ELECTRONIC COMMERCE ACT (R.A. No. 8792) Objective: 1. To facilitate domestic and international transactions, contracts and exchanges and storage of information through the utilization of electronic, optical and similar medium, mode, instrumentality and technology; 2. To recognize authenticity and reliability of electronic documents related to such activities; and 3. To promote the universal use of electronic transactions in the government and by the general public. Applicability: It applies to any kind of (electronic) data message and electronic document used in the context of commercial and non-commercial activities. Legal Recognition of Electronic Data Messages, Documents, and Signatures - Electronic Data Message is the information generated, sent, received or stored by electronic, optical, or similar means. - Electronic Document is the 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. o LEGAL EFFECT: It shall have the legal effect, validity and enforceability as any other document or legal writing. Equivalent Compliance Any legal requirement that a document be in writing is complied by an electronic document if: It maintains its integrity and reliability; and o It can be authenticated. Any legal requirement that a document be presented or retained in its original form is met by an electronic document if: o There exists a reliable assurance as to the integrity of the document from the time when it was first generated; and o The document is capable of being displayed to the person to whom it is to be presented. signature or reliance on the electronic signature is not reasonable under the circumstances. o - Electronic Signature is any distinctive mark, characteristics 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. o LEGAL EFFECT: It shall be equivalent to the signature of a person on a written document if that signature is proved by showing that a prescribed procedure, not alterable by the parties interested in the electronic document. o Presumption Relating to Electronic Signatures The electronic signature is the signature of the person to whom it correlates; and The electronic signature was fixed by that person with the intention of signing or proving the electronic document, unless the person relying on the electronically signed electronic document knows or has noticed of defects in or unreliability of the Rules on Admissibility and Evidential Weight of Electronic Data Message or Electronic Document - - The admissibility of an electronic data message or electronic document in evidence cannot be denied: o On the sole ground that is in electronic form; or o On the ground that it is not in the standard written form and electronic data message or electronic document meeting and complying with the requirement. 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 factors shall be given due regard. Obligation of Confidentiality - Obligation of confidentiality provides that 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. FOREIGN INVESTMENTS ACT (RA 7042, as amended by RA 11647) Policy of the Law [Sec.1, RA 11647] - - - To attract, promote, and welcome productive investments from foreign individuals, partnerships, corporations, and governments, including their political subdivisions, in activities which significantly contribute to national industrialization and socio-economic development. Foreign investment is encouraged in enterprises that significantly expand livelihood and employment opportunities for Filipinos. o To enhance economic value of farm products; o To promote welfare of Filipino consumers; o To expand the scope, quality, and volume of exports and their access to foreign markets; and/or o Transfer relevant technologies in agriculture, industry, and support services. General Rule: There are no restrictions on extent of foreign ownership of export enterprises. o EXCEPTION: In areas included in the negative list. Definition of Terms [Sec.2, RA11647] - Foreign Investment is an equity investment made by a non-Philippine national in the form of foreign exchange and/or other assets actually transferred to the Philippines and duly registered with the Central Bank which shall assess and appraise the value of such assets other than foreign exchange. - Doing Business shall include: o Soliciting orders, service contracts, opening offices; o Appointing representatives or distributors, operating under the full control of foreign corporation domiciled in the Philippines; Participating in the management, supervision, or control of any domestic business, firm, entity, or corporation in the Philippines; and o Any other act or acts that imply a continuity of commercial dealings or arrangement. General Test to determine whether a foreign corporation is considered “doing business” in the Philippines: o Substance Test o Continuity Test fall within Lists A and B of the Foreign Investment Negative List. o List A – areas of activities reserved to Philippine national by mandate of the Constitution and specific laws. o List B – areas of activities and enterprises regulated pursuant to law for reasons of security, defense, risk to health and morals, and protection to small and medium-scale enterprises. o - - - Export Enterprise is an enterprise wherein a manufacturer, processor, or service enterprise exports 60% or more of its output, or wherein a trader purchases product domestically and exports 60% or more of such purchases. A non-Philippine national, not otherwise prohibited by law, and upon registration with the SEC, or with the DTI in the case of single proprietorship. o General Rule: a non-Philippine national is allowed to do business or invest in a domestic enterprise up to 100% of its capital. o EXCEPTION: Unless participation of nonPhilippine nationals in the enterprise is prohibited or limited under the Foreign Investments Negative List. Foreign Investments in Export Enterprises [Sec. 7, RA 11647] - - Domestic Market Enterprise an enterprise which products good for sale, or renders services to the domestic market entirely or if exporting a portion of its output fails to consistency export at least 60% thereof. Registration of Investment of Non-Philippine Nationals [Sec. 6, RA 11647] - Foreign Investments in Domestic Market Enterprises [Sec. 7, RA 7042] Foreign equity participation in export enterprises shall be allowed up to 100% provided that the products and services of such enterprises do not General Rule: Foreign or non-Philippine national investors are allowed to invest in domestic enterprises. o EXCEPTION: When foreign ownership is either prohibited or limited by law. Foreign Investment Negative List [Sec. 8, RA 11647] - Foreign Investment Negative List is the list of areas of economic activity whose foreign ownership is limited to a maximum of 40% of the equity capital of the enterprises engaged therein. o Categories: List A – areas of activities reserved to Philippine national by mandate of the Constitution and