Part 2

Republic of the Philippines
CAMARINES NORTE STATE COLLEGE

F. Pimentel Avenue, Brgy. 2, Daet, Camarines Norte – 4600, Philippines
REGULATORY FRAMEWORK AND LEGAL

ISSUES IN BUSINESS PART II
(Paraphrased)
by:
Nadine Kate M. Revilla Roshel Jane G. Salvador
Zyra Y. Cabarle
Bachelor of Science in Accountancy 2A
Camarines Norte State College
based on the work of:
Atty. Andrix D. Domingo, CPA, MBA
Submitted to:
Ryan Daves F. Quinones, CPA
January 2021
Page 1 of 138
ACT NO. 2031

THE NEGOTIABLE INSTRUMENTS LAW
CHAPTER 1
FORM AND INTERPRETATION
SECTION 1. Form of negotiable instruments. – An instrument to be

negotiable must conform to the following requirements:
(a) It must be in writing and signed by the maker or drawer;
(b) Must contain an unconditional promise or order to pay a sum certain

in money;
(c) Must be payable on demand, or at a fixed or determinable future

time;
(d) Must be payable to order or to bearer; and
(e) Where the instrument is addressed to a drawee, he must be named or

otherwise indicated therein with reasonable certainty.
Paraphrased
Section 1 provides that in order to be negotiable, an instrument must meet the

following criteria: (a) it shall be written, and shall be signed by the maker or
drawer; (b) include an unconditional promise or a command that a particular
amount be paid in the amount of money; (c) it shall be due on request or on a
set or determinable future basis, (d) the instrument shall be due by the orderer
or bearer; and (e) it shall be mentioned with reasonable certainty if the
instrument is directed to a drawee.
SECTION 2. What constitutes certainty as to sum. – The sum payable is

a sum certain within the meaning of this Act, although it is to be paid:
(a) with interest; or
(b) by stated installments; or
Page 2 of 138
(c) by stated installments, with a provision that, upon default in payment

of any installment or of interest, the whole shall become due; or
(d) with exchange, whether at a fixed rate or at the current rate; or
(e) with costs of collection or an attorney's fee, in case payment shall

not be made at maturity.
Paraphrased
The sum payable is a certain sum, although payable under this Act: (a) by
interest; (b) by declared installments; or (c) by declared installments, provided
that the whole is due on default, on payment of any payment or interest; or (d)
by bill, whether at a fixed rate or at a present rate; or (e) by collection costs or
an attorney.
SECTION 3. When promise is unconditional. – An unqualified order or

promise to pay is unconditional within the meaning of this Act though
coupled with:
(a) An indication of a particular fund out of which reimbursement is to

be made or a particular account to be debited with the amount; or
(b) A statement of the transaction which gives rise to the instrument.
But an order or promise to pay out of a particular fund is not

unconditional.
Paraphrased
Unqualified payment orders or pledges are, but not limited to, (a) the
indication of a particular fund to be reimbursed or a particular bank account to
be debited by the amount of the transaction; and (b) a description of the
transaction that gives birth to such instrument. However, an order or
undertaking to pay a certain money is not binding.
SECTION 4. Determinable future time; what constitutes. – An instrument

is payable at a determinable future time, within the meaning of this Act,
which is expressed to be payable:
(a) At a fixed period after date or sight; or
(b) On or before a fixed or determinable future time specified therein; or
Page 3 of 138
(c) On or at a fixed period after the occurrence of a specified event

which is certain to happen, though the time of happening be uncertain.
An instrument payable upon a contingency is not negotiable, and the

happening of the event does not cure the defect.
Paraphrased
A device is payable at a determinable date in the future, which is expressed

as payable within the meaning of this Act, that of: (a) a definite period after the
date or location; or (b) on or before a set or fixable time for the future specified
within the Act; or (c) a defined amount of time following the occurrence of a
specified event which, however uncertain, is certain to occur. A contingent
instrument is not negotiable and the occurrence does not remedy the flaw as
set forth by Section 4.
SECTION 5. Additional provisions not affecting negotiability. – An

instrument which contains an order or promise to do any act in addition
to the payment of money is not negotiable. But the negotiable character
of an instrument otherwise negotiable is not affected by a provision
which:
(a) authorizes the sale of collateral securities in case the instrument be

not paid at maturity; or
(b) authorizes a confession of judgment if the instrument be not paid at

maturity; or
(c) waives the benefit of any law intended for the advantage or
protection of the obligor; or
(d) gives the holder an election to require something to be done in lieu

of payment of money.
But nothing in this section shall validate any provision or stipulation

otherwise illegal.
Paraphrased
There is no negotiable instrument to which there is a command or promise to

perform any act in addition to the payment of money. However, a provision
which: (a) allows for the sales of collateral securities if the instrument is not
payable at maturity; or (b) authorizes a declaration of judgment if the
Page 4 of 138
instrument is not payable at maturity; or (c) waives the benefit of any law
designed to benefit or protect a debtor; or (d) grants t t of the negotiable
features of the otherwise negotiable instrument. However, no provision or
requirement otherwise prohibited shall validate in this section.
SECTION 6. Omissions; seal; particular money. – The validity and

negotiable character of an instrument are not affected by the fact that:
(a) it is not dated; or
(b) does not specify the value given, or that any value had been given
therefor; or
(c) does not specify the place where it is drawn or the place where it is
payable; or
(d) bears a seal; or
(e) designates a particular kind of current money in which payment is to

be made.
But nothing in this section shall alter or repeal any statute requiring in
certain cases the nature of the consideration to be stated in the
instrument.
Paraphrased
Under Section 6, the legality and negotiable nature of the instrument is not
impacted by the fact that: (a) it is not dated; or (b) it does not indicate the
value or value given; or (c) it does not indicate the location of drawing or the
site of payment; or (d) it is marked with a seal; or (e) the amount is marked as
the current kind of money to be paid for in the case of a specific payment.
However, note that nothing in this section will modify or annul any legislation
requiring the nature of the consideration to be included in the document in
specific instances.
SECTION 7. When payable on demand. – An instrument is payable on

demand:
(a) When it is so expressed to be payable on demand, or at sight, or on

presentation; or
Page 5 of 138
(b) In which no time for payment is expressed.
Where an instrument is issued, accepted, or indorsed when overdue, it

is, as regards the person so issuing, accepting, or indorsing it, payable
on demand.
Paraphrased
On demand, an instrument is payable: (a) when it is said to be receivable on

request, in view or upon presentation; or (b) when there is no time for
payment. Where an instrument is issued, accepted or indorsed while late, it
shall be payable on demand for the issuer, accepter or endorser of the
instrument.
SECTION 8. When payable to order. – The instrument is payable to order

where it is drawn payable to the order of a specified person or to him or
his order. It may be drawn payable to the order of:
(a) A payee who is not maker, drawer, or drawee; or
(b) The drawer or maker; or
(c) The drawee; or
(d) Two or more payees jointly; or
(e) One or some of several payees; or
(f) The holder of an office for the time being.
Where the instrument is payable to order, the payee must be named or

otherwise indicated therein with reasonable certainty.
Paraphrased
The instrument shall be payable if it is made payable on behalf of a particular

person or on his or her command. It may be drawn payable on the basis of:
(a) a payee who is not maker, drawer or drawee; or (b) a drawer or drawer; or
(c) a drawee; or (d) two or more payees jointly; or (e) one or more payees.
When the instrument is due, the payee should have reasonable certainty or
else be designated therein.
Page 6 of 138
SECTION 9. When payable to bearer. – The instrument is payable to

bearer:
(a) When it is expressed to be so payable; or
(b) When it is payable to a person named therein or bearer; or
(c) When it is payable to the order of a fictitious or non-existing person,

and such fact was known to the person making it so payable; or
(d) When the name of the payee does not purport to be the name of any
person; or
(e) When the only or last indorsement is an indorsement in blank.
Paraphrased
This instrument is payable to the bearer: (a) if it has been expressed as being
payable; or (b) if it is payable to a person who has been named or has been
designated; or (c) if it is payable by a fictive or non-existent person and the
person who made the instrument payable knew of it; or (d) if the name of the
payee does not pretend to be the name of any person; or (e) when only or last
is in that way payable. These undertakings are governed by Section 9 of this
Act.
SECTION 10. Terms, when sufficient. – The instrument need not follow

the language of this Act, but any terms are sufficient which clearly
indicate an intention to conform to the requirements hereof.
Paraphrased
As for Section 10, however, no phrases are necessary for the document to
clearly reflect a desire to comply with the provisions of this Act.
SECTION 11. Date, presumption as to. – Where the instrument or an

acceptance or any indorsement thereon is dated, such date is deemed
prima facie to be the true date of the making, drawing, acceptance, or
indorsement, as the case may be.
Page 7 of 138
Paraphrased
When the instrument is dated, or any indication thereof, the date is prima facie
considered the real date on which it is made, drawn, accepted or endorsed,
as the case may be.
SECTION 12. Ante-dated and post-dated. – The instrument is not invalid

for the reason only that it is ante-dated or post-dated, provided this is
not done for an illegal or fraudulent purpose. The person to whom an
instrument so dated is delivered acquires the title thereto as of the date
of delivery.
Paraphrased
The fact that the instrument is ante-dated or post-dated does not make it
invalid, as long as it is not done for an unlawful or fraudulent purpose. The
person to whom a properly dated instrument is delivered gains ownership to it
as of the delivery date as stated in Section 12.
SECTION 13. When date may be inserted. – Where an instrument

expressed to be payable at a fixed period after date is issued undated,
or where the acceptance of an instrument payable at a fixed period after
sight is undated, any holder may insert therein the true date of issue or
acceptance, and the instrument shall be payable accordingly. The
insertion of a wrong date does not avoid the instrument in the hands of
a subsequent holder in due course; but as to him, the date so inserted is
to be regarded as the true date.
Paraphrased
Section 13 provides that any holder may enter the real date of issuance or
acceptance in an instrument indicated to be payable at a set period after date,
or in the acceptance of an instrument due at a certain period after sight, and
the instrument shall be due accordingly. The insertion of a false date does not
prevent the instrument from eventually falling into the hands of a future holder;
nonetheless, the date thus put is to be treated as the actual date by him.
SECTION 14. Blanks; when may be filled. – Where the instrument is

wanting in any material particular, the person in possession thereof has
a prima facie authority to complete it by filling up the blanks therein.
And a signature on a blank paper delivered by the person making the
signature in order that the paper may be converted into a negotiable
Page 8 of 138
instrument operates as a prima facie authority to fill it up as such for

any amount. In order, however, that any such instrument when
completed may be enforced against any person who became a party
thereto prior to its completion, it must be filled up strictly in accordance
with the authority given and within a reasonable time. But if any such
instrument, after completion, is negotiated to a holder in due course, it
is valid and effectual for all purposes in his hands, and he may enforce it
as if it had been filled up strictly in accordance with the authority given
and within a reasonable time.
Paraphrased
If any important detail of the instrument is missing, the person in possession

of it has a prima facie power to complete it by filling in the gaps. A signature
on a blank piece of paper given by the person signing it in order for it to be
transformed into a negotiable instrument serves as a prima facie permission
to fill it up with any amount. However, any such instrument must be filled out
strictly in line with the authorization granted and within a reasonable period in
order for it to be enforced against any person who became a party to it prior to
its completion. However, if such a document is submitted to a holder in a
timely manner after completion, it is legitimate and effective for all purposes in
his hands, and he may enforce it as if it had been filled out exactly according
to the authorization provided and within a reasonable period.
SECTION 15. Incomplete instrument not delivered. – Where an

incomplete instrument has not been delivered, it will not, if completed
and negotiated without authority, be a valid contract in the hands of any
holder, as against any person whose signature was placed thereon
before delivery.
Paraphrased
If an unfinished instrument has not been delivered, it will not be a legitimate

contract in the hands of any holder as against any person whose signature
was placed on it before delivery if it is completed and negotiated without
permission.
SECTION 16. Delivery; when effectual; when presumed. – Every contract

on a negotiable instrument is incomplete and revocable until delivery of
the instrument for the purpose of giving effect thereto. As between
immediate parties and as regards a remote party other than a holder in
due course, the delivery, in order to be effectual, must be made either by
or under the authority of the party making, drawing, accepting, or
Page 9 of 138
indorsing, as the case may be; and, in such case, the delivery may be
shown to have been conditional, or for a special purpose only, and not
for the purpose of transferring the property in the instrument. But where
the instrument is in the hands of a holder in due course, a valid delivery
thereof by all parties prior to him so as to make them liable to him is
conclusively presumed. And where the instrument is no longer in the
possession of a party whose signature appears thereon, a valid and
intentional delivery by him is presumed until the contrary is proved.
Paraphrased
As for Section 16, until delivery of the instrument to ensure its application, any
contract on a negotiable instrument is incomplete and reversible. The delivery,
in order to be effective, must be made either by or under the authority of the
party making, drawing, accepting, or indorsing, as the case may be; and, in
such a case, the delivery may be shown to have been conditional, or for a
certain purpose only, and not for the purpose of transferring the property.
However, if the tool is properly handled by a holder, it is definitely believed
that all parties have validly delivered it before it to make it binding. And when
a party whose signature appears thereon does not own the instrument, it is
considered that its supply will be genuine and deliberate until the opposite has
been proven.
SECTION 17. Construction where instrument is ambiguous. – Where the

language of the instrument is ambiguous or there are omissions therein,
the following rules of construction apply:
(a) Where the sum payable is expressed in words and also in figures and
there is a discrepancy between the two, the sum denoted by the words
is the sum payable; but if the words are ambiguous or uncertain,
reference may be had to the figures to fix the amount;
(b) Where the instrument provides for the payment of interest, without
specifying the date from which interest is to run, the interest runs from
the date of the instrument, and if the instrument is undated, from the
issue thereof;
(c) Where the instrument is not dated, it will be considered to be dated

as of the time it was issued;
(d) Where there is a conflict between the written and printed provisions
of the instrument, the written provisions prevail;
Page 10 of 138
(e) Where the instrument is so ambiguous that there is doubt whether it

is a bill or note, the holder may treat it as either at his election;
(f) Where a signature is so placed upon the instrument that it is not clear
in what capacity the person making the same intended to sign, he is to
be deemed an endorser;
(g) Where an instrument containing the word "I promise to pay" is

signed by two or more persons, they are deemed to be jointly and
severally liable thereon.
Paraphrased
Under Section 17, when the instrument's wording is unclear or missing, the
following construction rules apply: (a) where there is an inconsistency
between the two, and the sum is stated in words and also in numbers, the
sum signified by the words is the amount to be paid; however if the terms are
vague or doubtful, there may be a need to refer the figures to determine the
amount; (b) where, without setting the date on which interest is to be paid, the
document provides for the payment of interest, interest shall be paid from that
date, and, if the document is not date, from it; (c) where the document is not
dated, it must be deemed to have been dated at that time; (d) Where the
written and printed provisions of that document are in dispute, the written
provisions prevail; (e) if a tool is so ambiguous that there is dispute as to the
fact that it is a bill or a note, it may either be treated by the holder at its choice;
(f) if the instrument is signed to such an extent that it is not obvious to what
extent a person who signs the same is meant to be an endorser; and (g)
where two or more persons have signed an instrument containing the word 'I
promise to pay,' they shall be deemed jointly and severely responsible.
SECTION 18. Liability of person signing in trade or assumed name. – No

person is liable on the instrument whose signature does not appear
thereon, except as herein otherwise expressly provided. But one who
signs in a trade or assumed name will be liable to the same extent as if
he had signed in his own name.
Paraphrased
Except as otherwise specifically specified above, no person is accountable on

an instrument whose signature does not appear on it. However, if you sign in
a trade or assumed name, you will be held to the same standards as if you
signed in your actual name.
Page 11 of 138
SECTION 19. Signature by agent; authority; how shown. – The signature

of any party may be made by a duly authorized agent. No particular form
of appointment is necessary for this purpose; and the authority of the
agent may be established as in other cases of agency.
Paraphrased
Any party's signature can be made by a fully authorized agent. For this
reason, no special form of appointment is required, and the agent's power can
be established as in other situations of agency which is governed by Section
19.
SECTION 20. Liability of person signing as agent, and so forth. – Where

the instrument contains or a person adds to his signature words
indicating that he signs for or on behalf of a principal or in a
representative capacity, he is not liable on the instrument if he was duly
authorized; but the mere addition of words describing him as an agent,
or as filling a representative character, without disclosing his principal,
does not exempt him from personal liability.
Paraphrased
In those cases where the instrument contains a word or a person adds words
that he signs on or on behalf of a principal or in representative capacity to the
signature, that person shall not be liable for the instrument if the person is
duly authorized, but simply adding words that describe him as an agent or as
an agent of representatives will not exempt him from personal accountability
without disclosing his principal.
SECTION 21. Signature by procuration; effect of. – A signature

by "procuration" operates as notice that the agent has but a limited
authority to sign, and the principal is bound only in case the agent in so
signing acted within the actual limits of his authority.
Paraphrased
As described in the above section, signature by procuration serves as

notification that the agent has only limited authority to sign, and the principal is
only bound if the agent operated within the true boundaries of his power when
signing.
Page 12 of 138
SECTION 22. Effect of indorsement by infant or corporation. – The

indorsement or assignment of the instrument by a corporation or by an
infant passes the property therein, notwithstanding that from want of
capacity, the corporation or infant may incur no liability thereon.
Paraphrased
While for Section 22, the endorsement or allocation of the instrument by a

company or a child is transferred to it, regardless of whether the baby or the
baby cannot be held liable for lack of capacity.
SECTION 23. Forged signature; effect of. – When a signature is forged or

made without the authority of the person whose signature it purports to
be, it is wholly inoperative, and no right to retain the instrument, or to
give a discharge therefor, or to enforce payment thereof against any
party thereto, can be acquired through or under such signature, unless
the party against whom it is sought to enforce such right is precluded
from setting up the forgery or want of authority.
Paraphrased
If the signature is forged or made without the authority of the person alleging
that it is a signature, it shall be wholly inoperative and shall not be entitled to
retain, discharge, or payment against any party thereof, unless it is prevented
from being signed or enforced by the party against whom such rights are
sought as prescribed by Section 23.
Page 13 of 138
CHAPTER 2
CONSIDERATION
SECTION 24. Presumption of consideration. – Every negotiable

instrument is deemed prima facie to have been issued for a valuable
consideration; and every person whose signature appears thereon to
have become a party thereto for value.
Paraphrased
Under Section 24, every negotiable document is presumed to have been

issued for a valuable price. Moreover, everyone whose signature appears on
it is presumed to have been a party to it for value.
SECTION 25. Value, what constitutes. – Value is any consideration

sufficient to support a simple contract. An antecedent or pre-existing
debt constitutes value; and is deemed such whether the instrument is
payable on demand or at a future time.
Paraphrased
Any consideration adequate to sustain a basic contract is referred to as value.

An antecedent or pre-existing debt has value, regardless of whether the
instrument is receivable on demand or at a later date.
SECTION 26. What constitutes holder for value. – Where value has at

any time been given for the instrument, the holder is deemed a holder
for value in respect to all parties who become such prior to that time.
Paraphrased
When value has been assigned for the instrument at any point, the holder is
considered as a value holder for all parties before that period.
SECTION 27. When lien on instrument constitutes holder for value. –

Where the holder has a lien on the instrument arising either from
contract or by implication of law, he is deemed a holder for value to the
extent of his lien.
Page 14 of 138
Paraphrased
Under Section 27, when a lien is attached to the instrument either by contract
or by means of law, the holder is regarded as a value holder to the amount of
his lien.
SECTION 28. Effect of want of consideration. – Absence or failure of

consideration is a matter of defense as against any person not a holder
in due course; and partial failure of consideration is a defense pro tanto,
whether the failure is an ascertained and liquidated amount or
otherwise.
Paraphrased
The defense against a person not a holder is an absence or non-compliance

issue and part of the failure is a defense pro tanto, whether the failure is an
established and liquidated amount or not.
SECTION 29. Liability of accommodation party. – An accommodation

party is one who has signed the instrument as maker, drawer, acceptor,
or endorser, without receiving value therefor, and for the purpose of
lending his name to some other person. Such a person is liable on the
instrument to a holder for value, notwithstanding such holder, at the
time of taking the instrument, knew him to be only an accommodation
party.
Paraphrased
A lodging party is one which signed the tool without obtaining any value, and
in order to make its name available to any other person as a creator, drawer,
accepter or endorser. Such a person is responsible to a holder on the
instrument for value notwithstanding the holder understood that he was simply
a lodging party at the time the instrument was taken as described by Article
29.
Page 15 of 138
CHAPTER 3
NEGOTIATION
SECTION 30. What constitutes negotiation. – An instrument is

negotiated when it is transferred from one person to another in such
manner as to constitute the transferee the holder thereof. If payable to
bearer, it is negotiated by delivery; if payable to order, it is negotiated by
the indorsement of the holder and completed by delivery.
Paraphrased
When an instrument is transferred from one person to another in a way that

constitutes the holder of the transferee. Where it is payable to a bearer,
deliveries are concluded; where payable on order, holder's approval is sought
and deliveries are concluded.
SECTION 31. Indorsement; how made. – The indorsement must be

written on the instrument itself or upon a paper attached thereto. The
signature of the endorser, without additional words, is a sufficient
indorsement.
Paraphrased
As set forward by the above section, the endorsement must be inscribed on

the instrument or on a piece of paper affixed to it. Without any extra remarks,
the endorser's signature suffices as an endorsement.
SECTION 32. Indorsement must be of entire instrument. – The

indorsement must be an indorsement of the entire instrument. An
indorsement which purports to transfer to the endorsere a part only of
the amount payable, or which purports to transfer the instrument to two
or more endorseres severally, does not operate as a negotiation of the
instrument. But where the instrument has been paid in part, it may be
indorsed as to the residue.
Paraphrased
The complete instrument must be indorsed. An endorsement that pretends to

transfer just a portion of the sum payable to the endorsee, or that pretends to
transfer the instrument to two or more endorsees at the same time, is not a
Page 16 of 138
negotiation of the instrument. However, if the instrument has been paid in

part, the remainder may be endorsed.
SECTION 33. Kinds of indorsement. – An indorsement may be either

special or in blank; and it may also be either restrictive or qualified or
conditional.
Paraphrased
As for Section 33, an endorsement might be specific or general, as well as

limiting, qualifying, or conditional.
SECTION 34. Special indorsement; indorsement in blank. – A special

indorsement specifies the person to whom, or to whose order, the
instrument is to be payable, and the indorsement of such endorsere is
necessary to the further negotiation of the instrument. An indorsement
in blank specifies no endorsere, and an instrument so indorsed is
payable to bearer, and may be negotiated by delivery.
Paraphrased
The person to whom, or to whose order, the instrument is to be payable is

specified by a special indorsement, and the endorser’s endorsement is
required for the instrument's further negotiation. A blank endorsement does
not specify an endorsement and an instrument so endorsed is payable and
can be negotiated by delivery.
SECTION 35. Blank indorsement; how changed to special

indorsement. – The holder may convert a blank indorsement into a
special indorsement by writing over the signature of the endorser in
blank any contract consistent with the character of the indorsement.
Paraphrased
By writing any contract consistent with the character of the endorsement over
the endorser's signature in blank, the holder can convert a blank endorsement
into a special endorsement as stated in Section 35.
SECTION 36. When indorsement restrictive. – An indorsement is

restrictive which either:
Page 17 of 138
(a) Prohibits the further negotiation of the instrument; or
(b) Constitutes the endorsere the agent of the endorser; or
(c) Vests the title in the endorsere in trust for or to the use of some other
persons.
But the mere absence of words implying power to negotiate does not
make an indorsement restrictive.
Paraphrased
The following are restrictive: (a) forbidding further negotiations on the

instrument; or (b) the endorser is the endorser's agent; or (c) the title in the
endorser is in the trust for or for the use of some other individuals. But the
sheer lack of wording that implies negotiating power does not impose
restrictions on indulgence.
SECTION 37. Effect of restrictive indorsement; rights of endorsere. – A

restrictive indorsement confers upon the endorsere the right:
(a) to receive payment of the instrument;
(b) to bring any action thereon that the endorser could bring;
(c) to transfer his rights as such endorsere, where the form of the
indorsement authorizes him to do so.
But all subsequent endorseres acquire only the title of the first
endorsere under the restrictive indorsement.
Paraphrased
The endorser has the right to (a) receive payment by the instrument; (b) bring
any action that the endorser can take; (c) transfer his rights as such, if he is
authorized by the indorsement form. But only the title of the first supported
under the restrictive endorsement acquires all subsequent supporters.
SECTION 38. Qualified indorsement. – A qualified indorsement

constitutes the endorser a mere assignor of the title to the instrument. It
may be made by adding to the endorser's signature the words "without
recourse" or any words of similar import. Such an indorsement does not
impair the negotiable character of the instrument.
Page 18 of 138
Paraphrased
The endorser becomes a simple title assignor to the instrument by a qualified

indulgence. The statement "without recourse," or any words of comparable
significance, may be added to the endorser's signature. The negotiable nature
of the instrument does not suffer from such an indulgence under Section 38.
SECTION 39. Conditional indorsement. – Where an indorsement is

conditional, the party required to pay the instrument may disregard the
condition and make payment to the endorsere or his transferee whether
the condition has been fulfilled or not. But any person to whom an
instrument so indorsed is negotiated will hold the same, or the proceeds
thereof, subject to the rights of the person indorsing conditionally.
Paraphrased
Where an indication is conditional, the party to which the instrument is

required may ignore the condition and pay the endorsement, regardless of
whether or not the condition is satisfied. However, any individual to whom an
instrument is negotiated in such an endorsed manner is to retain the same or
its proceeds, subject to a person's rights.
SECTION 40. Indorsement of instrument payable to bearer. – Where an

instrument, payable to bearer, is indorsed specially, it may nevertheless
be further negotiated by delivery; but the person indorsing specially is
liable as endorser to only such holders as make title through his
indorsement.
Paraphrased
Section 40 provides that, when a device that is payable to the bearer is

specifically endorsed, a delivery may still be discussed further but only such
holders as make the title through his endorsion shall remain accountable as
endorsers.
SECTION 41. Indorsement where payable to two or more persons. –

