“FOOD 

SAFETY ACT OF 2013.”

Pursuant to the provisions of Section 39, Republic Act 10611, otherwise known as the
“Food Safety Act of 2013”, the Department of Agriculture (DA) and the Department of
Health (DOH) hereby jointly adopt and promulgate the following Rules and Regulations:

ARTICLE I

DECLARATION OF POLICY AND OBJECTIVES

SECTION 1. Short Title. – This Act shall be known as the “Food Safety Act of 2013”.

Rule 1.1 These Rules and Regulations shall be known as the Implementing Rules and
Regulations (IRR) of Republic Act 10611, “An Act To Strengthen The Food Safety
Regulatory System In The Country To Protect Consumer Health And Facilitate Market
Access Of Local Foods And Food Products, And For Other Purposes” otherwise known
as the “Food Safety Act of 2013”.

Rule 1.2 These rules are promulgated to facilitate compliance with the provisions of the
Food Safety Act of 2013.

Rule 1.3 The Food Safety Act of 2013 shall be the framework for implementing the farm
to fork Food Safety Regulatory System.

SECTION 2. Declaration of Policy. – Section 15, Article II of the 1987 Philippine

Constitution declares that the State shall protect and promote the right to health of the
people and instil health consciousness among them. Furthermore, Section 9, Article XVI
provides that the State shall protect consumers from trade malpractices and from
substandard or hazardous products. Toward these ends, the State shall maintain a farm
to fork food safety regulatory system that ensures a high level of food safety, promotes
fair trade and advances the global competitiveness of Philippine foods and food
products.

SECTION 3. Objectives. – To strengthen the food safety regulatory system in the

country, the State shall adopt the following specific objectives:

(a) Protect the public from food-borne and water-borne illnesses and unsanitary,
unwholesome, misbranded or adulterated foods;

(b) Enhance industry and consumer confidence in the food regulatory system; and

(c) Achieve economic growth and development by promoting fair trade practices and
sound regulatory foundation for domestic and international trade.

Towards the attainment of these objectives, the following measures shall be

implemented:
(1) Delineate and link the mandates and responsibilities of the government agencies
involved;

(2) Provide a mechanism for coordination and accountability in the implementation of

regulatory functions;

(3) Establish policies and programs for addressing food safety hazards and developing
appropriate standards and control measures;

(4) Strengthen the scientific basis of the regulatory system; and

(5) Upgrade the capability of farmers, fisherfolk, industries, consumers and government
personnel in ensuring food safety.

ARTICLE II

DEFINITION OF TERMS

SECTION 4. Definition of Terms. – For the purposes of this Act, the following terms
shall be defined as follows:

(a) Advertising refers to the business of conceptualizing, presenting or making available

to the public, through any form of mass media, fact, data or information about the
attributes, features, quality or availability of food and its related products for the purpose
of promoting its sale or distribution and enhancing economic activity.

(b) Adulteration refers to an act which leads to the production of food which:

(1) Bears or contains any poisonous or deleterious substance that may render it
injurious to the health of the public;

(2) Bears or contains any added poisonous or deleterious substance in amounts

exceeding established maximum limits or standards for good manufacturing practice;

(3) Contains in whole or in part filthy, putrid or decomposed substance that is unfit for
human consumption;

(4) Has been prepared, packed or held under unsanitary conditions;

(5) In whole or in part, is the product of a diseased animal or an animal which has died
through ways other than slaughter;

(6) Is in a container having in whole or in part any poisonous or deleterious substance;

(7) Has been intentionally subjected to radiation unless the use of radiation is in
conformity with an existing regulation or exemption;
(8) Becomes injurious to health because of the omission or abstraction of a valuable
constituent; or if any substance has been substituted wholly or in part; or if damaged or
made inferior which has been concealed in any manner; or if any substance has been
added thereto or mixed or packed therewith so as to increase its bulk or weight, or
reduce its strength or to make it appear better or greater than it is;

(9) Has not been prepared in accordance with current acceptable manufacturing
practice as promulgated by way of regulation; and

(10) Uses expired ingredients.

(c) Authorization refers to the permission embodied in a document granted by a

regulatory agency to a natural or juridical person who has submitted an application for a
food business operation from primary production, post harvest handling, distribution,
processing, manufacture, importation, exportation, sale, and offer for sale, distribution,
transfer and preparation for human consumption. The authorization can take the form of
a permit, license, certificate of registration and certificate of compliance or exemption or
any similar document.

(d) Contaminant refers to any substance not intentionally added to food which is

present in such food as a result of the production (including operations carried out in
crop industry, animal husbandry and veterinary medicine) post harvest handling,
manufacturing, processing, preparation, treatment, packing, packaging, transport or
holding of such food as a result of environmental contamination.

(e) Control measure refers to any action and activity that can be used to prevent or
eliminate food safety hazard or to reduce it to an acceptable level.

(f) Crisis management refers to a proactive approach of addressing a situation, where a

risk to consumers, animal or plant health cannot he controlled by normal existing
mechanisms, through a plan which can be activated when such emergency arises.

(g) Food refers to any substance or product whether processed, partially processed or

unprocessed that is intended for human consumption. It includes drinks, chewing gum,
water and other substances which are intentionally incorporated into the food during its
manufacture, preparation and treatment.

(h) Feed refers to any substance or product, including additives, intended to be used for

oral feeding to animals.

(i) Food-borne illnesses refer to diseases, usually either infectious or toxic in nature,

caused by agents that enter the body through the ingestion of food.

(j) Food business refers to any undertaking, whether public or private, that carries out
any of the activities related to, or any of the stages of the food supply chain.
(k) Food business operator refers to a person engaged in the food business including
one’s agents and is responsible for ensuring that the requirements of this Act are met by
the food business under one’s control.

(l) Food hygiene (hereinafter referred to as hygiene) refers to the measures and

conditions necessary to control hazards that could lead to food-borne illnesses and to
ensure fitness for human consumption of a food of plant or animal origin taking into
account its intended use.

(m) Food law refers to the laws, regulations and administrative provisions governing

food in general, donated food and food safety at any stage of production, processing,
distribution and preparation for human consumption.

(n) Food safety refers to the assurance that food will not cause harm to the consumer
when it is prepared or eaten according to its intended use.

(o) Food safety regulatory agencies (FSRAs) refer to the following national government

agencies:

Under the Department of Agriculture (DA) – the Bureau of Animal Industry, the National
Meat Inspection Service, the Bureau of Fisheries and Aquatic Resources, the Bureau of
Plant Industry, the Fertilizer and Pesticide Authority, the Philippine Coconut Authority,
the Sugar Regulatory Administration and the National Food Authority.

Under the Department of Health (DOH) – the Food and Drug Administration, the Center
for Food Regulation and Research and the Bureau of Quarantine.

(p) Food safety officer refers to a professionally qualified and properly trained officer

appointed by a food safety regulatory agency o77r by local government units (LGUs) in
accordance with the appropriate civil service rules and regulations.

(q) Food safety regulatory system refers to the combination of regulations, food safety

standards, inspection, testing, data collection, monitoring and other activities carried out
by food safety regulatory agencies and by the LGUs in the implementation of their
responsibilities for the control of food safety risks in the food supply chain.

(r) Food supply chain refers to all stages in the production of food from primary
production, post harvest handling, distribution, processing and preparation for human
consumption. Preparation is the cooking or other treatments to which food is subjected
prior to its consumption.

(s) Good agricultural practices (GAP) refer to the practices that address environmental,

economic and social sustainability for on-farm processes, and which result in safe and
quality food and nonfood agricultural products.
(t) Good manufacturing practices refer to a quality assurance system aimed at ensuring
that products are consistently manufactured, packed, repacked or held to quality
standards appropriate for the intended use. It is thus concerned with both manufacturing
and quality control procedure.

(u) Good hygienic practices refer to all practices regarding the conditions and measures
necessary to ensure the safety and suitability of food at all stages of the food chain.

(v) Hazard Analyses and Critical Control Points (HACCP) refer to a science-based

system which identifies, evaluates and controls hazards which are significant for food
safety at critical points during a given stage in the food supply chain.

(w) Hazard refers to a biological, chemical or physical agent in food with a potential to

cause adverse effect on health.

(x) Inspection refers to the examination of food, food production facilities or

establishments, and the management and production systems of food businesses,
including the examination of documents, finished product testing and registration, and of
the origin and destination of production inputs and outputs to verify compliance with
legal requirements by an agency mandated to perform food safety regulatory and/or
enforcement functions.

(y) Label refers to the display of written, printed or graphic matter upon the immediate
container, tag, literature or other suitable material affixed thereto for the purpose of
giving information as to identify components, ingredients, attributes, directions for use,
specifications and such other information as may be required by law or regulations.

(z) Micro, small and medium enterprise (MSME) refers to food businesses as defined

within the classification of industries by the Department of Trade and Industry (DTI).

(aa) Misbranding refers to deliberate labelling or advertising of food that is misleading,

where the labelling and/or advertising claims certain food properties that cannot be
supported by a reliable source, a certifying body or by scientific evidence.

(bb) Official control refers to all types of controls and control activities made by

regulatory agencies to verify compliance with standards, operating procedures,
practices and other regulatory requirements. It includes routine monitoring of food
establishments and more intensive checks involving inspections, verifications, audits,
sampling and testing of samples and recall of defective products.

(cc) Person refers to any person, natural or juridical including, but not limited to, the
following persons: (i) food business operators; and (ii) food safety officers and other
regulatory personnel of the DA, the DOH and the Department of the Interior and Local
Government (DILG).
(dd) Post harvest stages refer to the stages in the food supply chain involving the
minimal transformation of plant and animal foods after primary production such as
removal of field heat for fruits, slaughter of animals, sorting, grading and cutting of fresh
plant and animal foods, icing and freezing, and the milling and storage of grain.

(ee) Primary production refers to the production, rearing or growing of primary products

including harvesting, milking and farmed animal production up to slaughter; and the
rearing and growing of fish and other seafood in aquaculture ponds. It also includes
fishing, and the hunting and catching of wild products.

(ff) Processing refers to any action that substantially alters the initial raw materials or
product or ingredients including, but not limited to, heating, smoking, curing, maturing,
drying, marinating, extraction, extrusion and a combination of those processes intended
to produce food.

(gg) Risk refers to the likelihood of an adverse health effect and the severity of this
effect following exposure to a hazard.

(hh) Risk analysis refers to a process consisting of three (3) interrelated components:

risk assessment, risk management and risk communication.

(ii) Risk assessment refers to the scientific evaluation of known or potential adverse

health effects resulting from human exposure to biological, chemical and physical
hazards.

(jj) Risk management refers to the process of weighing policy alternatives to accept,

minimize or reduce assessed risks and if necessary, to select and implement
appropriate prevention and control measures.

(kk) Risk communication refers to the interactive exchange of information and opinions

during the course of risk analysis on the hazards and risks among risk assessors, risk
managers, consumers, food and feed business operators, academia and other
stakeholders.

(ll) Food safety standards refer to the formal documents containing the requirements

that foods or food processors have to comply with to safeguard human health. They are
implemented by authorities and enforced by law; and are usually developed and
published under the auspices of a national standards body.

(mm) Traceability refers to the ability to follow the movement of a food through specified

stages of production, processing and distribution.

(nn) Monitoring refers to the systematic gathering of data through the sampling of

commodities as well as monitoring of food-borne diseases, collation and interpretation
of collected data.
Rule 4.1 Other terms used in these Rules and Regulations are defined as follows:

Rule 4.1a Accreditation is the formal recognition by an independent body, generally

known as an accreditation body that a certification body is capable of carrying out
certification. Accreditation is not obligatory but it adds another level of confidence, as
‘accredited’ means the certification body has been independently checked to make sure
it operates according to international standards. In the Philippines, the official
accreditation body is the Philippine Accreditation Bureau (PAB). Food Safety Regulatory
Agencies can provide Official Accreditation which is the procedure by which a
government agency having jurisdiction formally recognizes the competence of an
inspection and/or certification body to provide inspection and certification services.

Rule 4.1b Act refers to Republic Act 10611 or the Food Safety Act of 2013.

Rule 4.1c Agriculture or Fishery Establishment means the farm, fishing vessel,

buildings, and other facilities of a food business used for production of primary and
postharvest foods (including operations carried out in the crop industry, animal
husbandry, aquaculture, and fish capture), postharvest handling, preparation, treatment,
packaging, transport and/or storage, but excluding those sites, buildings and structures,
such as laboratories, administrative offices and other areas where food is not handled
and where people handling food do not enter. Agriculture or Fishery Establishment shall
also include facilities involved in activities related to agrochemicals and other inputs in
the primary and postharvest stages of production.

Rule 4.1d Aquaculture refers to fishery operations involving all forms of breeding,

raising and farming of fish and other fishery species in fresh, brackish and marine water
areas.

Rule 4.1e Audit refers to a systematic and functionally independent examination to

determine whether activities and related results comply with planned objectives.

Rule 4.1f Batch means a set of units of a product that is uniform in character and quality
obtained from a given process under practically identical circumstances and produced
in a given place within one defined production period. The food business operator must
define the batch.

Rule 4.1g Certification means the procedure by which official certification bodies or

officially recognized certification bodies provide written or equivalent assurance that
foods or food control systems conform to food safety requirements. Certification of food
may be, as appropriate, based on a range of inspection activities which may include
continuous on-line inspection, auditing of quality assurance systems, and examination
of finished products. Official Inspection and Certification Systems are administered by
FSRAs or government agencies having jurisdiction.
Rule 4.1h Code of Good Agricultural Practices (GAP) for Food Safety means practices
used to prevent or reduce the risk of hazards occurring during production, harvesting,
and postharvest handling of produce.

Rule 4.1i Code of Good Animal Husbandry Practices (GAHP) for Food Safety means
practices used to prevent or reduce the risk of hazards related to food safety occurring
during production, harvesting, postharvest handling of poultry, livestock and their
products as sources of human food as well as ensuring animal health and welfare.

Rule 4.1r Fraud or Fraudulent Practice refers to any act or omission, including a

misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party
to obtain a financial or other benefits or to avoid an obligation or for other reasons.

Rule 4.1s FSCO means Food Safety Compliance Officer designated by the Food

Business Operator.

Rule 4.1t High risk activities means activities commonly applied in any part of the food
supply chain that may cause food-borne diseases to consumers if left uncontrolled.

Rule 4.1u Labelling includes any written, printed or graphic matter that is present on the
label, accompanies the food, or is displayed near the food, including that for the
purpose of promoting its sale or disposal.

Rule 4.1v Laboratory Accreditation means an attestation conveying formal

demonstration of a laboratory’s competence and capability to carry out specific scientific
and technical tests or analytical service with respect to food products.

Rule 4.1w Licensing by the DA means the process by which DA FSRAs approve an

application, of a person, corporation, cooperative, agriculture or fishery establishment,
or other juridical persons, for authority to operate an establishment or to engage in any
activity in the primary production and postharvest stages of the food supply chain to
produce safe primary and postharvest animal and plant food and inputs. It includes
facilities involved in activities related to agrochemicals and other inputs in the primary
and postharvest stages of production. The approval will require proving capability to
operate a facility or establishment or to engage in activities in the primary production
and postharvest stages of the food supply chain and covered by the license.

Rule 4.1x Licensing by the DOH means the process of approval by the DOH of an

application to operate or establish an establishment prior to engaging in the
manufacture, importation, exportation, sale, offer for sale, distribution, transfer, and
where applicable the use, testing, promotion, advertisement, and for sponsorship of
processed and prepackaged food products.

Rule 4.1y Lot refers to a set of units of a product which has been produced and/or
manufactured and/or packaged under similar conditions. A lot can consist of several
batches.
Rule 4.1z National Dairy Authority (NDA) is a Food Safety Regulatory Agency under the
Department of Agriculture

Rule 4.1aa Packaged is primary or postharvest food made up in advance in a container

with or without the label, for further processing, for catering purposes, or for sale to
institutional buyers and/or consumers.

Rule 4.1bb Point of Entry means a passage for international entry or exit of travelers,

baggage, cargo, containers, conveyances, goods and postal parcels as well as
agencies and areas providing services to them on entry or exit.

Rule 4.1cc Post-market surveillance refers to activities involved in safety and quality

monitoring of primary and postharvest food, production inputs, processed and
prepackaged food after market authorization has been issued. This shall also include
among others adverse events reporting, product safety update reporting, collection and
testing of food products in the market.

Rule 4.1dd Precautionary Measures are protective interim measures used where there

is uncertainty as to the existence or extent of risks to human health without having to
wait until the reality and seriousness of those risks become fully apparent through the
establishment of sufficient scientific data.

Rule 4.1ee Prepackaged is processed food made up in advance in a container, labeled

and ready for sale to the consumer, or for catering purposes.

Rule 4.1ff Private Testing Laboratory means a legal entity, other than a government

testing laboratory, that engages in the business of conducting tests, calibration, assay,
examination measurements, or analytical services with respect to fresh and processed
food products and farm inputs.

