WEEK 15 – Philippine Deposit Insurance Corporation
 Section 4 of the same Act is accordingly
Anti-Money Laundering Act
E-Commerce Act
Data Privacy Act
Philippine Competition Act
❶ Philippine Deposit Insurance Corporation
PDIC Act, R.A. No. 10846, Sections 1-2, 7-8, 25-29, 32
AN ACT ENHANCING THE RESOLUTION AND
LIQUIDATION FRAMEWORK FOR BANKS, AMENDING
FOR THE PURPOSE REPUBLIC ACT NO. 3591, AS
AMENDED, AND OTHER RELATED LAWS
Be it enacted by the Senate and House of Representatives of
the Philippines in Congress assembled:
SECTION 1. Section 1 of Republic Act No. 3591, as
amended, is hereby amended to read as follows:
“THE CREATION OF THE PHILIPPINE DEPOSIT
INSURANCE CORPORATION
“SECTION 1. — There is hereby created a Philippine
Deposit Insurance Corporation hereinafter referred to as
the ‘Corporation’ which shall insure as herein provided,
the deposits of all banks which are entitled to the benefits
of insurance under this Act, and which shall have the
powers hereinafter granted.
“The Corporation shall, as a basic policy, promote and
safeguard the interests of the depositing public by
providing insurance coverage on all insured deposits and
helping maintain a sound and stable banking system.”
SECTION 2. A new section entitled Section 2 of the same
Act shall be inserted between Sections 1 and 3 which shall
read as follows:
“STATE POLICY
“SEC. 2. — It is hereby declared to be the policy of the
State to strengthen the mandatory deposit insurance
coverage system to generate, preserve, maintain faith and
confidence in the country’s banking system, and protect it
from illegal schemes and machinations.
“Towards this end, the government must extend all means
and mechanisms necessary for the Corporation to
effectively fulfill its vital task of promoting and
safeguarding the interests of the depositing public by way
of providing insurance coverage on bank deposits and in
helping develop a sound and stable banking system.
“In view of the crucial role and the nature of its functions
and responsibilities, the Corporation, while being a
government instrumentality with corporate powers, shall
enjoy fiscal and administrative autonomy.”
SECTION 7.
renumbered as Section 5, and is hereby amended to read
as follows:
“DEFINITION OF TERMS
“SEC. 5. As used in this Act –
“(a) The term asset refers to movable, immovable,
tangible, or intangible resources or properties
over which a bank has an established or equitable
interest, including the proceeds of the sale of its
bank and branch licenses subject to the approval
of the Bangko Sentral ng Pilipinas.
“(b) The term asset distribution plan refers to the
plan of distribution of the assets of a closed bank
to its creditors, based on its estimated realizable
value as of a certain cut-off date, prepared in
accordance with the Rules on Concurrence and
Preference of Credits under the Civil Code or other
laws.
“An asset distribution plan may be partial when it
pertains to the distribution of a portion or some of
the assets of the closed bank, or final when it
pertains to the distribution of all the assets of the
closed bank.
“(c) The term Board of Directors means the Board
of Directors of the Corporation.
“(d) The term bank and banking institution shall
be synonymous and interchangeable and shall
include banks, commercial banks, savings banks,
mortgage banks, rural banks, development banks,
cooperative banks, stock savings and loan
associations and branches and agencies in the
Philippines of foreign banks and all other
corporations authorized to perform banking
functions in the Philippines.
“(e) The term closed bank refers to a bank placed
under liquidation by the Monetary Board.
“(f) The term creditor refers to any individual or
entity with a valid claim against the assets of the
closed bank.
“(g) The term deposit means the unpaid balance of
money or its equivalent received by a bank in the
usual course of business and for which it has given
or is obliged to give credit to a commercial,
checking, savings, time or thrift account,
evidenced by a passbook, certificate of deposit, or
other evidence of deposit issued in accordance
with Bangko Sentral ng Pilipinas rules and
regulations and other applicable laws, together
with such other obligations of a bank, which,
consistent with banking usage and practices, the
Board of Directors shall determine and prescribe
by regulations to be deposit liabilities of the bank:
Provided, That any obligation of a bank which is
payable at the office of the bank located outside of
the Philippines shall not be a deposit for any of the
purposes of this Act or included as part of the total
deposits or of insured deposit: Provided, further,
That subject to the approval of the Board of
Directors, any insured bank which is incorporated
under the laws of the Philippines which maintains
a branch outside the Philippines may elect to
include for insurance its deposit obligations
payable only at such branch.
“The Corporation shall not pay deposit insurance
for the following accounts or transactions:
“(1) Investment products such as bonds
and securities, trust accounts, and other
similar instruments;
“(2) Deposit accounts or transactions
which are fictitious or fraudulent as
determined by the Corporation;
“(3) Deposit accounts or transactions
constituting, and/or emanating from,
unsafe and unsound banking practice/s,
as determined by the Corporation, in
consultation with the Bangko Sentral ng
Pilipinas, after due notice and hearing,
and publication of a directive to cease and
desist issued by the Corporation against
such deposit accounts, transactions or
practices; and
“(4) Deposits that are determined to be
the proceeds of an unlawful activity as
defined under Republic Act No. 9160, as
amended.
“The actions of the Corporation taken under
Section 5(g) shall be final and executory, and may
only be restrained or set aside by the Court of
Appeals, upon appropriate petition for certiorari
on the ground that the action was taken in excess
of jurisdiction or with such grave abuse of
discretion as to amount to a lack or excess of
jurisdiction. The petition for certiorari may only
be filed within thirty (30) days from notice of
denial of claim for deposit insurance.
“(h) The term disputed claim refers to a claim or
suit against the assets of a closed bank, or for
specific performance, or breach of contract, or
damages, of whatever nature or character,
whether for money or otherwise, liquidated or
unliquidated, fixed or contingent, matured or
current, denied by the receiver.
“(i) The term insured bank means any bank the
deposits of which are insured in accordance with
the provisions of this Act.
“(j) The term insured deposit means the amount
due to any bonafide depositor for legitimate
deposits in an insured bank as of the date of
closure but not to exceed Five hundred thousand
pesos (P500,000.00). Such amount shall be
determined according to such regulations as the
Board of Directors may prescribe. In determining
such amount due to any depositor, there shall be
added together all deposits in the bank
maintained in the same right and capacity for his
or her benefit either in his or her own name or in
the name of others. A joint account regardless of
whether the conjunction ‘and’, ‘or’, ‘and/or’ is
used, shall be insured separately from any
individually-owned deposit account: Provided,
That (1) if the account is held jointly by two or
more natural persons, or by two or more juridical
persons or entities, the maximum insured deposit
shall be divided into as many equal shares as there
are individuals, juridical persons or entities,
unless a different sharing is stipulated in the
document of deposit, and (2) if the account is held
by a juridical person or entity jointly with one or
more natural persons, the maximum insured
deposit shall be presumed to belong entirely to
such juridical person or entity: Provided, further,
That the aggregate of the interest of each co-
owner over several joint accounts, whether owned
by the same or different combinations of
individuals, juridical persons or entities, shall
likewise be subject to the maximum insured
deposit of Five hundred thousand pesos
(P500,000.00): Provided, furthermore, That the
provisions of any law to the contrary
notwithstanding, no owner/holder of any
passbook, certificate of deposit, or other evidence
of deposit shall be recognized as a depositor
entitled to the rights provided in this Act unless
the passbook, certificate of deposit, or other
evidence of deposit is determined by the
Corporation to be an authentic document or
record of the issuing bank: Provided, finally, That
in case of a condition that threatens the monetary
and financial stability of the banking system that
may have systemic consequences, as defined in
Section 22 hereof, as determined by the Monetary
Board, the maximum deposit insurance cover may
be adjusted in such amount, for such a period,
and/or for such deposit products, as may be
determined by a unanimous vote of the Board of
Directors in a meeting called for the purpose and
chaired by the Secretary of Finance, subject to the
approval of the President of the Philippines.
“(k) The term liquidation refers to the proceedings
under Sections 12 to 16 of this Act.
“(1) The term liquidation court refers to the
Regional Trial Court (RTC) of general jurisdiction
where the petition for assistance in the liquidation
of a closed bank is filed and given due course.
“(m) The term payout refers to the payment of
insured deposits.
“(n) The term petition for assistance in the
liquidation of a closed bank refers to the petition
filed by the receiver with the RTC in accordance
with Section 16 of this Act.
“(o) The term purchase of assets and assumption
of liabilities refers to a transaction where an
insured bank purchases any or all assets and
assumes any or all liabilities of another bank
under resolution or liquidation, as provided in this
Act.
“(p) The term receiver refers to the Corporation or
any of its duly authorized agents acting as receiver
of a closed bank.
“(q) The term records include all documents,
titles, papers and electronic data of the closed
bank, including those pertaining to deposit
accounts of and with the closed bank, its assets,
transactions and corporate affairs.
“(r) The term residual assets refer to assets, in
cash or in kind, to be turned over to the closed
bank’s stockholders of record, in proportion to
their interest in the closed bank as of date of
closure, after payment in full of liquidation costs,
fees and expenses, and the valid claims and
surplus dividends to all the creditors.
“(s) The term resolution refers to the actions
undertaken by the Corporation under Section 11
of this Act to:
“(1) Protect depositors, creditors and the
DIF;
“(2) Safeguard the continuity of essential
banking services or maintain financial
stability; and
“(3) Prevent deterioration or dissipation
of bank assets.
“(t) The term risk-based assessment system
pertains to a method for calculating an insured
bank’s assessment on the probability that the DIF
will incur a loss with respect to the bank, and the
likely amount of any such loss, based on its risk
rating that takes into consideration the following:
“(1) Quality and concentration of assets;
“(2) Categories and concentration of
liabilities, both insured and uninsured,
contingent and noncontingent;
“(3) Capital position;
“(4) Liquidity position;
“(5) Management and governance; and
“(6) Other factors relevant to assessing
such probability, as may be determined
by the Corporation:
“(u) The term statement of affairs refers to a
report of financial condition of the closed bank at
a given date, showing the: (1) estimated realizable
value of assets; (2) classification of credits; and (3)
estimated liabilities to be settled.
“(v) The term surplus dividends refers to the
remaining assets of the closed bank after
satisfaction in full of all the liquidation costs, fees
and expenses, and valid claims. The surplus
dividends shall be computed at the legal rate of
interest from the date of takeover to cut-off date of
the distribution plan, and shall be paid, in cash or
in kind, to creditors of the closed bank in
accordance with the Rules on Concurrence and
Preference of Credits under the Civil Code or other
laws.
“(w) The term takeover refers to the act of
physically taking possession and control of the
premises, assets and affairs of a closed bank for
the purpose of liquidating the bank.
“(x) The term transfer deposit means, a deposit in
an insured bank made available to a depositor by
the Corporation as payment of insured deposit of
such depositor in a closed bank and assumed by
another insured bank.
“(y) The term trust funds means funds held by an
insured bank in a fiduciary capacity and includes
without being limited to, funds held as trustee,
executor, administrator, guardian or agent.
“(z) The term valid claim refers to the claim
recognized by the receiver or allowed by the
liquidation court.
 “(aa) The term winding up period refers to the
period provided in Section 16 of this Act.”
SECTION 8. Section 5 of the same Act is accordingly
renumbered as Section 6, and is hereby amended to read
as follows:
“DEPOSIT INSURANCE COVERAGE
“SEC. 6. The deposit liabilities of any bank which is
engaged in the business of receiving deposits as herein
defined on the effective date of this Act, or which
thereafter may engage in the business of receiving
deposits, shall be insured with the Corporation.
“Whenever a bank is determined by the Bangko Sentral ng
Pilipinas to be capital deficient, the Corporation may
conduct an insurance risk evaluation on the bank to enable
it to assess the risks to the DIF. Such evaluation may
include the determination of: (i) the fair market value of
the assets and liabilities of a bank; or (ii) the risk
classification of a bank; or (iii) possible resolution modes
under Section 11 of this Act, subject to such terms and
conditions as the PDIC Board may prescribe.”
SECTION 25. A new section entitled Section 12 of the same
Act is hereby inserted between Sections 11 and 13 which
shall read as follows:
“LIQUIDATION OF A CLOSED BANK
“SEC. 12. (a) Whenever a bank is ordered closed by the
Monetary Board, the Corporation shall be designated as
receiver and it shall proceed with the takeover and
liquidation of the closed bank in accordance with this Act.
For this purpose, banks closed by the Monetary Board
shall no longer be rehabilitated.”
SECTION 26. A new section entitled Section 13 of the same
Act is hereby inserted between Sections 12 and 14 which
shall read as follows:
“AUTHORITIES OF A RECEIVER AND EFFECTS OF
PLACEMENT OF A BANK UNDER LIQUIDATION
“SEC. 13. (a) The receiver is authorized to adopt and
implement, without need of consent of the stockholders,
board of directors, creditors or depositors of the closed
bank, any or a combination of the following modes of
liquidation:
“(1) Conventional liquidation; and
“(2) Purchase of assets and/or assumption of
liabilities.
“(b) In addition to the powers of a receiver provided under
existing laws, the Corporation, as receiver of a closed bank,
is empowered to:
“(1) Represent and act for and on behalf of the
closed bank;
“(2) Gather and take charge of all the assets,
records and affairs of the closed bank, and
administer the same for the benefit of its
creditors;
“(3) Convert the assets of the closed bank to cash
or other forms of liquid assets, as far as
practicable;
“(4) Bring suits to enforce liabilities of the
directors, officers, employees, agents of the closed
bank and other entities related or connected to the
closed bank or to collect, recover, and preserve all
assets, including assets over which the bank has
equitable interest;
“(5) Appoint or hire persons or entities of
recognized competence in banking, finance, asset
management or remedial management, as its
deputies, assistants or agents, to perform such
powers and functions of the Corporation as
receiver of the closed bank, or assist in the
performance thereof;
“(6) Appoint or hire persons or entities of
recognized competence in forensic and fraud
investigations;
“(7) Pay accrued utilities, rentals and salaries of
personnel of the closed bank for a period not
exceeding three (3) months, from available funds
of the closed bank;
“(8) Collect loans and other claims of the closed
bank and for this purpose, modify, compromise or
restructure the terms and conditions of such loans
or claims as may be deemed advantageous to the
interests of the creditors of the closed bank;
“(9) Hire or retain private counsel as may be
necessary;
“(10) Borrow or obtain a loan, or mortgage, pledge
or encumber any asset of the closed bank, when
necessary to preserve or prevent dissipation of
the assets, or to redeem foreclosed assets of the
closed bank, or to minimize losses to its
depositors and creditors;
“(11) If the stipulated interest rate on deposits is
unusually high compared with prevailing
applicable interest rates, the Corporation as
 receiver, may exercise such powers which may
include a reduction of the interest rate to a
reasonable rate: Provided, That any modifications
or reductions shall apply only to earned and
unpaid interest;
“(12) Utilize available funds of the bank, including
funds generated by the receiver from the
conversion of assets to pay for reasonable costs
and expenses incurred for the preservation of the
assets, and liquidation of, the closed bank, without
need for approval of the liquidation court;
“For banks with insufficient funds, the
Corporation is authorized to advance the
foregoing costs and expenses, and collect
payment, as and when funds become available.
“(13) Charge reasonable fees for the liquidation of
the bank from the assets of the bank: Provided,
That payment of these fees, including any unpaid
advances under the immediately preceding
paragraph, shall be subject to approval by the
liquidation court;
“(14) Distribute the available assets of the closed
bank, in cash or in kind, to its creditors in
accordance with the Rules on Concurrence and
Preference of Credits under the Civil Code or other
laws;
“(15) Dispose records of the closed bank that are
no longer needed in the liquidation in accordance
with guidelines set by the PDIC Board of Directors,
notwithstanding the laws on archival period and
disposal of records; and
“(16) Exercise such other powers as are inherent
and necessary for the effective discharge of the
duties of the Corporation as receiver.
“The Board of Directors shall adopt such policies and
guidelines as may be necessary for the performance of the
above powers by personnel, deputies, assistants and
agents of the Corporation.
“(c) After the payment of all liabilities and claims against
the closed bank, the Corporation shall pay surplus, if any,
dividends at the legal rate of interest from date of takeover
to date of distribution to creditors and claimants of the
closed bank in accordance with the Rules on Concurrence
and Preference of Credits under the Civil Code or other
laws before distribution to the shareholders of the closed
bank.
“(d) The officers, employees, deputies, assistants and
agents of the receiver shall have no liability and shall not
be subject to any action, claim or demand in connection
with any act done or omitted to be done by them in good
faith in connection with the exercise of their powers and
functions under this Act and other applicable laws, or
other actions duly approved by the court.
“(e) The placement of a bank under liquidation shall have
the following effects:
“(1) On the corporate franchise or existence
“Upon placement by the Monetary Board of a bank
under liquidation, it shall continue as a body
corporate until the termination of the winding-up
period under Section 16 of this Act. Such
continuation as a body corporate shall only be for
the purpose of liquidating, settling and closing its
affairs and for the disposal, conveyance or
distribution of its assets pursuant to this Act. The
receiver shall represent the closed bank in all
cases by or against the closed bank and prosecute
and defend suits by or against it. In no case shall
the bank be reopened and permitted to resume
banking business after being placed under
liquidation.
“(2) On the powers and functions of its directors,
officers and stockholders
“The powers, voting rights, functions and duties,
as well as the allowances, remuneration and
perquisites of the directors, officers, and
stockholders of such bank are terminated upon its
closure. Accordingly, the directors, officers, and
stockholders shall be barred from interfering in
any way with the assets, records, and affairs of the
bank.
“The receiver shall exercise all authorities as may
be required to facilitate the liquidation of the
closed bank for the benefit of all its creditors.
“(3) On the assets
“Upon service of notice of closure as provided in
Section 14 of this Act, all the assets of the closed
bank shall he deemed in custodia legis in the
hands of the receiver, and as such, these assets
may not be subject to attachment, garnishment,
execution, levy or any other court processes. A’
judge, officer of the court or any person who shall
issue, order, process or cause the issuance or
implementation of the garnishment order, levy,
attachment or execution, shall be liable under
Section 27 of this Act: Provided, however, That
collaterals securing the loans and advances
granted by the Bangko Sentral ng Pilipinas shall
not be included in the assets of the closed bank for
distribution to other creditors: Provided, further,
That the proceeds in excess of the amount secured
shall be returned by the Bangko Sentral ng
Pilipinas to the receiver.
“Any preliminary attachment or garnishment on
any of the assets of the closed bank existing at the
time of closure shall not give any preference to the
attaching or garnishing party. Upon motion of the
receiver, the preliminary attachment or
garnishment shall be lifted and/or discharged.
“(4) On labor relations
“Notwithstanding the provisions of the Labor
Code, the employer-employee relationship
between the closed bank and its employees shall
be deemed terminated upon service of the notice
of closure of the bank in accordance with this Act.
Payment of separation pay or benefits provided
for by law shall be made from available assets of
the bank in accordance with the Rules on
Concurrence and Preference of Credits under the
Civil Code or other laws.
‘(5) Contractual obligations
“The receiver may cancel, terminate, rescind or
repudiate any contract of the closed bank that is
not necessary for the orderly liquidation of the
bank, or is grossly disadvantageous to the closed
bank, or for any ground provided by law.
“(6) On interest payments
“The liability of a bank to pay interest on deposits
and all other obligations as of closure shall cease
upon its closure by the Monetary Board without
prejudice to the first paragraph of Section 85 of
Republic Act No. 7653 (the New Central Bank Act):
Provided, That the receiver shall have the
authority, without need for approval of the
liquidation court, to assign, as payment to secured
creditors, the bank assets serving as collaterals to
their respective loans up to the extent of the
outstanding obligations, including interest as of
date of closure of the hank, as validated by the
receiver. The valuation of the asset shall be based
on the prevailing market value of the collaterals as
appraised by an independent appraiser on an ‘as is
where is’ basis.
“(7) Liability for penalties and surcharges for late
payment and nonpayment of taxes
“From the time of closure, the closed bank shall
not be liable for the payment of penalties and
surcharges arising from the late payment or
nonpayment of real property tax, capital gains tax,
transfer tax and similar charges.
“(8) Bank charges and fees on services
“The receiver may impose, on behalf of the closed
bank, charges and fees for services rendered after
bank closure, such as, but not limited to, the
execution of pertinent deeds and certifications.
“(9) Actions pending for or against the closed bank
“Except for actions pending before the Supreme
Court, actions pending for or against the closed
bank in any court or quasi-judicial body shall,
upon motion of the receiver, be suspended for a
period not exceeding one hundred eighty (180)
days and referred to mandatory mediation. Upon
termination of the mediation, the case shall be
referred back to the court or quasi-judicial body
for further proceedings.
“(10) Final decisions against the closed bank
“The execution and enforcement of a final decision
of a court other than the liquidation court against
the assets of a closed bank shall be stayed. The
prevailing parly shall file the final decision as a
claim with the liquidation court and settled in
accordance with the Rules on Concurrence and
Preference of Credits under the Civil Code or other
laws.
“(11) Docket and other court fees
“Payment of docket and other court fees relating
to all cases or actions filed by the receiver with
any judicial or quasi-judicial bodies shall be
deferred until the action is terminated with
finality. Any such fees shall constitute as a first
Hen on any judgment in favor of the closed bank
or in case of unfavorable judgment, such fees shall
be paid as liquidation costs and expenses during
the distribution of the assets of the closed bank.
“(12) All assets, records, and documents in the
possession of the closed bank at the time of its
closure are presumed held by the bank in the
concept of an owner.
“(13) The exercise of authority, functions, and
duties by the receiver under this Act shall be
presumed to have been performed in the regular
course of business.
“(14) Assets and documents of the closed bank
shall retain their private nature even if
administered by the receiver. Matters relating to
the exercise by the receiver of the functions under
this Act shall be subject to visitorial audit only by
the Commission on Audit.”
SECTION 27. A new section entitled Section 14 of the same
Act is hereby inserted between Sections 13 and 15 which
shall read as follows:
“NOTICE OF CLOSURE AND TAKEOVER ACTIVITIES
“SEC. 14. (a) Upon the designation of the Corporation as
receiver of a closed bank, it shall serve a notice of closure
to the highest-ranking officer of the bank present in the
bank premises, or in the absence of such officer, post the
notice of closure in the bank premises or on its main
entrance. The closure of the bank shall be deemed effective
upon the service of the notice of closure. Thereafter, the
receiver shall takeover the bank and exercise the powers
of the receiver as provided in this Act.
“(b) The receiver shall have authority to use reasonable
force, including the authority to force open the premises of
the bank, and exercise such acts necessary to take actual
physical possession and custody of the bank and all its
assets, records, documents, and take charge of its affairs
upon the service of the notice of closure.
“(c) Directors, officers, employees or agents of a bank hold
money and other assets of the bank in trust or under
administration or management by them for the bank in
their fiduciary capacity.
Upon service of the notice of closure to the bank, all
directors, officers, employees or agents of the closed bank
shall have the duty to immediately account for, surrender
and turn over to the receiver, and provide information
relative to, the assets, records, and affairs of the closed
bank in their possession, custody, administration or
management.
“(d) When the circumstances so warrant, the local
government unit and law enforcement agencies concerned
shall, upon request, immediately provide assistance to the
receiver during the service of notice of closure and actual
takeover operations to ensure the orderly conduct thereof
and the security and safety of the personnel of the receiver
and the employees of the closed bank.”
SECTION 28. A new section entitled Section 15 of the same
Act is hereby inserted between Sections 14 and 16 which
shall read as follows:
“PURCHASE OF ASSETS AND ASSUMPTION OF
LIABILITIES
“SEC. 15. (a) The receiver shall have the authority to
facilitate and implement the purchase of the assets of the
closed bank and the assumption of its liabilities by another
insured bank, without need for approval of the liquidation
court. The exercise of this authority shall be in accordance
with the Rules on Concurrence and Preference of Credits
under the Civil Code or other laws, subject to such terms
and conditions as the Corporation may prescribe. The
disposition of the branch licenses and other bank licenses
of the closed bank shall be subject to the approval of the
Bangko Sentral ng Pilipinas.
“(b) Such action of the receiver to determine whether a
bank may be the subject of a purchase of assets and
assumption of liabilities transaction shall be final and
executory, and may not be set aside by any court.”
SECTION 29. A new section entitled Section 16 of the same
Act is hereby inserted between Sections 15 and 17 which
shall read as follows:
“CONVENTIONAL LIQUIDATION
“A. ASSET MANAGEMENT AND CONVERSION
“SEC. 16. (a) The assets gathered by the receiver shall be
evaluated and verified as to their existence, ownership,
condition, and other factors to determine their realizable
value. In the management, preservation and disposition of
assets, the receiver shall be guided by cost-benefit
considerations, resources of the closed bank, and potential
asset recovery.
“(b) The conversion of the assets of the closed bank shall
be carried out in a fair and transparent manner in
accordance with the rules and procedures as may be
determined by the receiver.
“(c) In the management and/or conversion of the assets of
the closed bank, the receiver shall have the authority to:
“(1) Represent the closed bank before the Land
Registration Authority (LRA), the Bureau of Lands,
the Register of Deeds, the Land Transportation
Office (LTO), the Assessor’s Office or other
appropriate office of the local government unit,
the Securities and Exchange Commission (SEC), or
such other similar government agencies or private
entities in:
“(i) Verifying the authenticity of
ownership documents;
“(ii) Registering the interest of the closed
bank on a specific property;
“(iii) Consolidating ownership over an
asset of the closed bank;
“(iv) Securing certified true copies of
documents held by the foregoing
agencies/entities in relation to an asset of
the closed bank;
“(v) Securing the appropriate certification
from the foregoing agencies/entities in
 relation to an asset of the closed bank;
and
“(vi) Performing other related activities;
“(2) Conduct a physical or ocular inspection of the
properties owned by, or mortgaged to, the closed
bank, to determine their existence and present
condition;
“(3) Determine the disposal price of assets in
accordance with generally accepted valuation
principles, standards and practices, subject to
such guidelines as the receiver may determine;
“(4) Dispose real or personal properties of the
closed bank through bidding, negotiated sale or
any other mode including lease with option to
purchase, whether by piece or by lot, as may be
reasonably determined by the receiver based on
cost-benefit considerations and to allow efficient
distribution of assets to creditors; and
“(5) Engage third parties to assist in the
liquidation, manage and/or dispose the assets,
handle cases filed against or by the closed bank,
subject to such guidelines as determined by the
receiver.
“(d) Notwithstanding any provision of law to the contrary,
the following rules shall apply to the management and/or
conversion by the receiver of the assets of the closed bank:
“(1) Upon notification of the closure of a bank, the
LRA, the Bureau of Lands, the Register of Deeds,
the LTO, the assessor’s office or other appropriate
office of the local government unit, or such other
similar government agencies shall not allow any
transaction affecting the assets of the closed bank
without the consent of the receiver.
“(2) Upon issuance by the Monetary Board of the
resolution ordering the closure of a bank, any
person or entity in custody or possession of assets
or records of the closed bank, including, but not
limited to, the closed bank’s deposit accounts,
titles to real property, collaterals, promissory
notes, evidence of indebtedness or investments
shall immediately turn over custody of said assets
and records to the receiver. Such obligation shall
cover evidences of deposit such as passbooks or
certificates of deposit issued by the bank to its
depositors. Pending turnover, all persons or
entities in custody or possession of any asset or
record of the closed bank shall hold the said assets
or records in trust for the receiver.
“(3) The persons or entities in custody or
possession of such asset shall not allow, authorize
or cause the withdrawal, transfer, disposition,
removal, conversion, concealment, or other
transaction involving or relating to the subject
asset, unless otherwise directed by the receiver.
“(e) The receiver shall have the authority to invest funds
received from the conversion of the assets of the closed
bank in government securities, other government-
guaranteed marketable securities or investment-grade
debt instruments.
“(f) The proceeds of the sale of the bank and branch
licenses shall be for the benefit of the creditors of the
closed bank which shall be distributed in accordance with
this Act and the Rules on Concurrence and Preference of
Credits under the Civil Code or other laws.
“B. PETITION FOR ASSISTANCE IN THE LIQUIDATION
OF A CLOSED BANK
“(g) A petition for assistance in the liquidation is a special
proceeding for the liquidation of a closed bank, and
includes the declaration of the concomitant right of its
creditors and the order of payment of their valid claims in
the disposition of its assets.
“Any proceeding initiated under this section shall be
considered in rem. Jurisdiction over all persons affected by
the proceeding shall be considered as acquired upon
publication of the order setting the case for initial hearing
in any newspaper of general circulation in the Philippines.
“(h) The liquidation court shall have exclusive jurisdiction
to adjudicate disputed claims against the closed banks,
assist in the enforcement of individual liabilities of the
stockholders, directors and officers and decide on all other
issues as may be material to implement the distribution
plan adopted by the Corporation for general application to
all closed banks.
“(i) The provisions of Republic Act No. 8799, otherwise
known as ‘The Securities Regulation Code’, and Supreme
Court Administrative Matter No. 00-8-10-SC, entitled, ‘The
Rules of Procedure on Corporate Rehabilitation’, shall not
be applicable to the petition for assistance in the
liquidation of the closed bank.
“(j) The petition shall be filed in the RTC which has
jurisdiction over the principal office of the closed bank or
the principal office of the receiver, at the option of the
latter.
“(k) The petition shall be filed ex parte within a reasonable
period from receipt of the Monetary Board Resolution
placing the bank under liquidation.
“(1) All persons or entities with claims against the
assets of the closed bank shall file their claims
with the receiver within sixty (60) days from the
 date of publication of the notice of closure. Claims
filed outside the foregoing prescribed period shall
be disallowed.
“Claims denied by the receiver shall be filed with the
liquidation court within sixty (60) days from receipt of the
final notice of denial of claim.
“(m) A claim whose validity has not yet been determined
with finality at the time of the submission of the final asset
distribution plan, either by reason of a pending suit or for
whatever reason, shall be considered as contingent claim
and shall not be paid under the proposed final asset
distribution plan.
“(n) Upon finality of the order approving the final asset
distribution plan, the petition for assistance in the
liquidation of a closed bank shall henceforth be, for all
intents and purposes, considered closed and terminated
and the receiver, its officers, employees or agents, are
forever discharged from any and all claims and/or liability
arising from or in connection with the liquidation of the
closed bank.
“(o) The receiver shall submit a final report on the
implementation of the approved final asset distribution
plan to the Monetary Board and the SEC after the
expiration of the winding-up period provided in this Act.
“(p) The Supreme Court shall promulgate the appropriate
procedural rules to implement this section.
“C. WINDING-UP
“(q) The creditors shall have a period of six (6) months
from the date of publication of notice of the approval by
the court of the final asset distribution plan of the closed
bank within which to claim payment of the principal
obligations and surplus dividends. During this six-month
period, the receiver shall hold as trustee the assets
allocated in the final asset distribution plan for said
creditors.
“Failure by the creditor to comply with the documentary
requirements within the prescribed period and/or refusal
to accept the asset as payment shall be deemed as
abandonment or waiver of his or her right to payment.
“(r) The individual stockholders of record or their duly-
authorized representative or the court-appointed
stockholders’ representative shall have a period of six (6)
months from publication of notice of the approval by the
court of the final asset distribution plan of the closed bank
within which to claim the residual assets. During this six-
month period, the receiver shall hold as trustee the assets
allocated in the final asset distribution plan for said
stockholders of record.
“Failure by the individual stockholders of record or their
duly-authorized representative or the court-appointed
stockholders’ representative to comply with the
documentary requirements within the prescribed period
and/or refusal to accept the residual assets in kind shall be
deemed as abandonment or waiver of right to receive the
residual assets.
“(s) After the lapse of the six-month period provided in
paragraphs (q) and (r) of this section, all assets which
remain unclaimed by the creditors and/or stockholders of
record shall be turned over to the Bureau of Treasury.
“(t) The receiver shall continue to keep all the pertinent
records of the closed bank for a period of six (6) months
from the date of publication of the approval of the final
asset distribution plan.
After the lapse of this period, the receiver is authorized to
dispose of the same in accordance with the rules and
regulations to be prescribed by the receiver.”
SECTION 32. Section 14 of the same Act is accordingly
renumbered as Section 19 and is hereby amended to read
as follows:
“PAYMENT OF INSURED DEPOSITS
“SEC. 19. Whenever an insured bank shall have been closed
by the Monetary Board pursuant to Section 30 of Republic
Act No. 7653, or upon expiration or revocation of a bank’s
corporate term, payment of the insured deposits on such
closed bank shall be made by the Corporation as soon as
possible either (1) by cash or (2) by making available to
each depositor a transferred deposit in another insured
bank in an amount equal to insured deposit of such
depositor: Provided, however, That the Corporation, in its
discretion, may require proof of claims to be filed before
paying the insured deposits, and that in any case where the
Corporation is not satisfied as to the validity of a claim for
an insured deposit, it may require final determination of a
court of competent jurisdiction before paying such claim:
Provided, further, That failure to settle the claim, within six
(6) months from the date of filing of claim for insured
deposit, where such failure was due to grave abuse of
discretion, gross negligence, bad faith, or malice, shall,
upon conviction, subject the directors, officers or
employees of the Corporation responsible for the delay, to
imprisonment from six (6) months to one (1) year:
Provided, furthermore, That the period shall not apply if
the validity of the claim requires the resolution of issues of
facts and or law by another office, body or agency
including the case mentioned in the first proviso or by the
Corporation together with such other office, body or
agency.”