Where an instrument is payable to the order of two or more payees or
endorseres who are not partners, al l must indorse unless the one
indorsing has authority to indorse for the others.
Paraphrased
Page 19 of 138
If an instrument is paid on the order of two or more payees or endorsers who

are not partners, al l should endorse the instrument unless the individual
indorsing party has the power to support the others.
SECTION 42. Effect of instrument drawn or indorsed to a person as

cashier. – Where an instrument is drawn or indorsed to a person
as "cashier" or other fiscal officer of a bank or corporation, it is deemed
prima facie to be payable to the bank or corporation of which he is such
officer, and may be negotiated by either the indorsement of the bank or
corporation or the indorsement of the officer.
Paraphrased
If an instrument is drawn or retained by a ‘cashier’ or by another fiscal officer

of a bank or corporation, it shall be considered prima facie due by an officer's
bank or corporation and may be negotiated by an indorsement by a bank or
company or by an agent's remittance.
SECTION 43. Indorsement where name is misspelled, and so forth. –

Where the name of a payee or endorsere is wrongly designated or
misspelled, he may indorse the instrument as therein described adding,
if he thinks fit, his proper signature.
Paraphrased
If a payer’s name or endorser's name is improperly identified or mistakenly

designated, he may append his proper signature to the instrument as
indicated as stated by Section 43.
SECTION 44. Indorsement in representative capacity. – Where any

person is under obligation to indorse in a representative capacity, he
may indorse in such terms as to negative personal liability.
Paraphrased
Under the above section, when a person is obliged to act on behalf of him, he
may endorse his personal culpability in such words as to adverse effect.
SECTION 45. Time of indorsement; presumption. – Except where an

indorsement bears date after the maturity of the instrument, every
negotiation is deemed prima facie to have been effected before the
instrument was overdue.
Page 20 of 138
Paraphrased
All negotiations are considered to be prima facie completed before the

instrument is late, save when an indorsement has date of maturity.
SECTION 46. Place of indorsement; presumption. – Except where the

contrary appears, every indorsement is presumed prima facie to have
been made at the place where the instrument is dated.
Paraphrased
All adhesions are deemed to have prima facie been done when the instrument
is dated unless where the opposite appears.
SECTION 47. Continuation of negotiable character. – An instrument

negotiable in its origin continues to be negotiable until it has been
restrictively indorsed or discharged by payment or otherwise.
Paraphrased
Section 47 rules that, until it has been restrictively indorsed or discarded by

means of payment or otherwise, a negotiable instrument of its origin is still
negotiable.
SECTION 48. Striking out indorsement. – The holder may at any time

strike out any indorsement which is not necessary to his title. The
endorser whose indorsement is struck out, and all endorsers
subsequent to him, are thereby relieved from liability on the instrument.
Paraphrased
Any indication which is not required to his title may be at any moment. The
holder can. The endorser and any subsequent endorsers of the instrument will
be exempted from responsibility.
SECTION 49. Transfer without indorsement; effect of. – Where the holder

of an instrument payable to his order transfers it for value without
indorsing it, the transfer vests in the transferee such title as the
transferor had therein, and the transferee acquires in addition, the right
to have the indorsement of the transferor. But for the purpose of
determining whether the transferee is a holder in due course, the
negotiation takes effect as of the time when the indorsement is actually
made.
Page 21 of 138
Paraphrased
If a person holding an instrument payable on his order transfers the

instrument for value, without indorsing it, the cession vest as the customer
had in the customer and the customer also obtains the right to have the
custom of the transferor. In order to determine if the transferor is a holder, the
discussion takes place as soon as the approval is effected.
SECTION 50. When prior party may negotiate instrument. – Where an

instrument is negotiated back to a prior party, such party may, subject
to the provisions of this Act, reissue and further negotiable the same.
But he is not entitled to enforce payment thereof against any intervening
party to whom he was personally liable.
Paraphrased
If a negotiated instrument is returned to a prior party, the parties can reprint

and negotiate it, pursuant to the terms of this Act. However, he has no right to
collect payments against any party he was personally responsible to intervene
through.
Page 22 of 138
CHAPTER 4
RIGHTS OF THE HOLDER
SECTION 51. Right of holder to sue; payment. – The holder of a

negotiable instrument may to sue thereon in his own name; and
payment to him in due course discharges the instrument.
Paraphrased
As set forth by Section 51, the bearer of the negotiable tool may sue in his
own name thereon; and payment to him releases the tool in due process.
SECTION 52. What constitutes a holder in due course. – A holder in due

course is a holder who has taken the instrument under the following
conditions:
(a) That it is complete and regular upon its face;
(b) That he became the holder of it before it was overdue, and without
notice that it has been previously dishonored, if such was the fact;
(c) That he took it in good faith and for value;
(d) That at the time it was negotiated to him, he had no notice of any
infirmity in the instrument or defect in the title of the person negotiating
it.
Paraphrased
A holder who has taken the instrument in due process has done so under the
following conditions: (a) it is full and regular on its face; (b) it has been taken
up before it was overdue and has been dishonored beforehand, if that is the
situation; (c) it has taken hold of it in good faith and for value; and (d) at the
time it has been negotiated for it, it has not received notice of any defect or
defect of the person's title negotiating the device.
SECTION 53. When person not deemed holder in due course. – Where

an instrument payable on demand is negotiated on an unreasonable
Page 23 of 138
length of time after its issue, the holder is not deemed a holder in due
course.
Paraphrased
If a payment on demand instrument is negotiated for an excessive period after

its issuance, the holder is not considered a holder in due time.
SECTION 54. Notice before full amount is paid. – Where the transferee

receives notice of any infirmity in the instrument or defect in the title of
the person negotiating the same before he has paid the full amount
agreed to be paid therefor, he will be deemed a holder in due course
only to the extent of the amount therefore paid by him.
Paraphrased
If, prior to payment by the transferor of the total sum agreed to be paid for this
purpose, he shall be considered to be a holder only in due time if the
transferor has received the notification of a failure in the document of the
same person's title or defect only to the extent payable by him.
SECTION 55. When title defective. – The title of a person who negotiates

an instrument is defective within the meaning of this Act when he
obtained the instrument, or any signature thereto, by fraud, duress, or
force and fear, or other unlawful means, or for an illegal consideration,
or when he negotiates it in breach of faith, or under such circumstances
as amount to a fraud.
Paraphrased
A person negotiating an instrument, by fraud, coercion, or force and fear, or

other criminal methods, or by illegitimacy, or if he has obtainable or any
signature thereof, or if he negotiates it in breach or in such conditions as an
amount of fraud, is deficient within the meaning of this law.
SECTION 56. What constitutes notice of defect. – To constitute notice of

an infirmity in the instrument or defect in the title of the person
negotiating the same, the person to whom it is negotiated must have
had actual knowledge of the infirmity or defect, or knowledge of such
facts that his action in taking the instrument amounted to bad faith.
Paraphrased
Page 24 of 138
The person to whom it is being negotiated must have real knowledge of the
disease or defect or have knowledge of such facts that his or her actions to
use this instrument amounted to a faulty belief in order to constitute the
notification of a defective fabric or an inadequate title.
SECTION 57. Rights of holder in due course. – A holder in due course

holds the instrument free from any defect of title of prior parties, and
free from defenses available to prior parties among themselves, and
may enforce payment of the instrument for the full amount thereof
against all parties liable thereon.
Paraphrased
The holder shall, in due course, exempt it from any defects in title of the prior
parties, and shall be entitled to exercise the right for full payment of the
instrument against all parties responsible thereon, without any defenses
accessible to the prior parties under Section 57.
SECTION 58. When subject to original defense. – In the hands of any

holder other than a holder in due course, a negotiable instrument is
subject to the same defenses as if it were non-negotiable. But a holder
who derives his title through a holder in due course, and who is not
himself a party to any fraud or illegality affecting the instrument, has all
the rights of such former holder in respect of all parties prior to the
latter.
Paraphrased
A negotiable instrument is susceptible to the same defense, as if it were not

negotiable in the hands of a holder other than a holder in good time. However,
a holder who derives his title by a holder and who himself is not a party to any
deception or illegality that has an effect on the instrument shall have all the
rights of that former holder to all parties previously to the latter.
SECTION 59. Who is deemed holder in due course. – Every holder is

deemed prima facie to be a holder in due course; but when it is shown
that the title of any person who has negotiated the instrument was
defective, the burden is on the holder to prove that he or some person
under whom he claims acquired the title as holder in due course. But the
last-mentioned rule does not apply in favor of a party who became
bound on the instrument prior to the acquisition of such defective title.
Page 25 of 138
Paraphrased
As states in Section 59, every holder should be considered as a holder at first

glance; however when the title of any person who has negotiated this
document is revealed to be faulty, the duty lies on the holder to establish that
he or she has acquired it in due process. But the last rule does not apply to a
party which got attached to the instrument before such a defective title was
acquired.
Page 26 of 138
CHAPTER 5
LIABILITIES OF PARTIES
SECTION 60. Liability of maker. – The maker of a negotiable instrument,

by making it, engages that he will pay it according to its tenor, and
admits the existence of the payee and his then capacity to indorse.
Paraphrased
By manufacturing it, the manufacturer of a negotiable instrument commits him

to pay it according to his tenor and recognizes the existence of the payee and
its then ability to stand by.
SECTION 61. Liability of drawer. – The drawer by drawing the instrument

admits the existence of the payee and his then capacity to indorse; and
engages that, on due presentment, the instrument will be accepted or
paid, or both, according to its tenor, and that if it be dishonored and the
necessary proceedings on dishonor be duly taken, he will pay the
amount thereof to the holder or to any subsequent endorser who may be
compelled to pay it. But the drawer may insert in the instrument an
express stipulation negating or limiting his own liability to the holder.
Paraphrased
By drawing the instrument, the drawer acknowledges that the paying party
exists and his ability to indulge in it; it undertake to accept, pay or both of the
instrument according to his or her tenor, on due presentation, and that if
dishonored and the necessary dishonor proceedings duly taken, it will pay
that amount to the holder or any other subsequent endorser who is obliged to
do so. However, the drawer may incorporate an express provision in the
instrument that denies or restricts its own responsibility towards the holder.
SECTION 62. Liability of acceptor. – The acceptor, by accepting the

instrument, engages that he will pay it according to the tenor of his
acceptance and admits:
(a) The existence of the drawer, the genuineness of his signature, and
his capacity and authority to draw the instrument; and
(b) The existence of the payee and his then capacity to indorse.
Page 27 of 138
Paraphrased
By accepting the instrument the accepter undertakes to pay the payer on the
basis of the tenor he accepts and admits: (a) the existence of the drawer and
the authenticity of his signature, his capability and authority for drawing it; and
(b) the payee's existence and his ability to endorse at the time.
SECTION 63. When a person deemed endorser. – A person placing his

signature upon an instrument otherwise than as maker, drawer, or
acceptor, is deemed to be endorser unless he clearly indicates by
appropriate words his intention to be bound in some other capacity.
Paraphrased
An individual who places his name upon an instrument other than as a maker,
drawer, or receiver shall be regarded as a supporter if he does not clearly
express his purpose of being bound in a different capacity by proper wording.
SECTION 64. Liability of irregular endorser. – Where a person, not

otherwise a party to an instrument, places thereon his signature in blank
before delivery, he is liable as endorser, in accordance with the
following rules:
(a) If the instrument is payable to the order of a third person, he is liable

to the payee and to all subsequent parties.
(b) If the instrument is payable to the order of the maker or drawer, or is

payable to bearer, he is liable to all parties subsequent to the maker or
drawer.
(c) If he signs for the accommodation of the payee, he is liable to all

parties subsequent to the payee.
Paraphrased
When a person writes its signature in the blank before delivery, otherwise not
a party to an instrument, the person is accountable as a supporter under the
following rules: (a) the payee and all subsequent parties shall be responsible
if the instrument is payable by order of a third party; (b) if the instrument is to
be paid or is to be borne by the manufacturer's or drawer's order, it is
accountable to any party following the manufacturer or drawer; (c) When
signing for the payee's lodging, he shall be answerable to all persons
following the payee.
Page 28 of 138
SECTION 65. Warranty where negotiation by delivery and so forth. —

Every person negotiating an instrument by delivery or by a qualified
indorsement warrants:
(a) That the instrument is genuine and in all respects what it purports to
be;
(b) That he has a good title to it;
(c) That all prior parties had capacity to contract;
(d) That he has no knowledge of any fact which would impair the validity
of the instrument or render it valueless.
But when the negotiation is by delivery only, the warranty extends in

favor of no holder other than the immediate transferee.
The provisions of subdivision (c) of this section do not apply to a

person negotiating public or corporation securities other than bills and
notes.
Paraphrased
All persons who negotiate a document by delivery or by a qualified indulgence

guarantee: (a) that the instrument is authentic and that it is intended as true in
all aspects; (b) it has a good title to it; (c) that all previous parties were
capable of entering into an agreement; and (d) not being aware of any truth
that would weaken the validity of or make it valuable.
But if the agreement is carried out merely by delivery, the guarantee does not
apply to any holder save the immediate transferor. Moreover, subdivision (c)
of this section does not apply in respect of a person, other than bills and
notes, who negotiate public or company securities.
SECTION 66. Liability of general endorser. – Every endorser who

indorses without qualification, warrants to all subsequent holders in due
course:
(a) The matters and things mentioned in subdivisions (a), (b), and (c) of
the next preceding section; and
(b) That the instrument is, at the time of his indorsement, valid and
subsisting;
Page 29 of 138
And, in addition, he engages that, on due presentment, it shall be

accepted or paid, or both, as the case may be, according to its tenor,
and that if it be dishonored and the necessary proceedings on dishonor
be duly taken, he will pay the amount thereof to the holder, or to any
subsequent endorser who may be compelled to pay it.
Paraphrased
Any endorser without qualification must guarantee to all succeeding holders:

(a) the matters and objects referred to in the following paragraphs (a), (b), and
(c); and (b) the instrument is valid and subsistent at the moment of its
indulgence;
Furthermore, he commits the holder, or any later supporter to have to pay it,
to be accepted or paid on proper presentation or both, as the case may be, in
accordance with its own tenor, and to pay the amount thereof if it is duly
dishonored and the dishonor processes are duly undertaken.
Section 133. Holder entitled to acceptance on face of bill. - The holder of

a bill presenting the same for acceptance may require that the
acceptance be written on the bill, and, if such request is refused, may
treat the bill as dishonored.
Paraphrased
Section 133. Holder entitled to recognition on face of bill. - The holder of a bill
offering the same for acceptance may require that the reputation be written at
the bill, and, if such request is refused, can also deal with the bill as
dishonored.
Section 134. Acceptance by separate instrument. - Where an acceptance

is written on a paper other than the bill itself, it does not bind the
acceptor except in favor of a person to whom it is shown and who, on
the faith thereof, receives the bill for value.
Paraphrased
Section 134. Acceptance with the aid of separate instrument. - Where an

recognition is written on a paper apart from the bill itself, it does now not bind
the acceptor besides in choose of a person to whom it's far shown and who,
on the religion thereof, receives the invoice for cost.
Page 30 of 138
Section 135. Promise to accept; when equivalent to acceptance. - An

unconditional promise in writing to accept a bill before it is drawn is
deemed an actual acceptance in favor of every person who, upon the
faith thereof, receives the bill for value.
Paraphrased
Section 135. Promise to just accept; while equal to reputation. - An

unconditional promise in writing to simply accept an invoice before it is drawn
is deemed an real popularity in desire of each person who, upon the religion
thereof, receives the bill for fee.
Section 136. Time allowed drawee to accept. - The drawee is allowed

twenty-four hours after presentment in which to decide whether or not
he will accept the bill; the acceptance, if given, dates as of the day of
presentation.
Paraphrased
Section 136. Time allowed drawee to just accept. - The drawee is allowed
twenty-four hours after presentment in which to determine whether or not he'll
receive the invoice; the acceptance, if given, dates as of the day of
presentation.
Section 137. Liability of drawee returning or destroying bill. - Where a

drawee to whom a bill is delivered for acceptance destroys the same, or
refuses within twenty-four hours after such delivery or within such other
period as the holder may allow, to return the bill accepted or non-
accepted to the holder, he will be deemed to have accepted the same.
Paraphrased
Section 137. Liability of drawee returning or destroying invoice. - Where a

drawee to whom an invoice is added for recognition destroys the equal, or
refuses inside twenty-four hours after such shipping or inside such different
period as the holder may also allow, to return the invoice universal or non-
familiar to the holder, he can be deemed to have common the identical.
Section 138. Acceptance of incomplete bill. - A bill may be accepted

before it has been signed by the drawer, or while otherwise incomplete,
or when it is overdue, or after it has been dishonored by a previous
Page 31 of 138
refusal to accept, or by non-payment. But when a bill payable after sight

is dishonored by non-acceptance and the drawee subsequently accepts
it, the holder, in the absence of any different agreement, is entitled to
have the bill accepted as of the date of the first presentment.
Paraphrased
Section 138. Acceptance of incomplete bill. - A invoice may be typical before

it's been signed by way of the drawer, or even as in any other case
incomplete, or when it's miles overdue, or after it has been dishonored by a
previous refusal to simply accept, or by using non-payment. However, while a
bill payable after sight is dishonored by means of non-acceptance and the
drawee subsequently accepts it, the holder, within the absence of any
different settlement, is entitled to have the invoice customary as of the date of
the primary presentment.
Section 139. Kinds of acceptance. - An acceptance is either general or

qualified. A general acceptance assents without qualification to the
order of the drawer. A qualified acceptance in express terms varies the
effect of the bill as drawn.
Paraphrased
Section 139. Kinds of Acceptance. - An reputation is both fashionable or

qualified. A general acceptance assents without qualification to the order of
the drawer. A qualified attractiveness in express phrases varies the effect of
the invoice as drawn.
Section 140. What constitutes a general acceptance. - An acceptance to

pay at a particular place is a general acceptance unless it expressly
states that the bill is to be paid there only and not elsewhere.
Paraphrased
Section 140. What constitutes a widespread attractiveness. - An popularity to

pay at a specific area is a trendy recognition unless it expressly states that the
invoice is to be paid there simplest and no longer elsewhere.
Section 141. Qualified acceptance. - An acceptance is qualified which is:
Page 32 of 138
(a) Conditional; that is to say, which makes payment by the acceptor

dependent on the fulfillment of a condition therein stated;
(b) Partial; that is to say, an acceptance to pay part only of the amount
for which the bill is drawn;
(c) Local; that is to say, an acceptance to pay only at a particular place;
(d) Qualified as to time;
(e) The acceptance of some, one or more of the drawees but not of all.
Paraphrased
Section 141. Qualified popularity. - An popularity is qualified which is:
(a) Conditional; that is to mention, which makes price through the acceptor
dependent on the achievement of a situation therein stated;
(b) Partial; that is to mention, an popularity to pay element handiest of the

amount for which the invoice is drawn;
(c) Local; that is to mention, an recognition to pay simplest at a particular

vicinity;
(d) Qualified as to time;
(e) The acceptance of a few, one or extra of the drawees however now not of
all.
Section 142. Rights of parties as to qualified acceptance. - The holder

may refuse to take a qualified acceptance and if he does not obtain an
unqualified acceptance, he may treat the bill as dishonored by non-
acceptance. Where a qualified acceptance is taken, the drawer and
indorsers are discharged from liability on the bill unless they have
expressly or impliedly authorized the holder to take a qualified
acceptance, or subsequently assent thereto. When the drawer or an
indorser receives notice of a qualified acceptance, he must, within a
reasonable time, express his dissent to the holder or he will be deemed
to have assented thereto.
Paraphrased
Section 142. Rights of events as to certified reputation. - The holder may

additionally refuse to take a qualified attractiveness and if he does not acquire
an unqualified recognition, he may additionally treat the bill as dishonored
Page 33 of 138
through non-popularity. Where a qualified popularity is taken, the drawer and

indorsers are discharged from legal responsibility at the invoice until they
have expressly or impliedly legal the holder to take a certified acceptance, or
sooner or later assent thereto. Whilst the drawer or an indorser gets observe
of a qualified reputation, he has to, within an affordable time, express his
dissent to the holder or he may be deemed to have assented thereto.
XI. PRESENTMENT FOR ACCEPTANCE
Section 143. When presentment for acceptance must be made. -

Presentment for acceptance must be made:
(a) Where the bill is payable after sight, or in any other case, where
presentment for acceptance is necessary in order to fix the maturity of
the instrument; or
(b) Where the bill expressly stipulates that it shall be presented for
acceptance; or
(c) Where the bill is drawn payable elsewhere than at the residence or
place of business of the drawee.
In no other case is presentment for acceptance necessary in order to

render any party to the bill liable.
Paraphrased
Section 143. Whilst presentment for popularity need to be made. -

Presentment for reputation should be made:
(a) Wherein the bill is payable after sight, or in any other case, where
presentment for popularity is vital as a way to fix the maturity of the
instrument; or
(b) In which the invoice expressly stipulates that it shall be offered for
popularity; or
(c) Where the invoice is drawn payable elsewhere than on the residence or
place of job of the drawee.
In no other case is presentment for recognition essential for you to render any
celebration to the invoice responsible.
Page 34 of 138
Section 144. When failure to present releases drawer and indorser. -