Rule 4.1gg Recalls mean actions taken to remove a product from the market.

Rule 4.1hh Registration by DA means the process by which DA FSRAs enter

information about agriculture and fishery establishments engaged in the primary
production and postharvest stages of the food supply chain including facilities involved
in activities related to agrochemicals and other inputs in the primary and postharvest
stages of production, in an official list or official system for entering names and
information of the DA FSRAs.

Rule 4.1ii Registration by DOH means the process of approval of an application to

register processed and pre-packaged food products prior to engaging in the
manufacture, importation, exportation, sale, offer for sale, distribution, transfer, and
where applicable, the use, testing, promotion advertisement, and for sponsorship of
food products.
Rule 4.1jj Risk-Based Inspection refers to inspection focused on risk factors (i.e. those
that may cause food-borne disease in consumers if left uncontrolled) to determine the
adequacy of a food business operator’s quality and safety management.

Rule 4.1kk Risk Categorization refers to the classification of food businesses, food

operations and/or food products as high risk, medium risk or low risk based on inherent
and potential food safety risks in the production/processing system and/or on the
possibility of the presence of microbiological and chemical hazards in the food
produced; and history of compliance by the establishment with its quality and safety
management systems and pertinent regulations.

Rule 4.1ll Risk Management Plan as required by the FDA, means a set of food product
vigilance activities and interventions designed to identify, characterize, prevent or
minimize risks relating to food products, and the assessment of effectiveness of those
interventions. The risk management plan is a requirement for the issuance of the
appropriate authorization.

Rule 4.1mm Risk Management Plan of the DA-FSRA refers to a framework for

prioritizing food-borne risks and for optimizing risk management options and control
measures. It provides for monitoring and reviews as a basis for continuing improvement
of food safety measures.

Rule 4.1nn Street-vended foods or Street Foods means ready-to-eat foods prepared

and/or sold by vendors in the streets and other public places.

ARTICLE III

BASIC PRINCIPLES OF FOOD SAFETY

SECTION 5. Food Safety Requirements. – To ensure food safety, the following general
guidelines shall be observed:

Rule 5.1 Food safety requirements shall guide decision-making on potential adverse
health effects that may occur from the consumption of the food and the need to identify
risk management options.

Rule 5.2 The food business operator (FBO) and the regulatory agency shall take the
necessary steps to be knowledgeable of the conditions under which food could become
unsafe or injurious to health.

(a) In determining whether food is unsafe, the following shall be considered:

(1) The normal conditions of the use of food by the consumer;

Rule 5a.1. Food shall be presented in accordance with their intended use as provided
for in the specific guidelines developed and determined by the FSRA.
(2) The normal conditions maintained at each stage of primary production, processing,
handling, storage and distribution;

(3) The health of plants and animals from where the food is derived;

(4) The effect of feeds, crop protection chemicals and other production inputs on
otherwise healthy plants and animals; and

(5) The information provided to the consumer. This includes the information provided on
the label or any information generally available to the consumer. This should aid
consumers in avoiding specific health effects from a particular food or category of foods.

Rule 5a.2 All information provided to consumers on food and its preparation, such as
during cooking demonstrations, cooking shows, fresh and processed food product
launching and other similar activities, shall observe the requirements for hygienic food
handling and other practices for safe food preparation.

(b) In determining whether food is injurious to health, regard shall be given to the
following:

(1) The probable immediate, short-term or long-term effects on subsequent generations

of that food on health;

Rule 5b.1. The DOH shall monitor the effects of food on the health of individuals and on
subsequent generations (e.g. non-communicable diseases, micronutrient deficiencies).

(2) The probable cumulative effects; and

(3) The particular health sensitivities of a specific category of consumers where the food
is intended for that category.

(c) In determining whether food is unfit for human consumption, regard shall be given to
the unacceptability of the food according to its intended use due to contamination by
extraneous matter or through putrefaction, deterioration or decay;

Rule 5c.1 In declaring a food unfit for human consumption, the condition of the food
shall be evaluated through physical, chemical, microbiological, microscopic and other
tests, whenever necessary.

(d) Where unsafe food, is part of a batch, lot or consignment of food of the same class
or description, it shall be presumed that all food in that batch, lot or consignment is also
unsafe;

(e) Food that complies with specific national law or regulations governing food safety
shall be deemed safe insofar as the aspects covered by national law and regulations
are concerned. However, imported food that is declared unsafe, by the competent
authority of the exporting country after entry into the country shall be withdrawn from the
market and distribution channels; and

(f) Compliance of a food product with specific standards applicable to a specific food
shall not prohibit the competent authorities to take appropriate measures or to impose
restrictions on entry into the market or to require its withdrawal from the market, where
there is reason to suspect that such food product shows food safety related risks.

Rule 5f.1 FSRAs shall restrict entry into the market or apply other measures to protect
consumer health when food meeting specific standards is subsequently found to be a
potential source of food safety related risks. The measures shall be enforced until new
scientific data are obtained and/or after appropriate testing and inspection are carried
out to confirm safety of the food.

ARTICLE IV

GENERAL PRINCIPLES

SECTION 6. Food Law Objectives. – Food law shall aim for a high level of food safety,
protection of human life and health in the production and consumption of food. It shall
also aim for the protection of consumer interests through fair practices in the food trade.

Rule 6.1 These general principles shall serve as the framework for the development of
food safety standards, regulations and measures for meeting the objectives of the Act to
ensure a high level of food safety and fair practices in the food trade.

SECTION 7. Use of Science-based Risk Analysis. – The following shall guide the use of
science and risk analysis in food safety regulation:

(a) The development of food safety legislation and standards and the conduct of
inspection and other official control activities shall be based on the analysis of risk,
except where this approach is not feasible due to circumstances, or due to the nature of
the

Rule 7a.1 Risk analysis shall be the basis for the development of food safety standards
and regulations. It shall objectively combine and analyze scientific data on food safety
hazards in order to arrive at the best options for managing food-borne risks.

Rule 7a.2 The risk analysis shall cover all hazards directly or indirectly, intentionally or
unintentionally introduced into the food. This shall include hazards coming from
packaging materials, cleaning agents, and other sources.

Rule 7a.3 Risk categorization shall guide the DA and the DOH in the conduct of food
establishment inspections, testing and evaluation of food products, and/or for
implementing any other official control measures. The DA and the DOH shall classify
food businesses and their operations as high risk, medium risk, or low risk.
Rule 7a.4 The FSRAs shall implement measures, even in the absence of risk analysis,
under the following circumstances:

 In cases of emergency situations declared by national and/or international

authorities, unforeseen events, or other situations posing an imminent danger to
public health due to food-borne hazards;
 Food safety hazard has not been identified but relevant scientific information
suggests a link between consumption of a food and the appearance of serious
health effects; and
 Other similar circumstances.

(b) Risk assessment shall be based on sound scientific evidence and shall be
undertaken in an independent, objective and transparent manner. Scientific information
as obtained from scientific literature, epidemiological and monitoring studies and other
data that supports the risk assessment shall be used;

Rule 7b.1 DOH and the DA shall cooperate in establishing an effective system for
developing and sharing scientific data from local epidemiological, monitoring and
surveillance studies for use in the assessment of risk.

(c) Risk management shall take into account the results of risk assessment relevant to
local conditions, potential for enforcement, cost of compliance and others as may be
relevant to the situation;

Rule 7c.1 DA and DOH shall use a Risk Management Plan based on the principles of
risk analysis to develop and implement a Food Safety Regulatory System with a
mechanism for monitoring, review and continuous improvement.

Rule 7c.2 The choice of risk management options shall consider the cost of compliance,
impact on the ability of the industry to innovate and to be competitive, the feasibility of
implementation, potential for verification and enforcement, consistency with existing
domestic and international food standards and with the country’s international
obligations, and others.

(d) Risk communication shall be carried out between risk assessors and risk managers
in a transparent manner. Food safety risks shall also be communicated to farmers,
fisherfolk and food business operators to encourage compliance with the
implementation of control measures and to relevant sectors of society affected by the
law or the risks addressed in order to strengthen confidence in its provisions; and

Rule 7d.1 The risk communication strategy shall be discussed between risk assessors
and managers early in the process to ensure two-way communication.

Rule 7d.2 The strategy should designate the person who will present information to the
public and the manner through which it shall be done. The information shall be
conveyed in the most appropriate means and shall include the nature of food-borne
risks and the measures that can be taken by stakeholders to prevent, reduce, or
eliminate the risk.

(e) Food business operators shall be encouraged to implement a HACCP-based system

for food safety assurance in their operations.

SECTION 8. Protection of Consumer Interests. – The protection of consumer interest

shall be geared towards the following:

(a) Prevention of adulteration, misbranding, fraudulent practices and other practices

which mislead the consumer, and

Rule 8a.1 Any of the acts indicated in the definition for adulteration shall constitute
adulteration.

Rule 8a.2 Any misinformation or misleading information on the label or other information
materials shall also constitute misbranding.

Rule 8a.3 FBOs engaged in processed and prepackaged foods shall secure market
authorization from the Food and Drug Administration (FDA) for their establishment and
their products prior to manufacture and market distribution as per existing regulations.

Rule 8a.4 Food inspection and monitoring systems shall include assessing the potential
for adulteration, misbranding, and other forms of fraud.

Rule 8a.5 Penalties shall be imposed against incidents of adulteration, misbranding and
other forms of fraud in accordance with Article XII Section 37(e) Section 38 of the Act.

Rule 8a.6 The FBOs shall be fully compliant with all regulatory requirements prior to
marketing, advertising, or promoting products.

(b) Prevention of misrepresentation in the labelling and false advertising in the

presentation of food, including their shape, appearance or packaging, the packaging
materials used, the manner in which they are arranged, the setting in which they are
displayed, and the product description including the information which is made available
about them through whatever medium. Where relevant, the presentation of goods shall
provide consumers a basis to make informed choices in relation to the food they
purchase.

Rule 8b.1 The DA and the DOH shall strengthen the enforcement of labelling and
advertising requirements by intensifying post-market surveillance.

Rule 8b.2 The DA and the DOH shall develop and set the standards on labelling and
advertising.
SECTION 9. Setting of Food Safety Standards. – The DA and the DOH shall set the
mandatory food safety standards. The following shall guide the setting of standards:

(a) Standards shall be established on the basis of science, risk analysis, scientific
advice from expert body/bodies, standards of other countries, existing Philippine
National Standards (PNS) and the standards of the Codex Alimentarius Commission
(Codex), where these exist and are applicable;

Rule 9a.1 The DA and the DOH shall develop, adopt, amend and/or revise food safety
standards according to the principles and procedures in the Act The DA shall establish
standards and codes of practice for fresh foods or foods from the primary production
and postharvest sectors of the food supply chain and the DOH-FDA, for processed and
prepackaged foods.

Rule 9a.2 Recommendations of the Office International des Epizooties (OIE),

International Plant Protection Convention (IPPC), and other international bodies
relevant to food safety may also be considered in developing food safety standards.

Rule 9a.3 To the extent feasible, the DA and DOH shall endeavour to harmonize
national standards with international and regional standards.

(b) Codex standards shall be adopted except when these are in conflict with what is
necessary to protect consumers and scientific justification exists for the action taken;

Rule 9b. 1 Policies and procedures for the adoption of Codex standards or other
appropriate standards into national standards and regulations shall be established by
the DA and the DOH.

Rule 9b.2 Adoption of standards other than Codex shall be based on risk assessment.

(c) The DA and the DOH shall establish the policies and procedures for country
participation at Codex and the incorporation of Codex standards into national
regulations. The current National Codex Organization (NCO) is herein designated as
the Body to serve this purpose. The DA and the DOH shall designate a third level officer
as coordinator for Codex activities for their respective departments; and

Rule 9c.1 The DA and the DOH shall ensure that the country contributes effectively to
the development of international standards at Codex as these underpin food safety
regulations, promote harmonization and contribute to the development of national
standards.

Rule 9c.2 Country participation in the work of the Codex Alimentarius Commission
(CAC) shall be implemented through the NCO and its Manual of Operations. The
consultative process being implemented by the NCO involving public and private
stakeholders shall be strengthened.
(d) Participation at Codex shall be in accordance with the principles of RA10611 and
shall be financially supported by the government

Rule 9d.1 The DA and the DOH shall fund, as specified in the NCO Manual of
Operations, the attendance to Codex meetings and of activities related to ensuring
effective participation of the country in the work involved in the development of Codex
standards. The NCO shall prepare a program of activities and budget for funding by the
DA and DOH.

SECTION 10. Precaution. – In specific circumstances when the available relevant

information for use in risk assessment is insufficient to show that a certain type of food
or food product does not pose a risk to consumer health, precautionary measures shall
be adopted. When such precautionary measures are issued, the following rules shall
govern:

(a) The adopted measure shall remain enforced pending the submission of additional
scientific information based on the nature of the risk and type of information needed to
clarify the scientific uncertainty; and

(b) The measure shall be no more restrictive to trade than required and should be
proportionate to the level of protection required for consumers.

Rule 10b.1 The FSRAs shall implement precautionary measures to protect the health of
its consumers whenever a food safety risk exists but scientific data are inadequate. The
needed scientific data shall be established within a reasonable period of time as
determined by the DA or the DOH.

SECTION 11. Transparency. – The implementing agencies shall conduct public

consultation and disseminate relevant information to ensure the following:

Rule 11.1 Food safety measures shall be notified to the World Trade Organization
(WTO) in accordance with international obligations.

(a) Public consultation during the preparation, evaluation and revision of food legislation
shall be open, transparent and direct or through representative bodies unless the
urgency of the problem does not allow it; and

Rule 11a.1 The DA and the DOH, whenever they develop food safety regulation, shall
consult relevant stakeholders including consumer groups and the industry through
public consultations.

Rule 11a.2 Following public consultations or at an appropriate time, FBOs may inform
the DA and the DOH in writing of the impact of the regulation on business.

(b) In cases where it is suspected that food may pose a risk to human health, regulatory
authorities shall take appropriate steps to inform the general public about the nature of
the risk to health, the affected foods, types of food and the necessary measures to
prevent, reduce or eliminate the risk.

Rule 11b.1 The DA and the DOH shall develop a Risk Communication Plan to fully and
effectively inform the general public about food safety risks.

SECTION 12. Application to Trade. – Foods imported, produced, processed and

distributed for domestic and export markets shall comply with the following
requirements:

(a) Food to be imported into the country must come from countries with an equivalent
food safety regulatory system and shall comply with international agreements to which
the Philippines is a party.

Rule 12a.1 The DA and the DOH shall determine whether the country of origin has an
equivalent food safety regulatory system which is compliant with international
agreements.

Rule 12a.2 The FSRAs shall develop protocols and procedures to evaluate a foreign
country’s food safety regulatory system and determine its equivalence with that of the
national system.

Rule 12a.3 List of countries determined by the FSRAs to have equivalent food safety
regulatory system shall be made available and used in determining eligibility to export
into the Philippines.

(b) Imported foods shall undergo cargo inspection and clearance procedures by the DA
and the DOH at the first port of entry to determine compliance with national regulations.
This inspection by the DA and the DOH shall always take place prior to assessment for
tariff and other charges by the Bureau of Customs (BOC). The BOC and the Association
of International Shipping Lines (AISL) shall provide the DA and the DOH documents
such as the Inward Foreign Manifest of Arriving Vessels to enable the DA and the DOH
to identify shipments requiring food safety inspection. Shipments not complying with
national regulations shall be disposed according to policies established by the DA and
the DOH; and

Rule 12b.1 The DA and the DOH shall develop the regulations on cargo/shipment
inspections and clearance procedures for imported products prior to assessment of the
BOC for the appropriate tariffs.

Rule 12b.2 Inspections and clearance procedures shall be consistent with Article IV of
the Act, the Sanitary and Phytosanitary Measures (SPS) Agreement and Codex.

Rule 12b.3 Importers shall notify the DA and the DOH of incoming food shipments
within a period prescribed by the FSRA before these arrive at port of entry. The
notification shall be called the Import Notification Document (IND) and shall contain
among others, the information needed by the DA or the DOH to determine whether or
not the food will require physical inspection on arrival.

Rule 12b.4 The BOC shall provide the DA and the DOH with the Inward Foreign
Manifest of arriving vessels of AISL and non-AISL members and break bulk
organizations as the vessels arrive.

Rule 12b.5 Arriving shipments may or may not require physical inspection based on its
risk categorization as high risk, medium risk and low risk.

Rule 12b.6 Arriving shipments may or may not require laboratory testing. If a shipment
requires testing, it may be held at the port or transferred to another location. The
physical transfer of the shipment while awaiting laboratory testing is not an indication
that the shipment has been cleared for entry.

Rule 12b.7 Imported shipments shall meet Philippine standards and regulations and
those of the country of origin. Where no standards exist in the country of origin, the
FSRAs of the country of origin or the importer shall demonstrate that the shipment was
produced under a food safety regime equivalent to national standards.