SECTION 3. Section 3(i) of the same Act is further amended
to read as follows:
❷ Anti-Money Laundering Act
AMLA, R.A. No. 9194, Sections 1-6
R.A. No. 10167, Sections 1-2
AN ACT AMENDING REPUBLIC ACT NO. 9160,
OTHERWISE KNOWN AS THE “ANTI-MONEY
LAUNDERING ACT OF 2001”
Be it enacted by the Senate and House of Representative of
the Philippines in Congress assembled:
SECTION 1. Section 3, paragraph (b), of Republic Act No.
9160 is hereby amended as follows:
“(b) ‘Covered transaction’ is a transaction in cash or
other equivalent monetary instrument involving a
total amount in excess of Five hundred thousand pesos
(P500,000.00) within one (1) banking day.”
SECTION 2. Section 3 of the same Act is further amended
by inserting between paragraphs (b) and (c) a new
paragraph designated as (b-1) to read as follows:
“(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;
“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.”
“(i) ‘Unlawful activity’ refers to any act or omission or
series or combination thereof involving or having
direct relation to the following:
“(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, 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 of the Revised Penal
Code, as amended;
“(10) Smuggling under Republic Act Nos. 455 and
1937; SEIDAC
 “(11) Violations under 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,
including those perpetrated by terrorists against non-
combatant persons and similar targets;
“(13) Fraudulent practices and other violations under
Republic Act No. 8799, otherwise known as the
Securities Regulation Code of 2000;
“(14) Felonies or offenses of a similar nature that are
punishable under the penal laws of other countries.”
SECTION 4. Section 4 of the same Act is hereby amended to
read as follows:
“SEC. 4. Money Laundering Offense. — Money
laundering is a crime whereby the proceeds of an
unlawful activity as herein defined are transacted,
thereby making them appear to have originated from
legitimate sources. It is committed by the following:
“(a) Any person knowing that any monetary
instrument or property represents, involves, or relates
to, the proceeds of any unlawful activity, transacts or
attempts to transact said monetary instrument or
property.
“(b) Any person knowing that any monetary
instrument or property involves the proceeds of any
unlawful activity, performs or fails to perform any act
as a result of which he facilitates the offense of money
laundering referred to in paragraph (a) above.
“(c) Any person knowing that any monetary
instrument or property is required under this Act to be
disclosed and filed with the Anti-Money Laundering
Council (AMLC), fails to do so.”
SECTION 5. Section 7 of the same Act is hereby amended as
follows:
“SEC. 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 or suspicious
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 or suspicious 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 investigate suspicious transactions and covered
transactions deemed suspicious after an investigation
by AMLC, 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 the proceeds of 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;
“(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.”
SECTION 6. Section 9(c) of the same Act is hereby
amended to read as follows:

“(c) Reporting of Covered and Suspicious

Transactions. — Covered institutions shall report to
the AMLC all covered transactions and suspicious
transactions within five (5) working days from
occurrence thereof, unless the Supervising Authority
prescribes a longer period not exceeding ten (10)
working days.

“Should a transaction be determined to be both a

covered transaction and a suspicious transaction, the
covered institution shall be required to report the
same as a suspicious transaction.

“When reporting covered or suspicious transactions to

the AMLC, covered institutions and their officers and
employees shall not be deemed to have violated
Republic Act No. 1405, as amended, Republic Act No.
6426, as amended, Republic Act No. 8791 and other
similar laws, but are prohibited from communicating,
directly or indirectly, in any manner or by any means,
to any person, the fact that a covered or suspicious
transaction report was made, the contents thereof, or
any other information in relation thereto. In case of
violation thereof, the concerned officer and employee [REPUBLIC ACT NO. 10167]
of the covered institution shall be criminally liable.
However, no administrative, criminal or civil AN ACT TO FURTHER STRENGTHEN THE ANTI-MONEY
proceedings, shall lie against any person for having LAUNDERING LAW, AMENDING FOR THE PURPOSE
made a covered or suspicious transaction report in the SECTIONS 10 AND 11 OF REPUBLIC ACT NO. 9160,
regular performance of his duties in good faith, OTHERWISE KNOWN AS THE “ANTI-MONEY
whether or not such reporting results in any criminal LAUNDERING ACT OF 2001”, AS AMENDED, AND FOR
prosecution under this Act or any other law. OTHER PURPOSES

“When reporting covered or suspicious transactions to
the AMLC, covered institutions and their officers and
employees are prohibited from communicating
directly or indirectly, in any manner or by any means,
to any person or entity, the media, the fact that a
covered or suspicious transaction report was made,
the contents thereof, or any other information in
relation thereto. Neither may such reporting be
published or aired in any manner or form by the mass
media, electronic mail, or other similar devices. In case
of violation thereof, the concerned officer and
employee of the covered institution and media shall be
held criminally liable.”
Be it enacted by the Senate and House of Representatives
of the Philippines in Congress assembled:
SECTION 1. Section 10 of Republic Act No. 9160, as
amended, is hereby amended to read as follows:
“SEC. 10. Freezing of Monetary Instrument or
Property. – Upon verified ex parte petition by the
AMLC and after determination that probable cause
exists that any monetary instrument or property is in
any way related to an unlawful activity as defined in
Section 3(i) hereof, the Court of Appeals may issue a
freeze order, which shall be effective immediately. The
freeze order shall be for a period of twenty (20) days
unless extended by the court. In any case, the court
should act on the petition to freeze within twenty-four
(24) hours from filing of the petition. If the application
is filed a day before a nonworking day, the
computation of the twenty-four (24)-hour period shall
exclude the nonworking days.”

“A person whose account has been frozen may file a

motion to lift the freeze order and the court must
resolve this motion before the expiration of the twenty
(20)-day original freeze order.”
 “No court shall issue a temporary restraining order or 1987 Constitution, which are hereby incorporated by
a writ of injunction against any freeze order, except reference.”
the Supreme Court.”

SEC. 2. Section 11 of the same Act is hereby amended to

read as follows:

“SEC. 11. Authority to Inquire into Bank Deposits. –

Notwithstanding the provisions of Republic Act No.
1405, as amended; Republic Act No. 6426, as
amended; Republic Act No. 8791; and other laws, the
AMLC may inquire into or examine any particular
deposit or investment, including related accounts, with
any banking institution or non-bank financial
institution upon order of any competent court based
on an ex parte application in cases of violations of this
Act, when it has been established that there is
probable cause that the deposits or investments,
including related accounts involved, are related to an
unlawful activity as defined in Section 3(i) hereof or a
money laundering offense under Section 4 hereof;
except that no court order shall be required in cases
involving activities defined in Section 3(i)(1), (2), and
(12) hereof, and felonies or offenses of a nature similar
to those mentioned in Section 3(i)(1), (2), and (12),
which are Punishable under the penal laws of other
countries, and terrorism and conspiracy to commit
terrorism as defined and penalized under Republic Act
No. 9372.”

“The Court of Appeals shall act on the application to

inquire into or examine any deposit or investment
with any banking institution or non-bank financial
institution within twenty-four (24) hours from filing of
the application.”

“To ensure compliance with this Act, the Bangko

Sentral ng Pilipinas may, in the course of a periodic or
special examination, check the compliance of a
Covered institution with the requirements of the
AMLA and its implementing rules and regulations.”

“For purposes of this section, ‘related accounts’ shall

refer to accounts, the funds and sources of which
originated from and/or are materially linked to the
monetary instrument(s) or property(ies) subject of the
freeze order(s).”

“A court order ex parte must first be obtained before

the AMLC can inquire into these related Accounts:
Provided, That the procedure for the ex parte
application of the ex parte court order for the principal
account shall be the same with that of the related
accounts.”

“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

❸ E-Commerce Act
R.A. No. 8792, Sections 1-24, 30-32
AN ACT PROVIDING FOR THE RECOGNITION AND USE
OF ELECTRONIC COMMERCIAL AND NON-COMMERCIAL
TRANSACTIONS, PENALTIES FOR UNLAWFUL USE
THEREOF, AND OTHER PURPOSES
PART I Short Title and Declaration of Policy
SECTION 1. Short Title. — This Act shall be known and
cited as the “Electronic Commerce Act.”
SECTION 2(2). Declaration of Policy. — The State
recognizes the vital role of information and
communications technology (ICT) in nation-building; the
need to create an information-friendly environment which
supports and ensures the availability, diversity and
affordability of ICT products and services; the primary
responsibility of the private sector in contributing
investments and services in ICT; the need to develop, with
appropriate training programs and institutional policy
changes, human resources for the information age, a labor
force skilled in the use of ICT and a population capable of
operating and utilizing electronic appliances and
computers; its obligation to facilitate the transfer and
promotion of technology; to ensure network security,
connectivity and neutrality of technology for the national
benefit; and the need to marshal, organize and deploy
national information infrastructures, comprising in both
communications network and strategic information
services, including their interconnection to the global
information networks, with the necessary and appropriate
legal, financial, diplomatic and technical framework,
systems and facilities.
PART II Electronic Commerce in General
CHAPTER I General Provisions
SECTION 3(3). Objective. — This Act aims to facilitate
domestic and international dealings, transactions,
arrangements, agreements, contracts and exchanges and
storage of information through the utilization of electronic,
optical and similar medium, mode, instrumentality and
technology to recognize the authenticity and reliability of
electronic data messages or electronic documents related
to such activities and to promote the universal use of
electronic transactions in the government and by the
general public.
SECTION 4(4). Sphere of Application. — This Act shall
apply to any kind of electronic data message and electronic
document used in the context of commercial and non-
commercial activities to include domestic and
international dealings, transactions, arrangements,
agreements, contracts and exchanges and storage of
information.
SECTION 5(5). Definition of Terms. — For the purposes of
this Act, the following terms are defined, as follows:
(a) “Addressee” refers to a person who is intended by the
originator to receive the electronic data message or
electronic document, but does not include a person acting
as an intermediary with respect to that electronic data
message or electronic document.
(b) “Computer” refers to any device or apparatus singly or
interconnected which, by electronic, electro-mechanical,
optical and/or magnetic impulse, or other means with the
same function, can receive, record, transmit, store, process,
correlate, analyze, project, retrieve and/or produce
information, data, text, graphics, figures, voice, video,
symbols or other modes of expression or perform any one
or more of these functions.
(c) “Electronic data message” refers to information
generated, sent, received or stored by electronic, optical or
similar means.
(d) “Information and Communication 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 in which data is recorded or
stored and any procedures related to the recording or
storage of electronic data message or electronic document.
(e) “Electronic signature” refers to any distinctive mark,
characteristic and/or sound in electronic form,
representing the identity of a person and attached to or
logically associated with the electronic data message or
electronic document or any methodology or procedures
employed or adopted by a person and executed or adopted
by such person with the intention of authenticating or
approving an electronic data message or electronic
document.
(f) “Electronic document” refers to information or the
representation of information, data, figures, symbols or
other modes of written expression, described or however
represented, by which a right is established or an
obligation extinguished, or by which a fact may be proved
and affirmed, which is received, recorded, transmitted,
stored, processed, retrieved or produced electronically.
(g) “Electronic key” refers to a secret code which secures
and defends sensitive information that crosses over public
channels into a form decipherable only with a matching
electronic key.
(h) “Intermediary” refers to a person who in behalf of
another person and with respect to a particular electronic
data message or electronic document sends, receives
and/or stores or provides other services in respect of that
electronic data message or electronic document.
(i) “Originator” refers to a person by whom, or on whose
behalf, the electronic document purports to have been
created, generated and/or sent. The term does not include
a person acting as an intermediary with respect to that
electronic document.
(j) “Service provider” refers to a provider of —
i) Online services or network access, or the operator of
facilities therefor, including entities offering the
transmission, routing, or providing of connections for
online communications, digital or otherwise, between or
among points specified by a user, of electronic documents
of the user’s choosing; or
ii) The necessary technical means by which electronic
documents of an originator may be stored and made
accessible to a designated or undesignated third party.
Such service providers shall have no authority to modify or
alter the content of the electronic document received or to
make any entry therein on behalf of the originator,
addressee or any third party unless specifically authorized
to do so, and who shall retain the electronic document in
accordance with the specific request or as necessary for
the purpose of performing the services it was engaged to
perform.
CHAPTER II Legal Recognition of Electronic Data
Messages and Electronic Documents
SECTION 6(6). Legal Recognition of Electronic Data
Message. — Information shall not be denied validity or
enforceability solely on the ground that it is in the form of
an electronic data message purporting to give rise to such
legal effect, or that it is merely incorporated by reference
in that electronic data message.
SECTION 7(7). Legal Recognition of Electronic
Documents. — Electronic documents shall have the legal
effect, validity or enforceability as any other document or
legal writing, and —
(a) Where the law requires a document to be in writing,
that requirement is met by an electronic document if the
said electronic document maintains its integrity and
reliability and can be authenticated so as to be usable for
subsequent reference, in that —
(i) The electronic document has remained complete and
unaltered, apart from the addition of any endorsement and
any authorized change, or any change which arises in the
normal course of communication, storage and display; and
(ii) The electronic document is reliable in the light of the
purpose for which it was generated and in the light of all
relevant circumstances.
(b) Paragraph (a) applies whether the requirement therein
is in the form of an obligation or whether the law simply
provides consequences for the document not being
presented or retained in its original form.
(c) Where the law requires that a document be presented
or retained in its original form, that requirement is met by
an electronic document if —
i) There exist a reliable assurance as to the integrity of the
document from the time when it was first generated in its
final form; and
ii) That document is capable of being displayed to the
person to whom it is to be presented: Provided, That no
provision of this Act shall apply to vary any and all
requirements of existing laws on formalities required in
the execution of documents for their validity.
For evidentiary purposes, an electronic document shall be
the functional equivalent of a written document under
existing laws.
This Act does not modify any statutory rule relating to the
admissibility of electronic data messages or electronic
documents, except the rules relating to authentication and
best evidence.
SECTION 8(8). Legal Recognition of Electronic
Signatures. — An electronic signature on the electronic
document shall be equivalent to the signature of a person
on a written document if the signature is an electronic
signature and proved by showing that a prescribed
procedure, not alterable by the parties interested in the
electronic document, existed under which —
a.) A method is used to identify the party sought to be
bound and to indicate said party’s access to the electronic
document necessary for his consent or approval through
the electronic signature;
b.) Said method is reliable and appropriate for the purpose
for which the electronic document was generated or
communicated, in the light of all circumstances, including
any relevant agreement;
c.) It is necessary for the party sought to be bound, in order
to proceed further with the transaction, to have executed
or provided the electronic signature; and
d.) The other party is authorized and enabled to verify the
electronic signature and to make the decision to proceed
with the transaction authenticated by the same.
SECTION 9(9). Presumption Relating to Electronic
Signatures. — In any proceedings involving an electronic
signature, it shall be presumed that,
a.) The electronic signature is the signature of the person
to whom it correlates; and
b.) The electronic signature was affixed by that person
with the intention of signing or approving the electronic
document unless the person relying on the electronically
signed electronic document knows or has notice of defects
in or unreliability of the signature or reliance on the
electronic signature is not reasonable under the
circumstances.
SECTION 10(10). Original Documents. — (1) Where the law
requires information to be presented or retained in its
original form, that requirement is met by an electronic
data message or electronic document if:
(a) the integrity of the information from the time when it
was first generated in its final form, as an electronic data
message or electronic document is shown by
evidence aliunde or otherwise; and
(b) where it is required that information be presented, that
the information is capable of being displayed to the person
to whom it is to be presented.
(2) Paragraph (1) applies whether the requirement therein
is in the form of an obligation or whether the law simply
provides consequences for the information not being
presented or retained in its original form.
(3) For the purposes of subparagraph (a) of paragraph (1):
(a) the criteria for assessing integrity shall be whether the
information has remained complete and unaltered, apart
from the addition of any endorsement and any change
which arises in the normal course of communication,
storage and display; and
(b) the standard of reliability required shall be assessed in
the light of the purpose for which the information was
generated and in the light of all the relevant circumstances.
SECTION 11(11). Authentication of Electronic Data
Messages and Electronic Documents. — Until the Supreme
Court by appropriate rules shall have so provided,
electronic documents, electronic data messages and
electronic signatures, shall be authenticated by
demonstrating, substantiating and validating a claimed
identity of a user, device, or another entity in an
information or communication system, among other ways,
as follows:
(a) The electronic signature shall be authenticated by
proof that a letter, character, number or other symbol in
electronic form representing the persons named in and
attached to or logically associated with an electronic data
message, electronic document, or that the appropriate
methodology or security procedures, when applicable,
were employed or adopted by a person and executed or
adopted by such person, with the intention of
authenticating or approving an electronic data message or
electronic document;
(b) The electronic data message or electronic document
shall be authenticated by proof that an appropriate
security procedure, when applicable was adopted and
employed for the purpose of verifying the originator of an
electronic data message or electronic document, or
detecting error or alteration in the communication,
content or storage of an electronic document or electronic
data message from a specific point, which, using algorithm
or codes, identifying words or numbers, encryptions,
answers back or acknowledgment procedures, or similar
security devices.
The Supreme Court may adopt such other authentication
procedures, including the use of electronic notarization
systems as necessary and advisable, as well as the
certificate of authentication on printed or hard copies of
the electronic documents or electronic data messages by
electronic notaries, service providers and other duly
recognized or appointed certification authorities.
The person seeking to introduce an electronic data
message or electronic document in any legal proceeding
has the burden of proving its authenticity by evidence
capable of supporting a finding that the electronic data
message or electronic document is what the person claims
it to be.
In the absence of evidence to the contrary, the integrity of
the information and communication system in which an
electronic data message or electronic document is
recorded or stored may be established in any legal
proceeding —
(a) By evidence that at all material times the information
and communication system or other similar device was
operating in a manner that did not affect the integrity of
the electronic data message or electronic document, and
there are no other reasonable grounds to doubt the
integrity of the information and communication system;
(b) By showing that the electronic data message or
electronic document was recorded or stored by a party to
the proceedings who is adverse in interest to the party
using it; or
(c) By showing that the electronic data message or
electronic document was recorded or stored in the usual
and ordinary course of business by a person who is not a
party to the proceedings and who did not act under the
control of the party using the record.
SECTION 12(12). Admissibility and Evidential Weight of
Electronic Data Messages or Electronic Documents. — In
any legal proceedings, nothing in the application of the
rules on evidence shall deny the admissibility of an
electronic data message or electronic document in
evidence —
a. On the sole ground that it is in electronic form; or
b. On the ground that it is not in the standard written form,
and the electronic data message or electronic document
meeting, and complying with the requirements under
Sections 6 or 7 hereof shall be the best evidence of the
agreement and transaction contained therein.
In assessing the evidential weight of an electronic data
message or electronic document, the reliability of the
manner in which it was generated, stored or
communicated, the reliability of the manner in which its
originator was identified, and other relevant factor shall be
given due regard.
SECTION 13(13). Retention of Electronic Data Message or
Electronic Document. — Notwithstanding any provision of
law, rule or regulation to the contrary —
(a) The requirement in any provision of law that certain
documents be retained in their original form is satisfied by
retaining them in the form of an electronic data message or
electronic document which —
i. Remains accessible so as to be usable for subsequent
reference;
ii. Is retained in the format in which it was generated, sent
or received, or in a format which can be demonstrated to
accurately represent the electronic data message or
electronic document generated, sent or received;
iii. Enables the identification of its originator and
addressee, as well as the determination of the date and the
time it was sent or received.
(b) The requirement referred to in paragraph (a) is
satisfied by using the services of a third party, provided
that the conditions set forth in subparagraphs (i), (ii) and
(iii) of paragraph (a) are met.
SECTION 14(14). Proof by Affidavit. — The matters
referred to in Section 12, on admissibility and Section 9, on
the presumption of integrity, may be presumed to have
been established by an affidavit given to the best of the
deponent’s knowledge subject to the rights of parties in
interest as defined in the following section.
SECTION 15(15). Cross-Examination. — (1) A deponent of
an affidavit referred to in Section 14 that has been
introduced in evidence may be cross-examined as of right
by a party to the proceedings who is adverse in interest to
the party who has introduced the affidavit or has caused
the affidavit to be introduced.
(2) Any party to the proceedings has the right to cross-
examine a person referred to in Section 11, paragraph 4,
sub-paragraph c.
CHAPTER III Communication of Electronic Data
Messages or Electronic Documents
SECTION 16(16). Formation and Validity of Electronic
Contracts. — (1) Except as otherwise agreed by the parties,
an offer, the acceptance of an offer and such other
elements required under existing laws for the formation of
contracts may be expressed in, demonstrated and proved
by means of electronic data messages or electronic
documents and no contract shall be denied validity or
enforceability on the sole ground that it is in the form of an
electronic data message or electronic document, or that
any or all of the elements required under existing laws for
the formation of the contracts is expressed, demonstrated
and proved by means of electronic data messages or
electronic documents.
(2) Electronic transactions made through networking
among banks, or linkages thereof with other entities or
networks, and vice versa, shall be deemed consummated
upon the actual dispensing of cash or the debit of one
account and the corresponding credit to another, whether
such transaction is initiated by the depositor or by an
authorized collecting party: Provided, That the obligation
of one bank, entity, or person similarly situated to another
arising therefrom shall be considered absolute and shall
not be subjected to the process of preference of credits.
SECTION 17(17). Recognition by Parties of Electronic Data
Message or Electronic Document. — As between the
originator and the addressee of an electronic data message
or electronic document, a declaration of will or other
statement shall not be denied legal effect, validity or
enforceability solely on the ground that it is in the form of
an electronic data message or electronic document.
SECTION 18(18). Attribution of Electronic Data Message.
— (1) An electronic data message or electronic document
is that of the originator if it was sent by the originator
himself.
(2) As between the originator and the addressee, an
electronic data message or electronic document is deemed
to be that of the originator if it was sent:
(a) by a person who had the authority to act on behalf of
the originator with respect to that electronic data message
or electronic document; or
(b) by an information system programmed by, or on behalf
of the originator to operate automatically.
(3) As between the originator and the addressee, an
addressee is entitled to regard an electronic data message
or electronic document as being that of the originator, and
to act on that assumption, if:
(a) in order to ascertain whether the electronic data
message or electronic document was that of the originator,
the addressee properly applied a procedure previously
agreed to by the originator for that purpose; or
(b) the electronic data message or electronic document as
received by the addressee resulted from the actions of a
person whose relationship with the originator or with any
agent of the originator enabled that person to gain access
to a method used by the originator to identify electronic
data messages or electronic documents as his own.
(4) Paragraph (3) does not apply:
(a) as of the time when the addressee has both received
notice from the originator that the electronic data message
or electronic document is not that of the originator, and
has reasonable time to act accordingly; or
(b) in a case within paragraph (3) sub-paragraph (b), at
any time when the addressee knew or should have known,
had it exercised reasonable care or used any agreed
procedure, that the electronic data message or electronic
document was not that of the originator.
(5) Where an electronic data message or electronic
document is that of the originator or is deemed to be that
of the originator, or the addressee is entitled to act on that
assumption, then, as between the originator and the
addressee, the addressee is entitled to regard the
electronic data message or electronic document as
received as being what the originator intended to send,
and to act on that assumption. The addressee is not so
entitled when it knew or should have known, had it
exercised reasonable care or used any agreed procedure,
that the transmission resulted in any error in the
electronic data message or electronic document as
received.
(6) The addressee is entitled to regard each electronic data
message or electronic document received as a separate
electronic data message or electronic document and to act
on that assumption, except to the extent that it duplicates
another electronic data message or electronic document
and the addressee knew or should have known, had it
exercised reasonable care or used any agreed procedure,
that the electronic data message or electronic document
was a duplicate.
SECTION 19(19). Error on Electronic Data Message or
Electronic Document. — The addressee is entitled to regard
the electronic data message or electronic document
received as that which the originator intended to send, and
to act on that assumption, unless the addressee knew or
should have known, had the addressee exercised
reasonable care or used the appropriate procedure —
(a) That the transmission resulted in any error therein or
in the electronic data message or electronic document
when the electronic data message or electronic document
enters the designated information system, or
(b) That electronic data message or electronic document is
sent to an information system which is not so designated
by the addressee for the purpose.
SECTION 20. Agreement on Acknowledgment of Receipt of
Electronic Data Messages or Electronic Documents. — The
following rules shall apply where, on or before sending an
electronic data message or electronic document, the
originator and the addressee have agreed, or in that
electronic document or electronic data message, the
originator has requested, that receipt of the electronic
document or electronic data message be acknowledged:
a.) Where the originator has not agreed with the addressee
that the acknowledgment be given in a particular form or
by a particular method, an acknowledgment may be given
by or through any communication by the addressee,
automated or otherwise, or any conduct of the addressee,
sufficient to indicate to the originator that the electronic
data message or electronic document has been received.
b.) Where the originator has stated that the effect or
significance of the electronic data message or electronic
document is conditional on receipt of the acknowledgment
thereof, the electronic data message or electronic
document is treated as though it has never been sent, until
the acknowledgment is received.
c.) Where the originator has not stated that the effect or
significance of the electronic data message or electronic
document is conditional on receipt of the acknowledgment,
and the acknowledgment has not been received by the
originator within the time specified or agreed or, if no time
has been specified or agreed, within a reasonable time, the
originator may give notice to the addressee stating that no
acknowledgment has been received and specifying a
reasonable time by which the acknowledgment must be
received; and if the acknowledgment is not received within
the time specified in subparagraph (c), the originator may,
upon notice to the addressee, treat the electronic data
message or electronic document as though it had never
been sent, or exercise any other rights it may have.
SECTION 21(20). Time of Dispatch of Electronic Data
Messages or Electronic Documents. — Unless otherwise
agreed between the originator and the addressee, the
dispatch of an electronic data message or electronic
document occurs when it enters an information system
outside the control of the originator or of the person who
sent the electronic data message or electronic document
on behalf of the originator.
SECTION 22(21). Time of Receipt of Electronic Data
Messages or Electronic Documents. — Unless otherwise
agreed between the originator and the addressee, the time
of receipt of an electronic data message or electronic
document is as follows:
(a.) If the addressee has designated an information system
for the purpose of receiving electronic data messages or
electronic documents, receipt occurs at the time when the
electronic data message or electronic document enters the
designated information system: Provided, however, That if
the originator and the addressee are both participants in
the designated information system, receipt occurs at the
time when the electronic data message or electronic
document is retrieved by the addressee.
(b.) If the electronic data message or electronic document
is sent to an information system of the addressee that is
not the designated information system, receipt occurs at
the time when the electronic data message or electronic
document is retrieved by the addressee;
(c.) If the addressee has not designated an information
system, receipt occurs when the electronic data message
or electronic document enters an information system of
the addressee.
These rules apply notwithstanding that the place where
the information system is located may be different from
the place where the electronic data message or electronic
document is deemed to be received.
SECTION 23(22). Place of Dispatch and Receipt of
Electronic Data Message or Electronic Documents. — Unless
otherwise agreed between the originator and the
addressee, an electronic data message or electronic
document is deemed to be dispatched at the place where
the originator has its place of business and received at the
place where the addressee has its place of business. This
rule shall apply even if the originator or addressee had
used a laptop other portable device to transmit or receive
his electronic data message or electronic document. This
rule shall also apply to determine the tax situs of such
transaction.
For the purpose hereof —
a. If the originator or the addressee has more than one
place of business, the place of business is that which has
the closest relationship to the underlying transaction or,
where there is no underlying transaction, the principal
place of business.
b. If the originator or the addressee does not have a place
of business, reference is to be made to its habitual
residence; or
c. The “usual place of residence” in relation to a body
corporate, means the place where it is incorporated or
otherwise legally constituted.
SECTION 24(23). Choice of Security Methods. — Subject to
applicable laws and/or rules and guidelines promulgated
by the Department of Trade and Industry with other
appropriate government agencies, parties to any electronic
transaction shall be free to determine the type and level of
electronic data message or electronic document security
needed, and to select and use or implement appropriate
technological methods that suit their needs.
PART V Final Provisions
SECTION 30(29). Extent of Liability of a Service Provider. —
Except as otherwise provided in this Section, no person or
party shall be subject to any civil or criminal liability in
respect of the electronic data message or electronic
document for which the person or party acting as a service
provider as defined in Section 5, merely provides access if
such liability is founded on —
a.) The obligations and liabilities of the parties under the
electronic data message or electronic document;
b.) The making, publication, dissemination or distribution
of such material or any statement made in such material,
including possible infringement of any right subsisting in
or in relation to such material: Provided, That
i. The service provider does not have actual knowledge, or
is not aware of the facts or circumstances from which it is
apparent, that the making, publication, dissemination or
distribution of such material is unlawful or infringes any
rights subsisting in or in relation to such material;
ii. The service provider does not knowingly receive a
financial benefit directly attributable to the unlawful or
infringing activity; and