Except as herein otherwise provided, the holder of a bill which is
required by the next preceding section to be presented for acceptance
must either present it for acceptance or negotiate it within a reasonable
time. If he fails to do so, the drawer and all indorsers are discharged.
Paraphrased
Section 144. While failure to give releases drawer and indorser. - Besides as
herein otherwise supplied, the holder of a bill that's required via the next
preceding segment to be offered for recognition must either gift it for
popularity or negotiate it within an affordable time. If he fails to achieve this,
the drawer and all indorsers are discharged.
Section 145. Presentment; how made. - Presentment for acceptance

must be made by or on behalf of the holder at a reasonable hour, on a
business day and before the bill is overdue, to the drawee or some
person authorized to accept or refuse acceptance on his behalf; and
(a) Where a bill is addressed to two or more drawees who are not
partners, presentment must be made to them all unless one has
authority to accept or refuse acceptance for all, in which case
presentment may be made to him only;
(b) Where the drawee is dead, presentment may be made to his personal
representative;
(c) Where the drawee has been adjudged a bankrupt or an insolvent or

has made an assignment for the benefit of creditors, presentment may
be made to him or to his trustee or assignee.
Paraphrased
Section 145. Presentment; how made. - Presentment for attractiveness have

to be made by using or on behalf of the holder at a reasonable hour, on a
enterprise day and before the bill is overdue, to the drawee or a few character
legal to just accept or refuse acceptance on his behalf; and
(a) Where an invoice is addressed to two or more drawees who aren't

companions, presentment must be made to them all unless one has authority
to simply accept or refuse recognition for all, in which case presentment may
be made to him best;
Page 35 of 138
(b) Wherein the drawee is dead, presentment can be made to his personal
consultant;
(c) In which the drawee has been adjudged a bankrupt or an bancrupt or has
made an task for the benefit of lenders, presentment may be made to him or
to his trustee or assignee.
Section 146. On what days presentment may be made. - A bill may be

presented for acceptance on any day on which negotiable instruments
may be presented for payment under the provisions of Sections
seventy-two and eighty-five of this Act. When Saturday is not otherwise
a holiday, presentment for acceptance may be made before twelve
o'clock noon on that day.
Paraphrased
Section 146. On what days presentment can be made. - A bill may be

supplied for popularity on any day on which negotiable contraptions can be
provided for payment beneath the provisions of Sections seventy- and eighty-
five of this Act. Whilst Saturday isn't otherwise a holiday, presentment for
popularity may be made earlier than twelve o'clock midday on that day.
Section 147. Presentment where time is insufficient. - Where the holder

of a bill drawn payable elsewhere than at the place of business or the
residence of the drawee has no time, with the exercise of reasonable
diligence, to present the bill for acceptance before presenting it for
payment on the day that it falls due, the delay caused by presenting the
bill for acceptance before presenting it for payment is excused and does
not discharge the drawers and indorsers.
Paraphrased
Section 147. Presentment in which time is insufficient. - In which the holder of

a bill drawn payable somewhere else than at the place of business or the
house of the drawee has no time, with the exercise of affordable diligence, to
offer the invoice for reputation before providing it for payment on the day that
it falls due, the put off resulting from providing the bill for popularity earlier
than supplying it for fee is excused and does not discharge the drawers and
indorsers.
Page 36 of 138
Section 148. Where presentment is excused. - Presentment for

acceptance is excused and a bill may be treated as dishonored by non-
acceptance in either of the following cases:
(a) Where the drawee is dead, or has absconded, or is a fictitious person

or a person not having capacity to contract by bill.
(b) Where, after the exercise of reasonable diligence, presentment can

not be made.
(c) Where, although presentment has been irregular, acceptance has

been refused on some other ground.
Paraphrased
Section 148. Wherein presentment is excused. - Presentment for recognition

is excused and an invoice may be dealt with as dishonored with the aid of
non-recognition in both of the subsequent cases:
(a) Wherein the drawee is useless, or has absconded, or is a fictitious man or

woman or someone not having capability to contract by means of bill.
(b) Where, after the workout of reasonable diligence, presentment can't be

made.
(c) Wherein, although presentment has been irregular, attractiveness has

been refused on a few other ground.
Section 149. When dishonored by non-acceptance. - A bill is dishonored

by non-acceptance:
(a) When it is duly presented for acceptance and such an acceptance as

is prescribed by this Act is refused or cannot be obtained; or
(b) When presentment for acceptance is excused and the bill is not
accepted.
Paraphrased
Section 149. When dishonored by means of non-recognition. - An invoice is

dishonored through non-attractiveness:
(a) While it's far duly presented for recognition and such an popularity as is
prescribed by using this Act is refused or cannot be received; or
Page 37 of 138
(b) When presentment for recognition is excused and the invoice is not
regularly occurring.
Section 150. Duty of holder where bill not accepted. - Where a bill is duly
presented for acceptance and is not accepted within the prescribed
time, the person presenting it must treat the bill as dishonored by non-
acceptance or he loses the right of recourse against the drawer and
indorsers.
Paraphrased
Section 150. Duty of holder where invoice now not established. - In which an
invoice is duly provided for popularity and isn't always usual inside the
prescribed time, the individual supplying it need to deal with the bill as
dishonored via non-reputation or he loses the proper of recourse towards the
drawer and indorsers.
Section 151. Rights of holder where bill not accepted. - When a bill is
dishonored by non-acceptance, an immediate right of recourse against
the drawer and indorsers accrues to the holder and no presentment for
payment is necessary.
Paraphrased
Section 151. Rights of holder wherein invoice now not typical. - Whilst a bill is
dishonored via non-reputation, an instantaneous right of recourse against the
drawer and indorsers accrues to the holder and no presentment for charge is
important.
XII. PROTEST
Section 152. In what cases protest necessary. - Where a foreign bill
appearing on its face to be such is dishonored by non-acceptance, it
must be duly protested for non-acceptance, by non-acceptance is
dishonored and where such a bill which has not previously been
dishonored by nonpayment, it must be duly protested for nonpayment. If
it is not so protested, the drawer and indorsers are discharged. Where a
bill does not appear on its face to be a foreign bill, protest thereof in
case of dishonor is unnecessary.
Page 38 of 138
Paraphrased
Section 152. In what instances protest essential. - Wherein a foreign bill

appearing on its face to be such is dishonored by way of non-reputation, it has
to be duly protested for non-recognition, by non-reputation is dishonored and
where any such invoice which has no longer formerly been dishonored by
nonpayment, it has to be duly protested for nonpayment. If it isn't so
protested, the drawer and indorsers are discharged. in which an invoice does
now not seem on its face to be a foreign bill, protest thereof in case of
dishonor makes no sense.
Section 153. Protest; how made. - The protest must be annexed to the
bill or must contain a copy thereof, and must be under the hand and seal
of the notary making it and must specify:
(a) The time and place of presentment;
(b) The fact that presentment was made and the manner thereof;
(c) The cause or reason for protesting the bill;
(d) The demand made and the answer given, if any, or the fact that the
drawee or acceptor could not be found.
Paraphrased
Section 153. Protest; how made. - The protest has to be annexed to the
invoice or ought to contain a duplicate thereof, and ought to be under the
hand and seal of the notary making it and have to specify:
(a) The time and location of presentment;
(b) The reality that presentment was made and the way thereof;
(c) The reason or cause for protesting the bill;
(d) The call for made and the answer given, if any, or the fact that the drawee
or acceptor couldn't be observed.
Section 154. Protest, by whom made. - Protest may be made by:
(a) A notary public; or
(b) By any respectable resident of the place where the bill is dishonored,
in the presence of two or more credible witnesses.
Page 39 of 138
Paraphrased
Section 154. Protest, by using whom made. - Protest can be made by way of:
(a) A notary public; or
(b) With the aid of any respectable resident of the area wherein the invoice is
dishonored, in the presence of two or more credible witnesses.
Section 155. Protest; when to be made. - When a bill is protested, such

protest must be made on the day of its dishonor unless delay is excused
as herein provided. When a bill has been duly noted, the protest may be
subsequently extended as of the date of the noting.
Paraphrased
Section 155. Protest; whilst to be made. - While a bill is protested, such

protest should be made at the day of its dishonor unless postpone is excused
as herein provided. while an invoice has been duly cited, the protest may be
sooner or later extended as of the date of the noting.
Section 156. Protest; where made. - A bill must be protested at the place
where it is dishonored, except that when a bill drawn payable at the
place of business or residence of some person other than the drawee
has been dishonored by non-acceptance, it must be protested for non-
payment at the place where it is expressed to be payable, and no further
presentment for payment to, or demand on, the drawee is necessary.
Paraphrased
Section 156. Protest; in which made. - A bill must be protested at the vicinity
in which it's far dishonored, besides that once an invoice drawn payable at the
place of job or house of some individual aside from the drawee has been
dishonored by means of non-acceptance, it ought to be protested for non-
price at the location in which it's far expressed to be payable, and no in
addition presentment for price to, or demand on, the drawee is important.
Section 157. Protest both for non-acceptance and non-payment. - A bill

which has been protested for non-acceptance may be subsequently
protested for non-payment.
Page 40 of 138
Paraphrased
Section 157. Protest each for non-reputation and non-price. - A bill which has
been protested for non-recognition can be finally protested for non-payment.
Section 158. Protest before maturity where acceptor insolvent. - Where

the acceptor has been adjudged a bankrupt or an insolvent or has made
an assignment for the benefit of creditors before the bill matures, the
holder may cause the bill to be protested for better security against the
Paraphrased
Section 158. Protest before maturity in which acceptor bankrupt. - In which

the acceptor has been adjudged a bankrupt or an insolvent or has made an
task for the gain of lenders earlier than the bill matures, the holder may
additionally reason the bill to be protested for higher safety towards the
Section 159. When protest dispensed with. - Protest is dispensed with

by any circumstances which would dispense with notice of dishonor.
Delay in noting or protesting is excused when delay is caused by
circumstances beyond the control of the holder and not imputable to his
default, misconduct, or negligence. When the cause of delay ceases to
operate, the bill must be noted or protested with reasonable diligence.
Paraphrased
Section 159. While protest distributed with. - Protest is dispensed with via any
instances which would dispense with observe of dishonor. Delay in noting or
protesting is excused whilst postpone is due to situations past the manipulate
of the holder and not imputable to his default, misconduct, or negligence.
While the cause of put off ceases to perform, the bill need to be stated or
protested with affordable diligence.
Section 160. Protest where bill is lost and so forth. - When a bill is lost or
destroyed or is wrongly detained from the person entitled to hold it,
protest may be made on a copy or written particulars thereof.
Paraphrased
Page 41 of 138
Section 160. Protest where bill is misplaced and so forth. - Whilst an invoice is
lost or destroyed or is badly detained from the individual entitled to keep it,
protest can be made on a replica or written details thereof.
XIII. ACCEPTANCE FOR HONOR
Section 161. When bill may be accepted for honor. - When a bill of
exchange has been protested for dishonor by non-acceptance or
protested for better security and is not overdue, any person not being a
party already liable thereon may, with the consent of the holder,
intervene and accept the bill supra protest for the honor of any party
liable thereon or for the honor of the person for whose account the bill
is drawn. The acceptance for honor may be for part only of the sum for
which the bill is drawn; and where there has been an acceptance for
honor for one party, there may be a further acceptance by a different
person for the honor of another party.
Paraphrased
Section 161. While bill may be conventional for honor. - When a bill of
exchange has been protested for dishonor via non-acceptance or protested
for higher security and is not past due, any individual no longer being a party
already in charge thereon can also, with the consent of the holder, interfere
and receive the invoice supra protest for the honor of any party in charge
thereon or for the respect of the person for whose account the invoice is
drawn. The attractiveness for honor may be for part most effective of the sum
for which the bill is drawn; and wherein there has been an acceptance for
honor for one celebration, there may be a similarly popularity by a different
person for the honor of some other party.
Section 162. Acceptance for honor; how made. - An acceptance for

honor supra protest must be in writing and indicate that it is an
acceptance for honor and must be signed by the acceptor for honor.
Paraphrased
Section 162. Attractiveness for honor; how made. - An acceptance for honor
supra protest ought to be in writing and suggest that it is an reputation for
honor and have to be signed by way of the acceptor for honor.
Page 42 of 138
Section 163. When deemed to be an acceptance for honor of the drawer.

- Where an acceptance for honor does not expressly state for whose
honor it is made, it is deemed to be an acceptance for the honor of the
drawer.
Paraphrased
Section 163. Whilst deemed to be an acceptance for honor of the drawer. -

Where an reputation for honor does now not expressly state for whose honor
it is made, it's far deemed to be an acceptance for the respect of the drawer.
Section 164. Liability of the acceptor for honor. - The acceptor for honor
is liable to the holder and to all parties to the bill subsequent to the party
for whose honor he has accepted.
Paraphrased
Section 164. Liability of the acceptor for honor. - The acceptor for honor is
susceptible to the holder and to all parties to the invoice next to the birthday
celebration for whose honor he has established.
Section 165. Agreement of acceptor for honor. - The acceptor for honor,
by such acceptance, engages that he will, on due presentment, pay the
bill according to the terms of his acceptance provided it shall not have
been paid by the drawee and provided also that is shall have been duly
presented for payment and protested for non-payment and notice of
dishonor given to him.
Paraphrased
Section 165. Agreement of acceptor for honor. - The acceptor for honor, by
means of such reputation, engages that he will, on due presentment, pay the
bill according to the phrases of his acceptance supplied it shall now not be
paid by means of the drawee and provided also that is shall had been duly
offered for fee and protested for non-payment and word of dishonor given to
him.
Section 166. Maturity of bill payable after sight; accepted for honor. -
Where a bill payable after sight is accepted for honor, its maturity is
Page 43 of 138
calculated from the date of the noting for non-acceptance and not from
the date of the acceptance for honor.
Paraphrased
Section 166. Maturity of bill payable after sight; ordinary for honor. - In which
an invoice payable after sight is frequent for honor, its adulthood is calculated
from the date of the noting for non-attractiveness and no longer from the date
of the attractiveness for honor.
Section 167. Protest of bill accepted for honor, and so forth. - Where a
dishonored bill has been accepted for honor supra protest or contains a
referee in case of need, it must be protested for non-payment before it is
presented for payment to the acceptor for honor or referee in case of
need.
Paraphrased
Section 167. Protest of bill standard for honor, and so on. - Wherein a
dishonored invoice has been common for honor supra protest or consists of a
referee in case of need, it has to be protested for non-charge before it is
supplied for price to the acceptor for honor or referee in case of want.
Section 168. Presentment for payment to acceptor for honor, how made.
- Presentment for payment to the acceptor for honor must be made as
follows:
(a) If it is to be presented in the place where the protest for non-payment

was made, it must be presented not later than the day following its
maturity.
(b) If it is to be presented in some other place than the place where it

was protested, then it must be forwarded within the time specified in
Section one hundred and four.
Paraphrased
Section 168. Presentment for price to acceptor for honor, how made. -
Presentment for charge to the acceptor for honor have to be made as follows:
(a) If it's far to be provided in the area where the protest for non-price turned
into made, it need to be provided now not later than the day following its
maturity.
Page 44 of 138
(b) If it's miles to be supplied in a few other locations than the region where it
become protested, then it ought to be forwarded within the time specified in
section 104.
Section 169. When delay in making presentment is excused. - The

provisions of Section eighty-one apply where there is delay in making
presentment to the acceptor for honor or referee in case of need.
Paraphrased
Section 169. While put off in making presentment is excused. - The provisions
of section eighty-one practice where there's put off in making presentment to
the acceptor for honor or referee in case of need.
Section 170. Dishonor of bill by acceptor for honor. - When the bill is
dishonored by the acceptor for honor, it must be protested for non-
payment by him.
Paraphrased
Section 170. Dishonor of bill by acceptor for honor. - While the bill is
dishonored by way of the acceptor for honor, it has to be protested for non-
charge by way of him.
XIV. PAYMENT FOR HONOR
Section 171. Who may make payment for honor. - Where a bill has been
protested for non-payment, any person may intervene and pay it supra
protest for the honor of any person liable thereon or for the honor of the
person for whose account it was drawn.
Paraphrased
Section 171. Who might also make price for honor. - Where a bill has been
protested for non-charge, any man or woman may also intervene and pay it
supra protest for the respect of any character in charge thereon or for the
respect of the man or woman for whose account it become drawn.
Page 45 of 138
Section 172. Payment for honor; how made. - The payment for honor
supra protest, in order to operate as such and not as a mere voluntary
payment, must be attested by a notarial act of honor which may be
appended to the protest or form an extension to it.
Paraphrased
Section 172. Price for honor; how made. - The fee for honor supra protest, as
a way to function as such and not as a mere voluntary payment, ought to be
attested via a notarial act of honor which may be appended to the protest or
shape an extension to it.
Section 173. Declaration before payment for honor. - The notarial act of
honor must be founded on a declaration made by the payer for honor or
by his agent in that behalf declaring his intention to pay the bill for
honor and for whose honor he pays.
Paraphrased
Section 173. Statement earlier than charge for honor. - The notarial act of
honor need to be founded on a declaration made by means of the payer for
honor or with the aid of his agent in that behalf putting forward his purpose to
pay the invoice for honor and for whose honor he can pay.
Section 174. Preference of parties offering to pay for honor. - Where two
or more persons offer to pay a bill for the honor of different parties, the
person whose payment will discharge most parties to the bill is to be
given the preference.
Paraphrased
Section 174. Preference of parties presenting to pay for honor. - In which or

greater persons offer to pay a bill for the honor of various events, the
character whose fee will discharge most parties to the invoice is to be given
the desire.
Section 175. Effect on subsequent parties where bill is paid for honor. -
Where a bill has been paid for honor, all parties subsequent to the party
for whose honor it is paid are discharged but the payer for honor is
subrogated for, and succeeds to, both the rights and duties of the
Page 46 of 138
holder as regards the party for whose honor he pays and all parties
liable to the latter.
Paraphrased
Section 175. Impact on next events where invoice is paid for honor. - Wherein
an invoice has been paid for honor, all events next to the party for whose
honor it's far paid are discharged but the payer for honor is subrogated for,
and succeeds to, each the rights and obligations of the holder as regards the
party for whose honor he will pay and all parties prone to the latter.
Section 176. Where holder refuses to receive payment supra protest. -

Where the holder of a bill refuses to receive payment supra protest, he
loses his right of recourse against any party who would have been
discharged by such payment.
Paraphrased
Section 176. Wherein holder refuses to acquire payment supra protest. - In

which the holder of an invoice refuses to receive payment supra protest, he
loses his right of recourse in opposition to any party who would were
discharged by way of such payment.
Section 177. Rights of payer for honor. - The payer for honor, on paying
to the holder the amount of the bill and the notarial expenses incidental
to its dishonor, is entitled to receive both the bill itself and the protest.
Paraphrased
Section 177. Rights of payer for honor. - The payer for honor, on paying to the
holder the quantity of the invoice and the notarial charges incidental to its
dishonor, is entitled to obtain each the bill itself and the protest.
XV. BILLS IN SET
Section 178. Bills in set constitute one bill. - Where a bill is drawn in a
set, each part of the set being numbered and containing a reference to
the other parts, the whole of the parts constitutes one bill.
Page 47 of 138
Paraphrased
Section 178. Payments in set represent one invoice. - In which an invoice is

drawn in a hard and fast, every part of the set being numbered and containing
a reference to the other parts, the complete of the elements constitutes one
invoice.
Section 179. Right of holders where different parts are negotiated. -

Where two or more parts of a set are negotiated to different holders in
due course, the holder whose title first accrues is, as between such
holders, the true owner of the bill. But nothing in this section affects the
right of a person who, in due course, accepts or pays the parts first
presented to him.
Paraphrased
Section 179. Right of holders in which different elements are negotiated. -

Wherein two or greater components of a set are negotiated to extraordinary
holders in due course, the holder whose title first accrues is, as between such
holders, the authentic proprietor of the bill. However, nothing in this section
impacts the right of a person who, in due path, accepts or pays the parts first
presented to him.
Section 180. Liability of holder who indorses two or more parts of a set
to different persons. - Where the holder of a set indorses two or more
parts to different persons he is liable on every such part, and every
indorser subsequent to him is liable on the part he has himself indorsed,
as if such parts were separate bills.
Paraphrased
Section 180. Legal responsibility of holder who indorses or extra components

of a hard and fast to distinct people. - Wherein the holder of a fixed indorses
or more elements to one-of-a-kind people he is liable on each such element,
and each indorser next to him is accountable at the element he has himself
indorsed, as if such elements have been separate payments.
Section 181. Acceptance of bill drawn in sets. - The acceptance may be

written on any part and it must be written on one part only. If the drawee
accepts more than one part and such accepted parts negotiated to
Page 48 of 138
different holders in due course, he is liable on every such part as if it

were a separate bill.
Paraphrased
Section 181. Attractiveness of bill drawn in units. - The attractiveness can be

written on any element and it have to be written on one component only. If the
drawee accepts multiple part and such typical components negotiated to
unique holders in due direction, he's liable on each such element as if it had
been a separate bill.
Section 182. Payment by acceptor of bills drawn in sets. - When the

acceptor of a bill drawn in a set pays it without requiring the part
bearing his acceptance to be delivered up to him, and the part at
maturity is outstanding in the hands of a holder in due course, he is
liable to the holder thereon.
Paraphrased
Section 182. Fee by means of acceptor of payments drawn in units. - While

the acceptor of an invoice drawn in a set can pay it without requiring the
element bearing his recognition to be added up to him, and the component at
adulthood is top notch in the palms of a holder in due path, he's prone to the
holder thereon.
Section 183. Effect of discharging one of a set. - Except as herein

otherwise provided, where any one part of a bill drawn in a set is
discharged by payment or otherwise, the whole bill is discharged.
Paraphrased
Section 183. Impact of discharging one among a set. - Besides as herein

otherwise provided, in which any individual a part of an invoice drawn in a set
is discharged by using payment or otherwise, the complete invoice is
discharged.
XVI. PROMISSORY NOTES AND CHECKS
Page 49 of 138
Section 184. Promissory note, defined. - A negotiable promissory note

within the meaning of this Act is an unconditional promise in writing
made by one person to another, signed by the maker, engaging to pay
on demand, or at a fixed or determinable future time, a sum certain in
money to order or to bearer. Where a note is drawn to the maker's own
order, it is not complete until indorsed by him.
Paraphrased
Section 184. Promissory be aware, defined. - A negotiable promissory note

within the that means of this Act is an unconditional promise in writing made
by one man or woman to another, signed by means of the maker, attractive to
pay on demand, or at a hard and fast or determinable future time, a sum sure
in money to order or to bearer. In which a notice is attracted to the maker's
personal order, it is not complete until indorsed via him.
Section 185. Check, defined. - A check is a bill of exchange drawn on a

bank payable on demand. Except as herein otherwise provided, the
provisions of this Act applicable to a bill of exchange payable on
demand apply to a check.
Paraphrased
Section 185. Test, defined. - A take a look at is a invoice of trade drawn on a

bank payable on call for. except as herein in any other case provided, the
provisions of this Act relevant to a bill of trade payable on demand observe to
a check.
Section 186. Within what time a check must be presented. - A check

must be presented for payment within a reasonable time after its issue
or the drawer will be discharged from liability thereon to the extent of
the loss caused by the delay.
Paraphrased
Section 186. Inside what time a test need to be offered. - A test must be
supplied for payment within a reasonable time after its trouble or the drawer
will be discharged from liability thereon to the volume of the loss as a result of
the delay.
Page 50 of 138
Section 187. Certification of check; effect of. - Where a check is certified

by the bank on which it is drawn, the certification is equivalent to an
acceptance.
Paraphrased
Section 187. Certification of test; impact of. - Where a test is certified with the
aid of the bank on which it's miles drawn, the certification is equivalent to an
acceptance.
Section 188. Effect where the holder of check procures it to be certified.

- Where the holder of a check procures it to be accepted or certified, the
drawer and all indorsers are discharged from liability thereon.
Paraphrased
Section 188. Impact wherein the holder of test procures it to be licensed. - In

which the holder of a check procures it to be customary or licensed, the
drawer and all indorsers are discharged from liability thereon.
Section 189. When check operates as an assignment. - A check of itself

does not operate as an assignment of any part of the funds to the credit
of the drawer with the bank, and the bank is not liable to the holder
unless and until it accepts or certifies the check.
Paraphrased
Section 189. When take a look at operates as an project. - A check of itself

does no longer operate as an challenge of any a part of the budget to the
credit of the drawer with the bank, and the financial institution isn't at risk of
the holder until and until it accepts or certifies the test.
XVII. GENERAL PROVISIONS
Section 190. Short title. - This Act shall be known as the Negotiable
Instruments Law.
Paraphrased
Page 51 of 138
Section 190. short name. - This Act shall be called the Negotiable
Contraptions Regulation.
Section 191. Definition and meaning of terms. - In this Act, unless the
contract otherwise requires:
"Acceptance" means an acceptance completed by delivery or

notification;
"Action" includes counterclaim and set-off;
"Bank" includes any person or association of persons carrying on the

business of banking, whether incorporated or not;
"Bearer" means the person in possession of a bill or note which is

payable to bearer;
"Bill" means bill of exchange, and "note" means negotiable promissory

note;
"Delivery" means transfer of possession, actual or constructive, from

one person to another;
"Holder" means the payee or indorsee of a bill or note who is in

possession of it, or the bearer thereof;
"Indorsement" means an indorsement completed by delivery;
"Instrument" means negotiable instrument;
"Issue" means the first delivery of the instrument, complete in form, to a

person who takes it as a holder;
"Person" includes a body of persons, whether incorporated or not;
"Value" means valuable consideration;
"Written" includes printed, and "writing" includes print.
Paraphrased
Section 191. Definition and which means of phrases. - On this Act, unless the
agreement in any other case requires:
"Recognition" manner an recognition finished by using delivery or notification;
"Motion" includes counterclaim and set-off;
Page 52 of 138
"Financial institution" includes any character or association of people sporting

at the business of banking, whether included or now not;
"Bearer" approaches the man or woman in ownership of a bill or note which is

payable to bearer;
"Bill" means bill of alternate, and "observe" manner negotiable promissory

notice;
"Shipping" manner switch of possession, real or positive, from one person to

every other;
"Holder" method the payee or indorsee of a bill or be aware who's in

possession of it, or the bearer thereof;
"Indorsement" manner an indorsement finished through transport;
"Tool" manner negotiable tool;
"Difficulty" method the first transport of the device, whole in form, to someone
who takes it as a holder;
"Man or woman" consists of a body of men and women, whether or not

integrated or no longer;
"Fee" approach treasured consideration;
"Written" includes printed, and "writing" includes print.
Section 192. Persons primarily liable on instrument. - The person

"primarily" liable on an instrument is the person who, by the terms of
the instrument, is absolutely required to pay the same. All other parties
are "secondarily" liable.
Paraphrased
Section 192. Individuals mainly accountable on tool. - The person "mainly"

responsible on an tool is the individual that, by using the terms of the tool, is
truly required to pay the same. All different events are "secondarily"
accountable.
Section 193. Reasonable time, what constitutes. - In determining what is

a "reasonable time" regard is to be had to the nature of the instrument,
Page 53 of 138
the usage of trade or business with respect to such instruments, and the
facts of the particular case.
Paraphrased
Section 193. Affordable time, what constitutes. - In figuring out what is a

"reasonable time" regard is available to the character of the device, the usage
of trade or business with appreciate to such devices, and the statistics of the
precise case.
Section 194. Time, how computed; when last day falls on holiday. -
Where the day, or the last day for doing any act herein required or
permitted to be done falls on a Sunday or on a holiday, the act may be
done on the next succeeding secular or business day.
Paraphrased
Section 194. Time, how computed; whilst ultimate day falls on holiday. -
Wherein the day, or the last day for doing any act herein required or
authorized to be executed falls on a Sunday or on a vacation, the act may be
achieved on the next succeeding secular or commercial enterprise day.
Section 195. Application of Act. - The provisions of this Act do not apply
to negotiable instruments made and delivered prior to the taking effect
hereof.
Paraphrased
Section 195. Utility of Act. - The provisions of this Act do no longer follow to
negotiable gadgets made and delivered previous to the taking effect hereof.
Section 196. Cases 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 rules of the law merchant.
Paraphrased
Section 196. Instances no longer provided for in Act. - Any case not furnished
for on this Act shall be governed via the provisions of current legislation or in
default thereof, by the rules of the regulation merchant.
Page 54 of 138
Section 197. Repeals. - All acts and laws and parts thereof inconsistent
with this Act are hereby repealed.
Paraphrased
Section 197. Repeals. - All acts and laws and parts thereof inconsistent with
this Act are hereby repealed.
Section 198. Time when Act takes effect. - This Act shall take effect
ninety days after its publication in the Official Gazette of the Philippine
Islands shall have been completed.
Paraphrased
Section 198. Time while Act takes impact. - This Act shall take effect 90 days
after its publication within the legitimate Gazette of the Philippine Islands shall
be imposed.
Page 55 of 138
BATAS PAMBANSA BLG. 22