Rule 12b.8 Within one hundred eighty (180) days after the approval of this IRR, the DA
and the DOH, in consultation with the BOC, shall develop the regulations and set the
parameters of the inspection and clearance procedures of imported food shipments.
The inspection and clearance procedures shall be conducted by the DA and the DOH
within their respective jurisdiction.

Rule 12b.9 The approved regulations shall be subject to periodic review and
amendment as necessary.

(c) Exported foods shall at all times comply with national regulations and regulations of
the importing country. Returned shipments shall undergo border inspection clearance
as provided in Section 12(b) hereof.

Rule 12c.1 The DA and the DOH, in consultation with the BOC, shall develop and issue
the regulations on exported foods under their respective jurisdiction within 180 working
days after the approval of this IRR.

Rule 12c.2 Similarly, the DA and the DOH, in consultation with the BOC, shall develop
and issue regulations on returned shipments of foods under their respective jurisdiction
within 180 working days after the approval of this IRR.

Rule 12c.3 The approved regulations shall be subject to periodic review and
amendment as necessary.

ARTICLE V
 RESPONSIBILITIES ON FOOD SAFETY

SECTION 13. Principal Responsibility of Food Business Operators. – Food business

operators shall ensure that food satisfies the requirements of food law and that control
systems are in place to prevent, eliminate or reduce risks to consumers.

Rule 13.1 FBOs shall be primarily responsible for ensuring safety of their food products
and compliance of their production and distribution/trading systems to the requirements
of the Act.

Rule 13.2 FBOs shall ensure that foods they produce are prepared according to
standards, codes of practice and other control measures as prescribed by the FSRAs
that prevent or minimize food safety hazards or reduce the hazards to acceptable
levels.

Rule 13.3 Farmers and fisherfolks as well as FBOs in small and micro industries shall
be assisted by the DA and DOH in coordination with the local government units (LGUs)
to implement the standards and codes of practice.

Rule 13.4 FBOs in the primary production and postharvest stages, processed and
prepackaged sector of the food supply chain shall be encouraged to implement a
HACCP-based approach or an equivalent food safety control program in their
operations.

Rule 13.5 When required by markets, FBOs shall implement a HACCP-based system or
an equivalent food safety control program in their operations.

Rule 13.6 FBOs operating within the jurisdiction of the BOQ of the DOH shall ensure
that their food products comply with Good Manufacturing Practices (GMP)/HACCP
provisions and that their food handlers and stewards have valid BOQ health certificates.

SECTION 14. Specific Responsibilities of Food Business Operators. – Food business

operators shall have the following responsibilities under the Act:

(a) Food business operators shall be knowledgeable of the specific requirements of

food law relevant to their activities in the food supply chain and the procedures adopted
by relevant government agencies that implement the law. They shall adopt, apply and
be well informed of codes and principles for good practices. Micro and small industries
shall be assisted to facilitate their adoption of such practices;

Rule 14a.1 All food businesses shall designate a Food Safety Compliance Officer
(FSCO) who has passed a prescribed training course for FSCO recognized by the DA
and/or the DOH.

Rule 14a.1.1 For micro and small enterprises, the owner may serve as the FSCO or a
consultant FSCO may be employed part time or full time basis.
Rule 14a.1.2 Large and medium scale food businesses engaged in the production of
food in the primary and postharvest sector of the food supply chain shall designate a
FSCO who is preferably a graduate of food-related courses including but not limited to
agriculture, animal science, fisheries, veterinary medicine, food technology, chemistry,
chemical/industrial/sanitary engineering. Graduates of other courses must have work
experience on food safety.

Rule 14a.1.3 Large and medium scale food businesses engaged in the manufacture of
processed and prepackaged food shall designate a FSCO who is preferably a graduate
of food-related courses including but not limited to food technology, food and nutrition,
chemistry, microbiology, chemical/sanitary engineering, veterinary medicine, fisheries,
agriculture. Graduates of other courses must have work experience on food safety.

Rule 14a.2 The FSCO shall oversee the implementation of the food safety programs
and activities of the food business consistent with the provisions of this IRR.

Rule 14a.3 The FBO shall ensure that the designated FSCO attends the required
trainings conducted by DA, DOH, LGU or other recognized training service providers.

Rule 14a.4 FBOs shall, in accordance with the general principles of food safety, identify
and evaluate the hazards that could affect food, identify and implement preventive
controls to significantly minimize or prevent the occurrence of such hazards. The FBOs
shall ensure that such food is not adulterated, contaminated, misbranded, and
misleading. FBOs shall monitor the performance of control measures and maintain
monitoring records as a matter of routine practice.

Rule 14a.5 FBOs shall be proactive in monitoring sustained compliance to standards

and relevant regulatory policies. FBOs shall immediately report to the concerned FSRA
any food safety issue which may put the consumer’s health in danger.

Rule 14a.6 FBOs shall develop their respective product recall program, in accordance
with the requirement of the concerned FSRA, to handle the products that are not safe or
not in compliance with food safety requirements.

Rule 14a.7 FBOs producing processed and prepackaged food shall develop a Risk
Management Plan as basis for the issuance of appropriate authorizations by the DOH.

(b) If a food business operator considers or has reason to believe that a food which it
produced, processed, distributed or imported is not safe or not in compliance with food
safety requirements, it shall immediately initiate procedures to withdraw the food in
question from the market and inform the regulatory authority;

Rule 14b.1 FBOs shall immediately report to the FSRA products that are not safe or not
in compliance with food safety requirements. They shall also report any incident that
indicated that the said product has caused or contributed to the death, serious illness or
serious injury to a consumer or any person. The same shall be withdrawn from the
market, in accordance with their respective product recall program, and disposed
according to the procedures prescribed by the DA and/or the DOH.

Rule 14b.2 Food not fully or adequately in compliance with food safety regulations but
which can be brought into compliance through simple methods such as re-labelling, re-
packaging, sorting and/or cooking, may be recommended to be brought into compliance
by the FBO if the method of treatment proposed is acceptable to the DA and/or the
DOH. The resulting product shall be compliant with all regulatory requirements upon
determination of the DA and/or the DOH.

(c) Food business operators shall allow inspection of their businesses and collaborate
with the regulatory authorities on action taken to avoid risks posed by the food product/s
which they have supplied; and

Rule 14c.1 FBOs shall allow authorized officers of the FSRAs to enter at an appropriate
time any establishment including agriculture or fishery establishment in which food is
produced, processed and/or stored or to enter any vehicle used to transport food to
inspect for compliance with food safety regulations.

Rule 14c.2 In case of non-compliance with food safety regulations, FBOs shall & ensure
that adequate and appropriate corrective and preventive actions agreed between the
FBO and the FSRA shall be undertaken in a timely and effective manner. The actions
undertaken shall be subject to verification by the FSRA.

(d) Where the unsafe or noncompliant food product may have reached the consumer,
the operator shall effectively and accurately inform the consumers of the reason for the
withdrawal, and if necessary, recall the same from the market.

Rule 14d.1 The FBO shall inform the concerned FSRA and the consumer of the unsafe
or non-compliant food product to be withdrawn from the market in accordance with the
approved product recall program.

SECTION 15. Principal Responsibilities of Government Agencies. –   The DA, the DOH,

the DILG and the LGUs shall have the following responsibilities:

(a) The DA shall be responsible for food safety in the primary production and post-
harvest stages of food supply chain and foods locally produced or imported in this
category;

Rule 15a.1 In performing this responsibility, the DA shall ensure that all laws, standards,
policies, and programs assuring the safety of primary and postharvest food, foods
locally produced or imported under this category are implemented.

Rule 15.a.2 Primary food is food obtained from the primary production stage of the food
supply chain. Primary production refers to the production, rearing or growing of primary
products including harvesting, milking and farmed animal production up to slaughter,
and the rearing and growing of fish and other seafood in aquaculture ponds. It also
includes fishing, and the hunting and catching of wild products.

Rule 15a.3 Postharvest food is food obtained from postharvest stages of the food
supply chain. Postharvest stages involve minimal transformation of plant and animal
foods after primary production such as removal of field heat for fruits, slaughter of
animals, sorting, grading and cutting of fresh plant and animal foods, icing and freezing,
and the milling and storage of grain.

Rule 15a.4 Postharvest handling activities are essential to food safety and trade as
these activities control hazards and enhance the marketability of primary and
postharvest foods.

Rule 15a.5 Primary production and postharvest handling activities include transport and
dry and/or cold storage of primary and postharvest foods are subject to the
requirements of the Act.

Rule 15a.6 The DA shall prescribe the control measures, standards, Codes of
GAP/GAHP/GAqP for Food Safety, other codes of practice, and other requirements for
the safety of primary and postharvest foods, both locally produced and imported under
this category, and shall verify that these requirements are met.

Rule 15a.7 To ensure food safety during primary production, the health of plants and
animals from where the food is derived, the effects of feeds, crop and aquaculture
protection chemicals, veterinary drugs, biological products, and other production inputs
shall be considered and made part of food safety regulations.

Rule 15a.8 The DA shall assist the LGUs in establishing a mechanism for the issuance
and enforcement of ordinances and regulations for food safety based on national
standards within their territorial jurisdiction.

Rule 15a.9 The DA shall strengthen the monitoring and surveillance system for hazards
in the primary production and postharvest stages of the food supply chain.

(b) The DOH shall be responsible for the safety of processed and prepackaged foods,
foods locally produced or imported under this category and the conduct of monitoring
and epidemiological studies on food-borne illnesses;

Rule 15b.1 In performing this responsibility, the DOH shall ensure that all health laws,
standards, policies, and programs assuring the safety of processed and prepackaged
foods, processed foods but not prepackaged, foods locally produced or imported under
this category and the conduct of monitoring and epidemiological studies on food-borne
illnesses shall be strictly implemented.

Rule 15b.2 Processed food is the product obtained from the processing stage of the
food supply chain. The processing stage of the food supply chain is that stage that
substantially alters the initial raw materials or product or ingredients including, but not
limited to, heating, smoking, curing, maturing, drying, marinating, extraction, extrusion
and a combination of those processes intended to produce food.

Rule 15b.3 Transport and storage of processed and prepackaged foods shall be subject
to the requirements of the Act.

Rule 15b.4 The DOH through the FDA shall prescribe the control measures, standards,
regulations and requirements for the safety of processed and prepackaged foods, and
shall verify that these and all requirements of food law related to activities and products,
including locally produced and imported processed food products under this category,
are met.

Rule 15b.5 The DOH through the FDA shall ensure compliance with the food and
nutrition labelling requirements for processed and prepackaged food.

Rule 15b.6 The DOH shall prescribe the requirements for nutrition labelling of
processed and prepackaged food to meet objectives for the control of chronic diseases.
It shall provide guidance to LGUs in the nutrition labelling of food served in a FSE.

Rule 15b.7 The DOH shall strengthen the post-market surveillance system for
monitoring sustained compliance with product standards and regulations including
measures to control misbranding, adulteration, and other forms of fraud in locally
produced and imported processed and prepackaged food in the market.

Rule 15b.8 The DOH, through the National Epidemiology Center (NEC) now known as
the Epidemiology Bureau (EB), shall conduct the monitoring and epidemiological
studies on food-borne illness.

Rule 15b.9 The DOH through the BOQ shall ensure sanitation and food safety
measures in FSEs at points of entry, in-flight catering services and domestic and
international shipping vessels.

Rule 15b.10 The DOH shall assist the LGUs in establishing a mechanism for the
issuance and enforcement of ordinances and regulations for food safety based on
national standards within their territorial jurisdiction.

(c) The LGUs shall be responsible for food safety in food businesses such as, but not
limited to, activities in slaughterhouses, dressing plants, fish ports, wet markets,
supermarkets, school canteens, restaurants, catering establishments and water refilling
stations. The LGU shall also be responsible for street food sale, including ambulant
vending;

Rule 15c.1 The LGUs shall be responsible for the implementation of the food safety
requirements of foods produced within their areas of jurisdiction. They shall be guided
by national regulations. This shall include primary, postharvest, processed and
prepackaged foods marketed in traditional markets as well as restaurants and school
canteens, catered foods, street vended, and/or ambulant-vended foods and the
requirements for activities and facilities for the production, handling, processing,
preparation, transport and storage of these foods.

Rule 15c.2 The DA and the DOH shall establish a mechanism to assist the concerned
LGUs in ensuring that foods produced outside but marketed within their area of
jurisdiction meet DA and DOH food safety requirements.

Rule 15c.3 The DA and the DOH shall coordinate and provide technical assistance to
LGUs in the enactment of ordinances and regulations pertaining to their jurisdiction in
the Act.

(d) The DILG, in collaboration with the DA, the DOH and other government agencies
shall supervise the enforcement of food safety and sanitary rules and regulations as
well as the inspection and compliance of business establishments and facilities within its
territorial jurisdiction;

(e) The LGUs may be called upon by the DOH and the DA to assist in the
implementation of food laws, other relevant regulations and those that will hereafter be
issued;

Rule 15e.1 The DA and the DOH shall establish mechanisms for coordinating with the
LGUs in enforcing national food safety standards and regulations in food businesses
within their areas of jurisdiction.

Rule 15e.2 The DA and the DOH may delegate official controls to the LGUs and specify
the conditions under which this shall take place.

(f) The DA and the DOH shall capacitate the LGUs and provide necessary technical
assistance in the implementation of their food safety functions under their jurisdiction. In
compliance with this responsibility, they shall provide training to the DILG and the LGUs
and shall periodically assess the effectiveness of these training programs in
coordination with the DILG; and

Rule 15f.1 The DA and the DOH shall develop and implement capacity building
programs for the LGUs such as but not limited to training courses, advocacy,
information dissemination and including participation in national, regional, and
international activities on food safety.

Rule 15f.2 The DA and the DOH shall conduct training programs for LGU food safety
inspectors and other LGU personnel.

Rule 15f.3 The DA and the DOH shall regularly evaluate the effectiveness of training
programs and develop assessment criteria for this purpose.
(g) The DA and the DOH, in cooperation with the LGUs, shall monitor the presence of
biological, chemical, and physical contaminants in food to determine the nature and
sources of food safety hazards in the food supply chain.

Rule 15g.1 The DA and the DOH shall link and coordinate with LGUs to monitor
hazards in the food supply chain. Monitoring shall be used among others, to determine
the effectiveness of the food safety regulatory system.

SECTION 16. Specific Responsibilities of the Department of Agriculture. – The DA shall

be responsible for the development and enforcement of food safety standards and
regulations for foods in the primary production and postharvest stages of the food
supply chain. It shall monitor and ensure that the relevant requirements of the law are
complied with by farmers, fisher folks and food business operators. Pursuant thereto,
the DA Secretary shall ensure that the food safety regulatory mandates and functions
for fresh plant, animal, fisheries and aquaculture foods of the DA agencies are clearly
defined. The agencies under the DA with food safety regulatory functions are the
following:

(a) The Bureau of Animal Industry (BAI), for food derived from animals including eggs
and honey production;

(b) The National Dairy Authority (NDA), for milk production and post harvest handling;

(c) The National Meat Inspection Service (NMIS), for meats;

(d) The Bureau of Fisheries and Aquatic Resources (BFAR), for fresh fish and other
seafoods including those grown by aquaculture;

(e) The Bureau of Plant Industry (BPI), for plant foods;

(f) The Fertilizer and Pesticide Authority (FPA), for pesticides and fertilizers used in the
production of plant and animal food;

(g) The Philippine Coconut Authority (PCA), for fresh coconut;

(h) The Sugar Regulatory Administration (SRA), for sugar cane production and
marketing; and

(i) The National Food Authority (NFA), for rice, corn and other grains.

Rule 16.1 The DA FSRAs for primary and postharvest foods and agriculture and
aquaculture inputs for primary production indicated in Section 16 (a) to (i) shall be
referred to as the DA FSRAs. They shall strengthen their food safety regulatory systems
based on a risk management plan with provisions for review and monitoring for
continuous improvement.
Rule 16.2 The mandate for food safety in the DA shall be the responsibility of the DA
Secretary, assisted by the Heads of the DA FSRAs, Bureau of Agriculture and Fisheries
Standards (BAFS) and the Food Development Center (FDC), and the concerned
Undersecretary supervising them. The Undersecretary for Policy and Planning,
Research and Development (R&D) and Regulations shall provide oversight

Rule 16.3 The DA Undersecretary for Policy and Planning, R&D and Regulation shall
ensure that all regulatory issuances are compliant with national policies and
international commitments, oversee technical support to DA FSRAs provided by BAFS
and FDC and DA participation in all national and international activities on food safety.

Rule 16.4 The DA FSRAs shall implement the official controls for verifying that primary
and postharvest foods meet regulatory requirements for consumer health, consumer
protection, and trade. They shall be responsible for the registration of food businesses,
licensing of agriculture and fishery establishments, official certification of products and
services, official accreditation of inspection and certifying bodies, and other official
controls prescribed by the regulatory system and in compliance with the international
commitments.