iii. The service provider does not directly commit any

infringement or other unlawful act and does not induce or
cause another person or party to commit any infringement
or other unlawful act and/or does not benefit financially
from the infringing activity or unlawful act of another
person or party: Provided, further, That nothing in this
Section shall affect —

a) Any obligation founded on contract;

b) The obligation of a service provider as such under a

licensing or other regulatory regime established under
written law; or

c) Any obligation imposed under any written law;

d) The civil liability of any party to the extent that such

liability forms the basis for injunctive relief issued by a
court under any law requiring that the service provider
take or refrain from actions necessary to remove, block or
deny access to any material, or to preserve evidence of a
violation of law.

SECTION 31(30). Lawful Access. — Access to an electronic

file, or an electronic signature of an electronic data
message or electronic document shall only be authorized
and enforced in favor of the individual or entity having a
legal right to the possession or the use of the plaintext,
electronic signature or file and solely for the authorized
purposes. The electronic key for identity or integrity shall
not be made available to any person or party without the
consent of the individual or entity in lawful possession of
that electronic key.

SECTION 32(31). Obligation of Confidentiality. — Except

for the purposes authorized under this Act, any person
who obtained access to any electronic key, electronic data
message or electronic document, book, register,
correspondence, information, or other material pursuant
to any powers conferred under this Act, shall not convey to
or share the same with any other person.