BOUNCING CHECKS LAW
AN ACT PENALIZING THE MAKING OR DRAWING AND ISSUANCE OF A

CHECK WITHOUT SUFFICIENT FUNDS OR CREDIT AND FOR OTHER
PURPOSES.
Section 1. Checks without sufficient funds. – Any person who makes or

draws and issues any check to apply on account or for value, knowing
at the time of issue that he does not have sufficient funds in or credit
with the drawee bank for the payment of such check in full upon its
presentment, which check is subsequently dishonored by the drawee
bank for insufficiency of funds or credit or would have been dishonored
for the same reason had not the drawer, without any valid reason,
ordered the bank to stop payment, shall be punished by imprisonment
of not less than thirty days but not more than one (1) year or by a fine of
not less than but not more than double the amount of the check which
fine shall in no case exceed Two Hundred Thousand Pesos, or both
such fine and imprisonment at the discretion of the court.
The same penalty shall be imposed upon any person who, having
sufficient funds in or credit with the drawee bank when he makes or
draws and issues a check, shall fail to keep sufficient funds or to
maintain a credit to cover the full amount of the check if presented
within a period of ninety (90) days from the date appearing thereon, for
which reason it is dishonored by the drawee bank.
Where the check is drawn by a corporation, company or entity, the

person or persons who actually signed the check in behalf of such
drawer shall be liable under this Act.
Paraphrased
Whoever makes or draws and issues any check to be applied for account or
for value, knowing at the time of issue that the drawee bank has no sufficient
funds in or credit to pay for the check in full at the time of its delivery, the
drawee bank then dishonors its check for insufficient funds or credit, or
dishonor for the same reason, had not done so – the fine must in no event
exceed Two Hundred Thousand Pesos or either such fine or imprisonment
Page 56 of 138
shall be imposed at the discretion of a court by imprisonment for not less than
thirty days but not for more than one (1).
The same penalty is applied to any person who, when he makes or draws and
issues a check, does not have sufficient money or loans with a bank drawee if
they are presented within a period of neufty (ninety) days from the date of
appearance of the check and for this reason, does not have sufficient money
or credit to cover the entire amount of the check. The drawee bank is
dishonored. Moreover, if a firm, firm or entity draws the check, the person or
individuals who signed the check for the drawer is accountable for the
purposes of the Act.
SECTION 2. Evidence of knowledge of insufficient funds. – The making,

drawing and issuance of a check payment of which is refused by the
drawee because of insufficient funds in or credit with such bank, when
presented within ninety (90) days from the date of the check, shall be
prima facie evidence of knowledge of such insufficiency of funds or
credit unless such maker or drawer pays the holder thereof the amount
due thereon, or makes arrangements for payment in full by the drawee
of such check within (5) banking days after receiving notice that such
check has not been paid by the drawee.
Paraphrased
The creation, drawing and issuing of a check which the drawee is denied on
the basis of insufficient funds in or credit with that bank shall be prima facie
proof of the insufficiency of the fund or credit, if it is submitted within ninety
(90) days following the date of the check, unless the maker or drawer pays to
the owner the amount owing therefrom, or makes arrangements for payment
in full, within (5) bank days following receipt of notification, through the drawee
of such a check that the drawee has not paid for it.
Section 5. Liability under the Revised Penal Code. - Prosecution under

this Act shall be without prejudice to any liability for violation of any
provision of the Revised Penal Code.
Paraphrased
Section 5. Liability Under the Revised Penal Code. - Prosecution under this
Act will be without prejudice to any legal responsibility for violation of any
provision of the Revised Penal Code.
Page 57 of 138
Section 6. Separability clause. - If any separable provision of this Act be

declared unconstitutional, the remaining provisions shall continue to be
in force.
Paraphrased
Section 6. Separability Clause. - If any separable provision of this Act be

declared unconstitutional, the ultimate provisions shall stay in pressure.
Section 7. Effectivity. - This Act shall take effect fifteen days after
publication in the Official Gazette.
Paraphrased
Section 7. Effectivity. - This Act shall take effect fifteen days after guide in the
professional Gazette.
Page 58 of 138
BANK SECRECY ACT

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.
Paraphrased
It is officially proclaimed that the Government' s objective is to encourage

individuals to deposit their funds in banking institutions and to discourage
private hosting so that banks may use them correctly in approved loans to
support the country's economic development as described by Section 1 of the
Act.
SECTION 2. 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.
Paraphrased
Any deposits, including bond investments issued by the Government and its
policy subdivisions and instruments, in the Philippines with the banks and
banking institutions shall be deemed as being absolutely confidential, and no
person, government official, office or office may examine them or investigate
them except in case of bribery, or a neglect of public officials' duties or where
money placed or invested has been the topic of litigation, with written
Page 59 of 138
authorization of the depositor or in instances of impeachment or on an

application by the appropriate court.
Section 5. Any bank which shall make any deposit with the Insular
Treasurer 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 any bank for moneys so
deposited with the Insular Treasurer shall be defended by the Attorney-
General without cost to such bank.
Paraphrased
Section 5. Any financial institution which shall make any deposit with the
Insular Treasurer in conformity with the provisions of this Act shall not
thereafter be liable to any individual for the same and any movement which
may be delivered via any man or woman against any financial institution for
moneys so deposited with the Insular Treasurer will be defended through the
legal professional-preferred without value to such bank.
Section 6. This Act shall take effect on January first, nineteen hundred
and thirty-three.
Paraphrased
Section 6. This Act must take effect on January 1, 1933.
Page 60 of 138

AN ACT PROTECTING INDIVIDUAL PERSONAL INFORMATION IN
INFORMATION AND COMMUNICATIONS SYSTEMS IN THE
GOVERNMENT AND THE PRIVATE SECTOR, CREATING FOR THIS
PURPOSE A NATIONAL PRIVACY COMMISSION, AND FOR OTHER
PURPOSES
CHAPTER I
GENERAL PROVISIONS
SECTION 1. Short Title. – This Act shall be known as the “Data Privacy
Act of 2012”.
Paraphrased
The law is entitled Data Privacy Act of 2012 which shall govern and protect
personal information and communication systems.
SECTION. 2. Declaration of Policy. – It is the policy of the State to

protect the fundamental human right of privacy, of communication while
ensuring free flow of information to promote innovation and growth. The
State recognizes the vital role of information and communications
technology in nation-building and its inherent obligation to ensure that
personal information in information and communications systems in the
government and in the private sector are secured and protected.
Paraphrased
The State's policy is to defend the basic human right to privacy and to ensure
the freedom of communication, while promoting innovation and progress. The
States acknowledge the crucial role of ICT in nation-building and its intrinsic
commitment to guarantee that personal data is safeguarded and safeguarded
in government and private information and communication systems.
SECTION. 3. Definition of Terms. – Whenever used in this Act, the

following terms shall have the respective meanings hereafter set forth:
Page 61 of 138
(a) Commission shall refer to the National Privacy Commission created

by virtue of this Act.
(b) Consent of the data subject refers to any freely given, specific,
informed indication of will, whereby the data subject agrees to the
collection and processing of personal information about and/or relating
to him or her. Consent shall be evidenced by written, electronic or
recorded means. It may also be given on behalf of the data subject by an
agent specifically authorized by the data subject to do so.
(c) Data subject refers to an individual whose personal information is

processed.
(d) Direct marketing refers to communication by whatever means of any

advertising or marketing material which is directed to particular
individuals.
(e) Filing system refers to any act of information relating to natural or

juridical persons to the extent that, although the information is not
processed by equipment operating automatically in response to
instructions given for that purpose, the set is structured, either by
reference to individuals or by reference to criteria relating to individuals,
in such a way that specific information relating to a particular person is
readily accessible.
(f) Information and Communications System refers to a system for

generating, sending, receiving, storing or otherwise processing
electronic data messages or electronic documents and includes the
computer system or other similar device by or which data is recorded,
transmitted or stored and any procedure related to the recording,
transmission or storage of electronic data, electronic message, or
electronic document.
(g) Personal information refers to any information whether recorded in a

material form or not, from which the identity of an individual is apparent
or can be reasonably and directly ascertained by the entity holding the
information, or when put together with other information would directly
and certainly identify an individual.
(h) Personal information controller refers to a person or organization

who controls the collection, holding, processing or use of personal
information, including a person or organization who instructs another
person or organization to collect, hold, process, use, transfer or
disclose personal information on his or her behalf. The term excludes:
Page 62 of 138
(1) A person or organization who performs such functions as instructed

by another person or organization; and
(2) An individual who collects, holds, processes or uses personal

information in connection with the individual’s personal, family or
household affairs.
(i) Personal information processor refers to any natural or juridical

person qualified to act as such under this Act to whom a personal
information controller may outsource the processing of personal data
pertaining to a data subject.
(j) Processing refers to any operation or any set of operations performed

upon personal information including, but not limited to, the collection,
recording, organization, storage, updating or modification, retrieval,
consultation, use, consolidation, blocking, erasure or destruction of
data.
(k) Privileged information refers to any and all forms of data which under
the Rules of Court and other pertinent laws constitute privileged
communication.
(l) Sensitive personal information refers to personal information:
(1) About an individual’s race, ethnic origin, marital status, age, color,
and religious, philosophical or political affiliations;
(2) About an individual’s health, education, genetic or sexual life of a

person, or to any proceeding for any offense committed or alleged to
have been committed by such person, the disposal of such
proceedings, or the sentence of any court in such proceedings;
(3) Issued by government agencies peculiar to an individual which

includes, but not limited to, social security numbers, previous or cm-
rent health records, licenses or its denials, suspension or revocation,
and tax returns; and
(4) Specifically established by an executive order or an act of Congress

to be kept classified.
Paraphrased
The following terms shall, if used in this Act, have the following meanings:
(a) The National Privacy Commission established in accordance with this Act
shall be referred to by the Commission.
Page 63 of 138
(b) Consent of the data subject refers to any expression of will freely provide,
explicit, informed, whereby the data subject consents to personal information
about and/or related to the data subject being collected and processed.
Written, electronic or recorded means shall demonstrate consent. An agent
explicitly authorized by the data subject may also give it on behalf of the data
subject;
(c) The subject of the data refers to a person whose data are handled;
(d) Direct marketing refers to communication by any methods of advertising or

marketing material aimed at specific persons;
(e) The Filing System shall refer to any act of information relating to natural or
legal persons, provided the Set is structured in accordance with either
individuals or criteria relating to individuals, although the information is not
processed by equipment operating automatically in accordance with the
directions given for this purpose;
(f) The Information and Communications System shall refer to a system to

generate, send, receive, store or otherwise process e-Data messages or
electronic records and shall include, or store, a computer system or other
device of similar character that records, communicates, or stores data;
(g) Personal information refers to all information whether or not recorded in

the form of material which shows or may reasonably and immediately detect
the person's identity or when combined with other information;
(h) Personal Information Controller is a person or organization, including a

person or organization that authorizes a third party to recollect, hold, process,
transmit on its behalf or communicate, use, transmission or use of personally
identifiable information. This phrase excludes: (1) a person or organization
performing such activities as directed by another individual or organization
and (2) the person collecting, keeping, processing or using personal
information in relation to personal, family or home matters by the person or
organization;
(i) Any natural or legal person qualified as such by the Personal Information
Controller to function under this Act to whom the processing of personal data
about a data party may be outsourced by the Personal Information Controller;
(j) The processing refers to the collecting, recording, organizing, organization,

storage, updating or modification, retrieval, consultation, use, consolidation,
blocking, deletion or destruction of information in respect of a transaction or
set of activities based on personal information;
Page 64 of 138
(k) Privileged data refers to every kind of data which constitutes privileged
communication under the Rules of Court and other applicable legislation;
(l) Personal sensitive information refers to personal data: (1) on the race,
ethnic origin, marital status, age, color, religion, philosophy or politics of a
person; (2) the disposition or sentencing of any court in such procedures on a
person's own health, training, genetic or sexual life or to any proceeding for
any offense done or alleged by that person; (3) issued by government
agencies specific to a person that, but not limited to, includes the numbers of
the social security system, prior or cm-rent health records, licenses or its
denials and tax returns; and (4) established specifically by a managing order
or act of Congress to be kept classified. This applies to the Commission and
its owners.
SECTION 4. Scope. – This Act applies to the processing of all types of

personal information and to any natural and juridical person involved in
personal information processing including those personal information
controllers and processors who, although not found or established in
the Philippines, use equipment that are located in the Philippines, or
those who maintain an office, branch or agency in the Philippines
subject to the immediately succeeding paragraph: Provided, That the
requirements of Section 5 are complied with. This Act does not apply to
the following:
(a) Information about any individual who is or was an officer or

employee of a government institution that relates to the position or
functions of the individual, including:
(1) The fact that the individual is or was an officer or employee of the
government institution;
(2) The title, business address and office telephone number of the
individual;
(3) The classification, salary range and responsibilities of the position

held by the individual; and
(4) The name of the individual on a document prepared by the individual

in the course of employment with the government;
(b) Information about an individual who is or was performing service

under contract for a government institution that relates to the services
performed, including the terms of the contract, and the name of the
individual given in the course of the performance of those services;
Page 65 of 138
(c) Information relating to any discretionary benefit of a financial nature

such as the granting of a license or permit given by the government to
an individual, including the name of the individual and the exact nature
of the benefit;
(d) Personal information processed for journalistic, artistic, literary or

research purposes;
(e) Information necessary in order to carry out the functions of public

authority which includes the processing of personal data for the
performance by the independent, central monetary authority and law
enforcement and regulatory agencies of their constitutionally and
statutorily mandated functions. Nothing in this Act shall be construed as
to have amended or repealed Republic Act No. 1405, otherwise known
as the Secrecy of Bank Deposits Act; Republic Act No. 6426, otherwise
known as the Foreign Currency Deposit Act; and Republic Act No. 9510,
otherwise known as the Credit Information System Act (CISA);
(f) Information necessary for banks and other financial institutions

under the jurisdiction of the independent, central monetary authority or
Bangko Sentral ng Pilipinas to comply with Republic Act No. 9510, and
Republic Act No. 9160, as amended, otherwise known as the Anti-Money
Laundering Act and other applicable laws; and
(g) Personal information originally collected from residents of foreign

jurisdictions in accordance with the laws of those foreign jurisdictions,
including any applicable data privacy laws, which is being processed in
the Philippines.
Paraphrased
This Act applies to the processing of all types of personal information and to
any natural or juridical person involved in the processing of personal
information, including personal information controllers and processors who,
despite not being based or established in the Philippines, use equipment that
is, or who maintain an office, branch, or agency there. Assuming, of course,
that Section 5's conditions are met. The following are exempt from this Act:
(a) Information relating to the position or functions of any individual who is or

was an officer or employee of a government institution, including:
(1) the fact that the individual is or was an officer or employee of the
government institution;
(2) the title, business address, and office telephone number of the individual;
Page 66 of 138
(3) the classification, salary range, and responsibilities of the individual;
(4) information about an individual who is or was performing service under

contract for a government institution that relates to the services performed,
including the terms of the contract and the name of the individual given in the
course of the performance of those services;
(b) Information about an individual who is or was performing service under

contract for a government institution that relates to the services performed,
including the terms of the contract and the name of the individual given in the
course of the performance of those services;
(c) Information about any financial discretionary advantage given by the

government to an individual, such as the issuing of a license or permission,
including the subject's name and the nature of the benefit;
(d) Personal data used for journalism, art, literature, or research;
(e) Information required for the independent central monetary authority and
law enforcement and regulatory agencies to carry out their constitutionally and
statutorily mandated functions, including the processing of personal data for
the performance of their constitutionally and statutorily mandated functions.
Nothing in this Act will be regarded as amending or repealing Republic Act
No. 1405, also known as the Bank Deposit Secrecy Act; Republic Act No.
6426, also known as the Foreign Currency Deposit Act; or Republic Act No.
9510, also known as the Credit Information System Act (CISA);
(f) Information necessary for banks and other financial institutions under the
jurisdiction of the independent central monetary authority, or Bangko Sentral
ng Pilipinas, to comply with Republic Act No. 9510 and Republic Act No.
9160, as amended, otherwise known as the Anti-Money Laundering Act and
other applicable laws; and (g) Personal information originally collected from
residents of foreign j countries.
SECTION 5. Protection Afforded to Journalists and Their Sources. –

Nothing in this Act shall be construed as to have amended or repealed
the provisions of Republic Act No. 53, which affords the publishers,
editors or duly accredited reporters of any newspaper, magazine or
periodical of general circulation protection from being compelled to
reveal the source of any news report or information appearing in said
publication which was related in any confidence to such publisher,
editor, or reporter.
Paraphrased
Page 67 of 138
Nothing in this Act shall be construed as amending or repealing the provisions

of Republic Act No. 53, which protects the publishers, editors, or duly
accredited reporters of any general circulation newspaper, magazine, or
periodical from being forced to reveal the source of any news report or
information appearing in said publication that was related in confidence to
such publication.
SECTION 6. Extraterritorial Application. – This Act applies to an act done

or practice engaged in and outside of the Philippines by an entity if:
(a) The act, practice or processing relates to personal information about

a Philippine citizen or a resident;
(b) The entity has a link with the Philippines, and the entity is processing
personal information in the Philippines or even if the processing is
outside the Philippines as long as it is about Philippine citizens or
residents such as, but not limited to, the following:
(1) A contract is entered in the Philippines;
(2) A juridical entity unincorporated in the Philippines but has central

management and control in the country; and
(3) An entity that has a branch, agency, office or subsidiary in the

Philippines and the parent or affiliate of the Philippine entity has access
to personal information; and
(c) The entity has other links in the Philippines such as, but not limited
to:
(1) The entity carries on business in the Philippines; and
(2) The personal information was collected or held by an entity in the

Philippines.
Paraphrased
This Act governs an entity's actions or practices both inside and outside the
Philippines if:
(a) The act, practice, or processing concerns personal information about a

Philippine citizen or resident;
Page 68 of 138
(b) The entity has a connection to the Philippines, and the entity is processing
personal information in the Philippines or even outside the Philippines as long
as it concerns Philippine citizens or residents, such as, but not limited to:
(1) A contract is signed in the Philippines;
(2) A juridical entity that is not incorporated in the Philippines but has central
management and control in the country;
(3) An entity that has a branch, agency, office, or subsidiary in the Philippines
and the parent or affiliate of the Philippine entity has access to personal
information; and
(c) The entity has other ties to the Philippines but not constrained to:
(1) The entity is based in the Philippines; and
(2) the personal data was obtained or kept by a Philippine-based entity.
Page 69 of 138
CHAPTER II
THE NATIONAL PRIVACY COMMISSION
SECTION 7. Functions of the National Privacy Commission. – To

administer and implement the provisions of this Act, and to monitor and
ensure compliance of the country with international standards set for
data protection, there is hereby created an independent body to be
known as the National Privacy Commission, winch shall have the
following functions:
(a) Ensure compliance of personal information controllers with the

provisions of this Act;
(b) Receive complaints, institute investigations, facilitate or enable

settlement of complaints through the use of alternative dispute
resolution processes, adjudicate, award indemnity on matters affecting
any personal information, prepare reports on disposition of complaints
and resolution of any investigation it initiates, and, in cases it deems
appropriate, publicize any such report: Provided, That in resolving any
complaint or investigation (except where amicable settlement is reached
by the parties), the Commission shall act as a collegial body. For this
purpose, the Commission may be given access to personal information
that is subject of any complaint and to collect the information necessary
to perform its functions under this Act;
(c) Issue cease and desist orders, impose a temporary or permanent ban
on the processing of personal information, upon finding that the
processing will be detrimental to national security and public interest;
(d) Compel or petition any entity, government agency or instrumentality

to abide by its orders or take action on a matter affecting data privacy;
(e) Monitor the compliance of other government agencies or

instrumentalities on their security and technical measures and
recommend the necessary action in order to meet minimum standards
for protection of personal information pursuant to this Act;
(f) Coordinate with other government agencies and the private sector on
efforts to formulate and implement plans and policies to strengthen the
protection of personal information in the country;
Page 70 of 138
(g) Publish on a regular basis a guide to all laws relating to data

protection;
(h) Publish a compilation of agency system of records and notices,

including index and other finding aids;
(i) Recommend to the Department of Justice (DOJ) the prosecution and

imposition of penalties specified in Sections 25 to 29 of this Act; 8
(j) Review, approve, reject or require modification of privacy codes

voluntarily adhered to by personal information controllers: Provided,
That the privacy codes shall adhere to the underlying data privacy
principles embodied in this Act: Provided, further, That such privacy
codes may include private dispute resolution mechanisms for
complaints against any participating personal information controller.
For this purpose, the Commission shall consult with relevant regulatory
agencies in the formulation and administration of privacy codes
applying the standards set out in this Act, with respect to the persons,
entities, business activities and business sectors that said regulatory
bodies are authorized to principally regulate pursuant to the law:
Provided, finally. That the Commission may review such privacy codes
and require changes thereto for purposes of complying with this Act;
(k) Provide assistance on matters relating to privacy or data protection

at the request of a national or local agency, a private entity or any
person;
(l) Comment on the implication on data privacy of proposed national or

local statutes, regulations or procedures, issue advisory opinions and
interpret the provisions of this Act and other data privacy laws;
(m) Propose legislation, amendments or modifications to Philippine laws

on privacy or data protection as may be necessary;
(n) Ensure proper and effective coordination with data privacy

regulators in other countries and private accountability agents,
participate in international and regional initiatives for data privacy
protection;
(o) Negotiate and contract with other data privacy authorities of other
countries for cross-border application and implementation of respective
privacy laws;
(p) Assist Philippine companies doing business abroad to respond to

foreign privacy or data protection laws and regulations; and
Page 71 of 138
(q) Generally perform such acts as may be necessary to facilitate cross-

border enforcement of data privacy protection.
Paraphrased
The National Privacy Commission is hereby established to manage and

implement the provisions of this Act, as well as to monitor and assure
compliance of the country with international data protection standards. The
National Privacy Commission shall have the following functions:
(a) Ensure that personal information controllers comply with the Act's
provisions;
(b) Receive complaints, conduct investigations, facilitate or enable the

settlement of complaints through the use of alternative dispute resolution
processes, adjudicate, award indemnity on matters involving personal
information, prepare reports on the disposition of complaints and the
resolution of any investigation it conducts, and, in cases it deems appropriate,
make such reports public: The Commission shall work as a collegial body in
deciding any complaint or investigation (unless when the parties reach an
amicable settlement). The Commission may be provided access to personal
information that is the subject of a complaint for this reason, and may gather
the information needed to carry out its duties under this Act;
(c) Issue cease-and-desist orders, as well as a temporary or permanent

restriction on the processing of personal data, if the processing is found to be
harmful to national security or the public interest;
(d) Compel or petition any entity, government agency, or instrumentality to

comply with its orders or take action on a matter affecting data privacy;
(e) Monitor the compliance of other government agencies or instrumentalities

on their security and technical measures and recommend the necessary
action to meet the Act's minimum standards for personal information
protection;
(f) Work with other government agencies and the commercial sector to
develop and implement plans and strategies to improve the country's
protection of personal information;
(g) Publish a guide to all data protection regulations on a regular basis;
(h) Publish a compilation of the agency's records and notices, including an

index and other finding aids;
Page 72 of 138
(i) Recommend to the Department of Justice (DOJ) that the prosecution and
imposition of the penalties set forth in Sections 25 through 29 of this Act be
pursued;
(j) Examine, approve, reject, or force personal information controllers to

modify privacy codes that they have voluntarily adopted: Provided, however,
that the privacy codes correspond to the Act's core data privacy principles:
Furthermore, such privacy codes may contain private dispute resolution
processes for complaints directed at any participating personal information
controller. For this purpose, the Commission shall consult with relevant
regulatory agencies in the formulation and administration of privacy codes that
apply the standards set forth in this Act to the persons, entities, business
activities, and business sectors that said regulatory bodies are primarily
responsible for regulating under the law: Finally, the Commission has the
authority to assess such privacy codes and compel revisions in order to
conform with this Act;
(k) At the request of a national or local government, a private business, or any

individual, provide assistance on privacy or data protection issues;
(l) Issue advisory opinions and interpret the provisions of this Act and other
data privacy legislation, as well as comment on the implications of proposed
national or local statutes, rules, or procedures on data privacy;
(m) As needed, propose legislation, changes, or adjustments to Philippine

privacy and data protection laws;
(n) Ensure proper and effective coordination with other nations' data privacy
regulators and private accountability agents, as well as participation in
international and regional data privacy initiatives;
(o) Negotiate and contract with other countries' data privacy authorities for
cross-border application and implementation of respective privacy laws;
(p) Assist Philippine companies doing business abroad in complying with

foreign privacy or data protection laws and regulations; and
(q) Perform other acts as may be required to facilitate cross-border

enforcement of data privacy protection laws.
SECTION 8. Confidentiality. – The Commission shall ensure at all times

the confidentiality of any personal information that comes to its
knowledge and possession.
Page 73 of 138
Paraphrased
The Commission should guarantee that any personal information that it knows
and owns is kept secret at all times as provided by Section 8.
SECTION 9. Organizational Structure of the Commission. – The