Rule 16.5 The DA Secretary may put into place arrangements among the DA FSRAs
when necessary to improve efficiency and cost-effectiveness of services.

The Bureau of Agriculture and Fisheries Product Standards (BAFPS) shall develop food
safety standards including those for organic agriculture. The BAFPS shall establish the
mechanism for the development of science-based food safety standards for fresh plant,
animal, fisheries and aquaculture foods and shall use the services of experts from the
FSRA, other government agencies, academe and private sector.

Rule 16.6 BAFPS now known as the Bureau of Agriculture and Fisheries Standards
(BAFS) shall be the DA agency responsible for developing, adopting, and/or
amending/revising food safety standards and codes of practice for primary and
postharvest foods for the use of DA FSRAs in developing/implementing food safety
regulations.

Rule 16.7 BAFS shall establish the policies and procedures for a transparent, science-
based mechanism for the development of standards, which shall include but shall not be
limited to the following activities:

 Preparation of the Priority List for standards development

 Qualification and terms and conditions for members of the DA pool of scientific
experts
 Promoting functional separation but effective interaction between the DA pool of
scientific experts and the DA FSRAs
 Ensuring effective sourcing of scientific data including the design of technical
projects for data generation
 Validation and impact evaluation of standards and codes of practice
Rule 16.8 The BAFS shall organize the DA pool of scientific experts for the
development of food safety standards and the provision of scientific advice to the
Secretary, the Undersecretary for Policy and Planning, R&D and Regulations, the DA
FSRAs and the NCO. The members of the DA pool of scientific experts shall come from
academe, research institutions, and other relevant organizations.

Rule 16.9 BAFS shall organize Technical Working Groups (TWGs) to develop food
safety standards based on the scientific advice of the DA pool of scientific experts.

Rule 16.10 The members of the DA pool of scientific experts and the TWGs shall be
entitled to honoraria and other allowable emoluments for every meeting attended in
relation to their functions, subject to existing laws, rules and regulations.

The Food Development Center (FDC) of the NFA shall provide scientific support in
testing, research and training.

Rule 16.11 FDC shall be the Coordinating Laboratory for DA Laboratories and in this
capacity shall;

 Coordinate testing activities and conduct comparative testing as necessary

 Promote the implementation of Good Laboratory Practice (GLP)
 Provide testing services to DA FSRAs for the analysis of chemical, biological and
physical contaminants in food, particularly those requiring analysis at very low
levels using specialized equipment

Rule 16.12 FDC shall implement research projects to support science-based food safety
policies, standards and regulations and coordinate these projects with the Bureau of
Agricultural Research (BAR) and the academe.

Rule 16.13 FDC shall develop and conduct relevant training programs on food safety for
DA FSRAs and FBOs in coordination with the Agricultural Training Institute (ATI).

Rule 16.14 FDC shall collect fees for testing, training and research services it provides
to DA FSRAs, FBOs and other interested parties.

Rule 16.15 FDC shall prepare the guidelines for the provision of testing, training and
research services to the DA within one year from the implementation of this IRR.

When necessary and when funds allow, the appropriate food safety units shall be
created within the above-stated agencies. To strengthen these organizations, they shall
be provided with the necessary personnel out of the existing manpower of the DA.

Rule 16.16 The DA FSRAs, BAFS, FDC and the Office of the Undersecretary for Policy
and Planning, R&D and Regulations shall create functional food safety units, whenever
necessary, to implement their food safety functions. In doing so, the DA may utilize or
restructure existing units. Funds shall be provided by the DA and its agencies
concerned with the implementation of the Act Additional requirements shall be subject
to the usual government processes, rules and regulations.

Finally, the DA shall, in coordination with other government agencies, monitor the
presence of contaminants in foods of plant, animal and fishery origin and shall formulate
and implement measures to address incidents of food contamination.

Rule 16.17 The DA shall coordinate with the DOH in establishing an effective system
between them and with other government agencies for the collection and analysis of
data on food safety hazards in the food supply chain.

SECTION 17. The Undersecretary for Policy and Planning, Research and Development
(R&D) and Regulations. – Oversight functions for the Food Safety Act shall be assigned
to the Undersecretary for Policy and Planning, R&D and Regulations.

The Undersecretary for Policy and Planning, R&D and Regulations shall directly
supervise the Food Development Center and the BAFS and shall be the coordinator for
Codex activities at the DA and the Codex Contact Point.

Rule 17.1 The FDC of NFA shall be under the direct supervision of the Undersecretary
for Policy and Planning, R&D and Regulations after undergoing legal processes to
make the direct supervision possible.

Rule 17.2 The Office of the Undersecretary for Policy and Planning, R&D and
Regulations shall be the Codex Contact Point (CCP) and shall oversee the DA
participation in the work of the CAC and the NCO.

The Undersecretary for Policy and Planning, R&D and Regulations shall be provided
with the necessary manpower and funds from existing resources to ensure the smooth
and efficient discharge of its functions.

Rule 17.3 The requirements for funds and manpower to support the oversight functions
of the Undersecretary for Policy and Planning, R&D and Regulations shall initially be
provided by the DA.

SECTION 18. Specific Responsibilities of the DOH. – The DOH shall bear the following
specific responsibilities:

(a) The DOH shall ensure the safety of all food processing and product packaging
activities.

Rule 18a.1 The DOH through FDA shall be responsible for the overall regulation of all
activities pertaining to processed food (prepackaged or not prepackaged) including, but
not limited to, inspection, licensing, registration, post-market monitoring, and laboratory
analysis. It shall regulate the manufacture, importation, exportation, distribution, sale,
offer for sale, transfer, promotion, advertisement, sponsorship of, and/or, where
appropriate, the use and testing of all processed and prepackaged food products and
food supplements/dietary supplements.

Rule 18a.2 The FDA Center for Food Regulation and Research (CFRR) shall implement
the official controls for verifying that processed and prepackaged foods meet regulatory
requirements for consumer health, consumer protection, and trade.

Rule 18a.3 The FDA through the Regional Field Offices (RFOs), in performing their
primary function of inspecting establishments and monitoring their compliance, shall
strengthen the effective enforcement of GMP, HACCP, and other risk-based control
measures.

(b) The FDA Center for Food Regulation and Research shall be responsible for
implementing a performance-based food safety control management system which shall
include, but not limited to, the following:

(1) Development of food standards and regulations;

Rule 18b1.1 The FDA CFRR Product Research and Standards Development Division
shall be responsible for developing, adopting, and/or amending/revising food safety
standards and codes of practice for processed and prepackaged foods. It shall
strengthen and ensure sustained development of science-based policies and continued
updating of quality work procedures. The policies and procedures shall be incorporated
in the FDA systems including but not limited to:

1. Food standards and regulations to be researched, developed, amended/revised,

or updated
2. Development of protocol, procedures and qualifications for the identification,
recognition or organization of a pool of multi-disciplinary food experts from
relevant regulatory, health, academe, research institutions, professional
organizations to be known as DOH Joint Scientific Expert Group QSEG) which
shall provide scientific advice to the DOH and its joint undertaking with other
agencies including the NCO
3. The JSEG shall be entitled to allowable honoraria and other emoluments for
every meeting attended in relation to their functions subject to accounting and
auditing rules and regulations and availability of funds

(2) Post-market monitoring;

Rule 18b2.1 The FDA CFRR shall establish and maintain the post-market monitoring
system (PMS), including programs for monitoring, fact-finding activities, procedures for
risk-based inspection, and collection for testing of locally produced and imported
processed and prepackaged food in the market.

(3) Enforcement of HACCP and other risk-based control measures;

(4) Strong participation in Codex and other international standard setting bodies,

Rule 18b4.1 The FDA CFRR shall ensure the regular participation of country delegates
to activities of Codex and other international standard setting bodies. It shall strengthen
the country’s positions through the conduct and use of science-based studies and
research taking into consideration all sources of scientific information.

(5) Communication of risks and development of interactive exchange among

stakeholders;

Rule 18b5.1 The FDA CFRR shall collaborate with the Health Promotion and
Communication Service (HPCS) in the development and implementation of a risk
communication system on food safety as identified by recognized risk assessors. The
system shall include consultative discussions among stakeholders to maintain local and
international linkages on food safety.

(6) Establishment of laboratories for food safety and strengthening the capabilities of
existing laboratories;

Rule 18b6.1 The FDA CFRR Laboratory shall strengthen the conduct of quality
monitoring activities through laboratory testing/analysis of processed and prepackaged
food, regular participation in Proficiency Testing (PT), continuous performance of
method development, validation or verification, upgrading its equipment, oversight the
FDA satellite laboratories and laboratory accreditation of food testing laboratories.

(7) Development of a database of food safety hazards and food-borne illness from
epidemiological data;

Rule 18b7.1 The FDA CFRR shall develop a database of common food safety hazards
and food and water-borne diseases in coordination with the EB and the DA.

(8) Strengthening R&D capabilities on product safety and quality standards; and

Rule 18b8.1 The FDA CFRR shall identify national areas of research and development
on food product safety and quality and institute strategies in their implementation, foster
collaboration with partner institutions, conduct capacity building and improvement
activities for effective translation of research results into policy and practices, and
undertake, when appropriate, oversight/audit of related researches that would ensure
the safety and quality of food products.

(9) Certification of food safety inspectors.

Rule 18b9.1 The FDA CFRR shall allocate funds for the certification of food safety
inspectors (International Organization for Standardization (ISO) 17020). Certification of
food safety inspectors may be given by recognized third party certifying bodies
accredited by the PAB.
(c) The Bureau of Quarantine (BOQ) shall provide sanitation and ensure food safety in
its area of responsibility in both domestic and international ports and airports of entry,
including in-flight catering, food service establishments, sea vessels and aircraft, as
provided for in the implementing rules and regulations (IRR) of Republic Act No. 9271
and Presidential Decree No. 856, otherwise known as the “Code on Sanitation of the
Philippines”.

Rule 18c.1 The BOQ shall adopt HACCP system; enforce GMP-HACCP provisions and
guidelines; conduct surveillance of human infectious diseases including food and water-
borne disease outbreaks potentially entering the country; develop data base system and
conduct periodic monitoring and evaluation of Food Safety program in its area of
responsibility; institute processes and procedures, including reasonably appropriate
risk-based preventive controls that provide the same level of public health protection
including issuance of Health Certificate to stewards and food handlers and Vibrio
cholera Clearance Certificate for all outgoing foodstuff as required for both domestic
and international suppliers; provide relevant safety regulation inputs to the FSRCB.

Rule 18c.2 The BOQ shall coordinate with the LGUs in recognizing the areas of
responsibility as defined in Article V, Section 18(c) of the Act.

(d) The National Epidemiology Center (NEC), the Research Institute of Tropical
Medicine (RITM) and the National Center for Disease Prevention and Control (NCDPC)
shall conduct and document epidemiological monitoring studies on food-borne illnesses
for use in risk-based policy formulation. Food safety risk assessment bodies shall be
established for this purpose.

Rule 18d.1 The NEC, now named as the EB of the DOH, through its Public Health
Surveillance Division, shall be responsible for the overall planning, management,
direction, evaluation, and impact assessment for the prevention and control of food- and
water-borne illness programs.

Rule 18d.2 The RITM, Reference Laboratory in coordination with EB shall conduct
confirmation of samples from human with food and water-borne diseases.

Rule 18d.3 The NCDPC, now named as the Disease Prevention and Control Bureau
(DPCB), shall conduct a periodic evaluation of DOH food safety related programs to
determine its effectiveness in achieving legislated intent, purposes, and objectives in
coordination with other DOH offices. It shall also provide technical assistance and
logistics in the conduct of surveillance of outbreak or epidemic investigations.

(e) The National Center for Health Promotion (NCHP) shall be responsible for
advocating food safety awareness, information and education to the public.

Rule 18e.1 The NCHP now named as the HPCS shall be responsible for advocating
food safety awareness, information and education to the public.
Rule 18e.2 HPCS shall develop Health Promotion and Communication (HPC) and/or
risk communication plan for food safety in collaboration with the FDA, DPCB, EB, BOQ,
and other concerned government agencies; and lead the implementation of the HPC
Plan in collaboration with the DOH concerned offices, LGUs and other partners.

(f) The NCDPC shall strategize actions to help ensure the safety of food, reduce the risk
of food contamination and food-borne diseases, address the double burden of
micronutrient deficiencies and non-communicable diseases and to regularly evaluate
the progress made.

Rule 18f.1 The DPCB, in collaboration with FDA and other offices within the DOH, shall
develop strategic actions on risk management activities or programs relating to food
safety that affects health; review existing guidelines to improve policies pertaining to
micronutrient supplementation, food fortification of food products and food labelling;
develop guidelines on the decontamination and disposal of contaminated, adulterated
and sub-standard processed and prepackaged food products; and provide guidance for
LGUs in issuing ordinances to control excessive consumption of food substance leading
to the development of non-communicable diseases such as, but not limited to, diabetes,
hypertension, cardiovascular diseases, obesity and others.

Rule 18f.2 The DOH through DPCB, in coordination with DILG, shall assist in the
development of food safety guidelines for the FSEs relating to the prevention of non-
communicable diseases.

(g) The DOH and the FDA Center for Food Regulation and Research shall be
strengthened in terms of establishing food safety functional divisions and incremental
staffing of food safety officers and experts and be provided with funds including the fees
collected from services.

Rule 18g.1 The FDA CFRR shall be in charge of the food safety regulatory program of
the FDA-DOH. It shall create a Food Safety and Quality Division within CFRR for this
purpose. The Division shall provide technical assistance to the DOH Secretariat of the
FSRCB.

SECTION 19. Specific Responsibilities of the DILG and the LGUs. – The DILG and the
LGUs shall bear the following responsibilities:

(a) The LGUs shall be responsible for the enforcement of the “Code on Sanitation of the
Philippines” (Presidential Decree No. 856, December 23, 1975), food safety standards
and food safety regulations where food is produced, processed, prepared and/or sold in
their territorial jurisdiction. This shall include, but shall not be limited to, the following:

(1) Sanitation particularly in public markets, slaughterhouses, micro and small food
processing establishments and public eating places;

(2) Codes of Practice for production, post harvest handling, processing and hygiene;
(3) Safe use of food additives, processing aids and sanitation chemicals; and

(4) Proper labelling of pre-packaged foods.

Rule 19a.1 The FSRAs shall coordinate with and assist the DILG and LGU in
implementing and enforcing its food safety function and encourage them to use the food
safety regulations and standards including food additives, food/nutrition labelling and
other relevant food safety policies as references.

(b) The DILG shall support the DOH and the DA in the collection and documentation of
food-borne illness data, monitoring and research.

(c) The DILG and the LGUs shall participate in training programs, standards
development and other food safety activities to be undertaken by the DA, the DOH and
other concerned national agencies.

ARTICLE VI

FOOD SAFETY REGULATION COORDINATING BOARD (FSRCB)

SECTION 20. Powers and Functions. – There is hereby created a Food Safety

Regulation Coordinating Board, hereinafter referred to as the Board, with the following
powers and functions:

Rule 20.1 The FSRCB shall establish the policies and procedures for decision making
and its implementation. This shall be carried out as soon as the FSRCB is organized.

Rule 20.2 The FSRCB, when necessary, may seek the assistance and advice of
technical persons and other agencies on matters needed in food safety decision
making.

(a) Monitor and coordinate the performance and implementation of the mandates of the
DA, the DOH, the DILG and the LGUs in food safety regulation;

RULE 20a.1 The FSRCB shall monitor and evaluate DA-DOH coordination including but
not limited to the following areas:

 Policy and regulatory issues that arise from the implementation of measures and
official controls;
 Effect of regulations on food import and export trade activities;
 Exchange of information on standards and regulatory issuances and scientific
data on hazards, epidemiological studies, monitoring and surveillance activities
and others;
 The management of risk, the control of fraud, and the identification and
evaluation of emerging risks; and
 Evaluation of the impact of testing, training and research programs.
(b) Identify the agency responsible for enforcement based on their legal mandates when
jurisdiction over specific areas overlap;

(c) Coordinate crisis management and planning during food safety emergencies;

Rule 20c.1 The JFSRCB shall be responsible for preparing a crisis management plan
and the Chair and Co-Chair shall lead food control activities during an actual crisis. The
Co-chair of the FSRCB shall be specifically responsible for crises originating from
and/or affecting primary production and the postharvest handling portion of the food
supply chain.

Rule 20c.2 All members of the FSRCB shall contribute information that will strengthen
decision-making during the crisis.

(d) Establish the policies and procedures for coordination among agencies involved in
food safety;

Rule 20d.1 The FSRCB shall develop a system for the timely exchange of information
between the DA, the DOH, the DILG, and the LGUs on matters related to food safety.