specific laws. List B – areas of activities and enterprises regulated pursuant to law for reasons of security, defense, risk to health and morals, and protection to small and medium-scale enterprises. PUBLIC SERVICE ACT (Commonwealth Act No. 146, as amended by RA 11659) o o o Critical Infrastructure [Sec.2(e), RA 11659] - Critical Infrastructure refers to any public service which owns, uses, or operates systems and assets, whether physical or virtual, so vital to the Republic of the Philippines that the incapacity or destruction of such systems or assets would have a detrimental impact on national security, including telecommunications and other such vital services as may be declared by the President of the Philippines; Foreign State-owned Enterprise refers to an entity in which a foreign State: o directly or indirectly owns more than fiftypercent (50%) of the capital taking into account both the voting rights and beneficial ownership; o control, through ownership interests, the exercise of more than fifty percent (50%) of the voting rights; or o holds the power to appoint a majority of members of the board of directors or any other equivalent management body. - - - Public Service as Public Utility [Sec.4, RA 11659] - Public Utility refers to a public service that operates, manages or controls for public use any of the following: o Distribution of Electricity; o Transmission of Electricity; o Petroleum and Petroleum Products Pipeline Transmission Systems; Powers of the President to Suspend or Prohibit Transaction or Investment [Sec. 23, RA 11659] - Unlawful Acts [Sec.9, RA 11659] Foreign State-Owned Enterprise [Sec.2(g), RA 11659] - Water Pipeline Distribution Systems and Wastewater Pipeline Systems, including sewerage pipeline systems; Seaports; and Public Utility Vehicles. - To provide or maintain any service that is unsafe, improper, or inadequate, or withhold or refuse any service which can reasonably be demanded and furnished. To make or give, directly or indirectly, by itself or through its agents, attorneys or brokers, or any of them, discounts or rebates on authorized rates, or grant credit for the payment of freight charges, or any undue or unreasonable preference or advantage to any person or corporation or to any locality or to any particular description of traffic or service, or subject any particular person or corporation or locality or any particular description of traffic to any prejudice or disadvantage in any respect whatsoever; to adopt, maintain, or enforce any regulation, practice or measurement which shall be found or determined by the Commission to be unjust, unreasonable, unduly preferential or unjustly discriminatory. To refuse or neglect, when requested by the Postmaster General or his authorized representative, to carry public mail on the regular trips of any public land transportation service maintained or operated by any such public service, upon such terms and conditions and for a consideration in such amounts as may be agreed upon between the Postmaster General and the public service carrier or fixed by the Commission in the absence of an agreement between the Postmaster General and the carrier. To refuse or neglect, when requested by the Administrative Agency to urgently use, deliver or render the public service for the purpose of avoiding further loss on human, material, economic, or environment during a state of calamity. In the interest of national security, the President, after review, evaluation and recommendation of the relevant government department or Administrative Agency, may, within sixty (60) days from the receipt of such recommendation, suspend or prohibit any proposed merger or acquisition transaction; or any investment in a public service that effectively results in the grant of control, whether direct or indirect, to a foreigner or a foreign corporation. o The Philippine Competition Commission (PCC) may be consulted on all matters relating to mergers and acquisitions. o The NEDA shall promulgate rules and regulations to implement the provisions of this section. Investments by an Entity Controlled by or Acting on Behalf of the Foreign Government, or Foreign State-owned Enterprises [Sec. 24, RA 11659] - An entity controlled by or acting on behalf of the foreign government or foreign state-owned enterprises shall be prohibited from owning capital in any public service classified as public utility or critical infrastructure: Provided, That the prohibition shall apply only to investments made after the effectivity of this Act: Provided, further, That foreign state-owned enterprises which own capital prior to the effectivity of this law are prohibited from investing in additional capital upon the effectivity of this Act: Provided, finally, That notwithstanding the immediately preceding clause, the sovereign wealth funds and independent pensions funds of each state may collectively own up to thirty percent (30%) of the capital of such public services. o In the interest of national security, an entity controlled by or acting on behalf of the foreign government or foreign-owned enterprises shall not make any date or information disclosure, nor extend assistance, support or cooperation to any foreign government, instrumentalities or agents. Reciprocity Clause [Sec.25, RA 11659] - - - - Foreign nationals shall not be allowed to own more than fifty percent (50%) of the capital of entities engaged in the operation and management of critical infrastructure unless the country of such foreign national accords reciprocity to Philippine Nationals as may be provided by foreign law, treaty or international agreement. Reciprocity may be satisfied by according rights of similar value in other economic sectors. The NEDA shall promulgate rules and regulations for this purpose. Unless otherwise provided by law, or by any international agreement, a public service shall employ a foreign national only after the determination of non-availability of a Philippine National who is competent, able and willing to perform the services for which the foreign national is desired. Any foreign national seeking admission to the Philippines for employment purposes and any public service which desires to engage a foreign national for employment in the Philippines must obtain an employment permit pursuant to Presidential Decree No. 442, otherwise known as the "Labor Code of the Philippines", as amended. Public services employing foreign nationals issued employment permits in industries to be determined by the Department of Labor and Employment (DOLE) shall implement an understudy/skills development program to ensure the transfer of technology/skills to Filipinos, whether next-in-rank or otherwise, with the potential of succeeding the foreign national in the same establishment or its subsidiary, within a specific period as may be determined by the DOLE, upon consultation with relevant government agencies and industry experts.