Commission shall be attached to the Department of Information and
Communications Technology (DICT) and shall be headed by a Privacy
Commissioner, who shall also act as Chairman of the Commission. The
Privacy Commissioner shall be assisted by two (2) Deputy Privacy
Commissioners, one to be responsible for Data Processing Systems and
one to be responsible for Policies and Planning.
The Privacy Commissioner and the two (2) Deputy Privacy

Commissioners shall be appointed by the President of the Philippines
for a term of three (3) years, and may be reappointed for another term of
three (3) years. Vacancies in the Commission shall be filled in the same
manner in which the original appointment was made. The Privacy
Commissioner must be at least thirty-five (35) years of age and of good
moral character, unquestionable integrity and known probity, and a
recognized expert in the field of information technology and data
privacy. The Privacy Commissioner shall enjoy the benefits, privileges
and emoluments equivalent to the rank of Secretary.
The Deputy Privacy Commissioners must be recognized experts in the

field of information and communications technology and data privacy.
They shall enjoy the benefits, privileges and emoluments equivalent to
the rank of Undersecretary.
The Privacy Commissioner, the Deputy Commissioners, or any person

acting on their behalf or under their direction, shall not be civilly liable
for acts done in good faith in the performance of their duties. However,
he or she shall be liable for willful or negligent acts done by him or her
which are contrary to law, morals, public policy and good customs even
if he or she acted under orders or instructions of superiors: Provided,
That in case a lawsuit is filed against such official on the subject of the
performance of his or her duties, where such performance is lawful, he
or she shall be reimbursed by the Commission for reasonable costs of
litigation.
Paraphrased
The Commission will be affiliated with the Department of Information and

Communications Technology (DICT) and will be led by a Privacy
Commissioner who will also serve as the Commission's Chairman. Two (2)
Page 74 of 138
Deputy Privacy Commissioners will assist the Privacy Commissioner, one of

whom will be responsible for Data Processing Systems and the other for
Policies and Planning.
The President of the Philippines appoints the Privacy Commissioner and the
two (2) Deputy Privacy Commissioners for a three-year term, with the
possibility of re-appointment for another three-year term. Vacancies on the
Commission will be filled in the same manner as they were created. The
Protection Commissioner must be at least 35 years old, of strong moral
character, undeniable honesty, and well-known probity, as well as a
recognized expert in the field of information technology and data privacy. The
Privacy Commissioner will be entitled to the same benefits, privileges, and
emoluments as a Secretary.
Moreover, the Deputy Privacy Commissioners must be renowned experts in

the fields of data privacy and information and communications technology.
They will be entitled to the same benefits, privileges, and emoluments as
Undersecretaries. The Privacy Commissioner, the Deputy Commissioners,
and anybody operating on their behalf or under their direction are not civilly
liable for activities performed in good faith while carrying out their obligations.
However, even if he or she acted under orders or instructions from superiors,
he or she shall be liable for willful or negligent acts done by him or her that are
contrary to law, morals, public policy, and good customs: Provided, that if a
lawsuit is filed against such official on the subject of the performance of his or
her duties, where such performance is lawful, he or she shall be reimbursed.
SECTION 10. The Secretariat. – The Commission is hereby authorized to

establish a Secretariat. Majority of the members of the Secretariat must
have served for at least five (5) years in any agency of the government
that is involved in the processing of personal information including, but
not limited to, the following offices: Social Security System (SSS),
Government Service Insurance System (GSIS), Land Transportation
Office (LTO), Bureau of Internal Revenue (BIR), Philippine Health
Insurance Corporation (PhilHealth), Commission on Elections
(COMELEC), Department of Foreign Affairs (DFA), Department of Justice
(DOJ), and Philippine Postal Corporation (Philpost).
Paraphrased
The Commission has the power to set up a secretariat. Most Secretariat

members must have worked for at least five (5) years at any government
agency involved in the handling but not exclusive of personal data, such as
the Social Security System (SSS), Government Service Insurance System
Page 75 of 138
(GSIS), Land Transportation Office (LTO), Internal Revenue Office (BIR), and
Philippines Health Insurance Corporation (PhilHealth), all of which have been
responsible for the processing of personal information (Philpost).
Page 76 of 138
CHAPTER III
PROCESSING OF PERSONAL INFORMATION
SECTION 11. General Data Privacy Principles. – The processing of

personal information shall be allowed, subject to compliance with the
requirements of this Act and other laws allowing disclosure of
information to the public and adherence to the principles of
transparency, legitimate purpose and proportionality. Personal
information must, be:
(a) Collected for specified and legitimate purposes determined and

declared before, or as soon as reasonably practicable after collection,
and later processed in a way compatible with such declared, specified
and legitimate purposes only;
(b) Processed fairly and lawfully;
(c) Accurate, relevant and, where necessary for purposes for which it is
to be used the processing of personal information, kept up to date;
inaccurate or incomplete data must be rectified, supplemented,
destroyed or their further processing restricted;
(d) Adequate and not excessive in relation to the purposes for which
they are collected and processed; 11
(e) Retained only for as long as necessary for the fulfillment of the
purposes for which the data was obtained or for the establishment,
exercise or defense of legal claims, or for legitimate business purposes,
or as provided by law; and
(f) Kept in a form which permits identification of data subjects for no

longer than is necessary for the purposes for which the data were
collected and processed: Provided, That personal information collected
for other purposes may lie processed for historical, statistical or
scientific purposes, and in cases laid down in law may be stored for
longer periods: Provided, further, That adequate safeguards are
guaranteed by said laws authorizing their processing.
The personal information controller must ensure implementation of

personal information processing principles set out herein.
Page 77 of 138
Paraphrased
Personal data processing is permitted, subject to the provisions of this Act

and other laws enabling public disclosure of information, as well as the
principles of transparency, legitimate purpose, and proportionality. Personal
data must comply with the following requirements: (a) collected for specific
and legitimate purposes that are determined and declared before, or as soon
as reasonably practicable after, collection, and later processed in a way that is
compatible with such declared, specific, and legitimate purposes only; (b)
processed fairly and lawfully; (c) accurate, relevant, and, where necessary for
the purposes for which it is to be used the processing of personal information,
if necessary, for the purposes for which it is to be used the processing of
personal information, if necessary; (d) sufficient and not excessive for the
purposes for which they are collected and processed; (e) only kept for as long
as necessary to achieve the goals for which the data was collected, or to
establish, exercise, or defend legal rights, or for legitimate business
objectives, or as required by law; and (f) kept in a form that allows data
subjects to be identified for no longer than is required for the purposes for
which the data was collected and processed: Provided, however, that
personal data obtained for other purposes may be processed for historical,
statistical, or scientific reasons, and may be held for longer periods in certain
legal cases: Provided, further, that the laws permitting such processing
provide suitable protection.
The personal data controller is responsible for ensuring that the personal data
processing principles outlined here are followed.
SECTION 12. Criteria for Lawful Processing of Personal Information. –

The processing of personal information shall be permitted only if not
otherwise prohibited by law, and when at least one of the following
conditions exists:
(a) The data subject has given his or her consent;
(b) The processing of personal information is necessary and is related

to the fulfillment of a contract with the data subject or in order to take
steps at the request of the data subject prior to entering into a contract;
(c) The processing is necessary for compliance with a legal obligation to

which the personal information controller is subject;
Page 78 of 138
(d) The processing is necessary to protect vitally important interests of

the data subject, including life and health;
(e) The processing is necessary in order to respond to national

emergency, to comply with the requirements of public order and safety,
or to fulfill functions of public authority which necessarily includes the
processing of personal data for the fulfillment of its mandate; or 12
(f) The processing is necessary for the purposes of the legitimate

interests pursued by the personal information controller or by a third
party or parties to whom the data is disclosed, except where such
interests are overridden by fundamental rights and freedoms of the data
subject which require protection under the Philippine Constitution.
Paraphrased
Personal data processing is only permissible if it is not otherwise prohibited by

law and if at least one of the following conditions is met: (a) the data subject
has given his or her consent; (b) the processing of personal information is
necessary and related to the performance of a contract with the data subject
or to take steps at the data subject's request prior to entering into a contract;
(c) the processing is necessary for compliance with a legal obligation to which
the personal information controller is subject; (d) the processing is necessary
for compliance with a legal obligation to which the personal information
controller is subject; (e) the processing is required to respond to a national
emergency, to comply with public order and safety requirements, or to carry
out the responsibilities of a public authority, which must include the
processing of personal data in order to carry out its mandate; or (f) the
processing is necessary for the purposes of the personal information
controller's or a third party or parties to whom the data is disclosed legitimate
interests, unless such interests are overridden by the data subject's
fundamental rights and freedoms, which are protected under the Philippine
Constitution.
SECTION 13. Sensitive Personal Information and Privileged Information.

– The processing of sensitive personal information and privileged
information shall be prohibited, except in the following cases:
(a) The data subject has given his or her consent, specific to the
purpose prior to the processing, or in the case of privileged information,
all parties to the exchange have given their consent prior to processing;
Page 79 of 138
(b) The processing of the same is provided for by existing laws and
regulations: Provided, That such regulatory enactments guarantee the
protection of the sensitive personal information and the privileged
information: Provided, further, That the consent of the data subjects are
not required by law or regulation permitting the processing of the
sensitive personal information or the privileged information;
(c) The processing is necessary to protect the life and health of the data
subject or another person, and the data subject is not legally or
physically able to express his or her consent prior to the processing;
(d) The processing is necessary to achieve the lawful and

noncommercial objectives of public organizations and their
associations: Provided, That such processing is only confined and
related to the bona fide members of these organizations or their
associations: Provided, further, That the sensitive personal information
are not transferred to third parties: Provided, finally, That consent of the
data subject was obtained prior to processing;
(e) The processing is necessary for purposes of medical treatment, is

carried out by a medical practitioner or a medical treatment institution,
and an adequate level of protection of personal information is ensured;
or 13
(f) The processing concerns such personal information as is necessary

for the protection of lawful rights and interests of natural or legal
persons in court proceedings, or the establishment, exercise or defense
of legal claims, or when provided to government or public authority.
Paraphrased
Except in the following circumstances, the processing of sensitive personal

information and privileged information is prohibited:
(a) Prior to processing, the data subject has given his or her consent, which is
particular to the purpose, or, in the case of privileged information, all parties to
the exchange have granted their consent;
(b) Existing rules and regulations allow for the processing of the same:
Provided, however, that such regulatory enactments ensure the security of
sensitive personal data and privileged information: Furthermore, if the
processing of sensitive personal information or privileged information is
permitted by law or regulation, the consent of the data subjects is not
required;
Page 80 of 138
(c) The processing is essential to protect the data subject's or another

person's life or health, and the data subject is unable to give his or her
permission legally or physically prior to the processing;
(d) The processing is required in order for public organizations and their
associations to realize their legitimate and noncommercial objectives:
Provided, however, that such processing is limited to and limited to bona fide
members of certain organizations or associations: Furthermore, the sensitive
personal information will not be disclosed to third parties: Finally, before to
processing, the data subject's consent must be sought;
(e) The processing is essential for the purposes of medical treatment, is

carried out by a medical practitioner or a medical treatment institution, and
personal information is adequately protected; or
(f) The processing relates to personal data that is required for the protection of
natural or legal people' lawful rights and interests in judicial proceedings, the
establishment, exercise, or defense of legal claims, or when submitted to
government or public authority.
SECTION 14. Subcontract of Personal Information. – A personal

information controller may subcontract the processing of personal
information: Provided, that the personal information controller shall be
responsible for ensuring that proper safeguards are in place to ensure
the confidentiality of the personal information processed, prevent its
use for unauthorized purposes, and generally, comply with the
requirements of this Act and other laws for processing of personal
information. The personal information processor shall comply with all
the requirements of this Act and other applicable laws.
Paraphrased
A controller for personal information may subcontract the processing of

personal data: provided that the controller for personal data is responsible for
ensuring that adequate safeguards exist to ensure the confidentialité of the
data processed, to prevent its use for unauthorized purposes and generally to
comply with the provisions of that Act and other provisions of the pr Act. All
obligations set out in this Act and other applicable legislation shall be
respected by the personal data processor.
SECTION 15. Extension of Privileged Communication. – Personal

information controllers may invoke the principle of privileged
Page 81 of 138
communication over privileged information that they lawfully control or

process. Subject to existing laws and regulations, any evidence
gathered on privileged information is inadmissible.
Paraphrased
Controllers of personal information may use the concept of privileged

communication over information which is legitimately controlled or processed
by them. Any evidence collected on privileged information is inadmissible,
according to current rules and regulations.
Section 31. Malicious Disclosure. – Any personal information controller

or personal information processor or any of its officials, employees or
agents, who, with malice or in bad faith, discloses unwarranted or false
information relative to any personal information or personal sensitive
information obtained by him or her, shall be subject to imprisonment
ranging from one (1) year and six (6) months to five (5) years and a fine
of not less than Five hundred thousand pesos (Php500,000.00) but not
more than One million pesos (Php1,000,000.00).
Paraphrased
Section 31. Malicious Disclosure. – Any private statistics controller or non-

public statistics processor or any of its officers, employees or agents, who,
with malice or in terrible faith, discloses unwarranted or fake statistics relative
to any personal records or non-public touchy records received by using him or
her, will be concern to imprisonment starting from one (1) year and six (6)
months to five (five) years and a pleasant of not much less than 5 hundred
thousand pesos (Php500,000.00) but no longer greater than a million pesos
(Php1,000,000.00).
Section 32. Unauthorized Disclosure.
(a) Any personal information controller or personal information

processor or any of its officials, employees or agents, who discloses to
a third party personal information not covered by the immediately
preceding section without the consent of the data subject, shall he
subject to imprisonment ranging from one (1) year to three (3) years and
a fine of not less than Five hundred thousand pesos (Php500,000.00) but
not more than One million pesos (Php1,000,000.00).
Page 82 of 138
(b) Any personal information controller or personal information

processor or any of its officials, employees or agents, who discloses to
a third party sensitive personal information not covered by the
immediately preceding section without the consent of the data subject,
shall be subject to imprisonment ranging from three (3) years to five (5)
years and a fine of not less than Five hundred thousand pesos
(Php500,000.00) but not more than Two million pesos (Php2,000,000.00).
Paraphrased
Section 32. Unauthorized Disclosure.
(a) Any private records controller or private facts processor or any of its
officials, personnel or agents, who discloses to a 3rd party private facts now
not included by means of the right now preceding segment without the
consent of the information concern, shall he concern to imprisonment starting
from one (1) year to 3 (3) years and a pleasant of not less than 5 hundred
thousand pesos (Php500,000.00) however now not extra than one million
pesos (Php1,000,000.00).
(b) Any private information controller or personal data processor or any of its
officials, personnel or sellers, who discloses to a 3rd party sensitive non-
public statistics not covered by using the right away previous segment without
the consent of the statistics subject, will be difficulty to imprisonment ranging
from three (three) years to 5 (5) years and a quality of no longer much less
than 5 hundred thousand pesos (Php500,000.00) but no longer extra than
million pesos (Php2,000,000.00).
Section 33. Combination or Series of Acts. – Any combination or series

of acts as defined in Sections 25 to 32 shall make the person subject to
imprisonment ranging from three (3) years to six (6) years and a fine of
not less than One million pesos (Php1,000,000.00) but not more than
Five million pesos (Php5,000,000.00).
Paraphrased
Section 33. Combination or Series of Acts. – Any combination or series of

acts as defined in Sections 25 to 32 shall make the individual subject to
imprisonment starting from 3 (3) years to six (6) years and a best of not much
less than one million pesos (Php1,000,000.00) however not more than five
million pesos (Php5,000,000.00).
Page 83 of 138
Section 34. Extent of Liability. – If the offender is a corporation,

partnership or any juridical person, the penalty shall be imposed upon
the responsible officers, as the case may be, who participated in, or by
their gross negligence, allowed the commission of the crime. If the
offender is a juridical person, the court may suspend or revoke any of
its rights under this Act. If the offender is an alien, he or she shall, in
addition to the penalties herein prescribed, be deported without further
proceedings after serving the penalties prescribed. If the offender is a
public official or employee and lie or she is found guilty of acts
penalized under Sections 27 and 28 of this Act, he or she shall, in
addition to the penalties prescribed herein, suffer perpetual or
temporary absolute disqualification from office, as the case may be.
Paraphrased
Section 34. Volume of Liability. – If the perpetrator is a corporation,

partnership or any juridical individual, the penalty shall be imposed upon the
accountable officials, as the case may be, who participated in, or via their
gross negligence, allowed the fee of the crime. If the culprit is a juridical
character, the court docket might also suspend or revoke any of its rights
beneath this Act. If the perpetrator is an alien, he or she shall, similarly to the
consequences herein prescribed, be deported without similarly court cases
after serving the consequences prescribed. If the offender is a public legit or
worker and lie or she is determined responsible of acts penalized beneath
Sections 27 and 28 of this Act, she or he shall, further to the consequences
prescribed herein, go through perpetual or transient absolute disqualification
from workplace, because the case may be.
Section 35. Large-Scale. – The maximum penalty in the scale of

penalties respectively provided for the preceding offenses shall be
imposed when the personal information of at least one hundred (100)
persons is harmed, affected or involved as the result of the above
mentioned actions.
Paraphrased
Section 35. Large-Scale. – The maximum penalty in the scale of penalties

respectively provided for the preceding offenses will be imposed when the
private statistics of at the least one hundred (100) individuals is harmed,
affected or involved because the result of the above referred to moves.
Page 84 of 138
Section 36. Offense Committed by Public Officer. – When the offender or

the person responsible for the offense is a public officer as defined in
the Administrative Code of the Philippines in the exercise of his or her
duties, an accessory penalty consisting in the disqualification to occupy
public office for a term double the term of criminal penalty imposed
shall he applied.
Paraphrased
Section 36. Offense dedicated with the Aid of Public Officer. – When the
culprit or the character answerable for the offense is a public officer as
defined within the Administrative Code of the Philippines inside the exercise of
his or her obligations, an accessory penalty consisting within the
disqualification to occupy public office for a term double the time period of
criminal penalty imposed shall he implemented.
Section 37. Restitution. – Restitution for any aggrieved party shall be

governed by the provisions of the New Civil Code.
Paraphrased
Section 37. Restitution. – Restitution for any aggrieved party will be ruled by
way of the provisions of the new Civil Code.
CHAPTER IX
MISCELLANEOUS PROVISIONS
Section 38. Interpretation. – Any doubt in the interpretation of any

provision of this Act shall be liberally interpreted in a manner mindful of
the rights and interests of the individual about whom personal
information is processed.
Paraphrased
Section 38. Interpretation. – Any doubt in the interpretation of any provision of

this Act will be liberally interpreted in a manner conscious of the rights and
pastimes of the person about whom personal data is processed.
Page 85 of 138
Section 39. Implementing Rules and Regulations (IRR). – Within ninety

(90) days from the effectivity of this Act, the Commission shall
promulgate the rules and regulations to effectively implement the
provisions of this Act.
Paraphrased
Section 39. Implementing Rules and Policies (IRR). – Inside 90 (90) days
from the efficiency of this Act, the fee shall promulgate the regulations and
rules to effectively put into effect the provisions of this Act.
Section 40. Reports and Information. – The Commission shall annually

report to the President and Congress on its activities in carrying out the
provisions of this Act. The Commission shall undertake whatever efforts
it may determine to be necessary or appropriate to inform and educate
the public of data privacy, data protection and fair information rights
and responsibilities.
Paraphrased
Section 40. Reviews and Facts. – The commission shall annually file to the
President and Congress on its activities in wearing out the provisions of this
Act. The commission shall undertake something efforts it could decide to be
important or appropriate to inform and teach the general public of data
privately, facts protection and truthful information rights and obligations.
Section 41. Appropriations Clause. – The Commission shall be provided

with an initial appropriation of Twenty million pesos (Php20,000,000.00)
to be drawn from the national government. Appropriations for the
succeeding years shall be included in the General Appropriations Act. It
shall likewise receive Ten million pesos (Php10,000,000.00) per year for
five (5) years upon implementation of this Act drawn from the national
government.
Paraphrased
Section 41. Appropriations Clause. – The commission shall be furnished with

an initial appropriation of Twenty million pesos (Php20,000,000.00) to be
drawn from the national government. Appropriations for the succeeding years
shall be included within the preferred Appropriations Act. It shall likewise
acquire Ten million pesos (Php10,000,000.00) in keeping with year for five (5)
Page 86 of 138
years upon implementation of this Act drawn from the country wide
government.
Section 42. Transitory Provision. – Existing industries, businesses and

offices affected by the implementation of this Act shall be given one (1)
year transitory period from the effectivity of the IRR or such other period
as may be determined by the Commission, to comply with the
requirements of this Act.
In case that the DICT has not yet been created by the time the law takes
full force and effect, the National Privacy Commission shall be attached
to the Office of the President.
Paraphrased
Section 42. Transitory Provision. – Existing industries, groups and places of

work stricken by the implementation of this Act will be given one (1) yr
transitory length from the effectivity of the IRR or such different length as may
be determined with the aid of the fee, to conform with the necessities of this
Act.
In case that the DICT has now not yet been created by the time the regulation
takes complete force and impact, the national privacy commission shall be
connected to the office of the President.
Section 43. Separability Clause. – If any provision or part hereof is held

invalid or unconstitutional, the remainder of the law or the provision not
otherwise affected shall remain valid and subsisting.
Paraphrased
Section 43. Separability Clause. – If any provision or part hereof is held invalid
or unconstitutional, the rest of the regulation or the availability not in any other
case affected shall stay valid and subsisting.
Section 44. Repealing Clause. – The provision of Section 7 of Republic

Act No. 9372, otherwise known as the “Human Security Act of 2007”, is
hereby amended. Except as otherwise expressly provided in this Act, all
other laws, decrees, executive orders, proclamations and administrative
regulations or parts thereof inconsistent herewith are hereby repealed
or modified accordingly.
Page 87 of 138
Paraphrased
Section 44. Repealing Clause. – The provision of segment 7 of Republic Act

No. 9372, otherwise known as the “Human safety Act of 2007”, is hereby
amended. besides as in any other case expressly supplied in this Act, all
other laws, decrees, governmentt orders, proclamations and administrative
guidelines or elements thereof inconsistent herewith are hereby repealed or
changed as a result.
Section 45. Effectivity Clause. – This Act shall take effect fifteen (15)
days after its publication in at least two (2) national newspapers of
general circulation.
Paraphrased
Section 45. Clause. – This Act shall take effect fifteen (15) days after its
journal in at least (2) countrywide newspapers of trendy stream.
Page 88 of 138
AN ACT PROMOTING EASE OF DOING BUSINESS AND EFFICIENT