(e) Continuously evaluate the effectiveness of enforcement of food safety regulations

and research and training programs;

Rule 20e.1 The FSRCB shall review the effectiveness and appropriateness of
enforcement of food safety regulations, coordinated regulatory activities, research, and
training programs. The review shall be carried out at the end of each year unless
relevant information from monitoring and surveillance activities indicate the need for an
earlier review of said activities.

(f) Regularly submit reports to the Congressional Committees on Health, Agriculture and
Food, and Trade and Industry; and

Rule 20f.1 The FSRCB shall submit an annual report to the Congressional Committees
on Health, Agriculture, Food, and Trade and Industry as required by the Act.

(g) Accept grants and donations from local and international sources.

Rule 20g.1 The FSRCB may apply for/accept grants from local and international
sources to fund research, training programs, and monitoring and surveillance activities
on food safety except from entities regulated by FSRAs.

SECTION 21. Organization. – Within thirty (30) days from the effectivity of this IRR, the
Secretaries of the DA, the DOH and the DILG shall organize the Board in accordance
with the following rules:
(a) The Board shall be chaired by the DOH Secretary and co-chaired by the DA
Secretary. The alternate chair for the DOH shall be the FDA Director General and the
alternate co-chair for the DA Secretary shall be the Undersecretary for Policy and
Planning, R&D and Regulations. The members of the Board shall be the heads of the
food safety regulatory agencies of the DA, the Director of the FDA Center for Food
Regulation and Research, a representative field operator of the DILG with the rank of a
Director, the heads of Leagues of Barangays, Municipalities, Cities and Provinces and a
representative each from the DTI and the DOST with the rank of a Director. Directors of
other DOH agencies with food safety concerns shall join the meeting as it may be
deemed necessary by the DOH;

Rule 21a.1 The heads of DOH agencies with food safety concerns that shall join the
meeting as determined by the DOH including but not limited to BOQ, EB, DPCB, HPCS,
Bureau of Local Health Development (BLHD), and RITM.

Rule 21a.2 The heads of FDC and BAFS shall be represented at the FSRCB as
determined by the FSRCB.

Rule 21a.3 The FSRCB may invite representatives from the academe, food industry
associations/ organizations and/or consumer groups as resource persons as may be
deemed necessary.

Rule 21a.4 In the event that the FSRCB requires voting as recourse for decision
making, all member departments namely DOH, DA, DILG, Department of Trade and
Industry (DTI), Department of Science and Technology (DOST), and Leagues of
Barangays, Municipalities, Cities and Provinces shall each be entitled to one vote.

(b) Within twelve (12) months from the effectivity of this Act, the Board shall submit a
manual of procedures containing the rules for the conduct of meetings and decision-
making, among others;

Rule 21b.1 The FSRCB shall create a TWG to prepare a manual of procedures within
twelve (12) months from the approval of this IRR. The manual of procedures shall
contain the rules and procedures for the conduct of the FSRCB’s activities, meetings,
and decision-making.

(c) The Board shall be assisted by administrative and technical secretariat at the DOH.
Both the DOH and the DA shall establish functional divisions and shall organize the
administrative and technical personnel for the operation of the Board. The personnel
needed under this section shall be taken from the existing manpower of each
department; and

Rule 21c.1 The DOH shall establish the administrative Secretariat to the FSRCB. The
Food Safety and Quality Division created within the FDA CFRR shall provide technical
assistance to the FSRCB Secretariat in addition to its major activities relating to food
safety.
Rule 21c.2 The DA through the DA Undersecretary for Policy and Planning, R&D and
Regulations shall create a functional division from where the administrative and
technical support to the DA participation to the FSRCB shall be designated.

(d) Funds shall be allocated by the respective agencies concerned with food safety to
pay for the organization of meetings, participation of Board members, secretariat,
experts and the expenses of a working group to be created by the Board to prepare its
manual of procedures.

SECTION 22. Accountability for Food Safety Regulation. – The FSRAs of the DA and
the DOH, in coordination with the LGUs, shall be responsible in ensuring food safety at
various stages of the food supply chain within their specified mandates.

Rule 22.1 Responsibility and oversight functions for the implementation of coordinated
activities shall reside in the Chair and Co-Chair of the FSRCB.

ARTICLE VII

CRISIS MANAGEMENT

SECTION 23. Rapid Alert System. – A rapid alert system for the notification of a direct
or indirect risk to human health due to food shall be established by the FSRCB.

Rule 23.1 A national rapid alert system for food and feed shall be established to identify
and subsequently notify of the existence of a direct or indirect risk to human health from
food.

Rule 23.2 The protocols and procedures for the national rapid alert system for food and
feed shall consider existing international systems.

Rule 23.3 The FSRCB shall designate a national contact point for the national rapid
alert system for food and feed.

SECTION 24. Emergency Measures. – Where it is evident that food originating from

within the country or imported from another country is likely to constitute serious risk to
human health, the Board, in coordination with the FSRAs of the DOH and the DA, shall
immediately adopt one or more of the following measures, depending on the gravity of
the situation:

(a) In the case of food of national origin:

(1) Suspension of its distribution in the market or the use of the food in question;

(2) Laying down special conditions for the food in question; and

(3) Any other appropriate interim measures.

(b) In the case of food from another country:

(1) Suspension of imports of the food from all or parts of the third country concerned
and, where applicable, from the third country of transit;

(2) Laying down special conditions for the food in question from all or part of the third
country concerned; and

(3) Any other appropriate interim measures.

SECTION 25. Plan for Crisis Management. – The Board, in coordination with the
FSRAs and other relevant government agencies, shall prepare a general plan for the
management of a threat to food safety such as radiation contamination of food, food
shortage requiring coordinated action and other crisis situations which may compromise
food safety. This plan shall specify the situations representing a direct or indirect risk to
human health deriving from food which are not likely to be prevented, eliminated or
reduced to an acceptable level.

Rule 25.1 In the event of food shortage or other emergency situations, the equivalency
requirements for food safety regulatory system in Section 12 of the Act may be
reconsidered upon evaluation of the FSRAs and approval of the FSRCB.

ARTICLE VIII

IMPLEMENTATION OF FOOD SAFETY REGULATIONS

SECTION 26. Policies on Official Controls. – Official controls are established to verify

compliance with food laws and regulations and shall be prepared by each agency. The
following shall govern the exercise of official controls:

(a) Official controls shall be implemented by way of regulations prepared by the FSRAs
in accordance with the principles established in this Act;

Rule 26a.1 Official controls shall be based on Section 26 (a) to (h) of the Act. It shall be
a part of the Food Safety Regulatory System of the DA and the DOH.

(b) The frequency of official controls shall be proportionate to the severity and likelihood
of occurrence of the food safety risks being controlled;

Rule 26b.1 Official control procedures shall be risk-based and shall include risk-based
inspection, testing, certification and audits.

(c) Official controls shall be based on appropriate techniques, implemented by an

adequate number of suitably qualified and experienced personnel and with adequate
funds, facilities and equipment
Rule 26c.1 Food inspection shall be carried out by inspectors under the supervision of
food safety officers (FSO) or equivalent personnel who are graduates of food-related
courses including but not limited to chemistry, food and nutrition, food technology,
microbiology, chemical/sanitary engineering, veterinary medicine, fisheries, agriculture.
To qualify as FSO, graduates must have training and/or work experience in food safety.

Rule 26c.2 FSO or equivalent personnel involved in food inspection shall pass a
certified training course on food inspection every three years.

Rule 2 6c.3 The FSRAs shall ensure that adequate funds, facilities, and equipment for
the implementation of official controls are provided.

Rule 26c.4 Testing for official controls shall be carried out by professionally licensed
personnel depending on the test methods being implemented.

(d) The regulatory agency or body performing official controls shall meet operational
criteria and procedures established by the agencies to ensure impartiality and
effectiveness;

(e) Any personnel of FSRAs such as, but not limited to, food inspectors shall perform
official controls at the highest level of competence and integrity, ever mindful of conflict
of interest situations;

Rule 26e.1 Any personnel of the FSRAs, who in the performance of their official function
obtain proprietary information, shall observe strict confidentiality in the handling and use
of said information.

(f) Policies and procedures for official controls shall be documented in a manual of
operations to ensure consistency, high quality, uniformity, predictability and
transparency;

Rule 26f.1 A manual of procedures for food inspectors shall be developed by FSRAs
within a reasonable period of time after the approval of this IRR. Initial funding for the
development of this manual of procedures shall be provided by the DA and the DOH.

Rule 26f.2 Food testing laboratories shall have manuals on GLP, calibration
procedures, and a manual of validated testing methods compliant with Codex/ISO
requirements. Steps shall be taken to accredit food testing laboratories to ISO 17025.

(g) Provisions shall be made for official controls to be delegated to other competent
bodies as determined by the regulatory agency and of the conditions under which this
shall take place. When official controls are delegated, appropriate coordination and
other procedures including oversight shall be in place and effectively implemented. The
accountability over the delegated function shall remain with the regulatory agency; and
Rule 26g.1 Third party service providers of inspection, testing and certification activities
can be officially accredited by the FSRAs or accredited to the appropriate ISO standard
by the PAB.

(h) The agencies responsible for the implementation of official controls shall be provided
with the necessary funding and technical support out of their existing budget to perform
official controls according to the principles indicated in this Act.

Rule 26h.1 The funds necessary to implement the manual of procedures for official
controls shall be provided by the DA and the DOH.

SECTION 27. Traceability. – Traceability shall be established for foods at relevant

stages of production, post harvest handling, processing or distribution, when needed to
ensure compliance with food safety requirements. The rule on traceability shall also
cover production inputs such as feeds, food additives, ingredients, packaging materials
and other substances expected to be incorporated into a food or food product. To
ensure traceability, food business operators are required to:

(a) Be able to identify any person or company, from whom they have been supplied
with:

(1) Food;

(2) A food-producing animal;

(3) Production chemicals as pesticides and drugs; and

(4) Production, post-harvest handling and processing inputs such as feeds, food
additives, food ingredients, packaging materials, or any substance expected to be
incorporated into food or food product.

(b) Establish and implement systems and procedures which allow the above information
to be available to the regulatory authorities on demand; and

(c) Establish systems and procedures to identify the other businesses, to which their
products have been supplied. This information shall be made available to the regulatory
authorities upon demand.

Traceability in case of food-borne disease outbreak shall be established by the National

Epidemiology Center (NEC) of the DOH.

Rule 27.1 FBOs shall be required to establish a traceability system which will indicate at
the minimum where the food/food ingredient immediately came from and where it will
immediately proceed. The systems implemented by FBOs shall be based on principles
and standards of Codex and other international standard bodies.
Rule 27.2 The traceability system established by the FBOs shall be verified by the
concerned FSRAs.

Rule 27.3 The DA and other concerned agencies of the DOH shall assist the EB in
tracing food-borne disease outbreak from production to consumption.

SECTION 28. Licensing, Registration of Establishments. – Appropriate authorizations

shall be developed and issued in the form of a permit, license and certificate of
registration or compliance that would cover establishments, facilities engaged in
production, post-harvest handling, processing, packing, holding or producing food for
consumption in accordance with the mandated issuances of regulatory agencies issuing
such authorizations. Special derogations shall be provided due to geographical location
and after an assessment of risks, especially for micro, small and medium-sized food
business operators and health products.

Rule 28.1 Authorizations shall be issued when products or establishments have been
verified by examination or objective evidence, to meet specified requirements of the Act
for the product or the establishment. In issuing appropriate authorizations, the FSRAs
may consider modifying or updating existing authorization or establish new ones as
necessary.

Rule 28.2 As part of their regular mandates, the LGUs shall issue business permits to
FBOs indicating compliance with the sanitation code and such other food safety
requirements that may be prescribed. Such permit authorizes FBOs to market their
products within their territorial jurisdiction.

Rule 28.3 The DA and DOH shall issue appropriate authorizations to FBOs in
accordance with mandated issuances of FSRAs authorizing FBOs to market their
products for national and/or international markets.

SECTION 29. Inspection of Food Business Operators. – Regular inspection of food

business operators shall be performed by the FSRAs or the control bodies delegated to
conduct the activity. In addition, the following rules shall be followed in the conduct of
inspections:

(a) Inspection shall take into account compliance with mandatory food safety standards,
the implementation of HACCP, good manufacturing practices and other requirements of
regulations;

(b) The frequency of inspections shall be based on the assessment of risks.

Establishments producing high risk foods or carrying out high risk activities shall be
inspected more frequently;

(c) Inspectors shall have defined skills on risk-based inspection and shall be regularly
evaluated based on suitable procedures to verify their continuing competence
Rule 29c.1 Inspectors shall attend training programs designed to strengthen their
capabilities in the inspection of food, systems and technologies. Training programs shall
establish competence through but not limited to examinations and certifications.

(d) Appropriate procedures shall be in place to ensure that the results of inspection are
interpreted in a uniform manner.

Rule 29d.1 Methodologies for inspection shall be incorporated in the manual and shall
undergo periodic review.

SECTION 30. Food Testing Laboratories. – The following shall guide the management
and operation of food testing laboratories:

(a) Food testing shall be carried out by laboratories accredited in accordance with
international standards. Those that are not currently accredited shall apply for
accreditation within a specified period of time;

Rule 30a.1 DA and DOH laboratories shall conform to the national and/or international
standards for GLP and method validation. They shall seek and maintain accreditation to
ISO 17025.

Rule 30a.2 Food testing can be carried out by third party laboratories officially
accredited by the FSRAs. The criteria for the official accreditation of third party
laboratories shall be established by the FSRAs.

(b) Testing shall be carried out using the internationally approved procedures or
methods of analysis that have been validated;

Rule 30b.1 Food testing laboratories shall conduct verification of the validated test
methods or procedures.

(c) Laboratories shall be organized and managed to prevent conflict of interest in the
conduct of testing;

(d) Laboratories shall be staffed with analysts with the required expertise and
professional competence, and

Rule 30d.1 The competence of the laboratory analysts shall be regularly assessed.

(e) FSRAs may recognize private testing laboratories accredited by the Philippine
Accreditation Office (PAO) of the DTI to support their testing needs.

ARTICLE IX

TRAINING AND CONSUMER EDUCATION

SECTION 31. Training. – Skills training and other instructional/educational activities
shall be regularly provided to food business operators, food handlers and to government
personnel as follows:

(a) Food business operators particularly micro, small and medium scale enterprises
shall be trained on the requirements of food safety regulations and the understanding of
these requirements. Personnel shall be trained on HACCP, on the codes of good
practice and on technologies that will enable them to comply with regulations;

(b) Mandatory training on safe food handling and similar courses shall be implemented
for food handlers of food businesses; and

(c) Government personnel shall be trained on the scientific basis for the provisions of
the law and on the conduct of official controls.

The different FSRAs shall identify training needs and the appropriate training programs.
Mandatory training programs shall be developed and implemented by accredited
training providers.

Rule 31.1 All training programs on food safety shall include the requirements of the Act.

Rule 31.2 The DA and the DOH shall develop and conduct food safety trainings
designed specifically for FSCOs, the FBOs, and the FSRAs. Other government
institutions, the academe, professional associations and third party service providers
may also conduct food safety trainings provided that these are recognized by the
FSRAs.

Rule 31.3 The DA and the DOH may partner with other government institutions, the
academe, professional associations and third party service providers in providing these
food safety trainings.

SECTION 32. Consumer Education. – A consumer education program shall be

developed by the DA, the DOH and the LGUs in partnership with the Department of
Education, the implementation of which shall be carried out by the latter.

SECTION 33. Funding. – Funds shall be provided for the development and

implementation of training and consumer education programs.

Rule 33.1 The DA and the DOH shall provide funds for the development and initial
implementation of training and consumer education programs through the regular
appropriations of FSRAs and other relevant agencies.

ARTICLE X

FOOD-BORNE ILLNESS MONITORING, SURVEILLANCE AND RESEARCH

SECTION 34. Food-borne Illness Monitoring and Surveillance. – The government, in
support of risk analysis, shall implement the following programs:

(a) An integrated food-borne disease monitoring system that links to the sources of food
contamination in collaboration with the DOH-NEC and the NCDPC; and

Rule 34a.1 The DOH-NEC and the NCDPC shall collaborate with the FSRAs in
strengthening the sharing of information on food-borne diseases for the development of
appropriate risk management measures.

(b) Identification of hazards in the food supply chain and assessment, of levels of
exposure to the hazards.

Rule 34b.1 The DA and DOH shall link and coordinate their activities in identifying and
monitoring hazards in the food supply chain such as pesticide residues, food additives,
veterinary drug residues in food and chemical, biological, and other contaminants under
their jurisdiction. The results shall be used to create a database on the national food
safety situation.

SECTION 35. Research. – The government and academe shall develop and implement
a program of research on cost effective technologies and codes of practice for assisting
farmers, fisherfolk, micro, small and medium scale enterprises and other stakeholders
to enable them to comply with food safety regulations.

Rule 35.1 The DA and the DOH shall include cost-effective technologies and codes of
practice relative to food safety regulations in their respective research agenda or
research priorities.

