposit Act of the Philippines."

Section 2. Authority to deposit foreign currencies. – Any person, natural or juridical, may, in accordance
with the provisions of this Act, deposit with such Philippine banks in good standing, as may, upon
application, be designated by the Central Bank for the purpose, foreign currencies which are acceptable as
part of the international reserve, except those which are required by the Central Bank to be surrendered in
accordance with the provisions of Republic Act Numbered two hundred sixty-five (Now Rep. Act No. 7653).

Section 3. Authority of banks to accept foreign currency deposits. – The banks designated by the Central
Bank under Section two hereof shall have the authority:

(1) To accept deposits and to accept foreign currencies in trust Provided, That numbered accounts
for recording and servicing of said deposits shall be allowed;

(2) To issue certificates to evidence such deposits;

(3) To discount said certificates;

(4) To accept said deposits as collateral for loans subject to such rules and regulations as may be
promulgated by the Central Bank from time to time; and

(5) To pay interest in foreign currency on such deposits.

Section 4. Foreign currency cover requirements. – Except as the Monetary Board may otherwise prescribe
or allow, the depository banks shall maintain at all times a one hundred percent foreign currency cover for
their liabilities, of which cover at least fifteen percent shall be in the form of foreign currency deposit with
the Central Bank, and the balance in the form of foreign currency loans or securities, which loans or
securities shall be of short term maturities and readily marketable. Such foreign currency loans may include
loans to domestic enterprises which are export-oriented or registered with the Board of Investments,
subject to the limitations to be prescribed by the Monetary Board on such loans. Except as the Monetary
Board may otherwise prescribe or allow, the foreign currency cover shall be in the same currency as that of
the corresponding foreign currency deposit liability. The Central Bank may pay interest on the foreign
currency deposit, and if requested shall exchange the foreign currency notes and coins into foreign
currency instruments drawn on its depository banks. (As amended by PD No. 1453, June 11, 1978.)

Depository banks which, on account of networth, resources, past performance, or other pertinent criteria,
have been qualified by the Monetary Board to function under an expanded foreign currency deposit system,
shall be exempt from the requirements in the preceding paragraph of maintaining fifteen percent (15%) of
the cover in the form of foreign currency deposit with the Central Bank. Subject to prior Central Bank
approval when required by Central Bank regulations, said depository banks may extend foreign currency
loans to any domestic enterprise, without the limitations prescribed in the preceding paragraph regarding
maturity and marketability, and such loans shall be eligible for purposes of the 100% foreign currency cover
prescribed in the preceding paragraph. (As added by PD No. 1035.)

Section 5. Withdrawability and transferability of deposits. – There shall be no restriction on the withdrawal
by the depositor of his deposit or on the transferability of the same abroad except those arising from the
contract between the depositor and the bank.

Section 6. Tax exemption. – All foreign currency deposits made under this Act, as amended by PD No.
1035, as well as foreign currency deposits authorized under PD No. 1034, including interest and all other
income or earnings of such deposits, are hereby exempted from any and all taxes whatsoever irrespective
of whether or not these deposits are made by residents or nonresidents so long as the deposits are eligible
or allowed under aforementioned laws and, in the case of nonresidents, irrespective of whether or not they
are engaged in trade or business in the Philippines. (As amended by PD No. 1246, prom. Nov. 21, 1977.)
26
Section 7. Rules and regulations. – The Monetary Board of the Central Bank shall promulgate such rules
and regulations as may be necessary to carry out the provisions of this Act which shall take effect after the
publications in the Official Gazette and in a newspaper of national circulation for at least once a week for
three consecutive weeks. In case the Central Bank promulgates new rules and regulations decreasing the
rights of depositors, rules and regulations at the time the deposit was made shall govern.

Section 8. Secrecy of foreign currency deposits. – All foreign currency deposits authorized under this Act,
as amended by PD No. 1035, as well as foreign currency deposits authorized under PD No. 1034, are
hereby declared as and considered of an absolutely confidential nature and, except upon the written
permission of the depositor, in no instance shall foreign currency deposits be examined, inquired or looked
into by any person, government official, bureau or office whether judicial or administrative or legislative, or
any other entity whether public or private; Provided, however, That said foreign currency deposits shall be
exempt from attachment, garnishment, or any other order or process of any court, legislative body,
government agency or any administrative body whatsoever. (As amended by PD No. 1035, and further
amended by PD No. 1246, prom. Nov. 21, 1977.)

Section 9. Deposit insurance coverage. – The deposits under this Act shall be insured under the provisions
of Republic Act No. 3591, as amended (Philippine Deposit Insurance Corporation), as well as its
implementing rules and regulations: Provided, That insurance payment shall be in the same currency in
which the insured deposits are denominated.

Section 10. Penal provisions. – Any willful violation of this Act or any regulation duly promulgated by the
Monetary Board pursuant hereto shall subject the offender upon conviction to an imprisonment of not less
than one year nor more than five years or a fine of not less than five thousand pesos nor more than twenty-
five thousand pesos, or both such fine and imprisonment at the discretion of the court.

Section 11. Separability clause. – The provisions of this Act are hereby declared to be separable and in the
event one or more of such provisions are held unconstitutional, the validity of other provisions shall not be
affected thereby.

Section 12. Repealing clause. – All acts, executive orders, rules and regulations, or parts thereof, which
are inconsistent with any provisions of this Act are hereby repealed, amended or modified accordingly,
without prejudice, however, to deposits made thereunder.

Section 12-A. Amendatory enactments and regulations. – In the event a new enactment or regulation is
issued decreasing the rights hereunder granted, such new enactment or regulation shall not apply to
foreign currency deposits already made or existing at the time of issuance of such new enactment or
regulation, but such new enactment or regulation shall apply only to foreign currency deposits made after
its issuance. (As added by PD No. 1246, prom. Nov. 21, 1977.)

Section 13. Effectivity. – This Act shall take effect upon its approval.

27
 REPUBLIC ACT No. 1405. AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS
WITH ANY BANKING INSTITUTION AND PROVIDING PENALTY THEREFOR.

Section 1. It is hereby declared to be the policy of the Government to give encouragement to the people to
deposit their money in banking institutions and to discourage private hoarding so that the same may be
properly utilized by banks in authorized loans to assist in the economic development of the country.

Section 2. 1 All deposits of whatever nature with banks or banking institutions in the Philippines including
investments in bonds issued by the Government of the Philippines, its political subdivisions and its
instrumentalities, are hereby considered as of an absolutely confidential nature and may not be examined,
inquired or looked into by any person, government official, bureau or office, except upon written permission
of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or
dereliction of duty of public officials, or in cases where the money deposited or invested is the subject
matter of the litigation.

Section 3. It shall be unlawful for any official or employee of a banking institution to disclose to any person
other than those mentioned in Section two hereof any information concerning said deposits.

Section 4. All Acts or parts of Acts, Special Charters, Executive Orders, Rules and Regulations which are
inconsistent with the provisions of this Act are hereby repealed.

Section 5. Any violation of this law will subject offender upon conviction, to an imprisonment of not more
than five years or a fine of not more than twenty thousand pesos or both, in the discretion of the court.

Section 6. This Act shall take effect upon its approval.

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