DELIVERY OF GOVERNMENT SERVICES, AMENDING FOR THE
PURPOSE REPUBLIC ACT NO. 9485, OTHERWISE KNOWN AS THE
ANTI-RED TAPE ACT OF 2007, AND FOR OTHER PURPOSES.
SECTION 1. Short Title. – This Act shall be known as the “Ease of Doing
Business and Efficient Government Service Delivery Act of 2018"
Paraphrased
The law is entitled Ease of Doing Business and Efficient Government Service
Delivery Act of 2018 which amends Republic Act No. 9485.
SECTION 2. Declaration of Policy. – It is hereby declared the policy of

the State to promote integrity, accountability, proper management of
public affairs and public property as well as to establish effective
practices, aimed at efficient turnaround of the delivery of government
services and the prevention of graft and corruption in government.
Towards this end, the State shall maintain honesty and responsibility
among its public officials and employees, and shall take appropriate
measures to promote transparency in each agency with regard to the
manner of transacting with the public, which shall encompass a
program for the adoption of simplified requirements and procedures
that will reduce red tape and expedite business and nonbusiness related
transactions in government.
Paraphrased
State policy is therefore stated to foster integrity, accountability, proper public

and public property management as well as to build effective procedures for
efficient rotation of public service provision and prevention of government
grease and corruption. To that end, the State shall maintain honesty,
responsibility and the transparency of the manner in which it deals with the
public, including a program to introduce simplified requirements and
procedures that will reduce bureaucracy and accelerate business and shall
Page 89 of 138
adopt suitable measures for promoting transparency within each agency and
fast transactions in public connected to business and non-business.
SECTION 3. Coverage. – This Act shall apply to all government offices

and agencies including local government units (LGUs), government-
owned or controlled corporations and other government
instrumentalities, whether located in the Philippines or abroad, that
provide services covering business and nonbusiness related
transactions as defined in this Act.
Paraphrased
This Act covers all Government Offices and agencies that provide, whether
located on the Philippines or abroad, services relating to business and non-
business transactions as defined by that Act, including local Government
Units (LGUs), government owned or controlled corporations and other
governmental instruments.
SECTION 4. Definition of Terms. – As used in this Act, the following

terms are defined as follows:
(a) Action refers to the written approval or disapproval made by a

government office or agency on the application or request submitted by
an applicant or requesting party for processing;
(b) Business One Stop Shop (BOSS) – a single common site or location,

or a single online website or portal designated for the Business Permit
and Licensing System (BPLS) of an LGU to receive and process
applications, receive payments, and issue approved licenses,
clearances, permits, or authorizations;
(c) Business-related transactions – a set of regulatory requirements that

a business entity must comply with to engage, operate or continue to
operate a business, such as, but not limited to, collection or preparation
of a number of documents, submission to national and local
government authorities, approval of application submitted, and receipt
of a formal certificate or certificates, permits, licenses which include
primary and secondary, clearances and such similar authorization or
Page 90 of 138
documents which confer eligibility to operate or continue to operate as a

legitimate business;
(d) Complex transactions – applications or requests submitted by

applicants or requesting parties of a government office which
necessitate evaluation in the resolution of complicated issues by an
officer or employee of said government office, such transactions to be
determined by the office concerned;
(e) Fixer – any individual whether or not officially involved in the

operation of a government office or agency who has access to people
working therein, and whether or not in collusion with them, facilitates
speedy completion of transactions for pecuniary gain or any other
advantage or consideration;
(f) Government service – the process or transaction between applicants

or requesting parties and government offices or agencies involving
applications for any privilege, right, reward, license, clearance, permit or
authorization, concession, of for any modification, renewal or extension
of the enumerated applications or requests which are acted upon in the
ordinary course of business of the agency or office concerned;
(g) Highly technical application – an application which requires the use

of technical knowledge, specialized skills and/or training in the
processing and/or evaluation thereof;
(h) Nonbusiness transactions – all other government transactions not

falling under Section 4 (c) of this Act;
(i) Officer or employee – a person employed in a government office or

agency required to perform specific duties and responsibilities related
to the application or request submitted by an applicant or requesting
party for processing;
(j) Processing time – the time consumed by an LGU or national

government agency (NGA) from the receipt of an application or request
with complete requirements, accompanying documents and payment of
fees to the issuance of certification or such similar documents
approving or disapproving an application or request;
(k) Red tape – any regulation, rule, or administrative procedure or

system that is ineffective or detrimental in achieving its intended
Page 91 of 138
objectives and, as a result, produces slow, suboptimal, and undesirable

social outcomes;
(l) Regulation – any legal instrument that gives effect to a government

policy intervention and includes licensing, imposing information
obligation, compliance to standards or payment of any form of fee, levy,
charge or any other statutory and regulatory requirements necessary to
carry out activity; and
(m) Simple transactions – applications or requests submitted by

applicants or requesting parties of a government office or agency which
only require ministerial actions on the part of the public officer or
employee, or that which present only inconsequential issues for the
resolution by an officer or employee of said government.
Paraphrased
The following terms are defined as they are used in this Act:
(a) Action refers to a government office or agency's written approval or denial

of an applicant's or requesting party's application or request for processing.
(b) Business One Stop Shop (BOSS) – a single common site or location, or a
single online website or portal, dedicated to receiving and processing
applications, receiving payments, and issuing approved licenses, clearances,
permits, or authorizations by an LGU's Business Permit and Licensing System
(BPLS);
(c) Business-related transactions – a set of regulatory requirements that a

business entity must meet in order to engage, operate, or continue to operate
a business, including, but not limited to, document collection and preparation,
submission to national and local government authorities, approval of an
application submitted, and receipt of a formal certificate or certificates,
permits, and licenses.
(d) Complex transactions - applications or requests submitted by applicants or

requesting parties to a government office that require an officer or employee
of said government office to evaluate in the settlement of intricate issues,
such transactions to be resolved by the office concerned;
(e) Fixer – any person who, whether or not officially involved in the running of
a government office or agency, has access to people who work there and,
Page 92 of 138
whether or not in conjunction with them, promotes the quick completion of

transactions for monetary gain or any other benefit or consideration;
(f) Government service – the process or transaction between applicants or

requesting parties and government offices or agencies involving applications
for any privilege, right, reward, license, clearance, permit or authorization,
concession, or modification, renewal, or extension of the enumerated
applications or requests that are acted on in the ordinary course of the
agency's business.
(g) Highly technical application – one that necessitates the use of technical
knowledge, specialist skills, and/or training in its processing and/or evaluation.
(h) Nonbusiness transactions - all other government transactions that do not

fall under Section 4 (c) of the telecommunications act.
(i) Officer or employee – a person employed by a government office or agency

who is responsible for certain tasks and obligations relating to an applicant's
or requesting party's application or request for processing.
(j) Processing time – the time taken by a local government unit (LGU) or a
national government agency (NGA) to process an application or request from
the receipt of all required documents, payment of fees, and issuance of
certification or other similar documents approving or disapproving the
application or request.
(k) Red tape — any regulation, rule, administrative procedure, or system that
is ineffectual or harmful in attaining its intended aims, resulting in sluggish,
suboptimal, and unwanted social effects;
(l) Regulation - any legal document that gives effect to a government policy
intervention, such as licensing, imposing information obligations, complying
with standards, or paying any fee, levy, charge, or other statutory or
regulatory requirements essential to carry out activity; and
(m) Simple transactions – applications or requests presented by applicants or

requesting parties to a government office or agency that only demand
ministerial actions from the public officer or employee, or that present only
minor issues for resolution by the government's officer or employee.
Page 93 of 138
SECTION 5. Reengineering of Systems and Procedures. – All offices and

agencies which provide government services are hereby mandated to
regularly undertake cost compliance analysis, time and motion studies,
undergo evaluation and improvement of their transaction systems and
procedures and reengineer the same if deemed necessary to reduce
bureaucratic red tape and processing time.
The Anti-Red Tape Authority, created in this Act, shall coordinate with
all government offices covered under Section 3 of this Act in the review
of existing laws, executive issuances and local ordinances, and
recommend the repeal of the same if deemed outdated, redundant, and
adds undue regulatory burden to the transacting public.
All proposed regulations of government agencies under Section 3 of

this Act shall undergo regulatory impact assessment to establish if the
proposed regulation does not add undue regulatory burden and cost to
these agencies and the applicants or requesting parties: Provided, That
when necessary, any proposed regulation may undergo pilot
implementation to assess regulatory impact.
Upon effectivity of this Act, all LGUs and NGAs are directed to initiate
review of existing policies and operations and commence with the
reengineering of their systems and procedures in compliance with the
provisions of this Act, pending the approval of the implementing rules
and regulations (IRR) thereof."
Paraphrased
All government offices and agencies are required to do cost compliance

analyses, time and motion studies, and evaluate and improve existing
transaction systems and procedures, as well as reengineer them if necessary,
in order to cut bureaucratic red tape and processing time. The Anti-Red Tape
Authority, established by this Act, will work with all government departments
covered by Section 3 of this Act to examine current laws, executive orders,
and municipal ordinances and suggest their repeal if they are outdated,
redundant, or impose an unfair regulatory burden on the public.
All proposed regulations issued by government agencies under Section 3 of

this Act must be subjected to a regulatory impact assessment to determine
whether they impose an unreasonable regulatory burden or cost on these
agencies and the applicants or seeking parties: Provided, however, that any
proposed regulation may be subjected to a pilot implementation to assess
regulatory impact if necessary.
Page 94 of 138
Furthermore, upon the effective date of this Act, all LGUs and NGAs are
ordered to assess their existing policies and operations and begin
reengineering their systems and procedures in accordance with its
requirements, pending approval of the implementing rules and regulations
(IRR)."
SECTION 6. Citizen’s Charter. – All government agencies including

departments, bureaus, offices, instrumentalities, or government-owned
and/or –controlled corporations, or LGUs shall set up their respective
most current and updated service standards to be known as the
Citizen’s Charter in the form of information billboards which shall be
posted at the main entrance of offices or at the most conspicuous place,
in their respective websites and in the form of published materials
written either in English, Filipino, or in the local dialect, that detail:
(a) A comprehensive and uniform checklist of requirements for each

type of application or request;
(b) The procedure to obtain a particular service;
(c) The person/s responsible for each step;
(d) The maximum time to conclude the process;
(e) The document/s to be presented by the applicant or requesting party,

if necessary;
(f) The amount of fees, if necessary; and
(g) The procedure for filing complaints.
Paraphrased
All government agencies, including departments, bureaus, offices,

instrumentalities, or government-owned and/or –controlled corporations, or
local government units (LGUs), shall establish their respective most current
and updated service standards, known as the Citizen's Charter, in the form of
information billboards to be posted at the main entrance of offices or in the
most conspicuous place in their respective jurisdictions: (a) a comprehensive
and uniform checklist of requirements for each type of application or request;
(b) the procedure for obtaining a specific service; (c) the person(s)
responsible for each step; (d) the maximum time for the process to be
Page 95 of 138
completed; (e) the document(s) to be presented by the applicant or requesting

party, if necessary; (f) the amount of fees, if necessary; and (g) the procedure
for filing.
SECTION 7. Zero-Contact Policy. – Except during the preliminary

assessment of the request and evaluation of sufficiency of submitted
requirements, no government officer or employee shall have any
contact, in any manner, unless strictly necessary with any applicant or
requesting party concerning an application or request. Once the
Department of Information and Communications Technology (DICT) has
completed a web-based software enabled business registration system
that is acceptable to the public as mandated under Section 26 of this
Act, all transactions shall be coursed through such system. All
government agencies including LGUs shall adopt a zero-contact policy.
Paraphrased
No government officer or staff member shall be contacted, in any way other

than during the preliminary assessment of the request and assessment of
adequacy of the requirements presented, unless the application or requesting
party is strictly essential. After completing the business registration system for
web-based software which is acceptable to the public as specified under
Section 26 of this Act, the Department of Information and Communications
Technology (DICT) will conduct all transactions through the system. A zero-
contact policy should be adopted by all government agencies including LGUs.
SECTION 8. Accountability of Heads of Offices and Agencies. – The

head of the office or agency shall be primarily responsible for the
implementation of this Act and shall be held accountable to the public in
rendering fast, efficient, convenient and reliable service. All transactions
and processes are deemed to have been made with the permission or
clearance from the highest authority having jurisdiction over the
government office or agency concerned.
Paraphrased
Heads of Bureaus and Agencies are accountable. The head of the office or
agency is principally responsible and accountable to the public for the
execution of this Act in providing quick, efficient, convenient and reliable
Page 96 of 138
services. Each transaction and procedure is considered to be done by the

highest authority having jurisdiction over the government or agency
concerned with approval or approval.
SECTION 9. Accessing Government Services. – The following shall

adopted by all government offices and agencies:
(a) Acceptance of Applications or Requests. –
(1) All officers or employees shall accept written applications, requests,

and/or documents being submitted by applicants or requesting parties
of the offices or agencies.
(2) The receiving officer or employee shall perform a preliminary

assessment of the application or request submitted with its supporting
documents to ensure a more expeditious action on the application or
request. The receiving officer or employee shall immediately inform the
applicant or requesting party of any deficiency in the accompanying
requirements, which shall be limited to those enumerated in the
Citizen’s Charter.
(3) The receiving officer or employee shall assign a unique identification

number to an application or request, which shall be the identifying
number for all subsequent transactions between the government and
the applicant or requesting party regarding such specific application or
request.
(4) The receiving officer or employee shall issue an acknowledgement

receipt containing the seal of the agency, the name of the responsible
officer or employee, his/her unit and designation, and the date and time
of receipt of such application or request.
(b) Action of Offices. –
(1) All applications or requests submitted shall be acted upon by the

assigned officer or employee within the prescribed processing time
stated in the Citizen’s Charter which shall not be longer than three (3)
working days in the case of simple transactions and seven (7) working
days in the case of complex transactions from the date the request
and/or complete application or request was received.
Page 97 of 138
For applications or requests involving activities which pose danger to

public health, public safety, public morals, public policy, and highly
technical application, the prescribed processing time shall in no case be
longer than twenty (20) working days or as determined by the
government agency or instrumentality concerned, whichever is shorter.
The maximum time prescribed above may be extended only once for the
same number of days, which shall be indicated in the Citizen’s Charter.
Prior to the lapse of the processing time, the office or agency concerned
shall notify the applicant or requesting party in writing of the reason for
the extension and final date of release of the government service/s
requested. Such written notification shall be signed by the applicant or
requesting party to serve as proof of notice.
If the application or request for license, clearance permit, certification or

authorization shall require the approval of the local Sangguniang
Bayan, Sangguniang Panlungsod, or the Sangguniang Panlalawigan as
the case may be, the Sanggunian concerned shall be given a period of
forty-five (45) working days to act on the application or request, which
can be extended for another twenty (20) working days. If the
local Sanggunian concerned has denied the application or request, the
reason for the denial, as well as the remedial measures that may be
taken by the applicant shall be cited by the concerned Sanggunian.
In cases where the cause of delay is due to force majeure or natural or

man-made disasters, which result to damage or destruction of
documents, and/or system failure of the computerized or automatic
processing, the prescribed processing times mandated in this Act shall
be suspended and appropriate adjustments shall be made.
(2) No application or request shall be returned to the applicant or

requesting party without appropriate action. In case an application or
request is disapproved, the officer or employee who rendered the
decision shall send a formal notice to the applicant or requesting party
within the prescribed processing time, stating therein the reason for the
disapproval. A finding by a competent authority of a violation of any or
other laws by the applicant or requesting party shall constitute a valid
ground for the disapproval of the application or request, without
prejudice to other grounds provided in this Act or other pertinent laws.
(c) Denial of Application or Request for Access to Government Service.

– Any denial of application or request for access to government service
shall be fully explained in writing, stating the name of the person making
Page 98 of 138
the denial and the grounds upon which such denial is based. Any denial
of application or request is deemed to have been made with the
permission or clearance from the highest authority having jurisdiction
over the government office or agency concerned.
(d) Limitation of Signatories – The number of signatories in any

document shall be limited to a maximum of three (3) signatures which
shall represent officers directly supervising the office or agency
concerned: Provided, That in case the authorized signatory is on official
business or official leave, an alternate shall be designated as signatory.
Electronic signatures or pre-signed license, clearance, permit,
certification or authorization with adequate security and control
mechanism may be used.
(e) Electronic Versions of Licenses, Clearances, Permits, Certifications

or Authorizations. – All government agencies covered under Section 3
of this Act shall, when applicable, develop electronic versions of
licenses, clearances, permits, certifications or authorizations with the
same level of authority as that of the signed hard copy, which may be
printed by the applicants or requesting parties in the convenience of
their offices.
(f) Adoption of Working Schedules to Serve Applicants or Requesting

Parties. – Heads of offices and agencies which render government
services shall adopt appropriate working schedules to ensure that all
applicants or requesting parties who are within their premises prior to
the end of official working hours are attended to and served even during
lunch break and after regular working hours.
(g) Identification Card. – All employees transacting with the public shall
be provided with an official identification card which shall be visibly
worn during office hours.
(h) Establishment of Public Assistance/Complaints Desk. – Each office

or agency shall establish a public assistance/complaints desk in all their
offices."
Paraphrased
All government offices and agencies must implement the following:
(a) Acceptance of Requests or Applications. –
Page 99 of 138
(1) All officers and staff of the offices or agencies must accept written
applications, requests, and/or documents supplied by applicants or requesting
parties.
(2) To ensure a speedier response on the application or request, the receiving

officer or employee must make a preliminary assessment of the application or
request presented with its supporting papers. Any shortfall in the
accompanying requirements, which shall be confined to those mentioned in
the Citizen's Charter, shall be immediately communicated to the applicant or
requesting party by the receiving officer or employee.
(3) An application or request will be assigned a unique identification number

by the receiving officer or employee, which will be used in all subsequent
transactions between the government and the applicant or requesting party
about that specific application or request.
(4) The receiving officer or employee must issue an acknowledgement receipt

that includes the agency's seal, the name of the responsible officer or
employee, his or her unit and designation, as well as the date and time of
receipt of the application or request.
(b) Action of Offices. –
(1) All applications or requests shall be processed by the assigned officer or

employee within the prescribed processing time stated in the Citizen's
Charter, which shall not exceed three (3) working days in the case of simple
transactions and seven (7) working days in the case of complex transactions,
from the date the request and/or complete application is received.
The prescribed processing time for applications or requests involving activities

that endanger public health, public safety, public morals, public policy, or
highly technical applications shall not exceed twenty (20) working days, or as
determined by the government agency or instrumentality, whichever is
shorter.
The maximum time limit set out above may only be extended once for the
same number of days specified in the Citizen's Charter. Prior to the expiration
of the processing time, the office or agency in charge must notify the applicant
or requesting party in writing of the reason for the extension and the final date
for the release of the requested government service(s). To serve as proof of
notice, the applicant or requesting party must sign the written notification.
Page 100 of 138

If the application or request for a license, clearance permit, certification, or

authorization requires the approval of the local Sangguniang Bayan,
Sangguniang Panlungsod, or Sangguniang Panlalawigan, as the case may
be, the Sanggunian concerned is given forty-five (45) working days to act on
the application or request, which can be extended for another twenty (20)
working days. If the concerned local Sanggunian has denied the application or
request, the reason for the refusal, as well as any remedial steps that the
applicant may take, must be given by the concerned Sanggunian.
The prescribed processing times mandated by this Act shall be suspended

and appropriate adjustments made in cases where the cause of delay is due
to force majeure or natural or man-made disasters that result in document
damage or destruction, and/or system failure of the computerized or
automatic processing.
(2) No application or request will be returned to the applicant or requesting

party until it has been properly processed. If an application or request is
denied, the officer or employee who made the decision must give a formal
notification to the applicant or requesting party within the prescribed
processing time, explaining why the request or application was denied. A
competent authority's conclusion of a violation of any or other laws by the
applicant or requesting party shall constitute a valid basis for the application
or request's denial, without prejudice to other grounds established in this Act
or other applicable laws.
(c) Denial of an Application or Request for Government Service. – Any refusal

of an application or request for government service must be thoroughly
explained in writing, including the name of the person who made the decision
and the reason for the denial. Any application or request denial is presumed
to have been made with authorization or clearance from the highest authority
with jurisdiction over the government office or agency in question.
(d) Signatories - Any document may have no more than three (3) signatories,
all of whom must be officers directly controlling the office or agency in
question: If the authorized signatory is unavailable due to official business or
leave, an alternate shall be named as signatory. With sufficient security and
control mechanisms, electronic signatures or pre-signed licenses, clearances,
permits, certifications, or authorizations may be employed.
e) Electronic Licenses, Clearances, Permits, Certifications, or Authorizations.

When applicable, all government agencies covered by Section 3 of this Act
must develop electronic versions of licenses, clearances, permits,
certifications, or authorizations with the same level of authority as the signed
Page 101 of 138

hard copy, which can be printed by applicants or requesting parties at their

leisure.
(f) Adoption of Working Schedules to Serve Applicants or Requesting Parties.

– Heads of offices and agencies that provide government services must adopt
appropriate working schedules to ensure that all applicants or requesting
parties who arrive before the end of official working hours are attended to and
served, including during lunch breaks and after regular working hours.
(g) Identity Card. - All personnel who deal with the public must be given an
official identification card, which must be visible during business hours.
(h) Public Assistance/Complaints Desk Establishment. - Each office or agency

shall create a public assistance/complaints desk in each of its offices."
SECTION 10. Automatic Approval or Automatic Extension of License,

Clearance, Permit, Certification or Authorization. – If a government
office or agency fails to approve or disapprove an original application or
request for issuance of license, clearance, permit, certification or
authorization within the prescribed processing time, said application or
request shall be deemed approved: Provided, That all required
documents have been submitted and all required fees and charges have
been paid. The acknowledgment receipt together with the official receipt
for payment of all required fees issued to the applicant or requesting
party shall be enough proof or has the same force and effect of a
license, clearance, permit, certification or authorization under this
automatic approval mechanism.
If a government office or agency fails to act on an application or request

for renewal of a license, clearance, permit, certification or authorization
subject for renewal within the prescribed processing time, said license,
clearance, permit, certification or authorization shall automatically be
extended: Provided, That the Authority, in coordination with the Civil
Service Commission (CSC), Department of Trade and Industry (DTI),
Securities and Exchange Commission (SEC), Department of the Interior
and Local Government (DILG) and other agencies which shall formulate
the IRR of this Act, shall provide a listing of simple, complex, highly
technical applications, and activities which pose danger to public
health, public safety, public morals or to public policy.
Paraphrased
Page 102 of 138

If a government office or agency fails to approve or disapprove an original

application or request for the issue of a license, clearance, permit,
certification, or permission within the specified processing time, the
application or request is deemed approved: Assuming that all necessary
documents have been filed and that all fees and charges have been paid. The
acknowledgment receipt coupled with the official receipt for payment of all
applicable fees issued to the applicant or requesting party shall be enough
proof or has the same force and effect as a license, clearance, permit,
certification or permission under this automatic approval system.
If a government office or agency fails to act on an application for renewal of a

license, clearance, permission, certification, or authorization subject to
renewal within the required processing period, the license, clearance, permit,
certification, or authorization is automatically extended: Provided, however,
that the Authority, in collaboration with the Civil Service Commission (CSC),
the Department of Trade and Industry (DTI), the Securities and Exchange
Commission (SEC), the Department of the Interior and Local Government
(DILG), and other agencies, shall provide a list of simple, complex, highly
technical applications, and activities that pose a risk to public health and
safety.
SECTION 11. Streamlined Procedures for the Issuance of Local

Business Licenses, Clearances, Permits, Certifications or
Authorizations. – The LGUs are mandated to implement the following
revised guidelines in the issuance of business licenses, clearances,
permits, certifications or authorizations:
(a) A single or unified business application form shall be used in

processing new applications for business permits and business
renewals which consolidates all the information of the applicant or
requesting party by various local government departments, such as, but
not limited to, the local taxes and clearances, building clearance,
sanitary permit, zoning clearance, and other specific LGU requirements,
as the case may be, including the fire clearance from the Bureau of Fire
Protection (BFP). The unified form shall be made available online using
technology-neutral platforms such as, but not limited to, the central
business portal or the city/municipality’s website and various channels
for dissemination. Hard copies of the unified forms shall likewise be
made available at all times in designated areas of the concerned office
and/or agency.
Page 103 of 138

(b) A one-stop business facilitation service, hereinafter referred to as the

business one stop shop, (BOSS) for the city/municipality’s business
permitting and licensing system to receive and process manual and/or
electronic submission of application for license, clearance, permit,
certification or authorization shall be established within the
cities/municipalities’ Negosyo Center as provided for under Republic
Act No. 10644, otherwise known as the "Go Negosyo Act." There shall
be a queuing mechanism in the BOSS to better manage the flow of
applications among the LGUs’ departments receiving and processing
applications. LGUs shall implement collocation of the offices of the
treasury, business permits and licensing office, zoning office, including
the BFP, and other relevant city/municipality offices/departments,
among others, engaged in starting a business, dealing with construction
permits.
(c) Cities/Municipalities are mandated to automate their business

permitting and licensing system or set up an electronic BOSS within a
period of three (3) years upon the effectivity of this Act for a more
efficient business registration processes. Cities/Municipalities with
electronic BOSS shall develop electronic versions of licenses,
clearances, permits, certifications or authorizations with the same level
of authority, which may be printed by businesses in the convenience of
their offices. The DICT shall make available to LGUs the software for the
computerization of the business permit and licensing system. The DICT,
DTI, and DILG, shall provide technical assistance in the planning and
implementation of a computerized or software-enabled business
permitting and licensing system.
(d) To lessen the transaction requirements, other local clearances such

as, but not limited to, sanitary permits, environmental and agricultural
clearances shall be issued together with the business permit.
(e) Business permits shall be valid for a period of one (1) year. The
city/municipality may have the option to renew business permits within
the first month of the year or on the anniversary date of the issuance of
the business permit.
(f) Barangay clearances and permits related to doing business shall be

applied, issued, and collected at the city/municipality in accordance with
the prescribed processing time of this Act: Provided, that the share in
the collections shall be remitted to the respective barangays.
Page 104 of 138

The pertinent provisions of Republic Act No. 7160, otherwise known as

"The Local Government Code of 1991", specifically Article IV, Section
152(c) is hereby amended accordingly."
Paraphrased
The following new criteria must be followed by LGUs when issuing business
licenses, clearances, permits, certifications, or authorizations:
(a) In processing new applications for business permits and business

renewals, a single or unified business application form shall be used that
consolidates all information provided by various local government
departments, including, but not limited to, local taxes and clearances, building
clearance, sanitary permit, zoning clearance, and other specific LGU
requirements (BFP).The single form will be made available online via
technology-neutral platforms such as the central business portal or the
city/website, municipality's as well as other distribution methods. Hard copies
of the unified forms must also be kept on hand in designated places of the
respective office and/or agency at all times.
(b) Within the cities/municipalities' Negosyo Center, a one-stop business

facilitation service, hereinafter referred to as the business one stop shop
(BOSS), shall be established for the city/business municipality's permitting
and licensing system to receive and process manual and/or electronic
submissions of application for license, clearance, permit, certification, or
authorization. In order to better manage the flow of applications across the
LGUs' departments receiving and processing applications, the BOSS will
include a queuing mechanism. Treasury, business permits and licensing,
zoning, including the BFP, and other relevant city/municipality
offices/departments, among others, engaged in launching a business and
dealing with building permits, shall be collocated by LGUs.
(c) Cities/municipalities are required to automate their business permitting and

licensing system or establish an electronic BOSS within three (3) years of the
Act's enactment in order to improve business registration operations.
Cities/municipalities with electronic BOSS must create electronic versions of
licenses, clearances, permits, certifications, or authorizations with the same
level of authority, which enterprises can print at their leisure. The DICT is
required to make software for the computerization of the business permit and
licensing system available to local governments. The DICT, DTI, and DILG will
provide technical support in the development and implementation of a
computerized or software-enabled business permitting and licensing system.
Page 105 of 138

(d) Other local clearances, such as sanitary permits, environmental

clearances, and agricultural clearances, shall be given concurrently with the
business permit to reduce transaction needs.
(e) Business permits are only valid for one (1) year. The city/municipality may
be able to renew business permits within the first month of the year or on the
anniversary of the business permit's issuance.
(f) In accordance with the established processing time of this Act, barangay
clearances and permits linked to doing business shall be applied for, issued,
and collected at the city/municipality: Provided, however, that the individual
barangays receive their portion of the collections.
The relevant sections of Republic Act No. 7160, often known as "The Local
Government Code of 1991," notably Article IV, Section 152(c), are hereby
revised to reflect this."
Section 23. Civil and Criminal Liability, Not Barred. - The finding of

administrative liability under this Act shall not be a bar to the filing of
criminal, civil or other related charges under existing laws arising from
the same act or omission as herein enumerated."
Paraphrased
Section 23. Civil and Criminal Legal Responsibility, No Longer Barred. - The
finding of administrative legal responsibility underneath this Act shall not be a
bar to the filing of criminal, civil or other related prices under current legal
guidelines springing up from the same act or omission as herein enumerated."
Section 24. Administrative Jurisdiction. – The administrative jurisdiction

on any violation of the provisions of this Act shall be vested in either the
CSC, or the Office of the Ombudsman as determined by appropriate
laws and issuances."
Paraphrased
Section 24. Administrative Jurisdiction. – The administrative jurisdiction on

any violation of the provisions of this Act shall be vested in either the CSC, or
the office of the Ombudsman as determined by suitable legal guidelines and
issuances."
Page 106 of 138

Section 25. Immunity, Discharge of Co-Respondent/Accused to be a

Witness. – Any public official or employee or any person having been
charged with another offense under this Act and who voluntarily gives
information pertaining to an investigation or who willingly testifies
therefore, shall be exempt from prosecution in the case/s where his/her
information and testimony are given. The discharge may be granted and
directed by the investigating body or court upon the application or
petition of any of the respondent/accused-informant and before the
termination of the investigation: Provided, That:
(a) There is absolute necessity for the testimony of the

respondent/accused-informant whose discharge is requested;
(b) There is no other direct evidence available for the proper prosecution
of the offense committed, except the testimony of said
respondent/accused-informant;
(c) The testimony of said respondent can be substantially corroborated

in its material points;
(d) The respondent/accused-informant has not been previously

convicted of a crime involving moral turpitude; and
(e) Said respondent/accused-informant does not appear to be the most

guilty.
Evidence adduced in support of the discharge shall automatically form

part of the records of the investigation. Should the investigating body or
court deny the motion or request for discharge as a witness, his/her
sworn statement shall be inadmissible as evidence."
Paraphrased
Section 25. Immunity, Discharge of Co-Respondent/Accused to be a Witness.