Rule 35.2 The DA and the DOH shall engage the academe and other relevant
institutions in the conduct of research.

Rule 35.3 Results of such research shall be used in the development of policies and
improvement of food safety regulations.

ARTICLE XI

POLICY ON FEES

SECTION 36. Collection of Fees. – The DA, the DOH and the LGUs, where applicable,
shall be allowed to collect fees for the inspection of food products, production and
processing facilities, issuance of import or export certificates, laboratory testing of food
samples and other fees as may be deemed necessary.

Fees shall be based on an officially-approved procedure for estimating the cost of the
activity undertaken and shall be subject to government accounting and auditing rules
and regulations.
Rule 36.1 FSRAs shall issue a schedule of fees for services provided.

ARTICLE XII

PROHIBITIONS, PENALTIES AND SANCTIONS

SECTION 37. Prohibited Acts. – It shall be unlawful for any person to:

(a) Produce, handle or manufacture for sale, offer for sale, distribute in commerce, or
import into the Philippines any food or food product which is not in conformity with an
applicable food quality or safety standard promulgated in accordance with this Act.

(b) Produce, handle or manufacture for sale, offer for sale, distribute in commerce, or
import into the Philippines any food or food product which has been declared as banned
food product;

(c) Refuse access to pertinent records or entry of inspection officers of the FSRA;

(d) Fail to comply with an order relating to notifications to recall unsafe products;

(e) Adulterate, misbrand, mislabel, falsely advertise any food product which misleads
the consumers and carry out any other acts contrary to good manufacturing practices;

(f) Operate a food business without the appropriate authorization;

(g) Connive with food business operators or food inspectors, which will result in food
safety risks to the consumers; and

(h) Violate the implementing rules and regulations of this Act.

SECTION 38. Penalty. – Any person who shall violate any provision of this Act shall
suffer the penalties provided hereunder:

Rule 38.1 The existing rules of procedures in administrative proceedings in each FSRA
shall be applied in the handling of cases and violations committed under the Act and its
IRR. The Executive Order No. 292 or the Administrative Code and the Rules of Court
shall be applicable in suppletory manner.

Rule 38.2 Prior to, or pending administrative proceedings, any temporary preventive
measures being exercised by each FSRA shall apply.

(a) For the first conviction, a fine of not less than Fifty thousand pesos (P50,000.00) but
not more than One hundred thousand pesos (P100,000.00) and suspension of
appropriate authorization for one (1) month shall be imposed;
(b) For the second conviction, a fine of not less than One hundred thousand pesos
(P100,000.00) but not more than Two hundred thousand pesos (P200,000.00) and
suspension of appropriate authorization for three (3) months shall be imposed;

(c) For the third conviction, a fine of not less than Two hundred thousand pesos
(P200,000.00) but not more than Three hundred thousand pesos (P300,000.00) and
suspension of appropriate authorization for six (6) months shall be imposed;

(d) For violation resulting in slight physical injury of a person, upon conviction, a fine of
not less than Two hundred thousand pesos (P200,000.00) but not more than Three
hundred thousand pesos (P300,000.00) and suspension of appropriate authorization for
six (6) months shall be imposed. The offender shall also pay the hospitalization and
rehabilitation cost of a person;

(e) For violation resulting in less serious or serious physical injury of a person, upon
conviction, a fine of not less than Two hundred thousand pesos (P200,000.00) but not
more than Three hundred thousand pesos (P300,000.00) and suspension of
appropriate authorization for one (1) year shall be imposed. The offender shall also pay
the hospitalization and rehabilitation cost of a person;

(f) For violation resulting in death of a person, upon conviction, the penalty of
imprisonment of not less than six (6) months and one (1) day but not more than six (6)
years and one (1) day and a fine of not less than Three hundred thousand pesos
(P300,000.00) but not more than Five hundred thousand pesos (P500,000.00) and
permanent revocation of appropriate authorization to operate a food business shall be
imposed.

If the offender does not have the appropriate authorization, the imposable fines shall be
doubled.

If the offender is a government personnel, in addition to the penalty prescribed herein,

said personnel shall be subjected to the appropriate civil service laws.

If the offender is a naturalized citizen, in addition to the penalty prescribed herein, the
naturalization certificate and the registration in the civil registry of said citizen shall be
cancelled. Immediate deportation after payment of fine and service of sentence shall
also be imposed.

If the offender is an alien, said alien shall be summarily deported after payment of fine
and service of sentence and perpetually barred from entering the country.

Any director, officer or agent of a corporation who shall authorize, order or perform any
of the acts or practices constituting in whole or in part a violation of Section 37 hereof,
and who has knowledge or notice of noncompliance received by the corporation from
the concerned department, shall be subjected to the penalties under this section.
In case the violation is committed by, or in the interest of a foreign juridical person duly
licensed to engage in business in the Philippines, such license to engage in business in
the Philippines shall immediately be revoked.

Rule 38.3 The administrative penalties provided under the Act shall be in addition to
whatever penalties provided under other relevant laws which may penalize the same
acts.

Rule 38.4 For violation of prohibited acts of the Act and its IRR, both criminal action in
court and the administrative action may be instituted separately and independent of one
another. The filing of the administrative complaint and the imposition of administrative
penalties shall be lodged with the concerned FSRA.

Rule 38.5 The filing of action for violation of prohibited acts resulting in death of a
person and the imposition of the corresponding penalty of imprisonment shall be lodged
with the appropriate courts,

ARTICLE XIII

FINAL PROVISIONS

SECTION 39. Implementing Rules and Regulations. – These implementing rules and

regulations are jointly issued by DA and the DOH as mandated by Section 39 ;of the
Food Safety Act 2013.

Rule 39.1 The IRR of the Act may be jointly amended and/or updated, if the need
arises, by the DA and the DOH.

Rule 39.2 All doubts in the interpretation of the IRR shall be resolved in favour of the
protection of the health of consumers and in a manner consistent with the declared
policies and objectives of RA 10611.

Rule 39.3 Transitory Provisions:

Rule 39.3a Within thirty (30) days from the effectivity of this IRR, the Secretaries of the
DA, the DOH, and the DILG shall organize the FSRCB.

Rule 39.3b An ad hoc secretariat is hereby created to assist and support the
Secretaries of the DA, the DOH, and the DILG in identifying the members of the FSRCB
and prepare the agenda for the first Board meeting. It shall be composed of at least 2
representatives from each Department. The ad hoc secretariat shall automatically cease
to function immediately upon the organization of an administrative and technical
secretariat pursuant to Article VI, Section 21 (c) of the Act. The funding and personnel
requirements for the ad hoc secretariat shall be provided by the DA, DOH and DILG
from their existing funds and manpower complements.
Rule 39.3c The functions, duties and responsibilities pertaining to one FSRA but is
presently being performed by another FSRA pursuant to previous formal agreements or
issuances shall be continuously performed by the latter until the same are transferred to
the concerned FSRA.

Rule 39.3d The transfer and absorption of the functions, duties and responsibilities
belonging to the former shall be in accordance with the transition plan to be finalized
and approved during the first Board meeting and implemented within 24 months from
the effectivity of this IRR. Notwithstanding, the transfer and absorption of the functions,
duties and responsibilities shall take effect immediately after 24 months from the
effectivity of this IRR.

Rule 39.3e The transition plan shall include, among others:

i. The efficient transfer of all processed and pre-packaged food applications (product
registration and license of establishments) and consumer complaints with the Consumer
Arbitration Officer of the Department of Agriculture on processed and pre-packaged
food, together with all the required documents, records and relevant information to the
DOH-FDA;

ii. The DOH-FDA, with the assistance of DA-BFAR, shall pursue in securing EU
certification to processed fish products exported to EU; and

iii. The DA and DOH shall jointly undertake an information dissemination to notify
relevant stakeholders of the transfer of regulatory activities based on their mandates
and endeavour to continuously coordinate and cooperate for the effective
implementation of the Food Safety Act.

SECTION 40. Separability Clause. – If any provision of these implementing rules and
regulations is declared invalid or unconstitutional, the other provisions not affected
thereby shall remain in full force and effect.

SECTION 41. Repealing Clause. – All laws, presidential decrees, executive orders,

rules and regulations inconsistent with the provisions of the Food Safety Act 2013 and
these implementing rules and regulations are hereby repealed, amended or modified
accordingly.

SECTION 42. Effectivity. – These implementing rules and regulations shall take effect
fifteen (15) days after its publication in two (2) newspapers of general circulation.
Section 1. Title. – This Act Shall be known as the “Expanded Senior Citizens Act of
2010.”

Sec. 2. Section 1 of Republic Act No. 7432, as amended by Republic Act No. 9257,
otherwise known as the “Expanded Senior Citizens Act of 2003”, is hereby further
amended to read as follows:

“SECTION 1. Declaration of Policies and Objectives. – As provided in the Constitution

of the Republic of the Philippines, it is the declared policy of the State to promote a just
and dynamic social order that will ensure the prosperity and independence of the nation
and free the people from poverty through policies that provide adequate social services,
promote full employment, a rising standard of living and an improved quality of life. In
the Declaration of Principles and State Policies in Article II, Sections 10 and 11, it is
further declared that the State shall provide social justice in all phases of national
development and that the State values the dignity of every human person and
guarantees full respect for human rights.

“Article XIII, Section 11 of the Constitution provides that the State shall adopt an
integrated and comprehensive approach to health development which shall endeavor to
make essential goods, health and other social services available to all the people at
affordable cost. There shall be priority for the needs of the underprivileged, sick, elderly,
disabled, women and children. Article XV, Section 4 of the Constitution Further declares
that it is the duty of the family to take care of its elderly members while the State may
design programs of social security for them.

“Consistent with these constitutional principles, this Act shall serve the following
objectives:

“(a) To recognize the rights of senior citizens to take their proper place in society and
make it a concern of the family, community, and government;

“(b) To give full support to the improvement of the total well-being of the elderly and
their full participation in society, considering that senior citizens are integral part of
Philippine society;

“(c) To motivate and encourage the senior citizens to contribute to nation building;

“(d) To encourage their families and the communities they live with to reaffirm the
valued Filipino tradition of caring for the senior citizens;

“(e) To provide a comprehensive health care and rehabilitation system for disabled
senior citizens to foster their capacity to attain a more meaningful and productive
ageing; and
“(f) To recognize the important role of the private sector in the improvement of the
welfare of senior citizens and to actively seek their partnership.

“In accordance with these objectives, this Act shall:

“(1) establish mechanisms whereby the contributions of the senior citizens are
maximized;

“(2) adopt measures whereby our senior citizens are assisted and appreciated by the
community as a whole;

“(3) establish a program beneficial to the senior citizens, their families and the rest of
the community they serve: and

“(4) establish community-based health and rehabilitation programs for senior citizens in
every political unit of society.”

Sec. 3. Section 2 of Republic Act No. 7432, as amended by Republic Act No. 9257,
otherwise known as the Expanded Senior Citizens Act of 2003″, is hereby further
amended to read as follows:

SEC. 2. Definition of terms. – For purposes of this Act, these terms are defined as
follows:

“(a) Senior citizen or elderly refers to any resident citizen of the Philippines at least sixty

(60) years old;

“(b) Geriatrics refer to the branch of medical science devoted to the study of the

biological and physical changes and the diseases of old age;

“(c) Lodging establishment refers to a building, edifice, structure, apartment or house

including tourist inn, apartelle, motorist hotel, and pension house engaged in catering,
leasing or providing facilities to transients, tourists or travelers;

“(d) Medical Services refer to hospital services, professional services of physicians and

other health care professionals and diagnostics and laboratory tests that the necessary
for the diagnosis or treatment of an illness or injury;

“(e) Dental services to oral examination, cleaning, permanent and temporary filling,

extractions and gum treatments, restoration, replacement or repositioning of teeth, or
alteration of the alveolar or periodontium process of the maxilla and the mandible that
are necessary for the diagnosis or treatment of an illness or injury;

“(f) Nearest surviving relative refers to the legal spouse who survives the deceased
senior citizen: Provided, That where no spouse survives the decedent, this shall be
limited to relatives in the following order of degree of kinship: children, parents, siblings,
grandparents, grandchildren, uncles and aunts;

“(g) Home health care service refers to health or supportive care provided to the senior
citizen patient at home by licensed health care professionals to include, but not limited
to, physicians, nurses, midwives, physical therapist and caregivers; and

“(h) Indigent senior citizen, refers to any elderly who is frail, sickly or with disability, and
without pension or permanent source of income, compensation or financial assistance
from his/her relatives to support his/her basic needs, as determined by the Department
of Social Welfare and development (DSWD) in consultation with the National
Coordinating and Monitoring Board.”

Sec. 4 Section 4 of Republic Act No. 7432, as amended by Republic Act No. 9257,
otherwise known as the “Expanded Senior Citizens Act of 2003”, is hereby further
amended to read as follows:

“SEC. 4. Privileges for the Senior Citizens. –

The senior citizens shall be entitled to the following:

“(a) the grant of twenty percent (20%) discount and exemption from the value -added
tax (VAT), if applicable, on the sale of the following goods and services from all
establishments, for the exclusive use and enjoyment or availment of the senior citizen

“(1) on the purchase of medicines, including the purchase of influenza and

pnuemococcal vaccines, and such other essential medical supplies, accessories and
equipment to be determined by the Department of Health (DOH).

“The DOH shall establish guidelines and mechanism of compulsory rebates in the
sharing of burden of discounts among retailers, manufacturers and distributors, taking
into consideration their respective margins;

“(2) on the professional fees of attending physician/s in all private hospitals, medical
facilities, outpatient clinics and home health care services;

“(3) on the professional fees of licensed professional health providing home health care
services as endorsed by private hospitals or employed through home health care
employment agencies;

“(4) on medical and dental services, diagnostic and laboratory fees in all private
hospitals, medical facilities, outpatient clinics, and home health care services, in
accordance with the rules and regulations to be issued by the DOH, in coordination with
the Philippine Health Insurance Corporation (PhilHealth);
“(5) in actual fare for land transportation travel in public utility buses (PUBs), public utility
jeepneys (PUJs), taxis, Asian utility vehicles (AUVs), shuttle services and public
railways, including Light Rail Transit (LRT), Mass Rail Transit (MRT), and Philippine
National Railways (PNR);

“(6) in actual transportation fare for domestic air transport services and sea shipping
vessels and the like, based on the actual fare and advanced booking;

“(7) on the utilization of services in hotels and similar lodging establishments,

restaurants and recreation centers;

“(8) on admission fees charged by theaters, cinema houses and concert halls, circuses,
leisure and amusement; and

“(9) on funeral and burial services for the death of senior citizens;

“(b) exemption from the payment of individual income taxes of senior citizens who are
considered to be minimum wage earners in accordance with Republic Act No. 9504;

“(c) the grant of a minimum of five percent (5%) discount relative to the monthly
utilization of water and electricity supplied by the public utilities: Provided, That the
individual meters for the foregoing utilities are registered in the name of the senior
citizen residing therein: Provided, further, That the monthly consumption does not
exceed one hundred kilowatt hours (100 kWh) of electricity and thirty cubic meters (30
m3) of water: Provided, furthermore, That the privilege is granted per household
regardless of the number of senior citizens residing therein;

“(d) exemption from training fees for socioeconomic programs;

“(e) free medical and dental services, diagnostic and laboratory fees such as, but not
limited to, x-rays, computerized tomography scans and blood tests, in all government
facilities, subject to the guidelines to be issued by the DOH in coordination with the
PhilHealth;

“(f) the DOH shall administer free vaccination against the influenza virus and
pneumococcal disease for indigent senior citizen patients;

“(g) educational assistance to senior citizens to pursue pot secondary, tertiary, post
tertiary, vocational and technical education, as well as short-term courses for retooling
in both public and private schools through provision of scholarships, grants, financial
aids, subsides and other incentives to qualified senior citizens, including support for
books, learning materials, and uniform allowances, to the extent
feasible: Provided, That senior citizens shall meet minimum admission requirements;

“(h) to the extent practicable and feasible, the continuance of the same benefits and
privileges given by the Government Service Insurance System (GSIS), the Social
Security System (SSS) and the PAG-IBIG, as the case may be, as are enjoyed by those
in actual service;

“(i) retirement benefits of retirees from both the government and the private sector shall
be regularly reviewed to ensure their continuing responsiveness and sustainability, and
to the extent practicable and feasible, shall be upgraded to be at par with the current
scale enjoyed by those in actual service;

“(j) to the extent possible, the government may grant special discounts in special
programs for senior citizens on purchase of basic commodities, subject to the guidelines
to be issued for the purpose by the Department of Trade and Industry (DTI) and the
Department of Agriculture (DA);

“(k) provision of express lanes for senior citizens in all commercial and government
establishments; in the absence thereof, priority shall be given to them; and

“(l) death benefit assistance of a minimum of Two thousand pesos (Php2, 000.00) shall
be given to the nearest surviving relative of a deceased senior citizen which amount
shall be subject to adjustments due to inflation in accordance with the guidelines to be
issued by the DSWD.cralaw

“In the availment of the privileges mentioned above, the senior citizen, or his/her duly
authorized representative, may submit as proof of his/her entitled thereto any of the
following:

“(1) an identification card issued by the Office of the Senior Citizen Affairs (OSCA) of
the place where the senior citizen resides: Provided, That the identification card issued
by the particular OSCA shall be honored nationwide;

“(2) the passport of the senior citizen concerned; and

“(3) other documents that establish that the senior citizen is a citizen of the Republic
and is at least sixty (60) years of age as further provided in the implementing rules and
regulations.