❹ Data Privacy Act
R.A. No. 10173, Sections 1-6, 11-19, 20(a-f), 21-24
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
Be it enacted, by the Senate and House of Representatives of
the Philippines in Congress assembled:
CHAPTER I GENERAL PROVISIONS
SECTION 1. Short Title. – This Act shall be known as
the “Data Privacy Act of 2012”.
SEC. 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.
SEC. 3. Definition of Terms. – Whenever used in this Act, the
following terms shall have the respective meanings
hereafter set forth:
(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:
(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 current 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.
SEC. 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;
(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.
SEC. 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.
SEC. 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.
CHAPTER III PROCESSING OF PERSONAL
INFORMATION
SEC. 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;
(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.
SEC. 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;
 (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
(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.
SEC. 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;
(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
(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.
SEC. 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.
SEC. 15. Extension of Privileged Communication. – Personal
information controllers may invoke the principle of
privileged communication over privileged information that
they lawfully control or process. Subject to existing laws
and regulations, any evidence gathered on privileged
information is inadmissible.
CHAPTER IV RIGHTS OF THE DATA SUBJECT
SEC. 16. Rights of the Data Subject. – The data subject is
entitled to:
(a) Be informed whether personal information pertaining
to him or her shall be, are being or have been processed;
(b) Be furnished the information indicated hereunder
before the entry of his or her personal information into the
processing system of the personal information controller,
or at the next practical opportunity:
(1) Description of the personal information to
be entered into the system;
(2) Purposes for which they are being or are
to be processed;
(3) Scope and method of the personal
information processing;
(4) The recipients or classes of recipients to
whom they are or may be disclosed;
(5) Methods utilized for automated access, if
the same is allowed by the data subject,
and the extent to which such access is
authorized;
(6) The identity and contact details of the
personal information controller or its
representative;
(7) The period for which the information will
be stored; and
(8) The existence of their rights, i.e., to access,
correction, as well as the right to lodge a
complaint before the Commission.
Any information supplied or declaration made to the data
subject on these matters shall not be amended without
prior notification of data subject: Provided, That the
notification under subsection (b) shall not apply should
the personal information be needed pursuant to
a subpoena or when the collection and processing are for
obvious purposes, including when it is necessary for the
performance of or in relation to a contract or service or
when necessary or desirable in the context of an employer-
employee relationship, between the collector and the data
subject, or when the information is being collected and
processed as a result of legal obligation;
(c) Reasonable access to, upon demand, the following:
(1) Contents of his or her personal information that
were processed;
(2) Sources from which personal information were
obtained;
(3) Names and addresses of recipients of the personal
information;
(4) Manner by which such data were processed;
(5) Reasons for the disclosure of the personal
information to recipients;
(6) Information on automated processes where the
data will or likely to be made as the sole basis for
any decision significantly affecting or will affect
the data subject;
(7) Date when his or her personal information
concerning the data subject were last accessed
and modified; and
(8) The designation, or name or identity and address
of the personal information controller;
(d) Dispute the inaccuracy or error in the personal
information and have the personal information controller
correct it immediately and accordingly, unless the request
is vexatious or otherwise unreasonable. If the personal
information have been corrected, the personal information
controller shall ensure the accessibility of both the new
and the retracted information and the simultaneous
receipt of the new and the retracted information by
recipients thereof: Provided, That the third parties who
have previously received such processed personal
information shall he informed of its inaccuracy and its
rectification upon reasonable request of the data subject;
(e) Suspend, withdraw or order the blocking, removal or
destruction of his or her personal information from the
personal information controller’s filing system upon
discovery and substantial proof that the personal
information are incomplete, outdated, false, unlawfully
obtained, used for unauthorized purposes or are no longer
necessary for the purposes for which they were collected.
In this case, the personal information controller may notify
third parties who have previously received such processed
personal information; and
(f) Be indemnified for any damages sustained due to such
inaccurate, incomplete, outdated, false, unlawfully
obtained or unauthorized use of personal information.
SEC. 17. Transmissibility of Rights of the Data Subject. – The
lawful heirs and assigns of the data subject may invoke the
rights of the data subject for, which he or she is an heir or
assignee at any time after the death of the data subject or
when the data subject is incapacitated or incapable of
exercising the rights as enumerated in the immediately
preceding section.
SEC. 18. Right to Data Portability. – The data subject shall
have the right, where personal information is processed by
electronic means and in a structured and commonly used
format, to obtain from the personal information controller
a copy of data undergoing processing in an electronic or
structured format, which is commonly used and allows for
further use by the data subject. The Commission may
specify the electronic format referred to above, as well as
the technical standards, modalities and procedures for
their transfer.
SEC. 19. Non-Applicability. – The immediately preceding
sections are not applicable if the processed personal
information are used only for the needs of scientific and
statistical research and, on the basis of such, no activities
are carried out and no decisions are taken regarding the
data subject: Provided, That the personal information shall
be held under strict confidentiality and shall be used only
for the declared purpose. Likewise, the immediately
preceding sections are not applicable to processing of
personal information gathered for the purpose of
investigations in relation to any criminal, administrative or
tax liabilities of a data subject.
CHAPTER V SECURITY OF PERSONAL INFORMATION
SEC. 20. Security of Personal Information. –
(a) The personal information controller must implement
reasonable and appropriate organizational, physical and
technical measures intended for the protection of personal
information against any accidental or unlawful
destruction, alteration and disclosure, as well as against
any other unlawful processing.
(b) The personal information controller shall implement
reasonable and appropriate measures to protect personal
information against natural dangers such as accidental loss
or destruction, and human dangers such as unlawful
access, fraudulent misuse, unlawful destruction, alteration
and contamination.
(c) The determination of the appropriate level of security
under this section must take into account the nature of the
personal information to be protected, the risks
represented by the processing, the size of the organization
and complexity of its operations, current data privacy best
practices and the cost of security implementation. Subject
to guidelines as the Commission may issue from time to
time, the measures implemented must include:
 (1) Safeguards to protect its computer network
against accidental, unlawful or unauthorized
usage or interference with or hindering of their
functioning or availability;
(2) A security policy with respect to the processing of
personal information;
(3) A process for identifying and accessing reasonably
foreseeable vulnerabilities in its computer
networks, and for taking preventive, corrective
and mitigating action against security incidents
that can lead to a security breach; and
(4) Regular monitoring for security breaches and a
process for taking preventive, corrective and
mitigating action against security incidents that
can lead to a security breach.
(d) The personal information controller must further
ensure that third parties processing personal information
on its behalf shall implement the security measures
required by this provision.
(e) The employees, agents or representatives of a personal
information controller who are involved in the processing
of personal information shall operate and hold personal
information under strict confidentiality if the personal
information are not intended for public disclosure. This
obligation shall continue even after leaving the public
service, transfer to another position or upon termination
of employment or contractual relations.
(f) The personal information controller shall promptly
notify the Commission and affected data subjects when
sensitive personal information or other information that
may, under the circumstances, be used to enable identity
fraud are reasonably believed to have been acquired by an
unauthorized person, and the personal information
controller or the Commission believes (bat such
unauthorized acquisition is likely to give rise to a real risk
of serious harm to any affected data subject. The
notification shall at least describe the nature of the breach,
the sensitive personal information possibly involved, and
the measures taken by the entity to address the breach.
Notification may be delayed only to the extent necessary to
determine the scope of the breach, to prevent further
disclosures, or to restore reasonable integrity to the
information and communications system.
(1) In evaluating if notification is unwarranted, the
Commission may take into account compliance by
the personal information controller with this
section and existence of good faith in the
acquisition of personal information.
(2) The Commission may exempt a personal
information controller from notification where, in
its reasonable judgment, such notification would
not be in the public interest or in the interests of
the affected data subjects.
(3) The Commission may authorize postponement of
notification where it may hinder the progress of a
criminal investigation related to a serious breach.
CHAPTER VI ACCOUNTABILITY FOR TRANSFER OF
PERSONAL INFORMATION
SEC. 21. Principle of Accountability. – Each personal
information controller is responsible for personal
information under its control or custody, including
information that have been transferred to a third party for
processing, whether domestically or internationally,
subject to cross-border arrangement and cooperation.
(a) The personal information controller is accountable for
complying with the requirements of this Act and shall use
contractual or other reasonable means to provide a
comparable level of protection while the information are
being processed by a third party.
(b) The personal information controller shall designate an
individual or individuals who are accountable for the
organization’s compliance with this Act. The identity of the
individual(s) so designated shall be made known to any
data subject upon request.
CHAPTER VII SECURITY OF SENSITIVE PERSONAL
INFORMATION IN GOVERNMENT
SEC. 22. Responsibility of Heads of Agencies. – All sensitive
personal information maintained by the government, its
agencies and instrumentalities shall be secured, as far as
practicable, with the use of the most appropriate standard
recognized by the information and communications
technology industry, and as recommended by the
Commission. The head of each government agency or
instrumentality shall be responsible for complying with
the security requirements mentioned herein while the
Commission shall monitor the compliance and may
recommend the necessary action in order to satisfy the
minimum standards.
SEC. 23. Requirements Relating to Access by Agency
Personnel to Sensitive Personal Information. – (a) On-site
and Online Access – Except as may be allowed through
guidelines to be issued by the Commission, no employee of
the government shall have access to sensitive personal
information on government property or through online
facilities unless the employee has received a security
clearance from the head of the source agency.
(b) Off-site Access – Unless otherwise provided in
guidelines to be issued by the Commission, sensitive
personal information maintained by an agency may not be
transported or accessed from a location off government
property unless a request for such transportation or access
is submitted and approved by the head of the agency in
accordance with the following guidelines:
(1) Deadline for Approval or Disapproval – In the case
of any request submitted to the head of an agency,
such head of the agency shall approve or
disapprove the request within two (2) business
 days after the date of submission of the request. In
case there is no action by the head of the agency,
then such request is considered disapproved;
(2) Limitation to One thousand (1,000) Records – If a
request is approved, the head of the agency shall
limit the access to not more than one thousand
(1,000) records at a time; and
(3) Encryption – Any technology used to store,
transport or access sensitive personal information
for purposes of off-site access approved under this
subsection shall be secured by the use of the most
secure encryption standard recognized by the
Commission.
The requirements of this subsection shall be implemented
not later than six (6) months after the date of the
enactment of this Act.
SEC. 24. Applicability to Government Contractors. – In
entering into any contract that may involve accessing or
requiring sensitive personal information from one
thousand (1,000) or more individuals, an agency shall
require a contractor and its employees to register their
personal information processing system with the
Commission in accordance with this Act and to comply
with the other provisions of this Act including the
immediately preceding section, in the same manner as
agencies and government employees comply with such
requirements.
❺ Implementing Rules and Regulations of Data
Privacy Act
Sections 1-7, 17-29,34-41, 50
Pursuant to the mandate of the National Privacy
Commission to administer and implement the provisions
of the Data Privacy Act of 2012, and to monitor and ensure
compliance of the country with international standards set
for data protection, the following rules and regulations are
hereby promulgated to effectively implement the
provisions of the Act:
Rule I. Preliminary Provisions
Section 1. Title. These rules and regulations shall be known
as the “Implementing Rules and Regulations of the Data
Privacy Act of 2012”, or the “Rules”.
Section 2. Policy. These Rules further enforce the Data
Privacy Act and adopt generally accepted international
principles and standards for personal data protection.
They safeguard the fundamental human right of every
individual to privacy while ensuring free flow of
information for innovation, growth, and national
development. These Rules also recognize the vital role of
information and communications technology in nation-
building and enforce the State’s inherent obligation to
ensure that personal data in information and
communications systems in the government and in the
private sector are secured and protected.
Section 3. Definitions. Whenever used in these Rules, the
following terms shall have the respective meanings
hereafter set forth:
a. “Act” refers to Republic Act No. 10173, also known as the
Data Privacy Act of 2012;
b. “Commission” refers to the National Privacy
Commission;
c. “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 his or her
personal, sensitive personal, or privileged information.
Consent shall be evidenced by written, electronic or
recorded means. It may also be given on behalf of a data
subject by a lawful representative or an agent specifically
authorized by the data subject to do so;
d. “Data subject” refers to an individual whose personal,
sensitive personal, or privileged information is processed;
e. “Data processing systems” refers to the structure and
procedure by which personal data is collected and further
processed in an information and communications system
or relevant filing system, including the purpose and
intended output of the processing;
f. “Data sharing” is the disclosure or transfer to a third
party of personal data under the custody of a personal
information controller or personal information processor.
In the case of the latter, such disclosure or transfer must
have been upon the instructions of the personal
information controller concerned. The term excludes
outsourcing, or the disclosure or transfer of personal data
by a personal information controller to a personal
information processor;
g. “Direct marketing” refers to communication by whatever
means of any advertising or marketing material which is
directed to particular individuals;
h. “Filing system” refers to any set 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 individual is readily accessible;
i. “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 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;
j. “Personal data” refers to all types of personal
information;
k. “Personal data breach” refers to a breach of security
leading to the accidental or unlawful destruction, loss,
alteration, unauthorized disclosure of, or access to,
personal data transmitted, stored, or otherwise processed;
l. “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;
m. “Personal information controller” refers to a natural or
juridical person, or any other body who controls the
processing of personal data, or instructs another to
process personal data on its behalf. The term excludes:
1. A natural or juridical person, or any other body, who
performs such functions as instructed by another person
or organization; or
2. A natural person who processes personal data in
connection with his or her personal, family, or household
affairs;
There is control if the natural or juridical person or any
other body decides on what information is collected, or the
purpose or extent of its processing;
n. “Personal information processor” refers to any natural
or juridical person or any other body to whom a personal
information controller may outsource or instruct the
processing of personal data pertaining to a data subject;
o. “Processing” refers to any operation or any set of
operations performed upon personal data including, but
not limited to, the collection, recording, organization,
storage, updating or modification, retrieval, consultation,
use, consolidation, blocking, erasure or destruction of data.
Processing may be performed through automated means,
or manual processing, if the personal data are contained or
are intended to be contained in a filing system;
p. “Profiling” refers to any form of automated processing of
personal data consisting of the use of personal data to
evaluate certain personal aspects relating to a natural
person, in particular to analyze or predict aspects
concerning that natural person’s performance at work,
economic situation, health, personal preferences, interests,
reliability, behavior, location or movements;
q. “Privileged information” refers to any and all forms of
data, which, under the Rules of Court and other pertinent
laws constitute privileged communication;
r. “Public authority” refers to any government entity
created by the Constitution or law, and vested with law
enforcement or regulatory authority and functions;
s. “Security incident” is an event or occurrence that affects
or tends to affect data protection, or may compromise the
availability, integrity and confidentiality of personal data.
It includes incidents that would result to a personal data
breach, if not for safeguards that have been put in place;
t. 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
individual, 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 is not limited to, social security
numbers, previous or current 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.
Rule II. Scope of Application
Section 4. Scope. The Act and these Rules apply to the
processing of personal data by any natural and juridical
person in the government or private sector. They apply to
an act done or practice engaged in and outside of the
Philippines if:
a. The natural or juridical person involved in the
processing of personal data is found or established in the
Philippines;
b. The act, practice or processing relates to personal data
about a Philippine citizen or Philippine resident;
c. The processing of personal data is being done in the
Philippines; or
d. The act, practice or processing of personal data is done
or engaged in by an entity with links to the Philippines,
with due consideration to international law and comity,
such as, but not limited to, the following:
1. Use of equipment located in the country, or maintains an
office, branch or agency in the Philippines for processing of
personal data;
2. A contract is entered in the Philippines;
3. A juridical entity unincorporated in the Philippines but
has central management and control in the country;
4. 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 data;
5. An entity that carries on business in the Philippines;
6. An entity that collects or holds personal data in the
Philippines.
Section 5. Special Cases. The Act and these Rules shall not
apply to the following specified information, only to the
minimum extent of collection, access, use, disclosure or
other processing necessary to the purpose, function, or
activity concerned:
a. Information processed for purpose of allowing public
access to information that fall within matters of public
concern, pertaining to:
1. Information about any individual who is or was an
officer or employee of government that relates to his or
her position or functions, including:
(a) The fact that the individual is or was an officer or
employee of the government;
(b) The title, office address, and office telephone number of
the individual;
(c) The classification, salary range, and responsibilities of
the position held by the individual; and
(d) The name of the individual on a document he or she
prepared in the course of his or her employment with the
government;
2. Information about an individual who is or was
performing a service under contract for a government
institution, but only in so far as it relates to such service,
including the the name of the individual and the terms of
his or her contract;
3. Information relating to a benefit of a financial nature
conferred on an individual upon the discretion of the
government, such as the granting of a license or permit,
including the name of the individual and the exact nature
of the benefit: Provided, that they do not include benefits
given in the course of an ordinary transaction or as a
matter of right;
b. Personal information processed for journalistic, artistic
or literary purpose, in order to uphold freedom of speech,
of expression, or of the press, subject to requirements of
other applicable law or regulations;
c. Personal information that will be processed for research
purpose, intended for a public benefit, subject to the
requirements of applicable laws, regulations, or ethical
standards;
d. Information necessary in order to carry out the
functions of public authority, in accordance with a
constitutionally or statutorily mandated function
pertaining to law enforcement or regulatory function,
including the performance of the functions of the
independent, central monetary authority, subject to
restrictions provided by law. Nothing in this Act shall be
construed as having 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);
e. Information necessary for banks, other financial
institutions under the jurisdiction of the independent,
central monetary authority or Bangko Sentral ng Pilipinas,
and other bodies authorized by law, to the extent
necessary to comply with Republic Act No. 9510 (CISA),
Republic Act No. 9160, as amended, otherwise known as
the Anti-Money Laundering Act, and other applicable laws;
f. 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.
The burden of proving the law of the foreign jurisdiction
falls on the person or body seeking exemption. In the
absence of proof, the applicable law shall be presumed to
be the Act and these Rules:
Provided, that the non-applicability of the Act or these
Rules do not extend to personal information controllers or
personal information processors, who remain subject to
the requirements of implementing security measures for
personal data protection: Provided further, that the
processing of the information provided in the preceding
paragraphs shall be exempted from the requirements of
the Act only to the minimum extent necessary to achieve
the specific purpose, function, or activity.
Section 6. Protection afforded to Data Subjects.
a. Unless directly incompatible or inconsistent with the
preceding sections in relation to the purpose, function, or
activities the non-applicability concerns, the personal
information controller or personal information processor
shall uphold the rights of data subjects, and adhere to
general data privacy principles and the requirements of
lawful processing.
b. The burden of proving that the Act and these Rules are
not applicable to a particular information falls on those
involved in the processing of personal data or the party
claiming the non-applicability.
c. In all cases, the determination of any exemption shall be
liberally interpreted in favor of the rights and interests of
the data subject.
Section 7. Protection Afforded to Journalists and their
Sources.
a. Publishers, editors, or duly accredited reporters of any
newspaper, magazine or periodical of general circulation
shall not be compelled to reveal the source of any news
report or information appearing in said publication if it
was related in any confidence to such publisher, editor, or
reporter.
b. Publishers, editors, or duly accredited reporters who are
likewise personal information controllers or personal
information processors within the meaning of the law are
still bound to follow the Data Privacy Act and related
issuances with regard to the processing of personal data,
upholding rights of their data subjects and maintaining
compliance with other provisions that are not
incompatible with the protection provided by Republic Act
No. 53.
Rule IV. Data Privacy Principles
Section 17. General Data Privacy Principles. The processing
of personal data shall be allowed, subject to compliance
with the requirements of the Act and other laws allowing
disclosure of information to the public, and adherence to
the principles of transparency, legitimate purpose, and
proportionality.
Section 18. Principles of Transparency, Legitimate Purpose
and Proportionality. The processing of personal data shall
be allowed subject to adherence to the principles of
transparency, legitimate purpose, and proportionality.
a. Transparency. The data subject must be aware of the
nature, purpose, and extent of the processing of his or her
personal data, including the risks and safeguards involved,
the identity of personal information controller, his or her
rights as a data subject, and how these can be exercised.
Any information and communication relating to the
processing of personal data should be easy to access and
understand, using clear and plain language.
b. Legitimate purpose. The processing of information shall
be compatible with a declared and specified purpose
which must not be contrary to law, morals, or public
policy.
c. Proportionality. The processing of information shall be
adequate, relevant, suitable, necessary, and not excessive
in relation to a declared and specified purpose. Personal
data shall be processed only if the purpose of the
processing could not reasonably be fulfilled by other
means.
Section 19. General principles in collection, processing and
retention. The processing of personal data shall adhere to
the following general principles in the collection,
processing, and retention of personal data:
a. Collection must be for a declared, specified, and
legitimate purpose.
1. Consent is required prior to the collection and
processing of personal data, subject to exemptions
provided by the Act and other applicable laws and
regulations. When consent is required, it must be time-
bound in relation to the declared, specified and legitimate
purpose. Consent given may be withdrawn.
2. The data subject must be provided specific information
regarding the purpose and extent of processing, including,
where applicable, the automated processing of his or her
personal data for profiling, or processing for direct
marketing, and data sharing.
3. Purpose should be determined and declared before, or
as soon as reasonably practicable, after collection.
4. Only personal data that is necessary and compatible
with declared, specified, and legitimate purpose shall be
collected.
b. Personal data shall be processed fairly and lawfully.
1. Processing shall uphold the rights of the data subject,
including the right to refuse, withdraw consent, or object.
It shall likewise be transparent, and allow the data subject
sufficient information to know the nature and extent of
processing.
2. Information provided to a data subject must always be
in clear and plain language to ensure that they are easy to
understand and access.
3. Processing must be in a manner compatible with
declared, specified, and legitimate purpose.
4. Processed personal data should be adequate, relevant,
and limited to what is necessary in relation to the purposes
for which they are processed.
5. Processing shall be undertaken in a manner that ensures
appropriate privacy and security safeguards.
c. Processing should ensure data quality.
1. Personal data should be accurate and where necessary
for declared, specified and legitimate purpose, kept up to
date.
2. Inaccurate or incomplete data must be rectified,
supplemented, destroyed or their further processing
restricted.
d. Personal Data shall not be retained longer than
necessary.
1. Retention of personal data shall only for as long as
necessary:
(a) for the fulfillment of the declared, specified, and
legitimate purpose, or when the processing relevant to the
purpose has been terminated;
(b) for the establishment, exercise or defense of legal
claims; or
(c) for legitimate business purposes, which must be
consistent with standards followed by the applicable
industry or approved by appropriate government agency.
2. Retention of personal data shall be allowed in cases
provided by law.
3. Personal data shall be disposed or discarded in a secure
manner that would prevent further processing,
unauthorized access, or disclosure to any other party or
the public, or prejudice the interests of the data subjects.
e. Any authorized further processing shall have adequate
safeguards.
1. Personal data originally collected for a declared,
specified, or legitimate purpose may be processed further
for historical, statistical, or scientific purposes, and, in
cases laid down in law, may be stored for longer periods,
subject to implementation of the appropriate
organizational, physical, and technical security measures
required by the Act in order to safeguard the rights and
freedoms of the data subject.
2. Personal data which is aggregated or kept in a form
which does not permit identification of data subjects may
be kept longer than necessary for the declared, specified,
and legitimate purpose.
3. Personal data shall not be retained in perpetuity in
contemplation of a possible future use yet to be
determined.
Section 20. General Principles for Data Sharing. Further
Processing of Personal Data collected from a party other
than the Data Subject shall be allowed under any of the
following conditions:
a. Data sharing shall be allowed when it is expressly
authorized by law: Provided, that there are adequate
safeguards for data privacy and security, and processing
adheres to principle of transparency, legitimate purpose
and proportionality.
b. Data Sharing shall be allowed in the private sector if the
data subject consents to data sharing, and the following
conditions are complied with:
1. Consent for data sharing shall be required even when
the data is to be shared with an affiliate or mother
company, or similar relationships;
2. Data sharing for commercial purposes, including direct
marketing, shall be covered by a data sharing agreement.
(a) The data sharing agreement shall establish adequate
safeguards for data privacy and security, and uphold rights
of data subjects.
(b) The data sharing agreement shall be subject to review
by the Commission, on its own initiative or upon complaint
of data subject;
3. The data subject shall be provided with the following
information prior to collection or before data is shared:
(a) Identity of the personal information controllers or
personal information processors that will be given access
to the personal data;
(b) Purpose of data sharing;
(c) Categories of personal data concerned;
(d) Intended recipients or categories of recipients of the
personal data;
(e) Existence of the rights of data subjects, including the
right to access and correction, and the right to object;
(f) Other information that would sufficiently notify the
data subject of the nature and extent of data sharing and
the manner of processing.
4. Further processing of shared data shall adhere to the
data privacy principles laid down in the Act, these Rules,
and other issuances of the Commission.
c. Data collected from parties other than the data subject
for purpose of research shall be allowed when the personal
data is publicly available, or has the consent of the data
subject for purpose of research: Provided, that adequate
safeguards are in place, and no decision directly affecting
the data subject shall be made on the basis of the data
collected or processed. The rights of the data subject shall
be upheld without compromising research integrity.
d. Data sharing between government agencies for the
purpose of a public function or provision of a public
service shall be covered a data sharing agreement.
1. Any or all government agencies party to the agreement
shall comply with the Act, these Rules, and all other
issuances of the Commission, including putting in place
adequate safeguards for data privacy and security.
2. The data sharing agreement shall be subject to review of
the Commission, on its own initiative or upon complaint of
data subject.
Rule V. Lawful Processing of Personal Data
Section 21. Criteria for Lawful Processing of Personal
Information. Processing of personal information is allowed,
unless prohibited by law. For processing to be lawful, any
of the following conditions must be complied with:
a. The data subject must have given his or her consent
prior to the collection, or as soon as practicable and
reasonable;
b. The processing involves the personal information of a
data subject who is a party to a contractual agreement, in
order to fulfill obligations under the contract or to take
steps at the request of the data subject prior to entering
the said agreement;
c. The processing is necessary for compliance with a legal
obligation to which the personal information controller is
subject;
d. The processing is necessary to protect vitally important
interests of the data subject, including his or her life and
health;
e. The processing of personal information is necessary to
respond to national emergency or to comply with the
requirements of public order and safety, as prescribed by
law;
f. The processing of personal information is necessary for
the fulfillment of the constitutional or statutory mandate of
a public authority; or
g. The processing is necessary to pursue the legitimate
interests of 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.
Section 22. Sensitive Personal Information and Privileged
Information. The processing of sensitive personal and
privileged information is prohibited, except in any of the
following cases:
a. Consent is given by data subject, or by the parties to the
exchange of privileged information, prior to the processing
of the sensitive personal information or privileged
information, which shall be undertaken pursuant to a
declared, specified, and legitimate purpose;
b. The processing of the sensitive personal information or
privileged information is provided for by existing laws and
regulations: Provided, that said laws and regulations do
not require the consent of the data subject for the
processing, and guarantee the protection of personal data;
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:
1. Processing is confined and related to the bona fide
members of these organizations or their associations;
2. The sensitive personal information are not transferred
to third parties; and
3. Consent of the data subject was obtained prior to
processing;
e. The processing is necessary for the purpose of medical
treatment: Provided, that it is carried out by a medical
practitioner or a medical treatment institution, and an
adequate level of protection of personal data is ensured; or
f. The processing concerns sensitive personal information
or privileged information 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 pursuant to a constitutional or
statutory mandate.
Section 23. Extension of Privileged Communication.
Personal information controllers may invoke the principle
of privileged communication over privileged information
that they lawfully control or process. Subject to existing
laws and regulations, any evidence gathered from
privileged information is inadmissible.
When the Commission inquires upon communication
claimed to be privileged, the personal information
controller concerned shall prove the nature of the
communication in an executive session. Should the
communication be determined as privileged, it shall be
excluded from evidence, and the contents thereof shall not
form part of the records of the case: Provided, that where
the privileged communication itself is the subject of a
breach, or a privacy concern or investigation, it may be
disclosed to the Commission but only to the extent
necessary for the purpose of investigation, without
including the contents thereof in the records.
Section 24. Surveillance of Suspects and Interception of
Recording of Communications. Section 7 of Republic Act No.
9372, otherwise known as the “Human Security Act of
2007”, is hereby amended to include the condition that the
processing of personal data for the purpose of surveillance,
interception, or recording of communications shall comply
with the Data Privacy Act, including adherence to the
principles of transparency, proportionality, and legitimate
purpose.
Rule VI. Security Measures for the Protection of
Personal Data
Section 25. Data Privacy and Security. Personal information
controllers and personal information processors shall
implement reasonable and appropriate organizational,
physical, and technical security measures for the
protection of personal data.
The personal information controller and personal
information processor shall take steps to ensure that any
natural person acting under their authority and who has
access to personal data, does not process them except
upon their instructions, or as required by law.
The security measures shall aim to maintain the
availability, integrity, and confidentiality of personal data
and are intended for the protection of personal data
against any accidental or unlawful destruction, alteration,
and disclosure, as well as against any other unlawful
processing. These measures shall be implemented to
protect personal data against natural dangers such as
accidental loss or destruction, and human dangers such as
unlawful access, fraudulent misuse, unlawful destruction,
alteration and contamination.
Section 26. Organizational Security Measures. Where
appropriate, personal information controllers and
personal information processors shall comply with the
following guidelines for organizational security:
a. Compliance Officers. Any natural or juridical person or
other body involved in the processing of personal data
shall designate an individual or individuals who shall
function as data protection officer, compliance officer or
otherwise be accountable for ensuring compliance with
applicable laws and regulations for the protection of data
privacy and security.
b. Data Protection Policies. Any natural or juridical person
or other body involved in the processing of personal data
shall implement appropriate data protection policies that
provide for organization, physical, and technical security
measures, and, for such purpose, take into account the
nature, scope, context and purposes of the processing, as
well as the risks posed to the rights and freedoms of data
subjects.
1. The policies shall implement data protection principles
both at the time of the determination of the means for
processing and at the time of the processing itself.
2. The policies shall implement appropriate security
measures that, by default, ensure only personal data which
is necessary for the specified purpose of the processing are
processed. They shall determine the amount of personal
data collected, including the extent of processing involved,
the period of their storage, and their accessibility.
3. The polices shall provide for documentation, regular
review, evaluation, and updating of the privacy and
security policies and practices.
c. Records of Processing Activities. Any natural or juridical
person or other body involved in the processing of
personal data shall maintain records that sufficiently
describe its data processing system, and identify the duties
and responsibilities of those individuals who will have
access to personal data. Records should include:
1. Information about the purpose of the processing of
personal data, including any intended future processing or
data sharing;
2. A description of all categories of data subjects, personal
data, and recipients of such personal data that will be
involved in the processing;
3. General information about the data flow within the
organization, from the time of collection, processing, and
retention, including the time limits for disposal or erasure
of personal data;
4. A general description of the organizational, physical, and
technical security measures in place;
5. The name and contact details of the personal
information controller and, where applicable, the joint
controller, the its representative, and the compliance
officer or Data Protection Officer, or any other individual
or individuals accountable for ensuring compliance with
the applicable laws and regulations for the protection of
data privacy and security.
d. Management of Human Resources. Any natural or
juridical person or other entity involved in the processing
of personal data shall be responsible for selecting and
supervising its employees, agents, or representatives,
particularly those who will have access to personal data.
The said employees, agents, or representatives shall
operate and hold personal data under strict confidentiality
if the personal data are not intended for public disclosure.
This obligation shall continue even after leaving the public
service, transferring to another position, or upon
terminating their employment or contractual relations.
There shall be capacity building, orientation or training
programs for such employees, agents or representatives,
regarding privacy or security policies.
e. Processing of Personal Data. Any natural or juridical
person or other body involved in the processing of
personal data shall develop, implement and review:
1. A procedure for the collection of personal data, including
procedures for obtaining consent, when applicable;
2. Procedures that limit the processing of data, to ensure
that it is only to the extent necessary for the declared,
specified, and legitimate purpose;
3. Policies for access management, system monitoring, and
protocols to follow during security incidents or technical
problems;
4. Policies and procedures for data subjects to exercise
their rights under the Act;
5. Data retention schedule, including timeline or conditions
for erasure or disposal of records.
f. Contracts with Personal Information Processors. The
personal information controller, through appropriate
contractual agreements, shall ensure that its personal
information processors, where applicable, shall also
implement the security measures required by the Act and
these Rules. It shall only engage those personal
information processors that provide sufficient guarantees
to implement appropriate security measures specified in
the Act and these Rules, and ensure the protection of the
rights of the data subject.
Section 27. Physical Security Measures. Where appropriate,
personal information controllers and personal information
processors shall comply with the following guidelines for
physical security:
a. Policies and procedures shall be implemented to
monitor and limit access to and activities in the room,
workstation or facility, including guidelines that specify
the proper use of and access to electronic media;
b. Design of office space and work stations, including the
physical arrangement of furniture and equipment, shall
provide privacy to anyone processing personal data, taking
into consideration the environment and accessibility to the
public;
c. The duties, responsibilities and schedule of individuals
involved in the processing of personal data shall be clearly
defined to ensure that only the individuals actually
performing official duties shall be in the room or work
station, at any given time;
d. Any natural or juridical person or other body involved in
the processing of personal data shall implement Policies
and procedures regarding the transfer, removal, disposal,
and re-use of electronic media, to ensure appropriate
protection of personal data;
e. Policies and procedures that prevent the mechanical
destruction of files and equipment shall be established.
The room and workstation used in the processing of
personal data shall, as far as practicable, be secured
against natural disasters, power disturbances, external
access, and other similar threats.
Section 28. Guidelines for Technical Security
Measures. Where appropriate, personal information
controllers and personal information processors shall
adopt and establish the following technical security
measures:
a. A security policy with respect to the processing of
personal data;
b. Safeguards to protect their computer network against
accidental, unlawful or unauthorized usage, any
interference which will affect data integrity or hinder the
functioning or availability of the system, and unauthorized
access through an electronic network;
c. The ability to ensure and maintain the confidentiality,
integrity, availability, and resilience of their processing
systems and services;
d. Regular monitoring for security breaches, and a process
both for identifying and accessing reasonably foreseeable
vulnerabilities in their computer networks, and for taking
preventive, corrective, and mitigating action against
security incidents that can lead to a personal data breach;
e. The ability to restore the availability and access to
personal data in a timely manner in the event of a physical
or technical incident;
f. A process for regularly testing, assessing, and evaluating
the effectiveness of security measures;
g. Encryption of personal data during storage and while in
transit, authentication process, and other technical
security measures that control and limit access.
Section 29. Appropriate Level of Security. The Commission
shall monitor the compliance of natural or juridical person
or other body involved in the processing of personal data,
specifically their security measures, with the guidelines
provided in these Rules and subsequent issuances of the
Commission. In determining the level of security
appropriate for a particular personal information
controller or personal information processor, the
Commission shall take into account the nature of the
personal data that requires protection, the risks posed by
the processing, the size of the organization and complexity
of its operations, current data privacy best practices, and
the cost of security implementation. The security measures
provided herein shall be subject to regular review and
evaluation, and may be updated as necessary by the
Commission in separate issuances, taking into account the
most appropriate standard recognized by the information
and communications technology industry and data privacy
best practices.
Rule VIII. Rights of Data Subjects
Section 34. Rights of the Data Subject. The data subject is
entitled to the following rights:
a. Right to be informed.
1. The data subject has a right to be informed whether
personal data pertaining to him or her shall be, are being,
or have been processed, including the existence of
automated decision-making and profiling.
2. The data subject shall be notified and furnished with
information indicated hereunder before the entry of his or
her personal data into the processing system of the
personal information controller, or at the next practical
opportunity:
(a) Description of the personal data to be entered into the
system;
(b) Purposes for which they are being or will be processed,
including processing for direct marketing, profiling or
historical, statistical or scientific purpose;
(c) Basis of processing, when processing is not based on
the consent of the data subject;
(d) Scope and method of the personal data processing;
(e) The recipients or classes of recipients to whom the
personal data are or may be disclosed;
(f) Methods utilized for automated access, if the same is
allowed by the data subject, and the extent to which such
access is authorized, including meaningful information
about the logic involved, as well as the significance and the
envisaged consequences of such processing for the data
subject;
(g) The identity and contact details of the personal data
controller or its representative;
(h) The period for which the information will be stored;
and
(i) The existence of their rights as data subjects, including
the right to access, correction, and object to the processing,
as well as the right to lodge a complaint before the
Commission.
b. Right to object. The data subject shall have the right to
object to the processing of his or her personal data,
including processing for direct marketing, automated
processing or profiling. The data subject shall also be
notified and given an opportunity to withhold consent to
the processing in case of changes or any amendment to the
information supplied or declared to the data subject in the
preceding paragraph.
When a data subject objects or withholds consent, the
personal information controller shall no longer process the
personal data, unless:
1. The personal data is needed pursuant to a subpoena;
2. The collection and processing are for obvious purposes,
including, when it is necessary for the performance of or in
relation to a contract or service to which the data subject is
a party, or when necessary or desirable in the context of an
employer-employee relationship between the collector
and the data subject; or
3. The information is being collected and processed as a
result of a legal obligation.
c. Right to Access. The data subject has the right to
reasonable access to, upon demand, the following:
1. Contents of his or her personal data that were
processed;
2. Sources from which personal data were obtained;
3. Names and addresses of recipients of the personal data;
4. Manner by which such data were processed;
5. Reasons for the disclosure of the personal data to
recipients, if any;
6. Information on automated processes where the data
will, or is likely to, be made as the sole basis for any
decision that significantly affects or will affect the data
subject;
7. Date when his or her personal data concerning the data
subject were last accessed and modified; and
8. The designation, name or identity, and address of the
personal information controller.
d. Right to rectification. The data subject has the right to
dispute the inaccuracy or error in the personal data and
have the personal information controller correct it
immediately and accordingly, unless the request is
vexatious or otherwise unreasonable. If the personal data
has been corrected, the personal information controller
shall ensure the accessibility of both the new and the
retracted information and the simultaneous receipt of the
new and the retracted information by the intended
recipients thereof: Provided, That recipients or third
parties who have previously received such processed
personal data shall be informed of its inaccuracy and its
rectification, upon reasonable request of the data subject.
e. Right to Erasure or Blocking. The data subject shall have
the right to suspend, withdraw or order the blocking,
removal or destruction of his or her personal data from the
personal information controller’s filing system.
1. This right may be exercised upon discovery and
substantial proof of any of the following:
(a) The personal data is incomplete, outdated, false, or
unlawfully obtained;
(b) The personal data is being used for purpose not
authorized by the data subject;
(c) The personal data is no longer necessary for the
purposes for which they were collected;
(d) The data subject withdraws consent or objects to the
processing, and there is no other legal ground or
overriding legitimate interest for the processing;
(e) The personal data concerns private information that is
prejudicial to data subject, unless justified by freedom of
speech, of expression, or of the press or otherwise
authorized;
(f) The processing is unlawful;
(g) The personal information controller or personal
information processor violated the rights of the data
subject.
2. The personal information controller may notify third
parties who have previously received such processed
personal information.
f. Right to damages. The data subject shall be indemnified
for any damages sustained due to such inaccurate,
incomplete, outdated, false, unlawfully obtained or
unauthorized use of personal data, taking into account any
violation of his or her rights and freedoms as data subject.
Section 35. Transmissibility of Rights of the Data Subject.
The lawful heirs and assigns of the data subject may invoke
the rights of the data subject to which he or she is an heir
or an assignee, at any time after the death of the data
subject, or when the data subject is incapacitated or
incapable of exercising the rights as enumerated in the
immediately preceding section.
Section 36. Right to Data Portability. Where his or her
personal data is processed by electronic means and in a
structured and commonly used format, the data subject
shall have the right to obtain from the personal
information controller a copy of such data in an electronic
or structured format that is commonly used and allows for
further use by the data subject. The exercise of this right
shall primarily take into account the right of data subject to
have control over his or her personal data being processed
based on consent or contract, for commercial purpose, or
through automated means. The Commission may specify
the electronic format referred to above, as well as the
technical standards, modalities, procedures and other
rules for their transfer.
Section 37. Limitation on Rights. The immediately
preceding sections shall not be applicable if the processed
personal data are used only for the needs of scientific and
statistical research and, on the basis of such, no activities
are carried out and no decisions are taken regarding the
data subject: Provided, that the personal data shall be held
under strict confidentiality and shall be used only for the
declared purpose. The said sections are also not applicable
to the processing of personal data gathered for the
purpose of investigations in relation to any criminal,
administrative or tax liabilities of a data subject. Any
limitations on the rights of the data subject shall only be to
the minimum extent necessary to achieve the purpose of
said research or investigation.
Rule IX. Data Breach Notification.
Section 38. Data Breach Notification.
a. The Commission and affected data subjects shall be
notified by the personal information controller within
seventy-two (72) hours upon knowledge of, or when there
is reasonable belief by the personal information controller
or personal information processor that, a personal data
breach requiring notification has occurred.
b. Notification of personal data breach shall be required
when sensitive personal information or any other
information that may, under the circumstances, be used to
enable identity fraud are reasonably believed to have been
acquired by an unauthorized person, and the personal
information controller or the Commission believes that
such unauthorized acquisition is likely to give rise to a real
risk of serious harm to any affected data subject.
c. Depending on the nature of the incident, or if there is
delay or failure to notify, the Commission may investigate
the circumstances surrounding the personal data breach.
Investigations may include on-site examination of systems
and procedures.
Section 39. Contents of Notification. The notification shall at
least describe the nature of the breach, the personal data
possibly involved, and the measures taken by the entity to
address the breach. The notification shall also include
measures taken to reduce the harm or negative
consequences of the breach, the representatives of the
personal information controller, including their contact
details, from whom the data subject can obtain additional
information about the breach, and any assistance to be
provided to the affected data subjects.
Section 40. Delay of Notification. Notification may be
delayed only to the extent necessary to determine the
scope of the breach, to prevent further disclosures, or to
restore reasonable integrity to the information and
communications system.
a. In evaluating if notification is unwarranted, the
Commission may take into account compliance by the
personal information controller with this section and
existence of good faith in the acquisition of personal data.
b. The Commission may exempt a personal information
controller from notification where, in its reasonable
judgment, such notification would not be in the public
interest, or in the interest of the affected data subjects.
c. The Commission may authorize postponement of
notification where it may hinder the progress of a criminal
investigation related to a serious breach.
Section 41. Breach Report.
a. The personal information controller shall notify the
Commission by submitting a report, whether written or
electronic, containing the required contents of notification.
The report shall also include the name of a designated
representative of the personal information controller, and
his or her contact details.
b. All security incidents and personal data breaches shall
be documented through written reports, including those
not covered by the notification requirements. In the case of
personal data breaches, a report shall include the facts
surrounding an incident, the effects of such incident, and
the remedial actions taken by the personal information
controller. In other security incidents not involving
personal data, a report containing aggregated data shall
constitute sufficient documentation. These reports shall be
made available when requested by the Commission. A
general summary of the reports shall be submitted to the
Commission annually.
Section 42. Procedure for Notification. The Procedure for
breach notification shall be in accordance with the Act,
these Rules, and any other issuance of the Commission.
Rule XII. Rules on Accountability
Section 50. Accountability for Transfer of Personal Data. A
personal information controller shall be responsible for
any personal data under its control or custody, including
information that have been outsourced or transferred to a
personal information processor or a third party for
processing, whether domestically or internationally,
subject to cross-border arrangement and cooperation.
a. A personal information controller shall be accountable
for complying with the requirements of the Act, these
Rules, and other issuances of the Commission. It shall use
contractual or other reasonable means to provide a
comparable level of protection to the personal data while it
is being processed by a personal information processor or
third party.
b. A personal information controller shall designate an
individual or individuals who are accountable for its
compliance with the Act. The identity of the individual or
individuals so designated shall be made known to a data
subject upon request.
❻ Philippine Competition Act
R.A. No. 10667, Sections 1-7, 12-28

AN ACT PROVIDING FOR A NATIONAL COMPETITION

POLICY PROHIBITING ANTI-COMPETITIVE
AGREEMENTS, ABUSE OF DOMINANT POSITION AND
ANTI-COMPETITIVE MERGERS AND ACQUISITIONS,
ESTABLISHING THE PHILIPPINE COMPETITION
COMMISSION AND APPROPRIATING FUNDS THEREFOR

Be it enacted by the Senate and House of Representatives of

the Philippines in Congress assembled:

CHAPTER I GENERAL PROVISIONS

Section 1. Short Title. – This Act shall be known as the

"Philippine Competition Act".