– Any public respectable or worker or any individual having been charged with
every other offense beneath this Act and who voluntarily gives information
relating an research or who willingly testifies therefore, will be exempt from
prosecution within the case/s where his/her statistics and testimony are given.
the discharge can be granted and directed via the investigating body or
courtroom upon the software or petition of any of the respondent/accused-
informant and before the termination of the investigation: provided, That:
(a) There may be absolute necessity for the testimony of the

respondent/accused-informant whose discharge is requested;
Page 107 of 138

(b) There's no other direct proof available for the right prosecution of the
offense dedicated, except the testimony of stated respondent/accused-
informant;
(c) The testimony of said respondent may be appreciably corroborated in its

cloth factors;
(d) The respondent/accused-informant has now not been previously convicted

of against the law regarding ethical turpitude; and
(e) Stated respondent/accused-informant does now not look like the most
responsible.
Evidence adduced in assist of the release shall robotically form part of the
records of the investigation. have to the investigating frame or court docket
deny the movement or request for discharge as a witness, his/her sworn
declaration shall be inadmissible as evidence."
Section 26. Transition from Manual to Software-Enabled Business-

Related Transactions. – The DICT, in coordination with other concerned
agencies, shall within three (3) years after the effectivity of this Act,
automate business-related transactions by developing the necessary
software and technology-neutral platforms and secure infrastructure
that is web-based and accessible to the public. The DICT shall ensure
that all municipalities and provinces classified as third (3rd), fourth
(4th), fifth (5th) and sixth (6th) class are provided with appropriate
equipment and connectivity, information and communications
technology platform, training and capability building to ensure the LGUs
compliance with this Act.
Paraphrased
Section 26. Transition from Guide to Software Program-Enabled Business-

associated Transactions. – The DICT, in coordination with other concerned
agencies, shall inside 3 (three) years after the efficiency of this Act, automate
business-related transactions with the aid of growing the important software
program and era-neutral systems and comfy infrastructure that is web-based
and on hand to the public. The DICT shall make certain that everyone
municipalities and provinces labeled as 1/3 (3rd), fourth (4th), 5th (fifth) and
6th (sixth) elegance are provided with appropriate system and connectivity,
facts and communications generation platform, education and functionality
constructing to make certain the LGUs compliance with this Act.
Page 108 of 138

Section 27. Transitory Provisions.
(a) The Director General of the Authority, in consultation with the DTI,
shall determine the organizational structure and personnel complement
of the Authority.1âwphi1 To ensure continued implementation of ease of
doing business and anti-red tape reforms, the teams or units involved in
regulatory improvement and/or ease of doing business-related
programs of the DTI-Competitiveness Bureau shall serve as temporary
secretariat of the Authority until such time that its organizational
structure and personnel complement have been determined and filled
up: Provided, That the staff of the DTI-Competitiveness Bureau shall
have the option to be absorbed or transferred laterally to the Authority
without diminution of their rank, position, salaries and other
emoluments once the staffing pattern and plantilla position of the
Authority has been approved.
(b) All regulatory management programs and anti-red tape initiatives

across government agencies shall be gathered by the Authority. The
DTI, CDA, NCC, DOF, Development Academy of the Philippines (DAP),
and National Economic and Development Authority (NEDA) shall submit
to the Authority a report on the status of their respective projects related
to regulatory management.
(c) The Authority, in coordination with CSC and the Council, shall
conduct an information dissemination campaign in all NGAs and LGUs
to inform them of this Act amending Republic Act No. 9485, otherwise
known as the Anti-Red Tape Act of 2007."
Paraphrased
Section 27. Transitory Provisions.
(a) The Director trendy of the Authority, in consultation with the DTI, shall
decide the organizational structure and personnel supplement of the
Authority.1âwphi1 To ensure persevered implementation of ease of doing
business and anti-purple tape reforms, the groups or units worried in
regulatory development and/or ease of doing business-related programs of
the DTI-Competitiveness Bureau shall function brief secretariat of the
Authority till such time that its organizational structure and employees
supplement have been decided and stuffed up: provided, That the team of
workers of the DTI-Competitiveness Bureau shall have the choice to be
absorbed or transferred laterally to the Authority without diminution in their
rank, function, salaries and other emoluments once the staffing pattern and
plantilla position of the Authority has been accredited.
Page 109 of 138

(b) All regulatory management applications and anti-purple tape initiatives

across authorities’ groups shall be amassed with the aid of the Authority. The
DTI, CDA, NCC, DOF, improvement Academy of the Philippines (DAP), and
country wide financial and development Authority (NEDA) shall post to the
Authority a file at the fame of their respective tasks related to regulatory
control.
(c) The Authority, in coordination with CSC and the Council, shall behavior an
data dissemination campaign in all NGAs and LGUs to tell them of this Act
amending Republic Act No. 9485, in any other case referred to as the Anti-
Red Tape Act of 2007."
Section 28. Congressional Oversight Committee. – To monitor the

implementation of this Act, there shall be created a Congressional
Oversight Committee on Ease of Doing Business (COC-EODB), to be
composed of five (5) members from the Senate, which shall include the
Chairpersons of the Senate Committees on Trade and Commerce and
Entrepreneurship, Civil Service, Government Reorganization and
Professional Regulation, and Economic Affairs; and five (5) members
from the House of Representatives which shall include the Chairpersons
of the House Committees on Trade and Industry, Civil Service and
Professional Regulation, Government Reorganization, and Economic
Affairs. The COC-EODB shall be jointly chaired by the Chairpersons of
the Senate Committee on Trade and Commerce and Entrepreneurship
and the House of Representatives Committee on Trade and Industry:
Provided, That the oversight committee shall cease to exist after five (5)
years upon the effectivity of this Act.
The Secretariat of the COC-EODB shall be drawn from the existing

personnel of the Senate and House of Representatives committees
comprising the COC-EODB.
Paraphrased
Section 28. Congressional Oversight Committee. – To reveal the

implementation of this Act, there will be created a Congressional Oversight
Committee on Ease of Doing enterprise (COC-EODB), to be composed of 5
(5) contributors from the Senate, which shall encompass the Chairpersons of
the Senate Committees on trade and commerce and Entrepreneurship, Civil
service, government Reorganization and expert law, and financial Affairs; and
five (five) participants from the house of Representatives which shall consist
of the Chairpersons of the house Committees on trade and industry, Civil
provider and expert regulation, government Reorganization, and financial
Page 110 of 138

Affairs. The COC-EODB shall be jointly chaired with the aid of the
Chairpersons of the Senate Committee on exchange and commerce and
Entrepreneurship and the house of Representatives Committee on trade and
industry: supplied, That the oversight committee shall stop to exist after 5
(five) years upon the efficiency of this Act.
The Secretariat of the COC-EODB will be drawn from the present personnel
of the Senate and residence of Representatives committees comprising the
COC-EODB.
Section 29. Appropriations. – The amount necessary to carry out the

provisions of this Act shall be charged against the current year’s
appropriations of the concerned agencies. In addition, the amount of
Three hundred million pesos (P300,000,000.00) as initial funding for the
Authority to be charged against the unexpended Contingency Fund of
the Office of the President is hereby appropriated. Thereafter, the
amount needed for the implementation of this Act shall be included in
the annual General Appropriations Act.
Paraphrased
Section 29. Appropriations. – The amount necessary to perform the provisions

of this Act shall be charged towards the modern-day year’s appropriations of
the concerned corporations. similarly, the quantity of 3 hundred million pesos
(P300,000,000.00) as initial investment for the Authority to be charged against
the unexpended Contingency Fund of the workplace of the President is
hereby appropriated. Thereafter, the quantity wished for the implementation of
this Act shall be blanketed in the annual well known Appropriations Act.
Section 30. Implementing Rules and Regulations. – The Authority with

the CSC and DTI, and in coordination with the DICT, DOF, DILG, NEDA,
PSA, CDA, SEC, the Office of the Ombudsman, Housing and Land Use
Regulatory Board (HLURB) and the Union of Local Authorities of the
Philippines (ULAP), shall promulgate the necessary rules and
regulations within ninety (90) working days from the effectivity of this
Act.
Paraphrased
Section 30. Imposing Rules and Guidelines. – The Authority with the CSC and
DTI, and in coordination with the DICT, DOF, DILG, NEDA, PSA, CDA, SEC,
the workplace of the Ombudsman, Housing and Land Use Regulatory Board
Page 111 of 138

(HLURB) and the Union of nearby authorities of the Philippines (ULAP), shall
promulgate the vital guidelines and regulations within 90 (90) working days
from the efficiency of this Act.
Section 31. Separability Clause. – If any provision of this Act shall be

declared invalid or unconstitutional, such declaration shall not affect the
validity of the remaining provisions of this Act.
Paraphrased
Section 31. Separability Clause. – If any provision of this Act shall be declared
invalid or unconstitutional, such assertion shall not have an effect on the
validity of the last provisions of this Act.
Section 32. Repealing Clause. – All provisions of laws, presidential

decrees, letters of instruction and other presidential issuances which
are incompatible or inconsistent with the provisions of this Act are
hereby deemed amended or repealed accordingly.
Paraphrased
Section 32. Repealing Clause. – All provisions of laws, presidential decrees,

letters of instruction and different presidential issuances which can be
incompatible or inconsistent with the provisions of this Act are hereby deemed
amended or repealed thus.
Section 33. Effectivity. – This Act shall take effect within fifteen (15) days
following its publication in the Official Gazette or in two (2) national
newspapers of general circulation.
Paraphrased
Section 33. efficiency. – This Act shall take impact within fifteen (15) days
following its journal in the legitimate Gazette or in two (2) national newspapers
of general circulation.
Page 112 of 138

Page 113 of 138

(as amended by Republic Act No. 9194)
AN ACT DEFINING THE CRIME OF MONEY LAUNDERING, PROVIDING

PENALTIES THEREFOR AND FOR OTHER PURPOSES.
SECTION 1. Short Title. — This Act shall be known as the “Anti-Money

Laundering Act of 2001.”
Paraphrased
The law is entitled Anti-Money Laundering Act of 2001 that will govern certain
money laundering crimes.
SECTION 2. Declaration of Policy. — It is hereby declared the policy of

the State to protect and preserve the integrity and confidentiality of bank
accounts and to ensure that the Philippines shall not be used as a
money laundering site for the proceeds of any unlawful activity.
Consistent with its foreign policy, the State shall extend cooperation in
transnational investigations and prosecutions of persons involved in
money laundering activities wherever committed.
Paraphrased
The State's obligation to safeguard and maintain the completeness and

secrecy of bank accounts and to guarantee that the Philippines is not used for
any criminal activities as a money laundering website. The State should
expand, in accordance with its external policies, cooperation in transnational
research and prosecution wherever engaged in money laundering operations.
SECTION 3. Definitions. — For purposes of this Act, the following terms

are hereby defined as follows:
Page 114 of 138

(a) ‘Covered persons’, natural or juridical, refer to:
(1) banks, non-banks, quasi-banks, trust entities, foreign exchange

dealers, pawnshops, money changers, remittance and transfer
companies and other similar entities and all other persons and their
subsidiaries and affiliates supervised or regulated by the Bangko
Sentral ng Pilipinas (BSP);
(2) insurance companies, pre-need companies and all other persons

supervised or regulated by the Insurance Commission (IC);
(3) (i) securities dealers, brokers, salesmen, investment houses and

other similar persons managing securities or rendering services as
investment agent, advisor, or consultant, (ii) mutual funds, close-end
investment companies, common trust funds, and other similar persons,
and (iii) other entities administering or otherwise dealing in currency,
commodities or financial derivatives based thereon, valuable objects,
cash substitutes and other similar monetary instruments or property
supervised or regulated by the Securities and Exchange Commission
(SEC);
(4) jewelry dealers in precious metals, who, as a business, trade in

precious metals, for transactions in excess of One million pesos
(P1,000,000.00);
(5) jewelry dealers in precious stones, who, as a business, trade in

precious stones, for transactions in excess of One million pesos
(P1,000,000.00);
(6) company service providers which, as a business, provide any of the

following services to third parties: (i) acting as a formation agent of
juridical persons; (ii) acting as (or arranging for another person to act
as) a director or corporate secretary of a company, a partner of a
partnership, or a similar position in relation to other juridical persons;
(iii) providing a registered office, business address or accommodation,
correspondence or administrative address for a company, a partnership
or any other legal person or arrangement; and (iv) acting as (or
arranging for another person to act as) a nominee shareholder for
another person; and
(7) persons who provide any of the following services:
(i) managing of client money, securities or other assets;
Page 115 of 138

(ii) management of bank, savings or securities accounts;
(iii) organization of contributions for the creation, operation or

management of companies; and
(iv) creation, operation or management of juridical persons or

arrangements, and buying and selling business entities.
Notwithstanding the foregoing, the term ‘covered persons’ shall exclude

lawyers and accountants acting as independent legal professionals in
relation to information concerning their clients or where disclosure of
information would compromise client confidences or the attorney-client
relationship: Provided, That these lawyers and accountants are
authorized to practice in the Philippines and shall continue to be subject
to the provisions of their respective codes of conduct and/or
professional responsibility or any of its amendments.”
(8) casinos, including internet and ship-based casinos, with respect to

their casino cash transactions related to they gaming operations.
b) ‘Covered transaction’ is a transaction in cash or other equivalent

monetary instrument involving a total amount in excess of Five hundred
thousand pesos (₱500,000.00) within one (1) banking day; for covered
persons under Section 3(a)(8), a single casino transaction involving an
amount in excess of Five million pesos (₱5,000,000.00) or its equivalent
in any other currency.
(b-1) ‘Suspicious transaction’ are transactions with covered institutions,

regardless of the amounts involved, where any of the following
circumstances exist:
1. there is no underlying legal or trade obligation, purpose or economic

justification;
2. the client is not properly identified;
3. the amount involved is not commensurate with the business or

financial capacity of the client;
4. taking into account all known circumstances, it may be perceived that

the client’s transaction is structured in order to avoid being the subject
of reporting requirements under the Act;
Page 116 of 138

5. any circumstance relating to the transaction which is observed to

deviate from the profile of the client and/or the client’s past transactions
with the covered institution;
6. the transaction is in any way related to an unlawful activity or offense

under this Act that is about to be, is being or has been committed; or
7. any transaction that is similar or analogous to any of the foregoing.
(c) “Monetary instrument” refers to:
(1) coins or currency of legal tender of the Philippines, or of any other

country;
(2) drafts, checks and notes;
(3) securities or negotiable instruments, bonds, commercial papers,

deposit certificates, trust certificates, custodial receipts or deposit
substitute instruments, trading orders, transaction tickets and
confirmations of sale or investments and money market instruments;
and
(4) other similar instruments where title thereto passes to another by

endorsement, assignment or delivery.
(d) “Offender” refers to any person who commits a money laundering

offense.
(e) “Person” refers to any natural or juridical person.
(f) “Proceeds” refers to an amount derived or realized from an unlawful

activity.
(g) “Supervising Authority” refers to the appropriate supervisory or

regulatory agency, department or office supervising or regulating the
covered institutions enumerated in Section 3(a).
(h) “Transaction” refers to any act establishing any right or obligation or

giving rise to any contractual or legal relationship between the parties
thereto. It also includes any movement of funds by any means with a
covered institution.
(i) ‘Unlawful activity’ refers to any act or omission or series or

combination thereof involving or having direct relation to the following:
Page 117 of 138

(1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise
known as the Revised Penal Code, as amended;
(2) Sections 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15 and 16 of Republic Act No.
9165, otherwise known as the Comprehensive Dangerous Drugs Act of
2002;
(3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as

amended, otherwise known as the Anti-Graft and Corrupt Practices Act;
(4) Plunder under Republic Act No. 7080, as amended;
(5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and
302 of the Revised Penal Code, as amended;
(6) Jueteng and Masiao punished as illegal gambling under Presidential

Decree No. 1602;
(7) Piracy on the high seas under the Revised Penal Code, as amended
and Presidential Decree No. 532;
“(8) Qualified theft under Article 310 of the Revised Penal Code, as
amended;
(9) Swindling under Article 315 and Other Forms of Swindling under
Article 316 of the Revised Penal Code, as amended;
(10) Smuggling under Republic Act Nos. 455 and 1937;
(11) Violations of Republic Act No. 8792, otherwise known as the

Electronic Commerce Act of 2000;
(12) Hijacking and other violations under Republic Act No. 6235;
destructive arson and murder, as defined under the Revised Penal Code,
as amended;
(13) Terrorism and conspiracy to commit terrorism as defined and

penalized under Sections 3 and 4 of Republic Act No. 9372;
(14) Financing of terrorism under Section 4 and offenses punishable

under Sections 5, 6, 7 and 8 of Republic Act No. 10168, otherwise known
as the Terrorism Financing Prevention and Suppression Act of 2012:
Page 118 of 138

(15) Bribery under Articles 210, 211 and 211-A of the Revised Penal
Code, as amended, and Corruption of Public Officers under Article 212
of the Revised Penal Code, as amended;
(16) Frauds and Illegal Exactions and Transactions under Articles 213,
214, 215 and 216 of the Revised Penal Code, as amended;
(17) Malversation of Public Funds and Property under Articles 217 and
222 of the Revised Penal Code, as amended;
(18) Forgeries and Counterfeiting under Articles 163, 166, 167, 168, 169
and 176 of the Revised Penal Code, as amended;
(19) Violations of Sections 4 to 6 of Republic Act No. 9208, otherwise

known as the Anti-Trafficking in Persons Act of 2003;
(20) Violations of Sections 78 to 79 of Chapter IV, of Presidential Decree

No. 705, otherwise known as the Revised Forestry Code of the
Philippines, as amended;
(21) Violations of Sections 86 to 106 of Chapter VI, of Republic Act No.

8550, otherwise known as the Philippine Fisheries Code of 1998;
(22) Violations of Sections 101 to 107, and 110 of Republic Act No. 7942,
otherwise known as the Philippine Mining Act of 1995;
(23) Violations of Section 27(c), (e), (f), (g) and (i), of Republic Act No.
9147, otherwise known as the Wildlife Resources Conservation and
Protection Act;
(24) Violation of Section 7(b) of Republic Act No. 9072, otherwise known
as the National Caves and Cave Resources Management Protection Act;
(25) Violation of Republic Act No. 6539, otherwise known as the Anti-
Carnapping Act of 2002, as amended;
(26) Violations of Sections 1, 3 and 5 of Presidential Decree No. 1866, as

amended, otherwise known as the decree Codifying the Laws on
Illegal/Unlawful Possession, Manufacture, Dealing In, Acquisition or
Disposition of Firearms, Ammunition or Explosives;
(27) Violation of Presidential Decree No. 1612, otherwise known as the

Anti-Fencing Law;
Page 119 of 138

(28) Violation of Section 6 of Republic Act No. 8042, otherwise known as

the Migrant Workers and Overseas Filipinos Act of 1995, as amended by
Republic Act No. 10022;
(29) Violation of Republic Act No. 8293, otherwise known as the

Intellectual Property Code of the Philippines;

the Anti-Photo and Video Voyeurism Act of 2009;

the Anti-Child Pornography Act of 2009;
(32) Violations of Sections 5, 7, 8, 9, 10(c), (d) and (e), 11, 12 and 14 of

Republic Act No. 7610, otherwise known as the Special Protection of
Children Against Abuse, Exploitation and Discrimination;
(33) Fraudulent practices and other violations under Republic Act No.
8799, otherwise known as the Securities Regulation Code of 2000; and
(34) Felonies or offenses of a similar nature that are punishable under

the penal laws of other countries.”
(j) Precious metals’ shall mean gold, silver, platinum, palladium,

rhodium, ruthenium, iridium and osmium. These include alloys of
precious metals, solders and plating chemicals such as rhodium and
palladium plating solutions and potassium gold cyanide and potassium
silver cyanide and silver cyanide in salt solution.
(k) ‘Precious stones’ shall mean diamond, ruby, emerald, sapphire, opal,
amethyst, beryl, topaz, and garnet that are used in jewelry making,
including those formerly classified as semi-precious stones.”
(l) For purposes of covered persons under Section 3(a)(8), the following
terms are hereby defined as follows:
(1) ‘Casino’ refers to a business authorized by the appropriate

goverment agency to engage in gaming operations:
(i) ‘Internet-based casinos’ shall refer a casinos in which persons

participate by the use of remote communication facilities such as, but
not limited to, internet, telephone, television, radio or any other kind of
electronic or other technology for facilitating communication; and
Page 120 of 138

(ii) ‘Ship-based casino’ shall refer to casinos, the operation of which is

undertaken on board a vessel, ship, boat or any other water-based craft
wholly or partly intended for gambling;
(2) ‘Casino cash transaction’ refers to transactions involving the receipt

of cash by a casino paid by or on behalf of a customer, or transactions
involving the payout of cash by a casino to a customer or to any person
in his/her behalf; and
(3) ‘Gaming operations’ refer to the activities of the casino offering

games of chance and any variations thereof approved by the
appropriate government authorities.
Paraphrased
The following terms are hereby defined for the purposes of this Act:
(1) Banks, non-banks, quasi-banks, trust entities, foreign exchange dealers,

pawnshops, money changers, remittance and transfer companies, and other
similar entities, as well as all other persons and their subsidiaries and affiliates
supervised or regulated by the Bangko Sentral ng Pilipinas (BSP);
(2) The Insurance Commission (IC) supervises and regulates insurance

businesses, pre-need firms, and all other people;
(3) Securities dealers, brokers, salesmen, investment houses, and other

similar entities managing securities or rendering services as investment
agent, advisor, or consultant, (ii) mutual funds, close-end investment
companies, common trust funds, and other similar entities, and (iii) other
entities administering or otherwise dealing in currency, commodities, or
financial derivatives based on them;
(4) Jewelry dealers in precious metals who, as a business, trade in precious

metals for transactions in excess of One million pesos (P1,000,000.00);
(5) jewelry dealers in precious stones who, as a business, trade in precious

stones for transactions in excess of One million pesos (P1,000,000.00);
(6) company service providers who, as a business, provide any of the

following services to third parties: I acting as a formation agent of juridical
persons; (ii) acting as (or arranging for another person to act as) a director or
corporate secretary of a company, a partner of a partnership, or a similar
Page 121 of 138

position in relation to other juridical persons; (iii) providing a registered office,

business address, or similar service to other juridical persons; and
(7) individuals who provide any of the following services:
(i) managing client money, securities, or other assets;
(ii) managing bank, savings, or securities accounts;
(iii) organizing contributions for the creation, operation, or management of

companies; and
(iv) creating, operating, or managing juridical persons or arrangements, as

well as buying and selling business entities.
Despite the foregoing, lawyers and accountants acting as independent legal

practitioners in connection to information concerning their clients or where
revelation of information would jeopardize client confidences or the attorney-
client relationship are not considered "covered persons": Provided, however,
that these lawyers and accountants are licensed to practice in the Philippines
and will continue to be bound by their respective codes of conduct and/or
professional responsibility, as well as any revisions thereto.”
(8) Casino cash transactions relating to their gaming business, including

internet and ship-based casinos.
(b) A ‘covered transaction' is a cash or other equivalent monetary instrument

transaction in excess of Five hundred thousand pesos (500,000.00) within
one (1) banking day; for covered persons under Section 3(a)(8), a single
casino transaction in excess of Five million pesos (5,000,000.00) or its
equivalent in any other currency.
(b-1) A ‘suspicious transaction' is a transaction with a covered institution in

which any of the following circumstances present, regardless of the amount
involved:
1. There is no underlying legal or trade obligation, purpose, or economic

justification;
2. The client is not properly identified;
3. The amount involved is not commensurate with the client's business or

financial capacity;
Page 122 of 138

4. Taking all known circumstances into account, it may be perceived that the
client's transaction is structured to avoid being the subject of reporting
requirements.
5. Any scenario connected to the transaction that appears to differ from the
client's profile and/or previous transactions with the covered institution;
6. The transaction is in any manner connected to an upcoming, ongoing, or

completed unlawful behavior or violation under this Act; or
7. Any transaction that is comparable or identical to any of the preceding.
(c) “Monetary instrument” includes:
(1) Coins or legal tender of the Philippines or any other country;
(2) Drafts, checks, and notes;
(3) Securities or negotiable instruments, bonds, commercial papers, deposit

certificates, trust certificates, custodial receipts or deposit substitute
instruments, trading orders, transaction tickets, and confirmations of sale or
investments; and
(4) Securities or negotiable instruments, bonds, commercial papers, deposit

certificates, trust certificates, custodial receipts or deposit substitute
instruments
(d) Any individual who commits a money laundering offense is referred to as a