“In the purchase of goods and services which are on promotional discount, the senior
citizen can avail of the promotional discount or the discount provided herein, whichever
is higher.cralaw

“The establishment may claim the discounts granted under subsections (a) and (c) of
this section as tax deduction based on the cost of the goods sold or services rendered:
Provided, That the cost of the discount shall be allowed as deduction from gross income
for the same taxable year that the discount is granted: Provided, further, That the total
amount of the claimed tax deduction net of VAT, if applicable, shall be included in their
gross sales receipts for tax purposes and shall be subject to proper documentation and
to the provisions of the National Internal Revenue Code (NICR), as amended.”
Sec. 5. Section 5 of the same Act, as amended, is hereby further amended to read as
follows:

“SEC. 5. Government Assistance. – The government shall provide the following:

“(a) Employment

“Senior citizens who have the capacity and desire to work, or be re-employed, shall be
provided information and matching services to enable them to be productive members
of society. Terms of employment shall conform with the provisions of the Labor Code,
as amended, and other laws, rules and regulations.

“Private entities that will employ senior citizens as employees, upon the effectivity of this
Act, shall be entitled to an additional deduction from their gross income, equivalent to
fifteen percent (15%) of the total amount paid as salaries and wages to senior citizens,
subject to the provision of Section 34 of the NIRC, as amended: Provided, however,
That such employment shall continue for a period of at least six (6) months: Provided,
further, That the annual income of the senior citizen does not exceed the latest poverty
threshold as determined by the National Statistical Coordination Board (NSCB) of the
National Economic and Development Authority (NEDA) for that year.

“The Department of Labor and Employment (DOLE), in coordination with other

government agencies such as, but not limited to, the Technology and Livelihood
Resource Center (TLRC) and the Department of Trade and Industry (DTI), shall assess,
design and implement training programs that will provide skills and welfare or livelihood
support for senior citizens.

“(b) Education

“The Department of Education (DepED), the Technical Education and Skills

Development Authority (TESDA) and the Commission on Higher Education (CHED), in
consultation with nongovernmental organizations (NGOs) and people’s organizations
(POs) for senior citizens, shall institute programs that will ensure access to formal and
nonformal education.

“(c) Health

“The DOH, in coordination with local government units (LGUs), NGOs and POs for
senior citizens, shall institute a national health program and shall provide an integrated
health service for senior citizens. It shall train community-based health workers among
senior citizens and health personnel to specialize in the geriatric care and health
problems of senior citizens.

“The national health program for senior citizens shall, among others, be harmonized
with the National Prevention of Blindness Program of the DOH.
“Throughout the country, there shall be established a “senior citizens’ ward” in every
government hospital. This geriatric ward shall be for the exclusive use of senior citizens
who are in need of hospital confinement by reason of their health conditions. However,
when urgency of public necessity purposes so require, such geriatric ward may be used
for emergency purposes, after which, such “senior citizens’ ward” shall be reverted to its
nature as geriatric ward.

“(d) Social Services

“At least fifty percent (50%) discount shall be granted on the consumption of electricity,
water, and telephone by the senior citizens center and residential care/group homes
that are government-run or non-stock, non-profit domestic corporation organized and
operated primarily for the purpose of promoting the well-being of abandoned, neglected,
unattached, or homeless senior citizens, subject to the guidelines formulated by the
DSWD.

“(1) “self and social enhancement services” which provide senior citizens opportunities
for socializing, organizing, creative expression, and self-improvement;

“(2) “after care and follow-up services” for citizens who are discharged from the homes
or institutions for the aged, especially those who have problems of reintegration with
family and community, wherein both the senior citizens and their families are provided
with counseling;

“(3) “neighborhood support services” wherein the community or family members provide
caregiving services to their frail, sick, or bedridden senior citizens; and

“(4) “substitute family care ” in the form of residential care or group homes for the
abandoned, neglected, unattached or homeless senior citizens and those incapable of
self-care.

“(e) Housing

“The national government shall include in its national shelter program the special
housing needs of senior citizens, such as establishment of housing units for the elderly.

“(f) Access to Public Transport

“The Department of Transportation and Communications (DOTC) shall develop a

program to assist senior citizens to fully gain access to public transport facilities.

“(g) Incentive for Foster Care

“The government shall provide incentives to individuals or nongovernmental institution

caring for or establishing homes, residential communities or retirement villages solely
for, senior citizens, as follows:
“(1) realty tax holiday for the first five (5) years starting from the first year of operation;
and

“(2) priority in the construction or maintenance of provincial or municipal roads leading

to the aforesaid home, residential community or retirement village.

“(h) Additional Government Assistance

“(1) Social Pension

“Indigent senior citizens shall be entitled to a monthly stipend amounting to Five

hundred pesos (Php500.00) to augment the daily subsistence and other medical needs
of senior citizens, subject to a review every two (2) years by Congress, in consultation
with the DSWD.

“(2) Mandatory PhilHealth Coverage

“All indigent senior citizens shall be covered by the national health insurance program of
PhilHealth. The LGUs where the indigent senior citizens resides shall allocate the
necessary funds to ensure the enrollment of their indigent senior citizens in accordance
with the pertinent laws and regulations.

“(3) Social Safety Nets

“Social safety assistance intended to cushion the effects of economics shocks, disasters
and calamities shall be available for senior citizens. The social safety assistance which
shall include, but not limited to, food, medicines, and financial assistance for domicile
repair, shall be sourced from the disaster/calamity funds of LGUs where the senior
citizens reside, subject to the guidelimes to be issued by the DSWD.”

Sec. 6. Section 6 of the same Act, as amended, is heeby further amended to read as
follows:

SEC. 6. The Office for Senior Citizens Affairs (OSCA). – There shall be established in
all cities and municipalities an OSCA to be headed by a senior citizen who shall be
appointed by the mayor for a term of three (3) years without reappointment but without
prejudice to an extension if exigency so requires. Said appointee shall be chosen from a
list of three (3) nominees as recommended by a general assembly of senior citizens
organizations in the city or municipality.

“The head of the OSCA shall be appointed to serve the interest of senior citizens and
shall not be removed or replaced except for reasons of death permanent disability or
ineffective performance of his duties to the detriment of fellow senior citizens.

“The head of the OSCA shall be entitled to receive an honorarium of an amount at least
equivalent to Salary Grade 10 to be approved by the LGU concerned.
“The head of the OSCA shall be assisted by the City Social Welfare and Development
officer or by the Municipal Social Welfare and Development Officer, in coordination with
the Social Welfare and Development Office.

“The Office of the Mayor shall exercise supervision over the OSCA relative to their
plans, activities and programs for senior citizens. The OSCA shall work together and
establish linkages with accredited NGOs Pos and the barangays in their respective
areas.

“The OSCA shall have the following functions:

“(a) To plan, implement and monitor yearly work programs in pursuance of the
objectives of this Act;

“(b) To draw up a list of available and required services which can be provided by the
senior citizens;

“(c) To maintain and regularly update on a quarterly basis the list of senior citizens and
to issue national individual identification cards, free of charge, which shall be valid
anywhere in the country;

“(d) To serve as a general information and liason center for senior citizens;

“(e) To monitor compliance of the provisions of this Act particularly the grant of special
discounts and privileges to senior citizens;

“(f) To report to the mayor, any individual, establishments, business entity, institutions or
agency found violating any provision of this Act; and

“(g) To assist the senior citizens in filing complaints or charges against any individual,
establishments, business entity, institution, or agency refusing to comply with the
privileges under this Act before the Department of Justice (DOJ), the Provincial
Prosecutor’s Office, the regional or the municipal trial court, the municipal trial court in
cities, or the municipal circuit trial court.”

Sec. 7. Section 10 of the same Act, as amended, is hereby further amended to read as
follows:

“SEC. 10. Penalties. – Any person who refuses to honor the senior citizen card issued
by this the government or violates any provision of this Act shall suffer the following
penalties:

“(a) For the first violation, imprisonment of not less than two (2) years but not more than
six (6) years and a fine of not less than Fifty thousand pesos (Php50,000.00) but not
exceeding One hundred thousand pesos (Php100,000.00);
“(b) For any subsequent violation, imprisonment of not less than two (2) years but not
more than six (6) years and a fine of not less than One Hundred thousand pesos
(Php100,000.00) but not exceeding Two hundred thousand pesos (Php200,000.00);
and

“(c) Any person who abuses the privileges granted herein0- shall be punished with
imprisonment of not less than six (6) months and a fine of not less than Fifty thousand
pesos (Php50,000.00) but not more than One hundred thousand pesos
(Php100,000.00).

“If the offender is a corporation, partnership, organization or any similar entity, the
officials thereof directly involved such as the president, general manager, managing
partner, or such other officer charged with the management of the business affairs shall
be liable therefor.

“If the offender is an alien or a foreigner, he/she shall be deported immediately after
service of sentence.

“Upon filing of an appropriate complaint, and after due notice and hearing, the proper
authorities may also cause the cancellation or revocation of the business permit, permit
to operate, franchise and other similar privileges granted to any person, establishment
or business entity that fails to abide by the provisions of this Act.”

Sec. 8. Section 11 of the same Act, as amended, is hereby further amended to read as
follows:

“SEC. 11. Monitoring and Coordinating Mechanism. – A National Coordinating and

Monitoring Board shall be established which shall be composed of the following:

“(a) Chairperson – the Secretary of the DSWD or an authorized representative;

“(b) Vice Chairperson – the Secretary of the Department of the Interior and Local
Government (DILG) or an authorized representative; and

“(c) Members:

“(1) the Secretary of the DOJ or an authorized representative;

“(2) the Secretary of the DOH or an authorized representative;

“(3) the Secretary of the DTI or an authorized representative; and

(4) representatives from five (5) NGOs for senior citizens which are duly accredited by
the DSWD and have service primarily for senior citizens. Representatives of NGOs shall
serve a period of tree (3) years.
“The Board may call on other government agencies, NGOs and Pos to serve as
resource persons as the need arises. Resource person have no right to vote in the
National Coordinating and Monitoring Board.”

Sec. 9. Implementing Rules and Regulations. – Within sixty (60) days from theeffectivity
of this Act, the Secretary of the DSWD shall formulate and adopt amendments to the
existing rules and regulations implementing Republic Act No. 7432, as amended by
Republic Act No. 9257, to carry out the objectives of this Act, in consultation with the
Department of Finance, the Department of Tourism, the Housing and Urban
Development Coordinating Council (HUDCC), the DOLE, the DOJ, the DILG, the DTI,
the DOH, the DOTC, the NEDA, the DepED, the TESDA, the CHED, and five (5) NGOs
or POs for the senior citizens duly accredited by the DSWD. The guidelines pursuant to
Section 4(a)(i) shall be established by the DOH within sixty (60) days upon the
effectivity of this Act.

Sec. 10. Appropriations. – The Necessary appropriations for the operation and

maintenance of the OSCA shall be appropriated and approved by the LGUs concerned.
For national government agencies, the requirements to implement the provisions of this
Act shall be included in their respective budgets: Provided, That the funds to be used for
the national health program and for the vaccination of senior citizens in the first year of
the DOH and thereafter, as a line item under the under the DOH budget in the
subsequent General Appropriations Act (GAA): Provided, further, That the monthly
social pension for indigent senior citizens in the first year of implementation shall be
added to the regular appropriations of the DSWD budget in the subsequent GAA.

Sec. 11. Repealing Clause. – All law, executive orders, rules and regulations or any part
hereof inconsistent herewith are deemed repealed or modified accordingly.

Sec. 12. Separability Clause. – If any part or provision of this Act shall be declared
unconstitutional and invalid, such 18 declaration shall not invalidate other parts thereof
which shall remain in full force and effect.

Sec. 13. Effectivity. – This Act shall take effect fifteen (15) days its complete publication
n the Official Gazette or in at least two (2) newspapers of general circulation, whichever
comes earlier.
REPUBLIC ACT NO. 8791             May 23, 2000

AN ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION AND OPERATIONS OF

BANKS, QUASI-BANKS, TRUST ENTITIES AND FOR OTHER PURPOSES

CHAPTER I
TITLE AND CLASSIFICATION OF BANKS

Section 1. Title. The short title of this Act shall be "The General Banking Law of 2000." (1a)

Section 2. Declaration Of Policy. - The State recognizes the vital role of banks providing an
environment conducive to the sustained development of the national economy and the fiduciary
nature of banking that requires high standards of integrity and performance. In furtherance thereof,
the State shall promote and maintain a stable and efficient banking and financial system that is
globally competitive, dynamic and responsive to the demands of a developing economy. (n)

Section 3. Definition and Classification of Banks. -

3.1. "Banks" shall refer to entities engaged in the lending of funds obtained in the form of deposits.
(2a)

3.2. Banks shall be classified into:

(a) Universal banks;

(b) Commercial banks;

(c) Thrift banks, composed of: (i) Savings and mortgage banks, (ii) Stock savings and loan
associations, and (iii) Private development banks, as defined in the Republic Act No. 7906
(hereafter the "Thrift Banks Act");

(d) Rural banks, as defined in Republic Act No. 73S3 (hereafter the "Rural Banks Act");

(e) Cooperative banks, as defined in Republic Act No 6938 (hereafter the "Cooperative
Code");

(f) Islamic banks as defined in Republic Act No. 6848, otherwise known as the "Charter of Al
Amanah Islamic Investment Bank of the Philippines"; and

(g) Other classifications of banks as determined by the Monetary Board of the Bangko
Sentral ng Pilipinas. (6-Aa)

CHAPTER II
AUTHORITY OF THE BANGKO SENTRAL

Section 4. Supervisory Powers. The operations and activities of banks shall be subject to

supervision of the Bangko Sentral. "Supervision" shall include the following:
4.1. The issuance of rules of, conduct or the establishment standards of operation for uniform
application to all institutions or functions covered, taking into consideration the distinctive character
of the operations of institutions and the substantive similarities of specific functions to which such
rules, modes or standards are to be applied;

4.2 The conduct of examination to determine compliance with laws and regulations if the
circumstances so warrant as determined by the Monetary Board;

4.3 Overseeing to ascertain that laws and regulations are complied with;

4.4 Regular investigation which shall not be oftener than once a year from the last date of
examination to determine whether an institution is conducting its business on a safe or sound basis:
Provided, That the deficiencies/irregularities found by or discovered by an audit shall be immediately
addressed;

4.5 Inquiring into the solvency and liquidity of the institution (2-D); or

4.6 Enforcing prompt corrective action. (n)

The Bangko Sentral shall also have supervision over the operations of and exercise regulatory
powers over quasi-banks, trust entities and other financial institutions which under special laws are
subject to Bangko Sentral supervision. (2-Ca)

For the purposes of this Act, "quasi-banks" shall refer to entities engaged in the borrowing of funds
through the issuance, endorsement or assignment with recourse or acceptance of deposit
substitutes as defined in Section 95 of Republic Act No. 7653 (hereafter the "New Central Bank Act")
for purposes of re-lending or purchasing of receivables and other obligations. (2-Da)

Section 5. Policy Direction; Ratios, Ceilings and Limitations. - The Bangko Sentral shall provide
policy direction in the areas of money, banking and credit. (n)

For this purpose, the Monetary Board may prescribe ratios, ceilings, limitations, or other forms of
regulation on the different types of accounts and practices of banks and quasi-banks which shall, to
the extent feasible, conform to internationally accepted standards, including of the Bank for
International Settlements (BIS). The Monetary Board may exempt particular categories of
transactions from such ratios, ceilings. and limitations, but not limited to exceptional cases or to
enable a bank or quasi-bank under rehabilitation or during a merger or consolidation to continue in
business, with safety to its creditors, depositors and the general public. (2-Ca)

Section 6. Authority to Engage in Banking and Quasi-Banking Functions. - No person or entity shall
engage in banking operations or quasi-banking functions without authority from the Bangko
Sentral: .Provided, however, That an entity authorized by the Bangko Sentral to perform universal or
commercial banking functions shall likewise have the authority to engage in quasi-banking functions.

The determination of whether a person or entity is performing banking or quasi-banking functions

without Bangko Sentral authority shall be decided by the Monetary Board. To resolve such issue, the
Monetary Board may; through the appropriate supervising and examining department of the Bangko
Sentral, examine, inspect or investigate the books and records of such person or entity. Upon
issuance of this authority, such person or entity may commence to engage in banking operations or
quasi-banking function and shall continue to do so unless such authority is sooner surrendered,
revoked, suspended or annulled by the Bangko Sentral in accordance with this Act or other special
laws.