Section 2. Declaration of Policy. – The efficiency of market

competition as a mechanism for allocating goods and
services is a generally accepted precept. The State
recognizes that past measures undertaken to liberalize key
sectors in the economy need to be reinforced by measures
that safeguard competitive conditions. The State also
recognizes that the provision of equal opportunities to all
promotes entrepreneurial spirit, encourages private
investments, facilitates technology development and
transfer and enhances resource productivity.
Unencumbered market competition also serves the
interest of consumers by allowing them to exercise their
right of choice over goods and services offered in the
market.

Pursuant to the constitutional goals for the national

economy to attain a more equitable distribution of
opportunities, income, and wealth; a sustained increase in
the amount of goods and services produced by the nation
for the benefit of the people; and an expanding
productivity as the key to raising the quality of life for all,
especially the underprivileged and the constitutional
mandate that the State shall regulate or prohibit
monopolies when the public interest so requires and that
no combinations in restraint of trade or unfair competition
shall be allowed, the State shall:
(a) Enhance economic efficiency and promote free
and fair competition in trade, industry and all
commercial economic activities, as well as
establish a National Competition Policy to be
implemented by the Government of the Republic
of the Philippines and all of its political agencies as
a whole;
(b) Prevent economic concentration which will
control the production, distribution, trade, or
industry that will unduly stifle competition, lessen,
manipulate or constrict the discipline of free
markets; and
(c) Penalize all forms of anti-competitive
agreements, abuse of dominant position and anti-
competitive mergers and acquisitions, with the
objective of protecting consumer welfare and
advancing domestic and international trade and
economic development.
Section 3. Scope and Application. — This Act shall be
enforceable against any person or entity engaged in any
trade, industry and commerce in the Republic of the
Philippines. It shall likewise be applicable to international
trade having direct, substantial, and reasonably
foreseeable effects in trade, industry, or commerce in the
Republic of the Philippines, including those that result
from acts done outside the Republic of the Philippines.
This Act shall not apply to the combinations or activities of
workers or employees nor to agreements or arrangements
with their employers when such combinations, activities,
agreements, or arrangements are designed solely to
facilitate collective bargaining in respect of conditions of
employment.
Section 4. Definition of Terms. – As used in this Act:
(a) Acquisition refers to the purchase of securities
or assets, through contract or other means, for the
purpose of obtaining control by:
(1) One (1) entity of the whole or part of
another;
(2) Two (2) or more entities over
another; or
(3) One (1) or more entities over one (1)
or more entities;
(b) Agreement refers to any type or form of
contract, arrangement, understanding, collective
recommendation, or concerted action, whether
formal or informal, explicit or tacit, written or
oral;
(c) Conduct refers to any type or form of
undertaking, collective recommendation,
independent or concerted action or practice,
whether formal or informal;
(d) Commission refers to the Philippine
Competition Commission created under this Act;
(e) Confidential business information refers to
information which concerns or relates to the
operations, production, sales, shipments,
purchases, transfers, identification of customers,
inventories, or amount or source of any income,
profits, losses, expenditures;
(f) Control refers to the ability to substantially
influence or direct the actions or decisions of an
entity, whether by contract, agency or otherwise;
(g) Dominant position refers to a position of
economic strength that an entity or entities hold
which makes it capable of controlling the relevant
market independently from any or a combination
of the following: competitors, customers,
suppliers, or consumers;
(h) Entity refers to any person, natural or juridical,
sole proprietorship, partnership, combination or
association in any form, whether incorporated or
not, domestic or foreign, including those owned or
controlled by the government, engaged directly or
indirectly in any economic activity;
(i) Market refers to the group of goods or services
that are sufficiently interchangeable or
substitutable and the object of competition, and
the geographic area where said goods or services
are offered;
(j) Merger refers to the joining of two (2) or more
entities into an existing entity or to form a new
entity;
(k) Relevant market refers to the market in which
a particular good or service is sold and which is a
combination of the relevant product market and
the relevant geographic market, defined as
follows:
(1) A relevant product market comprises
all those goods and/or services which are
regarded as interchangeable or
substitutable by the consumer or the
 customer, by reason of the goods and/or
services’ characteristics, their prices and
their intended use; and
(2) The relevant geographic market
comprises the area in which the entity
concerned is involved in the supply and
demand of goods and services, in which
the conditions of competition are
sufficiently homogenous and which can
be distinguished from neighboring areas
because the conditions of competition are
different in those areas.
CHAPTER II PHILIPPINE COMPETITION
COMMISSION
Section 5. Philippine Competition Commission. – To
implement the national competition policy and attain the
objectives and purposes of this Act, an independent quasi-
judicial body is hereby created, which shall be known as
the Philippine Competition Commission (PCC), hereinafter
referred to as the Commission, and which shall be
organized within sixty (60) days after the effectivity of this
Act. Upon establishment of the Commission, Executive
Order No. 45 designating the Department of Justice as the
Competition Authority is hereby amended. The Office for
Competition (OFC) under the Office of the Secretary of
Justice shall however be retained, with its powers and
functions modified pursuant to Section 13 of this Chapter.
The Commission shall be an attached agency to the Office
of the President.
Section 6. Composition of the Commission. – The
Commission shall be composed of a Chairperson and four
(4) Commissioners. The Chairperson and the
Commissioners shall be citizens and residents of the
Philippines, of good moral character, of recognized probity
and independence and must have distinguished
themselves professionally in public, civic or academic
service in any of the following fields: economics, law,
finance, commerce or engineering. They must have been in
the active practice of their professions for at least ten (10)
years, and must not have been candidates for any elective
national or local office in the immediately preceding
elections, whether regular or special: Provided, That at
least one (1) shall be a member of the Philippine Bar with
at least ten (10) years of experience in the active practice
of law, and at least one (1) shall be an economist. The
Chairperson and the Commissioners who shall have the
rank equivalent of cabinet secretary and undersecretary,
respectively, shall be appointed by the President.
Section 7. Term of Office. – The term of office of the
Chairperson and the Commissioners shall be seven (7)
years without reappointment. Of the first set of appointees,
the Chairperson shall hold office for seven (7) years and of
the first four (4) Commissioners, two (2) shall hold office
for a term of seven (7) years and two (2) for a term of five
(5) years. In case a vacancy occurs before the expiration of
the term of office, the appointment to such vacancy shall
only be for the unexpired term of the predecessor.
The Chairperson and the Commissioners shall enjoy
security of tenure and shall not be suspended or removed
from office except for just cause as provided by law.
Section 12. Powers and Functions. — The Commission
shall have original and primary jurisdiction over the
enforcement and implementation of the provisions of this
Act, and its implementing rules and regulations. The
Commission shall exercise the following powers and
functions:
(a) Conduct inquiry, investigate, and hear and
decide on cases involving any violation of this Act
and other existing competition laws motu
proprio or upon receipt of a verified complaint
from an interested party or upon referral by the
concerned regulatory agency, and institute the
appropriate civil or criminal proceedings;
(b) Review proposed mergers and acquisitions,
determine thresholds for notification, determine
the requirements and procedures for notification,
and upon exercise of its powers to review,
prohibit mergers and acquisitions that will
substantially prevent, restrict, or lessen
competition in the relevant market;
(c) Monitor and undertake consultation with
stakeholders and affected agencies for the
purpose of understanding market behavior;
(d) Upon finding, based on substantial evidence,
that an entity has entered into an anti-competitive
agreement or has abused its dominant position
after due notice and hearing, stop or redress the
same, by applying remedies, such as, but not
limited to, issuance of injunctions, requirement of
divestment, and disgorgement of excess profits
under such reasonable parameters that shall be
prescribed by the rules and regulations
implementing this Act;
(e) Conduct administrative proceedings, impose
sanctions, fines or penalties for any
noncompliance with or breach of this Act and its
implementing rules and regulations (IRR) and
punish for contempt;
(f) Issue subpoena duces tecum and subpoena ad
testificandum to require the production of books,
records, or other documents or data which relate
to any matter relevant to the investigation and
personal appearance before the Commission,
summon witnesses, administer oaths, and issue
interim orders such as show cause orders and
cease and desist orders after due notice and
hearing in accordance with the rules and
regulations implementing this Act;
(g) Upon order of the court, undertake inspections
of business premises and other offices, land and
vehicles, as used by the entity, where it reasonably
suspects that relevant books, tax records, or other
documents which relate to any matter relevant to
the investigation are kept, in order to prevent the
removal, concealment, tampering with, or
destruction of the books, records, or other
documents;
(h) Issue adjustment or divestiture orders
including orders for corporate reorganization or
divestment in the manner and under such terms
and conditions as may be prescribed in the rules
and regulations implementing this Act.
Adjustment or divestiture orders, which are
structural remedies, should only be imposed:
(1) Where there is no equally effective
behavioral remedy; or
(2) Where any equally effective
behavioral remedy would be more
burdensome for the enterprise concerned
than the structural remedy. Changes to
the structure of an enterprise as it existed
before the infringement was committed
would only be proportionate to the
substantial risk of a lasting or repeated
infringement that derives from the very
structure of the enterprise;
(i) Deputize any and all enforcement agencies of
the government or enlist the aid and support of
any private institution, corporation, entity or
association, in the implementation of its powers
and functions;
(j) Monitor compliance by the person or entities
concerned with the cease and desist order or
consent judgment;
(k) Issue advisory opinions and guidelines on
competition matters for the effective enforcement
of this Act and submit annual and special reports
to Congress, including proposed legislation for the
regulation of commerce, trade, or industry;
(l) Monitor and analyze the practice of
competition in markets that affect the Philippine
economy; implement and oversee measures to
promote transparency and accountability; and
ensure that prohibitions and requirements of
competition laws are adhered to;
(m) Conduct, publish, and disseminate studies and
reports on anti-competitive conduct and
agreements to inform and guide the industry and
consumers;
(n) Intervene or participate in administrative and
regulatory proceedings requiring consideration of
the provisions of this Act that are initiated by
government agencies such as the Securities and
Exchange Commission, the Energy Regulatory
Commission and the National
Telecommunications Commission;
(o) Assist the National Economic and
Development Authority, in consultation with
relevant agencies and sectors, in the preparation
and formulation of a national competition policy;
(p) Act as the official representative of the
Philippine government in international
competition matters;
(q) Promote capacity building and the sharing of
best practices with other competition-related
bodies;
(r) Advocate pro-competitive policies of the
government by:
(1) Reviewing economic and
administrative regulations, motu
proprio or upon request, as to whether or
not they adversely affect relevant market
competition, and advising the concerned
agencies against such regulations; and
(2) Advising the Executive Branch on the
competitive implications of government
actions, policies and programs; and
(s) Charging reasonable fees to defray the
administrative cost of the services rendered.
Section 13. Office for Competition (OFC), Powers and
Functions. — The OFC under the Department of Justice
(DOJ-OFC) shall only conduct preliminary investigation
and undertake prosecution of all criminal offenses arising
under this Act and other competition-related laws in
accordance with Section 31 of Chapter VI of this Act. The
OFC shall be reorganized and allocated resources as may
be required therefor to effectively pursue such mandate.
CHAPTER III PROHIBITED ACTS
Section 14. Anti-Competitive Agreements. –
(a) The following agreements, between or among
competitors, are per se prohibited:
 (1) Restricting competition as to price, or
components thereof, or other terms of
trade;
(2) Fixing price at an auction or in any
form of bidding including cover bidding,
bid suppression, bid rotation and market
allocation and other analogous practices
of bid manipulation;
(b) The following agreements, between or among
competitors which have the object or effect of
substantially preventing, restricting or lessening
competition shall be prohibited:
(1) Setting, Kmiting, or controlling
production, markets, technical
development, or investment;
(2) Dividing or sharing the market,
whether by volume of sales or purchases,
territory, type of goods or services,
buyers or sellers or any other means;
(c) Agreements other than those specified in (a)
and (b) of this section which have the object or
effect of substantially preventing, restricting or
lessening competition shall also be
prohibited: Provided, Those which contribute to
improving the production or distribution of goods
and services or to promoting technical or
economic progress, while allowing consumers a
fair share of the resulting benefits, may not
necessarily be deemed a violation of this Act.
An entity that controls, is controlled by, or is under
common control with another entity or entities, have
common economic interests, and are not otherwise able to
decide or act independently of each other, shall not be
considered competitors for purposes of this section.
Section 15. Abuse of Dominant Position. – It shall be
prohibited for one or more entities to abuse their
dominant position by engaging in conduct that would
substantially prevent, restrict or lessen competition:
(a) Selling goods or services below cost with the
object of driving competition out of the relevant
market: Provided, That in the Commission’s
evaluation of this fact, it shall consider whether
the entity or entities have no such object and the
price established was in good faith to meet or
compete with the lower price of a competitor in
the same market selling the same or comparable
product or service of like quality;
(b) Imposing barriers to entry or committing acts
that prevent competitors from growing within the
market in an anti-competitive manner except
those that develop in the market as a result of or
arising from a superior product or process,
business acumen, or legal rights or laws;
(c) Making a transaction subject to acceptance by
the other parties of other obligations which, by
their nature or according to commercial usage,
have no connection with the transaction;
(d) Setting prices or other terms or conditions that
discriminate unreasonably between customers or
sellers of the same goods or services, where such
customers or sellers are contemporaneously
trading on similar terms and conditions, where
the effect may be to lessen competition
substantially: Provided, That the following shall be
considered permissible price differentials:
(1) Socialized pricing for the less
fortunate sector of the economy;
(2) Price differential which reasonably or
approximately reflect differences in the
cost of manufacture, sale, or delivery
resulting from differing methods,
technical conditions, or quantities in
which the goods or services are sold or
delivered to the buyers or sellers;
(3) Price differential or terms of sale
offered in response to the competitive
price of payments, services or changes in
the facilities furnished by a competitor;
and
(4) Price changes in response to changing
market conditions, marketability of goods
or services, or volume;
(e) Imposing restrictions on the lease or contract
for sale or trade of goods or services concerning
where, to whom, or in what forms goods or
services may be sold or traded, such as fixing
prices, giving preferential discounts or rebate
upon such price, or imposing conditions not to
deal with competing entities, where the object or
effect of the restrictions is to prevent, restrict or
lessen competition substantially: Provided, That
nothing contained in this Act shall prohibit or
render unlawful:
(1) Permissible franchising, licensing,
exclusive merchandising or exclusive
distributorship agreements such as those
which give each party the right to
unilaterally terminate the agreement; or
 (2) Agreements protecting intellectual
property rights, confidential information,
or trade secrets;
(f) Making supply of particular goods or services
dependent upon the purchase of other goods or
services from the supplier which have no direct
connection with the main goods or services to be
supplied;
(g) Directly or indirectly imposing unfairly low
purchase prices for the goods or services of,
among others, marginalized agricultural
producers, fisherfolk, micro-, small-, medium-scale
enterprises, and other marginalized service
providers and producers;
(h) Directly or indirectly imposing unfair purchase
or selling price on their competitors, customers,
suppliers or consumers, provided that prices that
develop in the market as a result of or due to a
superior product or process, business acumen or
legal rights or laws shall not be considered unfair
prices; and
(i) Limiting production, markets or technical
development to the prejudice of consumers,
provided that limitations that develop in the
market as a result of or due to a superior product
or process, business acumen or legal rights or
laws shall not be a violation of this Act:
Provided, That nothing in this Act shall be construed or
interpreted as a prohibition on having a dominant position
in a relevant market or on acquiring, maintaining and
increasing market share through legitimate means that do
not substantially prevent, restrict or lessen competition:
Provided, further, That any conduct which contributes to
improving production or distribution of goods or services
within the relevant market, or promoting technical and
economic progress while allowing consumers a fair share
of the resulting benefit may not necessarily be considered
an abuse of dominant position:
Provided, finally, That the foregoing shall not constrain the
Commission or the relevant regulator from pursuing
measures that would promote fair competition or more
competition as provided in this Act.
CHAPTER IV MERGERS AND ACQUISITIONS
Section 16. Review of Mergers and Acquisitions. — The
Commission shall have the power to review mergers and
acquisitions based on factors deemed relevant by the
Commission.
Section 17. Compulsory Notification. – Parties to the
merger or acquisition agreement referred to in the
preceding section wherein the value of the transaction
exceeds one billion pesos (P1,000,000,000.00) are
prohibited from consummating their agreement until
thirty (30) days after providing notification to the
Commission in the form and containing the information
specified in the regulations issued by the
Commission: Provided, That the Commission shall
promulgate other criteria, such as increased market share
in the relevant market in excess of minimum thresholds,
that may be applied specifically to a sector, or across some
or all sectors, in determining whether parties to a merger
or acquisition shall notify the Commission under this
Chapter.
An agreement consummated in violation of this
requirement to notify the Commission shall be considered
void and subject the parties to an administrative fine of
one percent (1%) to five percent (5%) of the value of the
transaction.
Should the Commission deem it necessary, it may request
further information that are reasonably necessary and
directly relevant to the prohibition under Section 20
hereof from the parties to the agreement before the
expiration of the thirty (30)-day period referred. The
issuance of such a request has the effect of extending the
period within which the agreement may not be
consummated for an additional sixty (60) days, beginning
on the day after the request for information is received by
the parties: Provided, That, in no case shall the total period
for review by the Commission of the subject agreement
exceed ninety (90) days from initial notification by the
parties.
When the above periods have expired and no decision has
been promulgated for whatever reason, the merger or
acquisition shall be deemed approved and the parties may
proceed to implement or consummate it. All notices,
documents and information provided to or emanating
from the Commission under this section shall be subject to
confidentiality rule under Section 34 of this Act except
when the release of information contained therein is with
the consent of the notifying entity or is mandatorily
required to be disclosed by law or by a valid order of a
court of competent jurisdiction, or of a government or
regulatory agency, including an exchange.
In the case of the merger or acquisition of banks, banking
institutions, building and loan associations, trust
companies, insurance companies, public utilities,
educational institutions and other special corporations
governed by special laws, a favorable or no-objection
ruling by the Commission shall not be construed as
dispensing of the requirement for a favorable
recommendation by the appropriate government agency
under Section 79 of the Corporation Code of the
Philippines.
A favorable recommendation by a governmental agency
with a competition mandate shall give rise to a disputable
presumption that the proposed merger or acquisition is
not violative of this Act.
Section 18. Effect of Notification. — If within the relevant
periods stipulated in the preceding section, the
Commission determines that such agreement is prohibited
under Section 20 and does not qualify for exemption under
Section 21 of this Chapter, the Commission may:
(a) Prohibit the implementation of the agreement;
(b) Prohibit the implementation of the agreement
unless and until it is modified by changes specified
by the Commission.
(c) Prohibit the implementation of the agreement
unless and until the pertinent party or parties
enter into legally enforceable agreements
specified by the Commission.
Section 19. Notification Threshold. – The Commission
shall, from time to time, adopt and publish regulations
stipulating:
(a) The transaction value threshold and such other
criteria subject to the notification requirement of
Section 17 of this Act;
(b) The information that must be supplied for
notified merger or acquisition;
(c) Exceptions or exemptions from the notification
requirement; and
(d) Other rules relating to the notification
procedures.
Section 20. Prohibited. Mergers and Acquisitions. – Merger
or acquisition agreements that substantially prevent,
restrict or lessen competition in the relevant market or in
the market for goods or services as may be determined by
the Commission shall be prohibited.
Section 21. Exemptions from Prohibited. Mergers and
Acquisitions. – Merger or acquisition agreement prohibited
under Section 20 of this Chapter may, nonetheless, be
exempt from prohibition by the Commission when the
parties establish either of the following:
(a) The concentration has brought about or is
likely to bring about gains in efficiencies that are
greater than the effects of any limitation on
competition that result or likely to result from the
merger or acquisition agreement; or
(b) A party to the merger or acquisition agreement
is faced with actual or imminent financial failure,
and the agreement represents the least anti-
competitive arrangement among the known
alternative uses for the failing entity’s assets:
Provided, That an entity shall not be prohibited from
continuing to own and hold the stock or other share capital
or assets of another corporation which it acquired prior to
the approval of this Act or acquiring or maintaining its
market share in a relevant market through such means
without violating the provisions of this Act:
Provided, further, That the acquisition of the stock or other
share capital of one or more corporations solely for
investment and not used for voting or exercising control
and not to otherwise bring about, or attempt to bring
about the prevention, restriction, or lessening of
competition in the relevant market shall not be prohibited.
Section 22. Burden of Proof. – The burden of proof under
Section 21 lies with the parties seeking the exemption. A
party seeking to rely on the exemption specified in Section
21(a) must demonstrate that if the agreement were not
implemented, significant efficiency gains would not be
realized.
Section 23. Finality of Ridings on Mergers and Acquisitions.
– Merger or acquisition agreements that have received a
favorable ruling from the Commission, except when such
ruling was obtained on the basis of fraud or false material
information, may not be challenged under this Act.
CHAPTER V DISPOSITION OF CASES
Section 24. Relevant Market. – For purposes of
determining the relevant market, the following factors,
among others, affecting the substitutability among goods
or services constituting such market and the geographic
area delineating the boundaries of the market shall be
considered:
(a) The possibilities of substituting the goods or
services in question, with others of domestic or
foreign origin, considering the technological
possibilities, extent to which substitutes are
available to consumers and time required for such
substitution;
(b) The cost of distribution of the good or service,
its raw materials, its supplements and substitutes
from other areas and abroad, considering freight,
insurance, import duties and non-tariff
restrictions; the restrictions imposed by economic
agents or by their associations; and the time
required to supply the market from those areas;
(c) The cost and probability of users or consumers
seeking other markets; and
(d) National, local or international restrictions
which limit access by users or consumers to
 alternate sources of supply or the access of
suppliers to alternate consumers.
Section 25. Control of an Entity. – In determining the
control of an entity, the Commission may consider the
following:
Control is presumed to exist when the parent owns
directly or indirectly, through subsidiaries, more than one
half (1/2) of the voting power of an entity, unless in
exceptional circumstances, it can clearly be demonstrated
that such ownership does not constitute control. Control
also exists even when an entity owns one half (1/2) or less
of the voting power of another entity when:
(a) There is power over more than one half (1/2)
of the voting rights by virtue of an agreement with
investors;
(b) There is power to direct or govern the
financial and operating policies of the entity under
a statute or agreement;
(c) There is power to appoint or remove the
majority of the members of the board of directors
or equivalent governing body;
(d) There is power to cast the majority votes at
meetings of the board of directors or equivalent
governing body;
(e) There exists ownership over or the right to use
all or a significant part of the assets of the entity;
(f) There exist rights or contracts which confer
decisive influence on the decisions of the entity.
Section 26. Determination of Anti-Competitive Agreement
or Conduct. – In determining whether anti-competitive
agreement or conduct has been committed, the
Commission shall:
(a) Define the relevant market allegedly affected
by the anti-competitive agreement or conduct,
following the principles laid out in Section 24 of
this Chapter;
(b) Determine if there is actual or potential
adverse impact on competition in the relevant
market caused by the alleged agreement or
conduct, and if such impact is substantial and
outweighs the actual or potential efficiency gains
that result from the agreement or conduct;
(c) Adopt a broad and forward-looking
perspective, recognizing future market
developments, any overriding need to make the
goods or services available to consumers, the
requirements of large investments in
infrastructure, the requirements of law, and the
need of our economy to respond to international
competition, but also taking account of past
behavior of the parties involved and prevailing
market conditions;
(d) Balance the need to ensure that competition is
not prevented or substantially restricted and the
risk that competition efficiency, productivity,
innovation, or development of priority areas or
industries in the general interest of the country
may be deterred by overzealous or undue
intervention; and
(e) Assess the totality of evidence on whether it is
more likely than not that the entity has engaged in
anti-competitive agreement or conduct including
whether the entity’s conduct was done with a
reasonable commercial purpose such as but not
limited to phasing out of a product or closure of a
business, or as a reasonable commercial response
to the market entry or conduct of a competitor.
Section 27. Market Dominant Position. – In determining
whether an entity has market dominant position for
purposes of this Act, the Commission shall consider the
following:
(a) The share of the entity in the relevant market
and whether it is able to fix prices unilaterally or
to restrict supply in the relevant market;
(b) The existence of barriers to entry and the
elements which could foreseeably alter both said
barriers and the supply from competitors;
(c) The existence and power of its competitors;
(d) The possibility of access by its competitors or
other entities to its sources of inputs;
(e) The power of its customers to switch to other
goods or services;
(f) Its recent conducts; and
(g) Other criteria established by the regulations of
this Act.
There shall be a rebuttable presumption of market
dominant position if the market share of an entity in the
relevant market is at least fifty percent (50%), unless a
new market share threshold is determined by the
Commission for that particular sector.
The Commission shall from time to time determine and
publish the threshold for dominant position or minimum
level of share in the relevant market that could give rise to
a presumption of dominant position. In such
determination, the Commission would consider the
structure of the relevant market, degree of integration,
access to end-users, technology and financial resources,
and other factors affecting the control of a market, as
provided in subsections (a) to (g) of this section.