"offender."
(e) Any natural or legal person is referred to as a "person."
(f) Amounts derived or realized through illegal action are referred to as

"proceeds."
(g) “Overseeing Authority” refers to the supervisory or regulatory agency,

department, or office in charge of supervising or regulating the covered
institutions listed in Section 3. (a).
(h) A "transaction" is any act that creates a right or obligation or establishes a

contractual or legal relationship between the parties. It also includes any
transfer of funds to or from a covered institution via any methods.
Page 123 of 138

(i) The term "illegal action" refers to any act, omission, sequence, or
combination of acts including or related to the following:
(1) Kidnapping for ransom under Article 267 of Act No. 3815, as amended,
also known as the Revised Penal Code;
(2) Sections 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15, and 16 of Republic Act No.
9165, also known as the Comprehensive Dangerous Drugs Act of 2002;
(3) Section 3 paragraphs B, C, E, G, H, and I of Republic Act No. 3019, as

amended, also known as the Anti-Graft and Corrupt Practices Act of
(4) Plunder under Republic Act No. 7080, as amended;
(5) Robbery and extortion under Articles 294, 295, 296 of the Revised Penal
Code, as amended;
(6) Jueteng and Masiao as illegal gambling under Presidential Decree No.
1602;
(7) Piracy on the high seas under the Revised Penal Code, as amended and
Presidential Decree No. 532;
(8) Qualified theft under Article 31 of the Revised Penal
(9) Swindling under Article 315 of the Revised Penal Code, as modified, and
Other Forms of Swindling under Article 316;
(10) Smuggling under Republic Acts Nos. 455 and 1937;
(11) Terrorism and conspiracy to commit terrorism as defined and penalized

under Sections 3 and 4 of Republic Act No. 9372;
(12) Hijacking and other violations under Republic Act No. 6235; destructive
arson and murder, as defined under the Revised Penal Code, as amended;
(13) Terrorism and conspiracy to commit terrorism as defined and penalized

under Sections 3 and 4 of Republic Act No. 9372;
(14) Financing of terrorism as defined and penalized under Sections 5, 6, 7

and 8 of Republic Act No. 10168, otherwise known as the Terrorism Financing
Prevention and Suppression Act of 2012:
Page 124 of 138

(15) Bribery under Articles 210, 211, and 211-A of the Revised Penal Code,
as amended, and Corruption of Public Officers under Article 212 of the
Revised Penal Code, as amended;
(16) Frauds and Illegal Exactions and Transactions under Articles 213, 214,
215, and 216 of the Revised Penal Code, as amended; and
(17) Misappropriation of Public Funds and Property under Articles 217 and
222 of the Revised Penal Code, as amended.
SECTION 4. Money Laundering Offense. – Money laundering is

committed by any person who, knowing that any monetary instrument
or property represents, involves, or relates to the proceeds of any
unlawful activity:
“(a) transacts said monetary instrument or property;
(b) converts, transfers, disposes of, moves, acquires, possesses or uses

said monetary instrument or property;
(c) conceals or disguises the true nature, source, location, disposition,

movement or ownership of or rights with respect to said monetary
instrument or property;
(d) attempts or conspires to commit money laundering offenses referred

to in paragraphs (a), (b) or (c);
(e) aids, abets, assists in or counsels the commission of the money

laundering offenses referred to in paragraphs (a), (b) or (c) above; and
(f) performs or fails to perform any act as a result of which he facilitates

the offense of money laundering referred to in paragraphs (a), (b) or (c)
above.
Money laundering is also committed by any covered person who,

knowing that a covered or suspicious transaction is required under this
Act to be reported to the Anti-Money Laundering Council (AMLC), fails
to do so.”
Paraphrased
Page 125 of 138

Money laundering is carried out by any person knowing that any monetal
instrument or property represents, involves or has to do with the proceeds of
any illegal activity: (a) transacting such monetary instrument or property; (b)
converting, transferring, disposing, moving, acquiring, holding or using such
monetary or property; (c) disguising or disguising the true nature, source,
location, or location of that money or property; (d) attempt or conspire to
commit crimes of money laundering pursuant to paragraphs (a), (b). or (c) of
this Act; (e) support, aid or counsel to commission offenses of money
laundering referred to in points (a), (b) or (c) of this Article; and (f) carry out, or
fail to perform, any act which would make it easier for the offense of money
laundering pursuant to points (a), (b) or (c) of these Articles to become
effective.
Any individual concerned is also responsible for the money laundering, who is
not needed to disclose to the Anti-Money Laundering Council (AMLC), as the
covered or suspicious transaction is required under this Act."
SECTION 5. Jurisdiction of Money Laundering Cases. — The regional

trial courts shall have jurisdiction to try all cases on money laundering.
Those committed by public officers and private persons who are in
conspiracy with such public officers shall be under the jurisdiction of
the Sandiganbayan.
Paraphrased
All money laundering matters must be tried by regional tribunals. The

Sandigan Bayan shall be the jurisdiction for those who are committed by
public officers and private individuals, who conspire with such public officials.
SECTION 6. Prosecution of Money Laundering. –
(a) Any person may be charged with and convicted of both the offense
of money laundering and the unlawful activity as herein defined.
(b) The prosecution of any offense or violation under this Act shall
proceed independently of any proceeding relating to the unlawful
activity.”
Paraphrased
Page 126 of 138

Either the offense of cash-laundering or unlawful action as stated in the

previous section can be accused and convicted of any individual. Any crime or
infringement under this Law must be prosecuted separately of any illegal
activity proceeding.
SECTION 7. Creation of Anti-Money Laundering Council (AMLC). – The

Anti-Money Laundering Council is hereby created and shall be
composed of the Governor of the Bangko Sentral ng Pilipinas as
Chairman, the Commissioner of the Insurance Commission and the
Chairman of the Securities and Exchange Commission, as members.
The AMLC shall act unanimously in the discharge of its functions as
defined hereunder:
(1) to require and receive covered transaction reports from covered

institutions;
(2) to issue orders addressed to the appropriate Supervising Authority

or the covered institution to determine the true identity of the owner of
any monetary instrument or property subject of a covered transaction
report or request for assistance from a foreign State, or believed by the
Council, on the basis of substantial evidence, to be, in whole or in part,
wherever located, representing, involving, or related to, directly or
indirectly, in any manner or by any means, the proceeds of an unlawful
activity;
(3) to institute civil forfeiture proceedings and all other remedial

proceedings through the Office of the Solicitor General;
(4) to cause the filing of complaints with the Department of Justice or

the Ombudsman for the prosecution of money laundering offenses;
(5) to initiate investigations of covered transactions, money laundering

activities and other violations of this Act;
6) to apply before the Court of Appeals, ex parte, for the freezing of any
monetary instrument or property alleged to be laundered, proceeds
from, or instrumentalities used in or intended for use in any unlawful
activity as defined in Section 3(i) hereof;
(7) to implement such measures as may be necessary and justified

under this Act to counteract money laundering;
Page 127 of 138

(8) to receive and take action in respect of, any request from foreign
states for assistance in their own anti-money laundering operations
provided in this Act;
(9) to develop educational programs on the pernicious effects of money

laundering, the methods and techniques used in money laundering, the
viable means of preventing money laundering and the effective ways of
prosecuting and punishing offenders;
(10) to enlist the assistance of any branch, department, bureau, office,

agency or instrumentality of the government, including government-
owned and -controlled corporations, in undertaking any and all anti-
money laundering operations, which may include the use of its
personnel, facilities and resources for the more resolute prevention,
detection and investigation of money laundering offenses and
prosecution of offenders; and
(11) to impose administrative sanctions for the violation of laws, rules,

regulations and orders and resolutions issued pursuant thereto; and
(12) to require the Land Registration Authority and all its Registries of
Deeds to submit to the AMLC, reports on all real estate transactions
involving an amount in excess of Five hundred thousand pesos
(P500,000.00) within fifteen (15) days from the date of registration of the
transaction, in a form to be prescribed by the AMLC. The AMLC may
also require the Land Registration Authority and all its Registries of
Deeds to submit copies of relevant documents of all real estate
transactions.
Paraphrased
In its capacity as Chairperson, Commissioner of the Insurance Commission

and Chairman of the Securities and Exchange Commission, the Anti-Money
Launderings Council should be formed of the Governors of the Sentral Ng of
the Philippines. In carrying out its powers as described in the following, the
AMLC should act unanimously:
(1) requesting and receiving covered transaction reports from the institutions
concerned;
(2) to give orders to the appropriate supervisory authority or to the covered

institution to determine, on the basis of substantial evidence, the true identity
Page 128 of 138

of the owning of any monetary instrument or asset subject to a categorized

transaction report; or the request for assistance from a foreign country;
(3) initiation, through the Office of the Solicitor General, of civil forfeiture and
other corrective procedures;
(4) to seek legal action against the Department of Justice or the Ombudsman
in relation to the prosecution of money laundering offenses;
(5) to begin the inquiry on the covered transactions and money laundering
and other violations thereupon;
(6) request to the Court Ex parte the earnings, or tools used, in or for use in
any illegal conduct as described in Section 3(i) of herein, for the freezing of
any monetary instrument or property claimed to be laundry;
(7) the implementation of measures to counter money-laundering that may be

necessary and justified under this Act;
(8) the receipt and action of any request from foreign States to assist them in
their own anti-money-laundering activities as provided in the Act,
(9) establish education programs on the harmful consequences of money

laundering, money laundering methods and tactics, feasible measures of
prevention of money laundering and efficient prosecution of criminals and
penalizing;
(10) to engage in any and all anti-money laundering operations involving the
use of its personnel, facilities and resources to ensure more resolute
prevention, detection and investigation of money laundry offenses by any
Government branches, office, office, agency or instrument, including
government-owned and under-controlled companies;
(11) impose administrative punishments on breaches of the laws, rules,

regulations and decrees issued in accordance with them; and
(12) require the Land Registry and all its Registrations for submission to
AMLC to report on all real estate transactions involving over five hundred
thousand pesos (P500,000.00) in a period of fifteen (15) days from the date of
the transaction and for all property transactions, which are subject to a total of
fifteen (15) days from the date of the infringement. The AMLC can also get
copies of any essential documentation from the Land Registration Authority
and all its registries for all real estate transactions.
Page 129 of 138

SECTION 8. Creation of a Secretariat. — The AMLC is hereby authorized

to establish a secretariat to be headed by an Executive Director who
shall be appointed by the Council for a term of five (5) years. He must be
a member of the Philippine Bar, at least thirty-five (35) years of age and
of good moral character, unquestionable integrity and known probity.
All members of the Secretariat must have served for at least five (5)
years either in the Insurance Commission, the Securities and Exchange
Commission or the Bangko Sentral ng Pilipinas (BSP) and shall hold
full-time permanent positions within the BSP.
Paraphrased
The AMLC is allowed today to create a Secretariat under the guidance of an

Executive Director who will have a term of five (5) years nominated by the
Council. He must have at least 35 years of age and a good morality,
undoubted integrity and known integrity, as a member of the Philippine Bar.
All members of the Secretaryate should have been serving in or in Bangko
Sentral ng Pilipinas (BSP) for at least five (5) years and shall have full-time
permanent posts in the BSP. The Secretariat shall also be responsible for all
members of the Secretariat.
Section 17. Restitution. — Restitution for any aggrieved party shall be

governed by the provisions of the New Civil Code.
Paraphrased
Section 17. Restitution. — Restitution for any aggrieved celebration will be

ruled with the aid of the provisions of the Brand New Civil Code.
Section 18. Implementing Rules and Regulations. — Within thirty (30)

days from the effectivity of this Act, the Bangko Sentral ng Pilipinas, the
Insurance Commission and the Securities and Exchange Commission
shall promulgate the rules and regulations to implement effectively the
provisions of this Act. Said rules and regulations shall be submitted to
the Congressional Oversight Committee for approval.
Covered institutions shall formulate their respective money laundering

prevention programs in accordance with this Act including, but not
limited to, information dissemination on money laundering activities and
Page 130 of 138

its prevention, detection and reporting, and the training of responsible

officers and personnel of covered institutions.
Within ninety (90) days from the effectivity of this Act, the AMLC, the
Philippine Amusement and Gaming Corporation (PAGCOR) and other
government regulatory agencies shall jointly promulgate the rules and
regulations to implement the provisions of this Act as applicable to
casinos as covered institutions. The implementing rules applicable to
other covered institutions shall not apply to casinos unless it is
expressly so provided under the rules and regulations to implement the
provisions of this Act.
Paraphrased
Section 18. Implementing Regulations and Policies. — Inside thirty (30) days
from the efficiency of this Act, the Bangko Sentral ng Pilipinas, the coverage
fee and the Securities and exchange commission shall promulgate the
policies and regulations to put into effect efficaciously the provisions of this
Act. stated policies and guidelines will be submitted to the Congressional
Oversight Committee for approval.
Covered institutions shall formulate their respective money laundering

prevention programs according with this Act along with, however no longer
constrained to, statistics dissemination on cash laundering sports and its
prevention, detection and reporting, and the education of accountable officials
and employees of blanketed establishments.
Inside ninety (ninety) days from the effectivity of this Act, the AMLC, the
Philippine leisure and Gaming employer (PAGCOR) and other authorities’
regulatory businesses shall at the same time promulgate the policies and
guidelines to implement the provisions of this Act as applicable to casinos as
covered institutions. The implementing policies relevant to different included
institutions shall not observe to casinos unless it is expressly so supplied
beneath the guidelines and rules to put into effect the provisions of this Act.
Section 19. Congressional Oversight Committee. — There is hereby

created a Congressional Oversight Committee composed of seven (7)
members from the Senate and seven (7) members from the House of
Representatives. The members from the Senate shall be appointed by
the Senate President based on the proportional representation of the
parties or coalitions therein with at least two (2) Senators representing
the minority. The members from the House of Representatives shall be
appointed by the Speaker also based on proportional representation of
Page 131 of 138

the parties or coalitions therein with at least two (2) members

representing the minority.
The Oversight Committee shall have the power to promulgate its own
rules, to oversee the implementation of this Act, and to review or revise
the implementing rules issued by the Anti-Money Laundering Council
within thirty (30) days from the promulgation of the said rules.
Paraphrased
Section 19. Congressional Oversight Committee. — There is hereby created a

Congressional Oversight Committee composed of 7 (7) members from the
Senate and seven (7) participants from the residence of Representatives. The
members from the Senate will be appointed via the Senate President based at
the proportional illustration of the parties or coalitions therein with as a
minimum (2) Senators representing the minority. The participants from the
house of Representatives shall be appointed through the Speaker also based
totally on proportional illustration of the parties or coalitions therein with at the
least (2) participants representing the minority.
The Oversight Committee shall have the power to promulgate its own
guidelines, to oversee the implementation of this Act, and to study or revise
the implementing regulations issued by using the Anti-Money Laundering
Council inside thirty (30) days from the promulgation of the stated policies.
Section 20. Non-intervention in the Bureau of Internal Revenue (BIR)

Operations. – Nothing contained in this Act nor in related antecedent
laws or existing agreements shall be construed to allow the AMLC to
participate in any manner in the operations of the BIR.
Paraphrased
Section 20. Non-Intervention Inside the Bureau of Inner Sales (BIR)

Operations. – nothing contained on this Act nor in related antecedent legal
guidelines or current agreements will be construed to permit the AMLC to take
part in any manner inside the operations of the BIR.
Section 21. The authority to inquire into or examine the main account
and the related accounts shall comply with the requirements of Article
III, Sections 2 and 3 of the 1987 Constitution, which are hereby
incorporated by reference. Likewise, the constitutional injunction
Page 132 of 138

against ex post facto laws and bills of attainder shall be respected in the
implementation of this Act.
Paraphrased
Section 21. The authority to inquire into or have a look at the primary account
and the associated money owed shall comply with the necessities of Article
III, Sections 2 and 3 of the 1987 constitution, which can be hereby included
through reference. Likewise, the constitutional injunction against ex put up
facto laws and payments of attainder shall be respected in the implementation
of this Act.
Section 22. Appropriations Clause. — The AMLC shall be provided with

an initial appropriation of Twenty-five Million Philippine pesos
(Php25,000,000.00) to be drawn from the national government.
Appropriations for the succeeding years shall be included in the General
Appropriations Act.
Paraphrased
Section 22. Appropriations Clause. — The AMLC shall be supplied with an

initial appropriation of Twenty-5 Million Philippine pesos (Php25,000,000.00)
to be drawn from the country wide government. Appropriations for the
succeeding years will be blanketed in the fashionable Appropriations Act.
Section 23. Separability Clause. — If any provision or section of this Act

or the application thereof to any person or circumstance is held to be
invalid, the other provisions or sections of this Act, and the application
of such provision or section to other persons or circumstances, shall
not be affected thereby.
Paraphrased
Section 23. Separability Clause. — If any provision or segment of this Act or

the software thereof to any person or situation is held to be invalid, the other
provisions or sections of this Act, and the application of such provision or
phase to other people or situations, shall not be affected thereby.
Section 24. Repealing Clause. — All laws, decrees, executive orders,

rules and regulations or parts thereof, including the relevant provisions
of Republic Act No. 1405, as amended; Republic Act No. 6426, as
Page 133 of 138

amended; Republic Act No. 8791, as amended and other similar laws, as
are inconsistent with this Act, are hereby repealed, amended or modified
accordingly.
Paraphrased
Section 24. Repealing Clause. — All legal guidelines, decrees, government

orders, policies and regulations or parts thereof, which include the relevant
provisions of Republic Act No. 1405, as amended; Republic Act No. 6426, as
amended; Republic Act No. 8791, as amended and other comparable laws,
as are inconsistent with this Act, are hereby repealed, amended or modified
thus.
Section 25. Effectivity. — This Act shall take effect fifteen (15) days after
its complete publication in the Official Gazette or in at least two (2)
national newspapers of general circulation.
Paraphrased
Section 25. efficiency. — This Act shall take impact fifteen (15) days after its
whole publication within the reputable Gazette or in at the least (2) national
newspapers of trendy flow.
Page 134 of 138

PRESIDENTIAL DECREE No. 679
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:
Page 135 of 138

“SECTION 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.
Paraphrased
The Act shall include, for each person known to be dead or who has not made
additional deposits or withdrawer for the previous 10 years or more the credit
or deposit of the money, bullion, security and other evidence of any kind of
debt and interest thereon with banks, buildings and loan associations and
trust corporations, as defined hereinafter. The Treasurer of the Philippines
shall be placed in credit with the Government of the Republic of the
Philippines for use as directed by the National Assembly combined with the
increases and the revenues thereof.
Section 2, 39 and 56 of the Republic Act, as amended, are the institutions

defined as "Banks," "Building and Loan Associations" and "Trust Companies"
under this Act as amended, whether or not under special charters.
“SECTION 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
Page 136 of 138

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;
“(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.
Paraphrased
All banks, building associations or trust associations must send to the

Treasurer of the Philippines, immediately after taking effect of this Act and
within the first month of January each unusual year a statement of all the
loans or deposits they own to the benefit of persons known to be dead or
have not made further deposits or have been deposited with them, with the
help of an oath from their respective management officers showing:
(a) the names of persons whose favor these unsolicited accounts have been
received and their last known residence or postal addresses; (b) the sum and
date of the balance outstanding without claim and whether or not the same is
Page 137 of 138

in money or security, and where the latter is of an equivalent nature; (c) the
date on whose favor the unclaimed balance has been received, if know, or the
date on which the person in whose favor that balance is not claimed has been
died; and (d) the interest owing on, if any, the amount of such unclaimed
balance.
For no less than sixty days after the date of filing, the copy of the above-
mentioned sworn declaration shall be displayed on the premises of the bank
and building and lending associations or trust corporation concerned:
Provided, the bank, building and lending organizations and the trust company
connect with a person for whom the unclaimed balance is at his last known
place of residence or postal address immediately prior to the submission of
the aforementioned sworn declaration.
The Treasurer of the Philippines has a duty to notify the Solicitor general, as
well as banks, construction and lending companies and trust organizations, of
the presence of unclaimed balance sheets.
Section 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."
Paraphrased
Section 5. Any financial institution, constructing and loan association or

accept as true with employer which shall make any deposit with the Treasurer
of the Philippines in conformity with the provisions of this Act shall not
thereafter be vulnerable to any individual for the same and any motion which
can be added by using any person towards in any financial institution,
constructing and mortgage affiliation, or consider employer for unclaimed
balances so deposited with the Treasurer of the Philippines will be defended
by way of the Solicitor general without value to such bank, building and
mortgage affiliation or consider employer."
Page 138 of 138

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Republic of the Philippines

CAMARINES NORTE STATE COLLEGE

REGULATORY FRAMEWORK AND LEGAL

Nadine Kate M. Revilla Roshel Jane G. Salvador

Bachelor of Science in Accountancy 2A

Camarines Norte State College

based on the work of:

Atty. Andrix D. Domingo, CPA, MBA

Ryan Daves F. Quinones, CPA

ACT NO. 2031

SECTION 1. Form of negotiable instruments. – An instrument to be

(a) It must be in writing and signed by the maker or drawer;

(b) Must contain an unconditional promise or order to pay a sum certain

(c) Must be payable on demand, or at a fixed or determinable future

(d) Must be payable to order or to bearer; and

(e) Where the instrument is addressed to a drawee, he must be named or

Section 1 provides that in order to be negotiable, an instrument must meet the

SECTION 2. What constitutes certainty as to sum. – The sum payable is

(a) with interest; or

(b) by stated installments; or

(c) by stated installments, with a provision that, upon default in payment

(d) with exchange, whether at a fixed rate or at the current rate; or

(e) with costs of collection or an attorney's fee, in case payment shall

SECTION 3. When promise is unconditional. – An unqualified order or

(a) An indication of a particular fund out of which reimbursement is to

(b) A statement of the transaction which gives rise to the instrument.

But an order or promise to pay out of a particular fund is not

SECTION 4. Determinable future time; what constitutes. – An instrument

(a) At a fixed period after date or sight; or

(b) On or before a fixed or determinable future time specified therein; or

(c) On or at a fixed period after the occurrence of a specified event

An instrument payable upon a contingency is not negotiable, and the

A device is payable at a determinable date in the future, which is expressed

SECTION 5. Additional provisions not affecting negotiability. – An

(a) authorizes the sale of collateral securities in case the instrument be

(b) authorizes a confession of judgment if the instrument be not paid at

(d) gives the holder an election to require something to be done in lieu

But nothing in this section shall validate any provision or stipulation

There is no negotiable instrument to which there is a command or promise to

SECTION 6. Omissions; seal; particular money. – The validity and

(a) it is not dated; or

(d) bears a seal; or

(e) designates a particular kind of current money in which payment is to

SECTION 7. When payable on demand. – An instrument is payable on

(a) When it is so expressed to be payable on demand, or at sight, or on

(b) In which no time for payment is expressed.

Where an instrument is issued, accepted, or indorsed when overdue, it

On demand, an instrument is payable: (a) when it is said to be receivable on

SECTION 8. When payable to order. – The instrument is payable to order

(a) A payee who is not maker, drawer, or drawee; or

(b) The drawer or maker; or

(c) The drawee; or

(d) Two or more payees jointly; or

(e) One or some of several payees; or

(f) The holder of an office for the time being.

Where the instrument is payable to order, the payee must be named or

The instrument shall be payable if it is made payable on behalf of a particular

SECTION 9. When payable to bearer. – The instrument is payable to

(a) When it is expressed to be so payable; or

(b) When it is payable to a person named therein or bearer; or

(c) When it is payable to the order of a fictitious or non-existing person,

(e) When the only or last indorsement is an indorsement in blank.

SECTION 10. Terms, when sufficient. – The instrument need not follow