The Commission shall not consider the acquiring,

maintaining and increasing of market share through
legitimate means not substantially preventing, restricting,
or lessening competition in the market such as but not
limited to having superior skills, rendering superior
service, producing or distributing quality products, having
business acumen, and the enjoyment and use of protected
intellectual property rights as violative of this Act.

Section 28. Forbearance. – The Commission may forbear

from applying the provisions of this Act, for a limited time,
in whole or in part, in all or specific cases, on an entity or
group of entities, if in its determination:

(a) Enforcement is not necessary to the

attainment of the policy objectives of this Act;

(b) Forbearance will neither impede competition

in the market where the entity or group of entities
seeking exemption operates nor in related
markets; and

(c) Forbearance is consistent with public interest

and the benefit and welfare of the consumers.

A public hearing shall be held to assist the Commission in ❼ Implementing Rules and Regulations of Philippine
making this determination. Competition Act
Rules 1-4 (Sections1-3, 5-6, 9-13)
The Commission’s order exempting the relevant entity or
group of entities under this section shall be made public.
Conditions may be attached to the forbearance if the
Commission deems it appropriate to ensure the long-term
interest of consumers.

In the event that the basis for the issuance of the

exemption order ceases to be valid, the order may be
withdrawn by the Commission.
❽ Case Digests

WEEK 15 #1 Apex Bancrights Holdings vs. BSP

G.R. No. 214866 | Oct. 2, 2017

Topic: Additional Laws

Petitioner: Apex Bancrights Holdings, Inc., Lead
Bancfund Holdings, Inc., Asia Wide Refreshments
Corporation, etc
Respondent: Bangko Sentral ng Pilipinas, Philippine
Deposit Insurance Corporation
Ponente: Perlas-Bernabe, J.
FACTS:

● Export and Industry Bank (EIB) entered into 3-

way merger with Urban Bank, Inc. (UBI) and Urbancorp
Investments, Inc. (UII) to rehabilitate UBI which was under
receivership

● EIB encountered financial difficulties and

prompted PDIC to extent financial assistance to it

● EIB still failed to overcome its financial problems

● PDIC again released additional financial assistance
conditioned upon the infusion by EIB stockholders of
additional capital whenever EIB’s adjusted Risk-Based
Capital Adequacy Ratio falls below 12.5%
● EIB failed to comply with BSP’s capital
requirements causing EIB’s stockholders to commence the
process of selling the bank
● Eventually, EIB’s president and chairman
voluntarily turned-over full control of EIB to BSP
● BSP, through Monetary Board (MB), issued
Resolution prohibiting EIB from doing business in the PH
and placing it under receivership of PDIC
● PDIC submitted its initial receivership report to
MB
o That EIB can be rehabilitated or permitted to
resume business provided that a bidding for its
rehabilitation will be conducted and the following
conditions are met:
▪ (a) there are qualified interested banks that will
comply with the parameters for rehabilitation of a closed
bank, capital strengthening, liquidity, sustainability and
viability of operations, and strengthening of bank
governance; and
▪ (b) all parties (including creditors and
stockholders) agree to the rehabilitation and the revised
payment terms and conditions of outstanding liabilities.||
● During public bidding, no bid was submitted; re-
bidding was set but also did not materialize since there
was no bid
● PDIC informed BSP that EIB can hardly be
rehabilitated
● MB issued Resolution directing PDIC to proceed
with liquidation of EIB
● Petitioners (SHs representing majority of EIB)
filed petition for certiorari challenging said Resolution of
MB
o Blamed PDIC for failure of rehabilitation
● PDIC countered that they are already estopped
from assailing placement of EIB under receivership and its
eventual liquidation since they had already surrendered
full control of the bank to BSP
● CA dismissed
ISSUE:
W/N Monetary Board gravely abused its discretion in
ordering the liquidation of EIB – NO because MB may
order liquidation upon PDIC’s finding that
rehabilitation is not possible
RULING:
● Sec. 30 of RA 7653 provides for the proceedings in
the receivership and liquidation of banks and quasi-banks
o Sec. 30 Proceedings in Receivership and
Liquidation – x x x
(d) x x x the Monetary Board may
summarily and without need for prior
hearing forbid the institution from
doing business in the Philippines and
designate the Philippine Deposit
Insurance Corporation as receiver of
the banking institution. xxx xxx xxx
The receiver shall immediately gather
and take charge of all the assets and
liabilities of the institution, administer
the same for the benefit of its
creditors, and exercise the general
powers of a receiver under the Revised
Rules of Court x x x[.]
If the receiver determines that the
institution cannot be rehabilitated or
permitted to resume business in
accordance with the next preceding
paragraph, the Monetary Board shall
notify in writing the board of directors
of its findings and direct the receiver
to proceed with the liquidation of the
institution. The receiver shall:
xxx xxx xxx
The actions of the Monetary Board
taken under this section or under
Section 29 of this Act shall be final and
executors, and may not be restrained
or set aside by the court except on
petition for certiorari on the ground
that the action taken was in excess of
jurisdiction or with such grave abuse
of discretion as to amount to lack or
excess of jurisdiction. The petition
for certiorari may only be filed by the
stockholders of record representing
the majority of the capital stock within
ten (10) days from receipt by the
board of directors of the institution of
the order directing receivership,
liquidation or conservatorship.
● Power and authority of MB to close banks and
liquidate them when public interest so requires is an
exercise of police power of the State
● Police power is subject to judicial inquiry and may
not be exercised arbitrarily or unreasonably and could be
set aside if it is capricious, discriminatory, whimsical,
arbitrary, unjust or is tantamount to a denial of due
process and equal protection clauses of Constitution
● GR: actions of MB shall be final and executory
and may not be restrained or set aside by the court
● XP: petition for certiorari on the ground that
action taken was in excess of jurisdiction or with
GADALEJ
o There is GAD when there is evasion of a positive
duty or a virtual refusal to perform a duty enjoined by law
or to act in contemplation of law as when the judgment
rendered is not based on law and evidence but on caprice,
whim and despotism
● MB did not gravely abuse its discretion in ordering
liquidation of EIB through its resolution
● The conditions stated for the rehabilitation of EIB
was not met because the bidding and re-bidding were
aborted since none of the pre-qualified Strategic Third
Party Investors (STPI) submitted letter of interest to
participate in the bidding which resulted in PDIC’s finding
that EIB is already insolvent and must already be
liquidated
● Once the receiver (PDIC) determines that
rehabilitation is no longer feasible, MB is simply obligated
to:
o Notify in writing the bank’s Board of Directors
o Direct PDIC to proceed with liquidation
● MB is not required by law to make a separate and
distinct factual determination before it can order the
liquidation of a bank or quasi-bank when PDIC has already
made such determination
● BSP (umbrella agency of MB), in its capacity as
government regulator of banks, and PDIC as statutory
receiver of banks are the principal agencies mandated by
law to determine financial viability of banks and quasi-
banks and facilitate receivership and liquidation of closed
financial institutions upon factual determination of latter’s
insolvency
WEEK 15 #02 So v. Philippine Deposit Insurance Corp.
G.R. No. 230020 | March 19, 2018
Topic: new amendment in PDIC's Charter under RA
10846, specifically Section 5(g)
Petitioner: PETER L. SO
Respondent: PHILIPPINE DEPOSIT INSURANCE
CORPORATION
Ponente: TIJAM, J.
DOCTRINE:
PDIC exercises judicial discretion and judgment in
determining whether a claimant is entitled to a deposit
insurance claim, which determination results from its
investigation of facts and weighing of evidence presented
before it. Noteworthy also is the fact that the law considers
PDIC's action as final and executory and may be reviewed
only on the ground of grave abuse of discretion.
FACTS:
o Petitioner Peter So (So) opened an account with
the Cooperative Rural Bank Bulacan (CRBB)
amounting to P300,000, for which he was assigned the
Special Incentive Savings Account (SISA) No. 05-
15712-1.
o On the same year, however, So learned that CRBB
closed its operations and was placed under Philippine
Deposit Insurance Corporation's (PDIC's) receivership.
This prompted So, together with other depositors, to
file an insurance claim with the PDIC. Acting upon such
claim, PDIC sent a letter/notice requiring So to submit
additional documents, which So averred of having
complied with. Upon investigation, the PDIC found that
So’s account originated from and was funded by the
proceeds of a terminated SISA (mother account),
jointly owned by a certain Reyes family.
o Thus, based on the determination that So's
account was among the product of the splitting of the
said mother account which is prohibited by law, PDIC
denied So's claim for payment of deposit insurance. So
then filed a Request for Reconsideration, which was
likewise denied by the PDIC.
o Aggrieved, So filed a Petition for Certiorari under
Rule 65 before the RTC.
o RTC upheld the factual findings and conclusions of
the PDIC. According to the RTC, based on the records,
the PDIC correctly denied So's claim for insurance on
the ground of splitting of deposits which is prohibited
by law.
o RTC also declared that, pursuant to its Charter (RA
3591), PDIC is empowered to determine and pass
upon the validity of the insurance deposits claims, it
 being the deposit insurer. As such, when it rules on
such claims, it is exercising a quasi-judicial function.
o Thus, it was held that petitioner's remedy to the
dismissal of his claim is to file a petition for certiorari
with the Court of Appeals under Section 4, Rule 65,
stating that if the petition involves the acts or
omissions of a quasi-judicial agency, unless otherwise
provided by law or the rules, it shall be filed in and
cognizable only by the Court of Appeals (CA).
jurisdiction or with such grave abuse of discretion as
to amount to a lack or excess of jurisdiction. The
petition for certiorari may only be filed within thirty
(30) days from notice of denial of claim for deposit
insurance.
o As it stands, the controversy as to which court has
jurisdiction over a petition for certiorari filed to
question the PDIC's action is already settled.

ISSUE:

Whether or not RTC have jurisdiction over a petition for

certiorari filed under Rule 65, assailing the PDIC's denial of
a deposit insurance claim.

RULING:

o NO. PDIC was created under RA 3591 as an

insurer of deposits in all banks entitled to the benefits
of insurance under the said Act to promote and
safeguard the interests of the depositing public.

o As such, PDIC has the duty and authority to

determine the validity of and grant or deny deposit
insurance claims.

o Section 16(a) of its Charter, as amended, provides

that PDIC shall commence the determination of
insured deposits due the depositors of a closed bank
upon its actual take over of the closed bank.

o Also, Section 1 of PDIC's Regulatory Issuance No.

2011-03, provides that as it is tasked to promote and
safeguard the interests of the depositing public by way
of providing permanent and continuing insurance
coverage on all insured deposits, and in helping
develop a sound and stable banking system at all
times, PDIC shall pay all legitimate deposits held by
bona fide depositors and provide a mechanism by
which depositors may seek reconsideration from its
decision, denying a deposit insurance claim.

o Further, it bears stressing that as stated in Section

4(f) of its Charter, as amended, PDIC's action, such as
denying a deposit insurance claim, is considered as
final and executory and may be reviewed by the court
only through a petition for certiorari on the ground of
grave abuse of discretion.

o Considering the foregoing, the legislative intent in

creating the PDIC as a quasi-judicial agency is clearly
manifest. Accordingly, the actions of the Corporation
taken under Section 5(g) shall be final and executory,
and may only be restrained or set aside by the Court of
Appeals, upon appropriate petition for certiorari on
the ground that the action was taken in excess of
WEEK 1 #03 CHUGANI V PDIC
G.R. No. 230037. March 19, 2018
Topic: PDIC
Petitioner: SPOUSES KISHORE LADHO CHUGANI and
PRISHA KISHORE CHUGANI, et al.
Respondent: PHILIPPINE DEPOSIT INSURANCE
CORPORATION
Ponente:
DOCTRINE:
1. The remedy to question the decisions of the PDIC is
through a Petition for Certiorari under Rule 65 and filed
before the CA.
FACTS:
● Petitioners then opened Time Deposit Accounts
with RBMI through inter-branch deposits to the accounts
of Rural Bank of Mawab (Davao), Inc., (RBMI) maintained
in Metrobank and China Bank-Tagum, Davao Branches.
● Petitioners came to know that the Monetary Board
of the BSP placed RBMI under receivership and thereafter
closed the latter.
● Petitioners, then filed claims for insurance of their
time deposits with the PDIC, but said claims were denied
on the ground that the time deposits were not valid
obligations of RBMI.
● Petitioners filed a Petition for Certiorari under
Rule 65 with the RTC. RTC dismissed for lack of
jurisdiction. CA affirmed the RTC.
ISSUES:
1. Whether the RTC has jurisdiction over the Petitions for
Certiorari filed by the petitioners – NO (CA has jurisdiction,
not RTC, PDIC being a quasi-judicial agency)
2. Whether the PDIC committed grave abuse of discretion
in denying petitioners claim for deposit insurance - NO
RULING:
1. Based on its charter, the PDIC has the duty to grant or
deny claims for deposit insurance under Section 4 (f) of
R.A. No. 3591, as amended by R.A. No. 9576. The power of
the PDIC as to whether it will deny or grant the claim for
deposit insurance based on its rules and regulations
partakes of a quasi-judicial function. In addition, decisions
of the PDIC as to deposit insurance shall be final and
executory, such that it can only be set aside by a petition
for certiorari evinces the intention of the Congress to make
PDIC as a quasi-judicial agency. Consistent with Section 4,
Rule 65, the CA has the jurisdiction to rule on the
alleged grave abuse of discretion of the PDIC.
Therefore, the CA is correct when it held that the RTC has
no jurisdiction over the Petitions for Certiorari filed by the
petitioners questioning the PDIC's denial of their claim for
deposit insurance. Nevertheless, any question as to where
the petition for certiorari should be filed to question
PDIC's decision on claims for deposit insurance has been
put to rest by R.A. No. 10846. Section 7 therein provides:
The actions of the PDIC taken under Section 5(g) shall
be final and executory, and may only be restrained or
set aside by the Court of Appeals, upon appropriate
petition for certiorari. Thus, the remedy to question
the decisions of the PDIC is through a Petition for
Certiorari under Rule 65 and filed before the CA.
2. Section 4 (f) of R.A. No. 3591, as amended by R.A. No.
9576 states that
deposit means the unpaid balance of money or its
equivalent received by
bank in the usual course of business and for which it has
given or is obliged to give credit to a commercial, checking,
savings, time or thrift account, or issued in accordance
with Bangko Sentral rules and regulations and other
applicable laws, together with such other obligations of a
bank, which, consistent with banking usage and practices.
For deposit to be considered as legitimate, it should be (1)
received by a bank as a deposit in the usual course of
business; (2) recorded in the books of the bank as such; (3)
opened in accordance with established forms and
requirements of the BSP and/or the PDIC. In order for the
claim for deposit insurance with the PDIC may prosper, it
is necessary that the corresponding deposit must be placed
in the insured bank.
IN THIS CASE, upon investigation by the PDIC, it was
discovered that (1) the money allegedly placed by the
petitioners in RBMI was in fact credited to the personal
account of Garan, the President of RBMI, hence, they could
not be construed as valid liabilities of RBMI to petitioners;
(2) based on bank records and the certified list of the
bank's outstanding deposit liabilities, the alleged deposits
of petitioners are not part of RBMI's outstanding liabilities;
and (3) the CTDs are not validly issued by RBMI, but were
mere replicas of the unissued and unused CTDs still
included in the inventory of RBMI. Further, the act of
petitioners in opening Time Deposits and thereafter
depositing several amounts of money through inter-branch
deposits with Metrobank and China Bank for the account
of RBMI can hardly be considered as in the ordinary course
of business.
WEEK 15 #04 Ligot v. Republic
G.R. No. 176944; March 6, 2013
Topic: Additional Laws
Petitioner: RET. LT. GEN. JACINTO C. LIGOT, ERLINDA
Y. LIGOT, PAULO Y. LIGOT, RIZA Y. LIGOT, and MIGUEL
Y. LIGOT
Respondent: REPUBLIC OF THE PHILIPPINES,
represented by the ANTI-MONEY LAUNDERING
COUNCIL
Ponente: Brion
FACTS:
● On June 27, 2005, the Republic of the Philippines
(Republic), represented by the Anti-Money Laundering
Council (AMLC), filed an Urgent Ex-Parte Application for
the issuance of a freeze order with the CA against certain
monetary instruments and properties of the petitioners,
pursuant to Section 10 of Republic Act (RA) No. 9160, as
amended. In support of this recommendation, the
Ombudsman attached the Complaint it filed against the
Ligots for perjury under Article 183 of the Revised Penal
Code, and for violations of Section 8 of RA No. 6713 (Code
of Conduct and Ethical Standards for Public Officials and
Employees) and RA No. 3019 (Anti-Graft and Corrupt
Practices Act).
● The Ombudsman’s complaint alleges that Lt. Gen.
Ligot and his family had other properties and bank
accounts, not declared in his SALN, amounting to at least
Fifty Four Million One Thousand Two Hundred Seventeen
Pesos (₱54,001,217.00)
● Bearing in mind that Lt. Gen. Ligot’s main source
of income was his salary as an officer of the AFP, and given
his wife and children’s lack of any other substantial
sources of income, the Ombudsman declared the assets
registered in Lt. Gen. Ligot’s name, as well as those in his
wife’s and children’s names, to be illegally obtained and
unexplained wealth, pursuant to the provisions of RA No.
1379.
● The Ombudsman’s investigation also looked into
Mrs. Ligot’s younger brother, Edgardo Tecson Yambao.
Despite Yambao’s lack of substantial income, the records
show that he has real properties and vehicles registered in
his name, amounting to Eight Million Seven Hundred Sixty
Three Thousand Five Hundred Fifty Pesos
(₱8,763,550.00), which he acquired from 1993 onwards.
The Office of the Ombudsman further observed that in the
documents it examined, Yambao declared three of the
Ligots’ addresses as his own.
● As a result of the Ombudsman’s complaint, the
Compliance and Investigation staff (CIS) of the AMLC
conducted a financial investigation, which revealed the
existence of the Ligots’ various bank accounts with several
financial institutions. On April 5, 2005, the Ombudsman
issued a resolution holding that probable cause exists that
Lt. Gen. Ligot violated Section 8, in relation to Section 11, of
RA No. 6713, as well as Article 183 of the Revised Penal
Code.
● On May 25, 2005, the AMLC filed an application for
a freeze order against the properties of Lt. Gen. Ligot and
the members of his family with the CA.
● The appellate court granted the application in its
July 5, 2005 resolution, valid for a period of 20 days from
the date of issuance, ruling that probable cause existed
that an unlawful activity and/or money laundering offense
had been committed by Lt. Gen. Ligot and his family,
including Yambao, and that the properties sought to be
frozen are related to the unlawful activity or money
laundering offense.
● On July 26, 2005, the Republic filed an Urgent
Motion for Extension of Effectivity of Freeze Order. Finding
merit in the Republic’s arguments, the CA granted the
motion in its September 20, 2005 resolution, extending the
freeze order until after all the appropriate proceedings
and/or investigations have been terminated.
● On September 28, 2005, the Ligots filed a motion
to lift the extended freeze order. CA denied.
● On January 31, 2006, the Ligots filed a motion for
reconsideration of the CA’s January 4, 2006 resolution,
insisting that the freeze order should be lifted considering:
(a) no predicate crime has been proven to support the
freeze order’s issuance; (b) the freeze order expired six
months after it was issued on July 5, 2005; and (c) the
freeze order is provisional in character and not intended to
supplant a case for money laundering. When the CA denied
this motion in its resolution dated January 12, 2007, the
Ligots filed the present petition.
ISSUE:
Whether or not a freeze order may be issued for an
indefinite period.
RULING: No.
● A freeze order is an extraordinary and interim
relief issued by the CA to prevent the dissipation, removal,
or disposal of properties that are suspected to be the
proceeds of, or related to, unlawful activities as defined in freeze order, it should file the necessary motion before the
Section 3(i) of RA No. 9160, as amended. The primary expiration of the six-month period and explain the reason
objective of a freeze order is to temporarily preserve or reasons for its failure to file an appropriate case and
monetary instruments or property that are in any way justify the period of extension sought. The freeze order
related to an unlawful activity or money laundering, should remain effective prior to the resolution by the CA,
by preventing the owner from utilizing them during which is hereby directed to resolve this kind of motion for
the duration of the freeze order. The relief is pre- extension with reasonable dispatch.
emptive in character, meant to prevent the owner
from disposing his property and thwarting the State’s
effort in building its case and eventually filing civil
forfeiture proceedings and/or prosecuting the owner. WHEREFORE, premises considered, we GRANT the
petition and LIFT the freeze order issued by the Court of
Appeals. This lifting is without prejudice to, and shall not
● As correctly noted by the petitioners, a freeze affect, the preservation orders that the lower courts have
order is meant to have a temporary effect; it was never ordered on the same properties in the cases pending
intended to supplant or replace the actual forfeiture cases before them.
where the provisional remedy - which means, the remedy
is an adjunct of or an incident to the main action – of
asking for the issuance of an asset preservation order from
the court where the petition is filed is precisely available.
For emphasis, a freeze order is both a preservatory and
preemptive remedy.

● To stress, the evils caused by the law’s silence on

the freeze order’s period of effectivity compelled this Court
to issue the Rule in Civil Forfeiture Cases. Specifically, the
Court fixed the maximum allowable extension on the
freeze order’s effectivity at six months. In doing so, the
Court sought to balance the State’s interest in going after
suspected money launderers with an individual’s
constitutionally-protected right not to be deprived of his
property without due process of law, as well as to be
presumed innocent until proven guilty.

● To our mind, the six-month extension period is

ordinarily sufficient for the government to act against the
suspected money launderer and to file the appropriate
forfeiture case against him, and is a reasonable period as
well that recognizes the property owner’s right to due
process. In this case, the period of inaction of six years,
under the circumstances, already far exceeded what is
reasonable.

● Thus, as a rule, the effectivity of a freeze order

may be extended by the CA for a period not exceeding six
months. Before or upon the lapse of this period, ideally, the
Republic should have already filed a case for civil forfeiture
against the property owner with the proper courts and
accordingly secure an asset preservation order or it should
have filed the necessary information. Otherwise, the
property owner should already be able to fully enjoy his
property without any legal process affecting it.

● However, should it become completely necessary

for the Republic to further extend the duration of the
WEEK 15 #5 Republic v. Eugenio Jr.
G.R. No. 174629 | February 14 2008
Topic: Additional Laws
Petitioner: Republic of the Philippines, represented by the
Anti-Money Laundering Council (AMLC)
Respondents: Hon. Antonio M. Eugenio Jr., as presiding
Judge of RTC Manila Branch 34, Pantaleon Alvarez and
Lilia Cheng
Ponente: Tinga, J.
DOCTRINE:
Facts: (sorry it’s long)
● Following the promulgation of Agan, a series of
investigations concerning the award of the NAIA 3
contracts to PIATCO were undertaken by the Ombudsman
and the Compliance and Investigation Staff (CIS) of
petitioner Anti-Money Laundering Council (AMLC).
● On 24 May 2005, the Office of the Solicitor General
(OSG) requested AMLC’s assistance "in obtaining more
evidence to completely reveal the financial trail of
corruption surrounding the [NAIA 3] Project.”
o During this time, petitioner Republic of the
Philippines was presently defending itself in two
international arbitration cases filed in relation to the NAIA
3 Project.
● The CIS conducted an intelligence database search
on the financial transactions of certain individuals
involved in the award, including respondent Pantaleon
Alvarez (Alvarez) who had been the Chairman of the PBAC
Technical Committee, NAIA-IPT3 Project.
● By this time, Alvarez had already been charged by
the Ombudsman with violation of Section 3(j) of R.A. No.
3019.
o It was found that Alvarez maintained eight (8)
bank accounts with six (6) different banks
● AMLC filed an application to inquire into or
examine the deposits or investments of Alvarez, Trinidad,
Liongson and Cheng Yong before the RTC of Makati
o AMLC sought to inquire into and/or examine the
deposits or investments of Pantaleon Alvarez, Wilfredo
Trinidad, Alfredo Liongson, and Cheng Yong, and their
related web of accounts wherever these may be found, as
defined under Rule 10.4 of the Revised Implementing
Rules and Regulations;" and to authorize the AMLC
Secretariat "to conduct an inquiry into subject accounts
once the Regional Trial Court grants the application to
inquire into and/or examine the bank accounts" of those
four individuals.
● RTC granted the AMLC authority to inquire and
examine the subject bank accouts.
● Pursuant to this, CIS proceeded to inquire and
examine the deposits, investments and related web
accounts of the four.
● Meanwhile, the Special Prosecutor of the Office of
the Ombudsman, Dennis Villa-Ignacio, requested the AMLC
to investigate the accounts of Alvarez, PIATCO, and several
other entities involved in the nullified contract.
● AMLC promulgated the December 2005
Resolution authorizing the executive director of the AMLC
to inquire into and examine the accounts named in the
letter, including one maintained by Alvarez with DBS Bank
and two other accounts in the name of Cheng Yong with
Metrobank.
● Following this, the Republic, through the
AMLC, filed an application before the Manila RTC to
inquire into and/or examine thirteen (13) accounts
and two (2) related web of accounts
o Alleged as having been used to facilitate
corruption in the NAIA 3 Project.
o Among said accounts were the DBS Bank account
of Alvarez and the Metrobank accounts of Cheng Yong.
● January 25 2006: RTC Manila granted the ex
parte application.
o Authority was thus granted to AMLC to inquire
into the bank accounts listed therein.
● Alvarez, through counsel, entered his appearance
before RTC Manila and filed an Urgent Motion to Stay
Enforcement of Order which granted the application.
o Alvarez alleged that he fortuitously learned of the
bank inquiry order, which was issued following an ex parte
application, and he argued that nothing in R.A. No. 9160
authorized the AMLC to seek the authority to inquire
into bank accounts ex parte
● RTC Manila stayed the enforcement of its bank
inquiry.
● The Republic filed an MR and this was granted.
● Alvarez filed an Urgent Motion and Manifestation,
o Alvarez intended to appeal. And, on the premise
that only a final and executory judgment or order could be
executed or implemented, Alvarez sought that the AMLC
be immediately ordered to refrain from enforcing the
Manila RTC bank inquiry order.
● RTC Manila granted Alvarez’s motion.
● July 25 2006: RTC Manila issued an order
wherein it clarified that the January 25 2006 wherein it
clarified that "the Ex Parte Order of this Court dated
January 12, 2006 can not be implemented against the
deposits or accounts of any of the persons enumerated in
the AMLC Application until the appeal of movant Alvarez is
finally resolved, otherwise, the appeal would be rendered
moot and academic or even nugatory."
o It reasoned that the other persons mentioned in
AMLC’s application were not served with the court’s 12
January 2006 Order. This 25 July 2006 Manila RTC Order is
the first of the four rulings being assailed through this
petition.
● The Republic filed an Urgent Omnibus Motion for
Reconsideration dated 27 July 2006.
o It urged that it be allowed to immediately enforce
the bank inquiry order against Alvarez and that Alvarez’s
notice of appeal be expunged from the records since
appeal from an order of inquiry is disallowed under the
Anti Money Laundering Act (AMLA).
● Respondent Lilia Cheng filed a Petition for
Certiorari, Prohibition and Mandamus with
Application for TRO and/or Writ of Preliminary
Injunction directed against AMLC, RTC Manila Judge
Eugenio Jr, and RTC Makati Judge Marella Jr.
o She identified herself as the wife of Cheng Yong
with whom she jointly owns a conjugal bank account with
Citibank that is covered by the Makati RTC bank inquiry
order, and two conjugal bank accounts with Metrobank
that are covered by the Manila RTC bank inquiry order.
Lilia Cheng imputed grave abuse of discretion on the part
of the Makati and Manila RTCs in granting AMLC’s ex parte
applications for a bank inquiry order, arguing among
others that the ex parte applications violated her
constitutional right to due process, that the bank inquiry
order under the AMLA can only be granted in connection
with violations of the AMLA and that the AMLA can not
apply to bank accounts opened and transactions entered
into prior to the effectivity of the AMLA or to bank
accounts located outside the Philippines.
● CA issued a TRO enjoining the Manila and
Makati Courts from implementing the bank inquiry
orders.
● Petitioner before the SC assailed the RTC
orders enjoining petitioner from the bank inquiry and also
sought the nullification of the order granting Lilia Cheng’s
petition.
● The Court initially granted a TRO in
petiitoner’s favor, enjoing the implementation of the RTC
orders. But, on respondents’ motion, the Court
suspended the implementation of the TRO,.
Issue: Whether AMLC may inquire into bank accounts ex
parte.
Ruling: No. Even if the bank inquiry order may be availed
of without need of a pre-existing case under the AMLA, it
does not follow that such order may be availed of ex parte.
There are several reasons why the AMLA does not
generally sanction ex parte applications and issuances of
the bank inquiry order.
● It is evident that Section 11 does not
specifically authorize, as a general rule, the issuance
ex parte of the bank inquiry order.
SEC. 11. Authority to Inquire into Bank Deposits. ―
Notwithstanding the provisions of Republic Act
No. 1405, as amended, Republic Act No. 6426, as
amended, Republic Act No. 8791, and other laws,
the AMLC may inquire into or examine any
particular deposit or investment with any banking
institution or non bank financial institution upon
order of any competent court in cases of violation
of this Act, when it has been established that there
is probable cause that the deposits or investments
are related to an unlawful activity as defined in
Section 3(i) hereof or a money laundering offense
under Section 4 hereof, except that no court order
shall be required in cases involving unlawful
activities defined in Sections 3(i)1, (2) and (12).
● To ensure compliance with this Act, the Bangko
Sentral ng Pilipinas (BSP) may inquire into or examine any
deposit of investment with any banking institution or non
bank financial institution when the examination is made in
the course of a periodic or special examination, in
accordance with the rules of examination of the BSP.70
(Emphasis supplied)
● Of course, Section 11 also allows the AMLC to
inquire into bank accounts without having to obtain a
judicial order in cases where there is probable cause that
the deposits or investments are related to kidnapping for
ransom, certain violations of the Comprehensive
Dangerous Drugs Act of 2002, hijacking and other
violations under R.A. No. 6235, destructive arson and
murder. Such special circumstances do not apply in this
case.
● In the instances where a court order is
required for the issuance of the bank inquiry order,
nothing in Section 11 specifically authorizes that such
court order may be issued ex parte. It might be argued
that this silence does not preclude the ex parte issuance of
the bank inquiry order since the same is not prohibited
under Section 11. Yet this argument falls when the
immediately preceding provision, Section 10, is examined.
 SEC. 10. Freezing of Monetary Instrument or
Property. ― The Court of Appeals, upon
application ex parte by the AMLC and after
determination that probable cause exists that any
monetary instrument or property is in any way
related to an unlawful activity as defined in
Section 3(i) hereof, may issue a freeze order which
shall be effective immediately. The freeze order
shall be for a period of twenty (20) days unless
extended by the court.
● Although oriented towards different purposes, the
freeze order under Section 10 and the bank inquiry order
under Section 11 are similar in that they are extraordinary
provisional reliefs which the AMLC may avail of to
effectively combat and prosecute money laundering
offenses.
o Crucially, Section 10 uses specific language to
authorize an ex parte application for the provisional relief
therein, a circumstance absent in Section 11. If indeed the
legislature had intended to authorize ex parte proceedings
for the issuance of the bank inquiry order, then it could
have easily expressed such intent in the law, as it did with
the freeze order under Section 10.
● Even more tellingly, the current language of
Sections 10 and 11 of the AMLA was crafted at the same
time, through the passage of R.A. No. 9194. Prior to the
amendatory law, it was the AMLC, not the Court of Appeals,
which had authority to issue a freeze order, whereas a
bank inquiry order always then required, without
exception, an order from a competent court.
o It was through the same enactment that ex parte
proceedings were introduced for the first time into the
AMLA, in the case of the freeze order which now can only
be issued by the Court of Appeals. It certainly would have
been convenient, through the same amendatory law, to
allow a similar ex parte procedure in the case of a bank
inquiry order had Congress been so minded. Yet nothing in
the provision itself, or even the available legislative record,
explicitly points to an ex parte judicial procedure in the
application for a bank inquiry order, unlike in the case of
the freeze order.
● That the AMLA does not contemplate ex parte
proceedings in applications for bank inquiry orders is
confirmed by the present implementing rules and
regulations of the AMLA, promulgated upon the passage of
R.A. No. 9194. With respect to freeze orders under Section
10, the implementing rules do expressly provide that the
applications for freeze orders be filed ex parte, but no
similar clearance is granted in the case of inquiry orders
under Section 11.
o These implementing rules were promulgated by
the Bangko Sentral ng Pilipinas, the Insurance Commission
and the Securities and Exchange Commission, and if it was
the true belief of these institutions that inquiry orders
could be issued ex parte similar to freeze orders, language
to that effect would have been incorporated in the said
Rules. This is stressed not because the implementing rules
could authorize ex parte applications for inquiry orders
despite the absence of statutory basis, but rather because
the framers of the law had no intention to allow such ex
parte applications.
o Even the Rules of Procedure adopted by this Court
in A.M. No. 05-11-04-SC to enforce the provisions of the
AMLA specifically authorize ex parte applications with
respect to freeze orders under Section 1079 but make no
similar authorization with respect to bank inquiry orders
under Section 11.
● The necessary implication of this finding that
Section 11 of the AMLA does not generally authorize the
issuance ex parte of the bank inquiry order would be that
such orders cannot be issued unless notice is given to the
owners of the account, allowing them the opportunity to
contest the issuance of the order. Without such a
consequence, the legislated distinction between ex parte
proceedings under Section 10 and those which are not ex
parte under Section 11 would be lost and rendered useless.
● There certainly is fertile ground to contest the
issuance of an ex parte order.
o Section 11 itself requires that it be established
that "there is probable cause that the deposits or
investments are related to unlawful activities," and it
obviously is the court which stands as arbiter whether
there is indeed such probable cause. The process of
inquiring into the existence of probable cause would
involve the function of determination reposed on the trial
court. Determination clearly implies a function of
adjudication on the part of the trial court, and not a
mechanical application of a standard pre-determination by
some other body. The word "determination" implies
deliberation and is, in normal legal contemplation,
equivalent to "the decision of a court of justice."
● The court receiving the application for inquiry
order cannot simply take the AMLC’s word that probable
cause exists that the deposits or investments are related to
an unlawful activity.
o It will have to exercise its own determinative
function in order to be convinced of such fact. The account
holder would be certainly capable of contesting such
probable cause if given the opportunity to be apprised of
the pending application to inquire into his account; hence a
notice requirement would not be an empty spectacle. It
may be so that the process of obtaining the inquiry order
may become more cumbersome or prolonged because of
the notice requirement, yet we fail to see any unreasonable
burden cast by such circumstance.
o Requiring notice to the account holder should not,
in any way, compromise the integrity of the bank records
subject of the inquiry which remain in the possession and
control of the bank.

WHEREFORE, the PETITION is DISMISSED. No

pronouncement as to costs.
WEEK 15 #06 Subido v. CA
G.R. No. 000000 | 6 Dec 2016
Topic: ADDTL laws
Petitioner: SUBIDO PAGENTE CERTEZA MENDOZA and
BINAY LAW OFFICES
Respondent: THE COURT OF APPEALS, HON. ANDRES B.
REYES, JR., in his capacity as Presiding Justice of the
Court of Appeals, and the ANTI-MONEY LAUNDERING
COUNCIL, represented by its members, HON. AMANDO
M. TETANGCO, JR., Governor of the BANGKO SENTRAL
NG PILIPINAS, HON. TERESITA J. HERBOSA,
Chairperson of the Securities and Exchange
Commission, and HON. EMMANUEL F. DOOC, Insurance
Commissioner of the Insurance Commission
Ponente: Perez
FACTS:
● In 2015, a year before the 2016 presidential
elections, reports abounded on the supposed
disproportionate wealth of then Vice President Jejomar
Binay and the rest of his family, some of whom were
likewise elected public officers. The Office of the
Ombudsman and the Senate conducted investigations and
inquiries thereon ostensibly based on their respective
powers delineated in the Constitution.
● From various news reports announcing the
inquiry into then Vice President Binay's bank accounts,
including accounts of members of his family, petitioner
Subido Pagente Certeza Mendoza & Binay Law Firm
(SPCMB) was most concerned with the article published in
the Manila Times on 25 February 2015 entitled "Inspect
Binay Bank Accounts" which read, in pertinent part:
● . . . The Anti-Money Laundering Council (AMLC)
asked the Court of Appeals (CA) to allow the [C]ouncil to
peek into the bank accounts of the Binays, their
corporations, and a law office where a family member
was once a partner.
● Also the bank accounts of the law office linked to
the family, the Subido Pagente Certeza Mendoza &
Binay Law Firm, where the Vice President's daughter
Abigail was a former partner.
● Within twenty four (24) hours, Presiding Justice
Reyes wrote SPCMB denying its request
● Subido Pagente Certeza Mendoza & Binay —
where Binay's daughter, Makati City (Metro Manila) Rep.
Mar-len Abigail Binay was a partner, are also included in
the probe, the sources said.
● In their Comment, the AMLC, through the Office of
the Solicitor General (OSG), points out a supposed
jurisdictional defect of the instant petition, i.e., SPCMB
failed to implead the House of Representatives which
enacted the AMLA and its amendments. In all, the OSG
argues for the dismissal of the present petition,
highlighting that the AMLC's inquiry into bank deposits
does not violate due process nor the right to privacy
ISSUE: 1) Whether Section 11 of R.A No. 9160 violates
substantial due process? No
2.) Whether Section 11 of R.A No. 9160 violates procedural
due process? No
3) Whether Section 11 of R.A No. 9160 is violative of the
constitutional right to privacy enshrined in Section 2,
Article III of the Constitution? No
RULING:
1) No. We do not subscribe to SPCMB' s position.
Succinctly, Section 11 of the AMLA providing for ex-parte
application and inquiry by the AMLC into certain bank
deposits and investments does not violate substantive due
process, there being no physical seizure of property
involved at that stage.
In fact, .Eugenio delineates a bank inquiry order
under Section 11 from a freeze order under
Section 10 on both remedies' effect on the direct
objects, i.e. the bank deposits and investments:
On the other hand, a bank inquiry order under Section 11
does not necessitate any form of physical seizure of
property of the account holder. What the bank inquiry
order
authorizes is the examination of the particular deposits or
investments in banking institutions or non-bank financial
institutions. The monetary instruments or property
deposited with such banks or financial institutions are not
seized in a physical sense, but are examined on particular
details such as the account holder's record of deposits and
transactions. Unlike the assets subject of the freeze order,
the records to be inspected under a bank inquiry order
cannot be physically seized or hidden by the account
holder. Said records are in the possession of the bank and
therefore cannot be destroyed at the instance of the
account holder alone as that would require the
extraordinary cooperation and devotion of the bank.
At the stage in which the petition was filed before us, the
inquiry into certain bank deposits and investments by
the AMLC still does not contemplate any form of
physical seizure of the targeted corporeal property.
2) No. The AMLC functions solely as an investigative body
in the instances mentioned in Rule 5.b.26 Thereafter, the
next step is for the AMLC to file a Complaint with either the
DOJ or the Ombudsman pursuant to Rule 6b. Even in the
case of Estrada v. Office of the Ombudsman, where the
conflict arose at the preliminary investigation stage by the
Ombudsman, we ruled that the Ombudsman's denial of
Senator Estrada's Request to be furnished copies of the
counter-affidavits of his co-respondents did not violate
Estrada's constitutional right to due process where the
sole issue is the existence of probable cause for the
purpose of determining whether an information should be
filed and does not prevent Estrada from requesting a copy
of the counter-affidavits of his co-respondents during the
pre-trial or even during trial.
Plainly, the AMLC's investigation of money laundering
offenses and its determination of possible money
laundering offenses, specifically its inquiry into certain
bank accounts allowed by court order, does not transform
it into an investigative body exercising quasi-judicial
powers. Hence, Section 11 of the AMLA, authorizing a bank
inquiry court order, cannot be said to violate SPCMB's
constitutional right to due process.
4. The authority to inquire into or examine the main
or principal account and the related accounts shall comply
with the requirements of Article III, Sections 2 and 3 of the
Constitution. The foregoing demonstrates that the inquiry
and examination into the bank account are not undertaken
whimsically and solely based on the investigative
discretion of the AMLC. In particular, the requirement of
demonstration by the AMLC, and determination by the CA,
of probable cause emphasizes the limits of such
governmental action. We will revert to these safeguards
under Section 11 as we specifically discuss the CA' s denial
of SPCMB' s letter request for information concerning the
purported issuance of a bank inquiry order involving its
accounts.
All told, we affirm the constitutionality of Section 11 of the
AMLA allowing the ex-parte application by the AMLC for
authority to inquire into, and examine, certain bank
deposits and investments.

3. No. We now come to a determination of whether Section WHEREFORE, the petition is DENIED. Section 11 of
11 is violative of the constitutional right to privacy Republic Act No. 9160, as amended, is declared VALID and
enshrined in Section 2, Article III of the Constitution. CONSTITUTIONAL.
SPCMB is adamant that the CA's denial of its request to be
furnished copies of AMLC's ex-parte application for a bank
inquiry order and all subsequent pleadings, documents
and orders filed and issued in relation thereto, constitutes
grave abuse of discretion where the purported blanket
authority under Section 11: ( 1) partakes of a general
warrant intended to aid a mere fishing expedition; (2)
violates the attorney-client privilege; (3) is not preceded
by predicate crime charging SPCMB of a money laundering
offense; and ( 4) is a form of political harassment [of
SPCMB' s] clientele.

We thus subjected Section 11 of the AMLA to heightened

scrutiny and found nothing arbitrary in the allowance and
authorization to AMLC to undertake an inquiry into certain
bank accounts or deposits. Instead, we found that it
provides safeguards before a bank inquiry order is issued,
ensuring adherence to the general state policy of
preserving the absolutely confidential nature of Philippine
bank accounts:

1. The AMLC is required to establish probable cause

as basis for its ex-parte application for bank inquiry order;

2. The CA, independent of the AMLC's demonstration

of probable cause, itself makes a finding of probable cause
that the deposits or investments are related to an unlawful
activity under Section 3(i) or a money laundering offense
under Section 4 of the AMLA;

3. A bank inquiry court order ex-parte for related

accounts is preceded by a bank inquiry court order ex-
parte for the principal account which court order ex-parte
for related accounts is separately based on probable cause
that such related account is materially linked to the
principal account inquired into; and
WEEK 15 #07 MCC INDUSTRIAL SALES CORP. v.
SSANGYONG CORP.
G.R. No. 170633 | October 17, 2007
Topic: Additional laws;
Petitioner: MCC INDUSTRIAL SALES CORPORATION
Respondent: SSANGYONG CORPORATION
Ponente: NACHURA, J
DOCTRINE:
An original printout of a facsimile transmission is not an
electronic data message or electronic document.
FACTS:
● Petitioner MCC Industrial Sales, a domestic
corporation with office at Binondo, Manila, is engaged in
the business of importing and wholesaling stainless steel
products. One of its suppliers is respondent Ssangyong
Corporation, an international trading company with head
office in Seoul, South Korea and regional headquarters in
Makati City, Philippines.
o The two corporations conducted business through
telephone calls and facsimile or telecopy transmissions.
o Ssangyong would send the pro forma invoices
containing the details of the steel product order to MCC; if
the latter conforms thereto, its representative affixes his
signature on the faxed copy and sends it back to
Ssangyong, again by fax.
● Respondent shipped the steel products to the PH.
It was arranged that the respondent will issue the sales
invoices through fax, and once the petitioner conforme to
such then MCC through its general manager and president
George Chan, the latter has to fax the same with his
signature.
o Petitioner had a hard time opening letters of
credit. Ssangyong decided to negotiate with its mother
company in Korea to grant MCC a discount and to extend
for a while the opening of letters of credit. Such request
was acceded by Respondent. The first $70,000 letter of
credit was issued by MCC but the remaining $170,000 was
not. (madami electronic transactions in between)
● Then, Responded filed a civil action for damages
due to breach of contract against petitioner MCC RTC
Makati City. In its complaint, Ssangyong alleged that
petitioner breached their contract when they refused to
open the L/C in the amount of US$170,000.00 for the
remaining 100MT of steel under Pro Forma Invoice Nos.
ST2-POSTS0401-1 and ST2-POSTS0401-2.
● After Ssangyong rested its case, petitioners filed a
Demurrer to Evidence alleging that Ssangyong failed to
present the original copies of the pro forma invoices on
which the civil action was based. RTC denied the demurrer,
ruling that the documentary evidence presented had
already been admitted and their admissibility finds
support in Republic Act (R.A.) No. 8792, otherwise known
as the Electronic Commerce Act of 2000. Considering that
both testimonial and documentary evidence tended to
substantiate the material allegations in the complaint,
Ssangyong's evidence sufficed for purposes of a prima facie
case.
● After trial on the merits, RTC ruled in favor of
Ssangyong. The transaction was evidenced by Pro Forma
Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2,
which were later amended only in terms of reduction of
volume as well as the price per MT, following Pro Forma
Invoice Nos. ST2-POSTS080-1 and ST2-POSTS080-2.
● On appeal, CA affirmed RTC and held that Pro
Forma Invoices were admissible in evidence, although they
were mere facsimile printouts of MCC's steel orders.
● Hence, this petition for review on certiorari before
this Court.
● Petitioner contends that the photocopies of the
pro forma invoices presented by respondent Ssangyong to
prove the perfection of their supposed contract of sale are
inadmissible in evidence and do not fall within the ambit of
R.A. No. 8792, because the law merely admits as the best
evidence the original fax transmittal.
● Respondent argues that the Rules on Electronic
Evidence, the original facsimile transmittal of the pro
forma invoice is admissible in evidence since it is an
electronic document and, therefore, the best evidence
under the law and the Rules.
o Respondent further claims that the photocopies of
these fax transmittals are admissible under the Rules on
Evidence because the respondent sufficiently explained the
non-production of the original fax transmittals.
ISSUE: Whether the print-out and/or photocopies of
facsimile transmissions are electronic evidence and
admissible as such?
RULING: NO.
● The issue poses a novel question that the Court
welcomes. It provides the occasion for this Court to
pronounce a definitive interpretation of the equally
innovative provisions of the Electronic Commerce Act of
2000 (R.A. No. 8792) vis-à -vis the Rules on Electronic
Evidence.
● The copies of the said pro-forma invoices
submitted by the appellee are admissible in evidence,
although they are mere electronic facsimile printouts of
appellant's orders. Such facsimile printouts are considered
Electronic Documents under the New Rules on Electronic
Evidence, which came into effect on August 1, 2001.
● An electronic document shall be regarded as the
equivalent of an original document under the Best
Evidence Rule, as long as it is a printout or output readable
by sight or other means, showing to reflect the data
accurately. (Rule 4, Section 1, A.M. No. 01-7-01-SC)
● R.A. No. 8792, otherwise known as the Electronic
Commerce Act of 2000, considers an electronic data
message or an electronic document as the functional
equivalent of a written document for evidentiary purposes.
o The Rules on Electronic Evidence regards an
electronic document as admissible in evidence if it
complies with the rules on admissibility prescribed by the
Rules of Court and related laws, and is authenticated in the
manner prescribed by the said Rules.
o An electronic document is also the equivalent of
an original document under the Best Evidence Rule, if it is
a printout or output readable by sight or other means,
shown to reflect the data accurately.
● Thus, to be admissible in evidence as an electronic
data message or to be considered as the functional
equivalent of an original document under the Best
Evidence Rule, the writing must foremost be an "electronic
data message" or an "electronic document."
● An original printout of a facsimile
transmission is NOT an electronic data message or
electronic document.
● The term "Electronic record" fixes the scope of the
Act. The record is the data. The record may be any
medium. It is "electronic" because it is recorded or stored
in or by a computer system or similar device. The Act is
intended to apply, for example, to data on magnetic strips
on cards, or in smart cards.
● The term "electronic data message," would not
apply to telexes or faxes, except computer-generated faxes.
It would also not apply to regular digital telephone
conversations, since the information is not recorded. It
would apply to voice mail, since the information has been
recorded in or by a device similar to a computer. Likewise
video records are not covered, though when the video is
transferred to a Web site it would be, because of the
involvement of the computer. Music recorded by a
computer system on a compact disk would be covered.
● In short, not all data recorded or stored in "digital"
form is covered. A computer or similar device has to be
involved in its creation or storage. The term "similar
device" does not extend to all devices that create or store
data in digital form. Although things that are not recorded
or preserved by or in a computer system are omitted from
this Act, they may well be admissible under other rules of
law. This Act focuses on replacing the search for
originality, proving the reliability of systems instead of
that of individual records, and using standards to show
systems reliability.
● Paper records that are produced directly by a
computer system, such as printouts, are themselves
electronic records, being just the means of intelligible
display of the contents of the record. Photocopies of the
printout would be paper records subject to the usual rules
about copies, but the "original" printout would be subject
to the rules of admissibility of this Act.
● However, printouts that are used only as paper
records, and whose computer origin is never again called
on, are treated as paper records. In this case the reliability
of the computer system that produced the record is
relevant to its reliability.
● Facsimile transmissions are not, in this sense,
"paperless," but verily are paper-based.
● A facsimile or fax transmission is a process
involving the transmission and reproduction of printed
and graphic matter by scanning an original copy, one
elemental area at a time, and representing the shade or
tone of each area by a specified amount of electric current.
The current is transmitted as a signal over regular
telephone lines or via microwave relay and is used by the
receiver to reproduce an image of the elemental area in the
proper position and the correct shade. The receiver is
equipped with a stylus or other device that produces a
printed record on paper referred to as a facsimile.
● Court pleadings may not be submitted through
a fax machine:
o A facsimile is not a genuine and authentic
pleading. It is, at best, an exact copy preserving all the
marks of an original. Without the original, there is no way
of determining on its face whether the facsimile pleading is
genuine and authentic and was originally signed by the
party and his counsel. It may, in fact, be a sham pleading.
● Accordingly, in an ordinary facsimile transmission,
there exists an original paper-based information or data
that is scanned, sent through a phone line, and re-printed
at the receiving end.
● We, therefore, conclude that the terms
"electronic data message" and "electronic document,"
as defined under the Electronic Commerce Act of 2000,
do not include a facsimile transmission. Accordingly, a
facsimile transmission cannot be considered as
electronic evidence. It is not the functional equivalent
of an original under the Best Evidence Rule and is not
admissible as electronic evidence.
● Since a facsimile transmission is not an "electronic
data message" or an "electronic document," and cannot be
considered as electronic evidence by the Court, with
greater reason is a photocopy of such a fax transmission
not electronic evidence. In the present case, therefore, Pro
Forma Invoice Nos. ST2-POSTS0401-1 and ST2-
POSTS0401-2 (Exhibits "E" and "F"), which are mere
photocopies of the original fax transmittals, are not
electronic evidence, contrary to the position of both the
trial and the appellate courts.
WHEREFORE, PREMISES CONSIDERED, the appeal is
PARTIALLY GRANTED. The Decision of the Court of
Appeals in CA-G.R. CV No. 82983 is MODIFIED in that the
award of actual damages is DELETED. However,
petitioner is ORDERED to pay respondent NOMINAL
DAMAGES in the amount of P200,000.00, and the
ATTORNEY'S FEES as awarded by the trial court. SO
ORDERED.
Notes:
What is a fax machine
● A facsimile machine, which was first patented in
1843 by Alexander Bain, is a device that can send or
receive pictures and text over a telephone line. It works by
digitizing an image—dividing it into a grid of dots. Each
dot is either on or off, depending on whether it is black or
white. Electronically, each dot is represented by a bit that
has a value of either 0 (off) or 1 (on).
● In this way, the fax machine translates a picture
into a series of zeros and ones (called a bit map) that can
be transmitted like normal computer data. On the
receiving side, a fax machine reads the incoming data,
translates the zeros and ones back into dots, and reprints
the picture.
● A fax machine is essentially an image scanner, a
modem and a computer printer combined into a highly
specialized package. The scanner converts the content of a
physical document into a digital image, the modem sends
the image data over a phone line, and the printer at the
other end makes a duplicate of the original document.
Rules cited:
● The Electronic Commerce Act of 2000 defines
electronic data message and electronic document as
follows:
o "Electronic Data Message" refers to information
generated, sent, received or stored by electronic, optical or
similar means.
o "Electronic Document" refers to information or
the representation of information, data, figures, symbols or
other modes of written expression, described or however
represented, by which a right is established or an
obligation extinguished, or by which a fact may be proved
and affirmed, which is received, recorded, transmitted,
stored, processed, retrieved or produced electronically.
● The Implementing Rules and Regulations (IRR)
of R.A. No. 8792, defines the terms as:
o "Electronic Data Message" refers to information
generated, sent, received or stored by electronic, optical or
similar means, but not limited to, electronic data
interchange (EDI), electronic mail, telegram, telex or
telecopy. Throughout these Rules, the term "electronic
data message" shall be equivalent to and be used
interchangeably with "electronic document."
o "Electronic Document" refers to information or
the representation of information, data, figures, symbols or
other modes of written expression, described or however
represented, by which a right is established or an
obligation extinguished, or by which a fact may be proved
and affirmed, which is received, recorded, transmitted,
stored, processed, retrieved or produced electronically.
Throughout these Rules, the term "electronic document"
shall be equivalent to and be used interchangeably with
"electronic data message."
● The phrase "but not limited to, electronic data
interchange (EDI), electronic mail, telegram, telex or
telecopy" in the IRR's definition of "electronic data
message" is copied from the Model Law on Electronic
Commerce adopted by the United Nations Commission on
International Trade Law (UNCITRAL), from which majority
of the provisions of R.A. No. 8792 were taken.
● While "data message" has reference to
information electronically sent, stored or transmitted, it
does not necessarily mean that it will give rise to a right or
extinguish an obligation, unlike an electronic document.
Evident from the law, however, is the legislative intent to
give the two terms the same construction.
● The Rules on Electronic Evidence promulgated
by this Court defines the said terms in the following
manner:
o (g) "Electronic data message" refers to
information generated, sent, received or stored by
electronic, optical or similar means.
o (h) "Electronic document" refers to information or
the representation of information, data, figures, symbols or
other modes of written expression, described or however
represented, by which a right is established or an
obligation extinguished, or by which a fact may be proved
and affirmed, which is received, recorded, transmitted,
stored, processed, retrieved or produced electronically. It
includes digitally signed documents and print-out or
output, readable by sight or other means, which accurately
reflects the electronic data message or electronic
document. For purposes of these Rules, the term
"electronic document" may be used interchangeably with
"electronic data message."
. Rules on Electronic Evidence – NOT IN THIS CASE
WEEK 15 #8 National Power Corporation vs. Codilla, Jr.
G.R. No. 170491 | April 3, 2007
Petitioner: National Power Corporation (NPC)
Respondent: Hon. Ramon Codilla, Jr. presiding Judge
RTC of Cebu Br. 19, Bangpai Shipping Company,
Wallem Shipping Inc.
Ponente: Chico-Nazario, J.
FACTS:
● M/V Dibena Win, owned and operated by Bangpai
Shipping (foreign) allegedly bumped and damaged NPC’s
Power Barge 209 moored at Cebu International Port
● NPC filed with RTC complaint for damages against
Bangpai Shipping
o Filed amended complaint impleading Wallem
Shipping as a ship agent of Bangpai
● Wallem filed MTD – denied by Judge Codilla
● Bangpai filed MTD – also denied
● NPC filed formal offer of evidence Exhibits A to V
● Bangpai and Wallem filed objections to NPC’s
formal offer of evidence
● Judge Codilla denied admission and excluded from
records Exhibits A, C, D, E, H, and sub-markings I, J, K, L, M,
N, O, P, Q, R, S
o Mere photocopies and even given opportunity to
present its originals, NPC did not present
o NPC attempted to justify the admission of the
photocopies contending that photocopies offered are
equivalent to original of the document on the basis of the
Electronic Evidence
o Judge Codilla ruled that information in the
photocopies was not received, recorded, retrieved or
produced electronically and that such electronic evidence
must be authenticated which NPC failed to do
● MR was denied
● NPC filed petition for certiorari
● CA denied
ISSUE: W/N photocopies are electronic documents under
RA 8792 or IRR of Electronic Commerce Act as well as
RULING:
● Electronic document - information or the
representation of information, data, figures, symbols
or other models of written expression, described or
however represented, by which a right is established or
an obligation extinguished, or by which a fact may be
proved and affirmed, which is received, recorded,
transmitted, stored, processed, retrieved or produced
electronically
o includes digitally signed documents and any
printout, readable by sight or other means which
accurately reflects the electronic data message or
electronic document
● The rules use the word "information" to define an
electronic document received, recorded, transmitted,
stored, processed, retrieved or produced electronically
● Electronic document is relevant only in terms of
the information contained therein, similar to any other
document which is presented in evidence as proof of its
contents
● What differentiates an electronic document from a
paper-based document is the manner by which the
information is processed
o the information contained in an electronic
document is received, recorded, transmitted, stored,
processed, retrieved or produced electronically
● Information contained in the photocopies
submitted by NPC will reveal that not all of the
contents therein, such as the signature of the persons
who purportedly signed the documents, may be
recorded or produced electronically
o By no stretch of the imagination can a person's
signature affixed manually be considered as information
electronically received, recorded, transmitted, stored,
processed, retrieved or produced
● Argument of NPC that since these paper printouts
were produced through an electronic process, then these
photocopies are electronic documents as defined in
the Rules on Electronic Evidence is obviously an
erroneous, if not preposterous, interpretation of the law
● Having declared that the offered photocopies are
not tantamount to electronic documents, it is
consequential that the same may not be considered as the
functional equivalent of their original as decreed in the law
Rules on Evidence related
● In addition, trial court was correct in rejecting
these photocopies as they violate the best evidence rule
and are therefore of no probative value being incompetent
pieces of evidence (Under Rule 130 Sec 2 of Rules on
Evidence)
● When the original document has been lost or
destroyed, or cannot be produced in court, the offeror,
upon proof of its execution or existence and the cause of its
unavailability without bad faith on his part, may prove its
contents by a copy, or by a recital of its contents in some
authentic document, or by the testimony of witnesses in
the order stated
● Offeror of secondary evidence is burdened to
prove the predicates thereof:
o (a) the loss or destruction of the original without
bad faith on the part of the proponent/offeror which can
be shown by circumstantial evidence of routine practices
of destruction of documents;
o (b) the proponent must prove by a fair
preponderance of evidence as to raise a reasonable
inference of the loss or destruction of the original copy;
and
o (c) it must be shown that a diligent and bona fide
but unsuccessful search has been made for the document
in the proper place or places
● NPC failed to establish that such offer was made in
accordance with the exceptions as enumerated under the
said Rule
NOTES:
Details on Exhibits (just in case mag ask si Sir)
● Exhibit "A" is a photocopy of a letter manually
signed by a certain Jose C. Troyo, with "RECEIVED"
stamped thereon, together with a handwritten date;
● Exhibit "C" is a photocopy of a list of estimated
cost of damages of petitioner's power barges 207 and 209
prepared by Hopewell Mobile Power Systems Corporation
and manually signed by Messrs. Rex Malaluan and Virgilio
Asprer;
● Exhibit "D" is a photocopy of a letter manually
signed by a certain Nestor G. Enriquez, Jr., with
"RECEIVED" stamped thereon, together with a
handwritten notation of the date it was received;
● Exhibit "E" is a photocopy of a Standard Marine
Protest Form which was filled up and accomplished by Rex
Joel C. Malaluan in his own handwriting and signed by him.
Portions of the Jurat were handwritten, and manually
signed by the Notary Public;
● Exhibit "Q" is a photocopy of a letter manually
signed by Virgilio Asprer and by a Notary Public, together
with other handwritten notations.

● Exhibit "H" is a photocopy of a letter manually

signed by Mr. Nestor G. Enriquez, Jr. with "RECEIVED"
stamped thereon, together with a handwritten notation of
the date it was received;

● Exhibit "I" is a photocopy of a computation of the

estimated energy loss allegedly suffered by petitioner
which was manually signed by Mr. Nestor G. Enriquez, Jr.;

● Exhibit "J" is a photocopy of a letter containing the

breakdown of the cost estimate, manually signed by Mr.
Nestor G. Enriquez, Jr., with "RECEIVED" stamped thereon,
together with a handwritten notation of the date it was
received, and other handwritten notations;

● Exhibit "K" is a photocopy of the Subpoena Duces

Tecum Ad Testificandum written using a manual
typewriter, signed manually by Atty. Ofelia Polo-De Los
Reyes, with a handwritten notation when it was received
by the party;

● Exhibit "L" is a photocopy of a portion of the

electricity supply and operation and maintenance
agreement between petitioner and Hopewell, containing
handwritten notations and every page containing three
unidentified manually placed signatures;

● Exhibit "M" is a photocopy of the Notice of

Termination with attachments addressed to Rex Joel C.
Malaluan, manually signed by Jaime S. Patinio, with a
handwritten notation of the date it was received. The sub-
markings also contain manual signatures and/or
handwritten notations;

● Exhibit "N" is a photocopy of a letter of

termination with attachments addressed to Virgilio Asprer
and manually signed by Jaime S. Patino. The sub-markings
contain manual signatures and/or handwritten notations;

● Exhibit "O" is the same photocopied document

marked as Annex C;

● Exhibit "P" is a photocopy of an incident report

manually signed by Messrs. Malaluan and Bautista and by
the Notary Public, with other handwritten notations;
WEEK 15 #09 Ople vs Torres
G.R. No. 127685 | July 23, 1998
(read separate and dissenting opinions)
Topic: Privacy
Petitioner: BLAS F. OPLE
Respondent: RUBEN D. TORRES, ALEXANDER AGUIRRE,
HECTOR VILLANUEVA, CIELITO HABITO, ROBERT
BARBERS, CARMENCITA REODICA, CESAR SARINO,
RENATO VALENCIA, TOMAS P. AFRICA, HEAD OF THE
NATIONAL COMPUTER CENTER and CHAIRMAN OF THE
COMMISSION ON AUDIT
Ponente: PUNO, J.
FACTS:
● Senator Blas F. Ople seeks to invalidate
Administrative Order No. 308 issued by President
Fidel Ramos entitled "Adoption of a National
Computerized Identification Reference System" on two
important constitutional grounds, viz: one, it is a
usurpation of the power of Congress to legislate, and
two, it impermissibly intrudes on our citizenry's
protected zone of privacy.
● Petitioner Ople filed the instant petition against
Executive Secretary Ruben Torres and the heads of the
government agencies, who as members of the Inter-
Agency Coordinating Committee, are charged with the
implementation of A.O. No. 308.
ISSUE: WON A.O. No. 308 is invalid as it violates the right
to privacy and also suffers from vagueness and
overbreadth
RULING: YES
● Assuming, arguendo, that A.O. No. 308 need not be
the subject of a law, still it cannot pass constitutional
muster as an administrative legislation because facially it
violates the right to privacy.
● The right to privacy is a fundamental right
guaranteed by the Constitution, hence, it is the burden of
government to show that A.O. No. 308 is justified by some
compelling state interest and that it is narrowly drawn.
A.O. No. 308 is predicated on two considerations: (1) the
need to provide our citizens and foreigners with the
facility to conveniently transact business with basic service
and social security providers and other government
instrumentalities and (2) the need to reduce, if not totally
eradicate, fraudulent transactions and misrepresentations
by persons seeking basic services. It is debatable whether
these interests are compelling enough to warrant the
issuance of A.O. No. 308. But what is not arguable is the
broadness, the vagueness, the overbreadth of A.O. No.
308 which if implemented will put our people's right to
privacy in clear and present danger.
● The heart of A.O. No. 308 lies in its Section 4 which
provides for a Population Reference Number (PRN) as a
"common reference number to establish a linkage among
concerned agencies" through the use of "Biometrics
Technology" and "computer application designs."
● The term "biometrics" has now evolved into a
broad category of technologies which provide precise
confirmation of an individual's identity through the use of
the individual's own physiological and behavioral
characteristics. A physiological characteristic is a relatively
stable physical characteristic such as a fingerprint, retinal
scan, hand geometry or facial features. A behavioral
characteristic is influenced by the individual's personality
and includes voice print, signature and keystroke. Most
biometric identification systems use a card or personal
identification number (PIN) for initial identification.
● A.O. No. 308 does not state what specific
biological characteristics and what particular
biometrics technology shall be used to identify people
who will seek its coverage. Considering the banquet of
options available to the implementors of A.O. No. 308, the
fear that it threatens the right to privacy of our people is
not groundless.
● A.O. No. 308 also does not state whether
encoding of data is limited to biological information
alone for identification purposes. In fact, the Solicitor
General claims that the adoption of the Identification
Reference System will contribute to the "generation of
population data for development planning." This is an
admission that the PRN will not be used solely for
identification but for the generation of other data with
remote relation to the avowed purposes of A.O. No. 308.
The indefiniteness of A.O. 308 can give the government
the roving authority to store and retrieve information
for a purpose other than the identification of the
individual through his PRN
● Even the assumption that the computer data file
will be limited to the name, address and other basic
personal information about the individual will not save
A.O. No. 308 from constitutional infirmity for again it does
not tell us how these information gathered shall be
handled. It does not provide who shall control and
access the data, under what circumstances and for
what purpose. These factors are essential to safeguard the
privacy and guaranty the integrity of the information. The
computer linkage gives other government agencies access
to the information. Yet, there are no controls to guard
against leakage of information.
Reasonable expectation of privacy (Two-part test)
● We reject the argument of the Solicitor General
that an individual has a reasonable expectation of privacy
with regard to the National ID and the use of biometrics
technology as it stands on quicksand. The reasonableness
of a person's expectation of privacy depends on a two-
part test:
o (a) whether by his conduct, the individual has
exhibited an expectation of privacy; and
o (b) whether this expectation is one that society
recognizes as reasonable.
● The factual circumstances of the case determines
the reasonableness of the expectation. However, other
factors, such as customs, physical surroundings and
practices of a particular activity, may serve to create or
diminish this expectation.
ISSUE: WON Use of biometrics and computer technology in
A.O. No. 308 does assures the individual of a reasonable
expectation of privacy
RULING: NO
● The use of biometrics and computer technology
in A.O. No. 308 does not assure the individual of a
reasonable expectation of privacy. The measure of
protection granted by the reasonable expectation
diminishes as relevant technology becomes more widely
accepted. The security of the computer data file depends
not only on the physical inaccessibility of the file but also
on the advances in hardware and software computer
technology. A.O. No. 308 is so widely drawn that a
minimum standard for a reasonable expectation of
privacy, regardless of technology used, cannot be
inferred from its provisions
● The rules and regulations to be drawn by the
IACC cannot remedy this fatal defect. Rules and
regulations merely implement the policy of the law or
order. On its face, A.O. No. 308 gives the IACC virtually
unfettered discretion to determine the metes and
bounds of the ID System.
● Nor do our present laws provide adequate
safeguards for a reasonable expectation of privacy.
Commonwealth Act No. 591 penalizes the disclosure by
any person of data furnished by the individual to the NSO
with imprisonment and fine. Republic Act No. 1161
prohibits public disclosure of SSS employment records and
reports. These laws, however, apply to records and data
with the NSO and the SSS. It is not clear whether they
may be applied to data with the other government
agencies forming part of the National ID System. The
need to clarify the penal aspect of A.O. No. 308 is
another reason why its enactment should be given to
Congress
ISSUE: WON A.O. No. 308 is overbroad and thus cannot be
upheld based on the Rational relationship test
RULING: YES
● The Solicitor General urges us to validate A.O. No.
308's abridgment of the right of privacy by using the
rational relationship test. He stressed that the purposes of
A.O. No. 308 are: (1) to streamline and speed up the
implementation of basic government services, (2)
eradicate fraud by avoiding duplication of services, and (3)
generate population data for development planning. He
concludes that these purposes justify the incursions into
the right to privacy for the means are rationally related to
the end.
● We are not impressed by the argument. In Morfe v.
Mutuc, we upheld the constitutionality of R.A. 3019, the
Anti-Graft and Corrupt Practices Act, as a valid police
power measure. We declared that the law, in compelling a
public officer to make an annual report disclosing his
assets and liabilities, his sources of income and expenses,
did not infringe on the individual's right to privacy. The
law was enacted to promote morality in public
administration by curtailing and minimizing the
opportunities for official corruption and maintaining a
standard of honesty in the public service.
● The same circumstances do not obtain in the case
at bar. For one, R.A. 3019 is a statute, not an
administrative order. Secondly, R.A. 3019 itself is
sufficiently detailed. The law is clear on what practices
were prohibited and penalized, and it was narrowly drawn
to avoid abuses. In the case at bar, A.O. No. 308 may have
been impelled by a worthy purpose, but, it cannot pass
constitutional scrutiny for it is not narrowly drawn. And
we now hold that when the integrity of a fundamental right
is at stake, this court will give the challenged law,
administrative order, rule or regulation a stricter scrutiny.
It will not do for the authorities to invoke the presumption
of regularity in the performance of official duties. Nor is it
enough for the authorities to prove that their act is not
irrational for a basic right can be diminished, if not
defeated, even when the government does not act
irrationally. They must satisfactorily show the presence of
compelling state interests and that the law, rule, or
regulation is narrowly drawn to preclude abuses. This
approach is demanded by the 1987 Constitution whose
entire matrix is designed to protect human rights and to
prevent authoritarianism. In case of doubt, the least we can
do is to lean towards the stance that will not put in danger
the rights protected by the Constitution.
● The case of Whalen v. Roe cited by the Solicitor
General is also off-line. In Whalen, the United States
Supreme Court was presented with the question of
whether the State of New York could keep a centralized
computer record of the names and addresses of all persons
who obtained certain drugs pursuant to a doctor's
prescription. The U.S. Supreme Court held that while an
individual's interest in avoiding disclosure of personal
matters is an aspect of the right to privacy, the statute did
not pose a grievous threat to establish a constitutional
violation. The patient-identification requirement was a
product of an orderly and rational legislative decision
made upon recommendation by a specially appointed
commission which held extensive hearings on the matter.
Moreover, the statute was narrowly drawn and
contained numerous safeguards against indiscriminate
disclosure. The statute laid down the procedure and
requirements for the gathering, storage and retrieval of the
information. It enumerated who were authorized to access
the data. It also prohibited public disclosure of the data by
imposing penalties for its violation. In view of these
safeguards, the infringement of the patients' right to
privacy was justified by a valid exercise of police power.
As we discussed above, A.O. No. 308 lacks these vital
safeguards.
Right to privacy (Strict scrutiny test)
● The right to privacy does not bar all incursions
into individual privacy. The right is not intended to stifle
scientific and technological advancements that enhance
public service and the common good. It merely requires
that the law be narrowly focused and a compelling interest
justify such intrusions. Intrusions into the right must be
accompanied by proper safeguards and well-defined
standards to prevent unconstitutional invasions. Any law
or order that invades individual privacy will be
subjected by this Court to strict scrutiny.
● Morfe v. Mutuc: “The concept of limited
government has always included the idea that
governmental powers stop short of certain intrusions into
the personal life of the citizen. This is indeed one of the
basic distinctions between absolute and limited
government...a system of limited government safeguards a
private sector, which belongs to the individual, firmly
distinguishing it from the public sector, which the state can
control...”
(Opinions: Marami sila so I included short ones lang)
PANGANIBAN, J., separate opinion;
● I concur only in the result and only on the ground
that an executive issuance is not legally sufficient to
establish an all-encompassing computerized system of
identification in the country. The subject matter contained
in AO 308 is beyond the powers of the President to
regulate without a legislative enactment.
● I reserve judgmeht on the issue of wherher a
national ID system is an infringement of the constitutional
right to privacy or the freedom of thought until after
Congress passes, if ever, a law to this effect. Only then, and
upon the filing of a proper petition, may the provisions of
the statute be scrutinized by the judiciary to determine
their constitutional foundation. Until such time, the issue is
premature; and any decision thereon, speculative and
academic. 
● Let it be noted that this Court, as shown by the
voting of the justices, has not definitively ruled on these
points. The voting is decisive only on the need for the
appropriate legislation, and it is only on this ground that
the petition is granted by this Court.
KAPUNAN, J., dissenting opinion;
● There is nothing in A.O. 308 to serve as sufficient
basis that the new system to be evolved violates the right
to privacy. Said order simply provides the system's general
framework. Without the concomitant guidelines, which
would spell out in detail how this new identification
system would work, the perceived violation of the right to
privacy amounts to nothing more than mere surmise and
speculation.
● What has caused hysteria over the National
Computerized Identification Reference System is the
possible utilization of Biometrics Technology which refers
to the use of autnomated matching of physiological or
behavioral characteristics to identify a person that would dangers of this new technology is thus securedly allayed by
violated the right to privacy. the specific limitations set by the standards.

● The majority opinion has enumerated various
forms and methods of Biometrics Technology which if
adopted in the National Computaized Identification
Reference System would seriously threaten the right to
privacy. Among which are biocrypt retinal scan, artificial
nose and thermogram. The majority also points to certain
alleged deficiencies of A O. No. 308. Thus:
1) A.O. No. 308 does not specify the particular
Biometrics Technology that shall be used for the
new identification system.
2) The order dots not state whether encoding of
data is limited to biological information alone for
identification purposes;
3) There is no provision as to who shall control
and access the data, under what circumstances
and for what purpose; and
4) There are no controls to guard against leakage
of information, thus heightening the potential for
misuse and abuse.
● More than this, the right to privacy is well-
esconced in and directly protected by various provisions of
the Bill of Rights, the Civil Code, the RPC, and certain laws,
all so painstakingly and resourcefully catalogued in the
majority opinion. Many of these laws provide penalties for
their violation in the form of imprisonment, fines, or
damages. These laws will serve as powerful deterrents not
only in the establishment of any administrative rule that
will violate the constitutionally protected right to privacy,
but also to would-be transgressors of such right.
● In Whalen v. Roe, a New York statute was
challenged for requiring physicians to identify patients
obtaining prescription drugs of the statute's "Schedule II"
category (a class of drugs having a potential for abuse and
a recognized medical use) so the names and addresses of
the prescription drug patients can be recorded in a
centralized computer file maintained by the New York
State Department of Health. Some patients regularly
receiving prescription for "Schedule II" drugs and doctors
who prescribed such drugs brought an action questioning
the validity of the statute on the ground that it violated the
rights of privacy.

● There is nothing in A.O. No. 308, as it is worded, to
suggest that the advanced methods of the Biometrics
Technology that may pose danger to the right of privacy
will be adopted.
● The standards set in A.O. No. 308 for the adoption
of the new system are spelled out in the "WHEREASES"
and body of the order, namely,
● US SC sustained the validity of the statute on the
ground that the patient identification requirement is a
reasonable exercise of the State's broad police powers. The
Court also held that there is no support in the record for an
assumption that the security provisions of the statute will
be adiministered improperly.

o the need to provide citizens and foreign residents

with the facility to conveniently transact business
with basic service and social security providers and other
government instrumentalities;

o the computerized system is intended

to properly and efficiently identify persons seeking basic
services or social security and reduce, if not totally eradicate
fraudulent transactions and misreprentation;

o the national identification reference system is

established among the key basic services and social security
providers;

o and finally, the IACC Secretariat shall coordinate

with different Social Security and Services Agencies to
establish the standards in the use of Biometrics
Technology.

● Consequently, the choice of the particular form

and extent of Biometrics Technology that will be applied
and the parameters for its use (as will be defined in the
guidelines) will be limited by the afore-stated standards.
The fear entertained by the majority on the potential