The department head and the examiners of the appropriate supervising and examining department
are hereby authorized to administer oaths to any such person, employee, officer, or director of any
such entity and to compel the presentation or production of such books, documents, papers or
records that are reasonably necessary to ascertain the facts relative to the true functions and
operations of such person or entity. Failure or refusal to comply with the required presentation or
production of such books, documents, papers or records within a reasonable time shall subject the
persons responsible therefore to the penal sanctions provided under the New Central Bank Act.

Persons or entities found to be performing banking or quasi-banking functions without authority from
the Bangko Sentral shall be subject to appropriate sanctions under the New Central Bank Act and
other applicable laws. (4a)

Section 7. Examination by the Bangko Sentral. - The Bangko Sentral shall, when examining a bank,
have the authority to examine an enterprise which is wholly or majority-owned or controlled by the
bank. (2-Ba)

CHAPTER III
ORGANIZATION, MANAGEMENT AND ADMINISTRATION OF BANKS. QUASI-BANKS AND
TRUST ENTITIES

Section 8. Organization. - The Monetary Board may authorize the organization of a bank or quasi-
bank subject to the following conditions:

8.1 That the entity is a stock corporation (7);

8.2 That its funds are obtained from the public, which shall mean twenty (20) or more persons (2-
Da); and

8.3 That the minimum capital requirements prescribed by the Monetary Board for each category of
banks are satisfied. (n)

No new commercial bank shall be established within three (3) years from the effectivity of this Act. In
the exercise of the authority granted herein, the Monetary Board shall take into consideration their
capability in terms of their financial resources and technical expertise and integrity. The bank
licensing process shall incorporate an assessment of the bank's ownership structure, directors and
senior management, its operating plan and internal controls as well as its projected financial
condition and capital base.

Section 9. Issuance of Stocks. - The Monetary Board may prescribe rules and regulations on the
types of stock a bank may issue, including the terms thereof and rights appurtenant thereto to
determine compliance with laws and regulations governing capital and equity structure of banks;
Provided, That banks shall issue par value stocks only.

Section 10. Treasury Stocks. - No bank shall purchase or acquire shares of its own capital stock or
accept its own shares as a security for a loan, except when authorized by the Monetary Board:
Provided, That in every case the stock so purchased or acquired shall, within six (6) months from the
time of its purchase or acquisition, be sold or disposed of at a public or private sale. (24a)
Section 11. Foreign Stockholdings. - Foreign individuals and non-bank corporations may own or
control up to forty percent (40%) of the voting stock of a domestic bank. This rule shall apply to
Filipinos and domestic non-bank corporations. (12a; 12-Aa) The percentage of foreign-owned voting
stocks in a bank shall be determined by the citizenship of the individual stockholders in that bank.
The citizenship of the corporation which is a stockholder in a bank shall follow the citizenship of the
controlling stockholders of the corporation, irrespective of the place of incorporation. (n)

Section 12. Stockholdings of Family Groups of Related Interests. - Stockholdings of individuals

related to each other within the fourth degree of consanguinity or affinity, legitimate or common-law,
shall be considered family groups or related interests and must be fully disclosed in all transactions
by such corporations or related groups of persons with the bank. (12-Ba)

Section 13. Corporate Stockholdings. - Two or more corporations owned or controlled by the same
family group or same group of persons shall be considered related interests and must be fully
disclosed in all transactions by such corporations or related group of persons with the bank. (12-Ba)

Section 14. Certificate of Authority to Register. - The Securities and Exchange Commission shall no
register the articles of incorporation of any bank, or any amendment thereto, unless accompanied by
a certificate of authority issued by the Monetary Board, under it seal. Such certificate shall not be
issued unless the Monetary Board is satisfied from the evidence submitted to it:

14.1 That all requirements of existing laws and regulations to engage in the business for which the
applicant is proposed to be incorporated have been complied with;

14.2 That the public interest and economic conditions, both general and local, justify the
authorization; and

14.3 That the amount of capital, the financing, organization, direction and administration, as well as
the integrity and responsibility of the organizers and administrators reasonably assure the safety of
deposits and the public interest. (9)

The Securities and Exchange Commission shall not register the by-laws of any bank, or any
amendment thereto, unless accompanied by a certificate of authority from the Bangko Sentral. (10)

Section 15. Board of Directors. - The provisions of the Corporation Code to the contrary
notwithstanding, there shall be at least five (5), and a maximum of fifteen (15) members of the board
or directors of a bank, two (2) of whom shall be independent directors. An "independent director"
shall mean a person other than an officer or employee of the bank, its subsidiaries or affiliates or
related interests. (n) Non-Filipino citizens may become members of the board of directors of a bank
to the extent of the foreign participation in the equity of said bank. (Sec. 7, RA 7721) The meetings
of the board of directors may be conducted through modern technologies such as, but not limited to,
teleconferencing and video-conferencing. (n)

Section 16. Fit and Proper Rule. - To maintain the quality of bank management and afford better
protection to depositors and the public in general the Monetary Board shall prescribe, pass upon and
review the qualifications and disqualifications of individuals elected or appointed bank directors or
officers and disqualify those found unfit. After due notice to the board of directors of the bank, the
Monetary Board may disqualify, suspend or remove any bank director or officer who commits or
omits an act which render him unfit for the position. In determining whether an individual is fit and
proper to hold the position of a director or officer of a bank, regard shall be given to his integrity,
experience, education, training, and competence. (9-Aa)
Section 17. Directors of Merged or Consolidated Banks. - In the case of a bank merger or
consolidation, the number of directors shall not exceed twenty-one (21). (l3a)

Section 18. Compensation and Other Benefits of Directors and Officers. To protect the finds of
depositors and creditors the Monetary Board may regulate the payment by the bark to its directors
and officers of compensation, allowance, fees, bonuses, stock options, profit sharing and fringe
benefits only in exceptional cases and when the circumstances warrant, such as but not limited to
the following:

18.1. When a bank is under comptrollership or conservatorship; or

18.2. When a bank is found by the Monetary Board to be conducting business in an unsafe or
unsound manner; or

18.3. When a bank is found by the Monetary Board to be in an unsatisfactory financial condition. (n)

Section 19. Prohibition on Public Officials. - Except as otherwise provided in the Rural Banks Act,
no appointive or elective public official whether full-time or part-time shall at the same time serve as
officer of any private bank, save in cases where such service is incident to financial assistance
provided by the government or a government owned or controlled corporation to the bank or unless
otherwise provided under existing laws. (13)

Section 20. Bank Branches. - Universal or commercial banks may open branches or other offices
within or outside the Philippines upon prior approval of the Bangko Sentral. Branching by all other
banks shall be governed by pertinent laws.

A bank may, subject to prior approval of the Monetary Board, use any or all of its branches as outlets
for the presentation and/or sale of the financial products of its allied undertaking or of its investment
house units. A bank authorized to establish branches or other offices shall be responsible for all
business conducted in such branches and offices to the same extent and in the same manner as
though such business had all been conducted in the head office. A bank and its branches and
offices shall be treated as one unit. (6-B; 27)

Section 21. Banking Days and Hours. - Unless otherwise authorized by the Bangko Sentral in the
interest of the banking public, all banks including their branches and offices shall transact business
on all working days for at least six (6) hours a day. In addition, banks or any of their branches or
offices may open for business on Saturdays, Sundays or holidays for at least three (3) hours a day:
Provided, That banks which opt to open on days other than working days shall report to the Bangko
Sentral the additional days during which they or their branches or offices shall transact business. For
purposes of this Section, working days shall mean Mondays to Fridays, except if such days are
holidays. (6-Ca)

Section 22. Strikes and Lockouts. - The banking industry is hereby declared as indispensable to the
national interest and, notwithstanding the provisions of any law to the contrary, any strike or lockout
involving banks, if unsettled after seven (7) calendar days shall be reported by the Bangko Sentral to
the secretary of Labor who may assume jurisdiction over the dispute or decide it or certify the sane
to the National Labor Relations Commission for compulsory arbitration. However, the President of
the Philippines may at any time intervene and assume jurisdiction over such labor dispute in order to
settle or terminate the same. (6-E)
 CHAPTER IV
DEPOSITS. LOANS AND OTHER OPERATIONS

Article I
Operations Of Universal Banks

Section 23. Powers of a Universal Bank - A universal bank shall have the authority to exercise, in
addition to the powers authorized for a commercial bank in Section 29, the powers of an investment
house as provided in existing laws and the power to invest in non-allied enterprises as provided in
this Act. (21-B)

Section 24. Equity Investments of a Universal Bank. - A universal bank may, subject to the
conditions stated in the succeeding paragraph, invest in the equities of allied and non-allied
enterprises as may be determined by the Monetary Board. Allied enterprises may either be financial
or non-financial. Except as the Monetary Board may otherwise prescribe:

24.1. The total investment in equities of allied and non-allied enterprises shall not exceed fifty
percent (50%) of the net worth of the bank; and

24.2. The equity investment in any one enterprise, whether allied or non-allied, shall not exceed
twenty-five percent (25%) of the net worth of the bank.

As used in this Act, "net worth" shall mean the total of the unimpaired paid-in capital including paid-in
surplus, retained earnings and undivided profit, net of valuation reserves and other adjustments as
may be required by the Bangko Sentral.

The acquisition of such equity or equities is subject to the prior approval of the Monetary Board
which shall promulgate appropriate guidelines to govern such investments. (21-Ba)

Section 25. Equity Investments of a Universal Bank in Financial Allied Enterprises. - A universal

bank can own up to one hundred percent (100%) of the equity in a thrift bank, a rural bank or a
financial allied enterprise. A publicly-listed universal or commercial bank may own up to one hundred
percent (100%) of the voting stock of only one other universal or commercial bank. (21-B; 21-Ca)

Section 26. Equity Investments of a Universal Bank in Non-Financial Allied Enterprises. - A

universal bank may own up to one hundred percent (100%) of the equity in a non-financial allied
enterprise. (21-Ba)

Section 27. Equity Investments of a Universal Bank in Non-Allied Enterprises. - The equity

investment of a universal bank, or of its wholly or majority-owned subsidiaries, in a single non-allied
enterprise shall not exceed thirty-five percent (35%) of the total equity in that enterprise nor shall it
exceed thirty-five percent (35%) of the voting stock in that enterprise. (21-B)

Section 28. Equity Investments in Quasi-Banks. - To promote competitive conditions in financial

markets, the Monetary Board may further limit to forty percent (40%) equity investments of universal
banks in quasi-banks. This rule shall also apply in the case of commercial banks. (12-E) Article II.
Operations Of Commercial Banks

Section 29. Powers of a Commercial Bank. - A commercial bank shall have, in addition to the
general powers incident to corporations, all such powers as may be necessary to carry on the
business of commercial banking such as accepting drafts and issuing letters of credit; discounting
and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt; accepting
or creating demand deposits; receiving other types of deposits and deposit substitutes; buying and
selling foreign exchange and gold or silver bullion; acquiring marketable bonds and other debt
securities; and extending credit, subject to such rules as the Monetary Board may promulgate.
These rules may include the determination of bonds and other debt securities eligible for investment,
the maturities and aggregate amount of such investment.

Section 30. Equity Investments of a Commercial Bank. - A commercial bank may, subject to the
conditions stated in the succeeding paragraphs, invest only in the equities of allied enterprises as
may be determined by the Monetary Board. Allied enterprises may either be financial or non-
financial. Except as the Monetary Board may otherwise prescribe:

30.1. The total investment in equities of allied enterprises shall not exceed thirty-five percent (35%)
of the net worth of the bark; and

30.2. The equity investment in any one enterprise shall not exceed twenty-five percent (25%) of tile
net worth of the bank. The acquisition of such equity or equities is subject to the prior approval of the
Monetary Board which shall promulgate appropriate guidelines to govern such investment.(2lA-a;
21-Ca)

Section 31. Equity Investments of a Commercial Bank in Financial Allied Enterprises. - A

commercial bank may own up to one hundred percent (100%) of the equity of a thrift bank or a rural
bank. Where the equity investment of a commercial bank is in other financial allied enterprises,
including another commercial bank, such investment shall remain a minority holding in that
enterprise. (21-Aa; 21-Ca)

Section 32. Equity Investments of a Commercial Bank in Non-Financial Allied Enterprises. A

commercial bank may own up to one hundred percent (100%) of the equity in a non-financial allied
enterprise. (21-Aa) Article III. Provisions Applicable To All Banks, Quasi-Banks, And Trust Entities

Section 33. Acceptance of Demand Deposits. - A bank other than a universal or commercial bank
cannot accept or create demand deposits except upon prior approval of, and subject to such
conditions and rules as may be prescribed by the Monetary Board. (72-Aa)

Section 34. Risk-Based Capital. - The Monetary Board shall prescribe the minimum ratio which the
net worth of a bank must bear to its total risk assets which may include contingent accounts. For
purposes of this Section, the Monetary Board may require such ratio be determined on the basis of
the net worth and risk assets of a bank and its subsidiaries, financial or otherwise, as well as
prescribe the composition and the manner of determining the net worth and total risk assets of banks
and their subsidiaries: Provided, That in the exercise of this authority, the Monetary Board shall, to
the extent feasible conform to internationally accepted standards, including those of the Bank for
International Settlements(BIS), relating to risk-based capital requirements: Provided further, That it
may alter or suspend compliance with such ratio whenever necessary for a maximum period of one
(1) year: Provided, finally, That such ratio shall be applied uniformly to banks of the same category.
In case a bank does not comply with the prescribed minimum ratio, the Monetary Board may limit or
prohibit the distribution of net profits by such bank and may require that part or all of the net profits
be used to increase the capital accounts of the bank until the minimum requirement has been met
The Monetary Board may, furthermore, restrict or prohibit the acquisition of major assets and the
making of new investments by the bank, with the exception of purchases of readily marketable
evidences of indebtedness of the Republic of the Philippines and of the Bangko Sentral and any
other evidences of indebtedness or obligations the servicing and repayment of which are fully
guaranteed by the Republic of the Philippines, until the minimum required capital ratio has been
restored. In case of a bank merger or consolidation, or when a bank is under rehabilitation under a
program approved by the Bangko Sentral, Monetary Board may temporarily relieve the surviving
bank, consolidated bank, or constituent bank or corporations under rehabilitation from full
compliance with the required capital ratio under such conditions as it may prescribe. Before the
effectivity of rules which the Monetary Board is authorized to prescribe under this provision, Section
22 of the General Banking Act, as amended, Section 9 of the Thrift Banks Act, and all pertinent rules
issued pursuant thereto, shall continue to be in force. (22a)

Section 35. Limit on Loans, Credit Accommodations and Guarantees

35.1 Except as the Monetary Board may otherwise prescribe for reasons of national interest, the
total amount of loans, credit accommodations and guarantees as may be defined by the Monetary
Board that may be extended by a bank to any person, partnership, association, corporation or other
entity shall at no time exceed twenty percent (20%) of the net worth of such bank. The basis for
determining compliance with single borrower limit is the total credit commitment of the bank to the
borrower.

35.2. Unless the Monetary Board prescribes otherwise, the total amount of loans, credit
accommodations and guarantees prescribed in the preceding paragraph may be increased by an
additional ten percent (10%) of the net worth of such bank provided the additional liabilities of any
borrower are adequately secured by trust receipts, shipping documents, warehouse receipts or other
similar documents transferring or securing title covering readily marketable, non-perishable goods
which must be fully covered by insurance.

35.3 The above prescribed ceilings shall include (a) the direct liability of the maker or acceptor of
paper discounted with or sold to such bank and the liability of a general endorser, drawer or
guarantor who obtains a loan or other credit accommodation from or discounts paper with or sells
papers to such bank; (b) in the case of an individual who owns or controls a majority interest in a
corporation, partnership, association or any other entity, the liabilities of said entities to such bank;
(c) in the case of a corporation, all liabilities to such bank of all subsidiaries in which such
corporation owns or controls a majority interest; and (d) in the case of a partnership, association or
other entity, the liabilities of the members thereof to such bank.

35.4. Even if a parent corporation, partnership, association, entity or an individual who owns or
controls a majority interest in such entities has no liability to the bank, the Monetary Board may
prescribe the combination of the liabilities of subsidiary corporations or members of the partnership,
association, entity or such individual under certain circumstances, including but not limited to any of
the following situations: (a) the parent corporation, partnership, association, entity or individual
guarantees the repayment of the liabilities; (b) the liabilities were incurred for the accommodation of
the parent corporation or another subsidiary or of the partnership or association or entity or such
individual; or (c) the subsidiaries though separate entities operate merely as departments or
divisions of a single entity.

35.5. For purposes of this Section, loans, other credit accommodations and guarantees shall
exclude: (a) loans and other credit accommodations secured by obligations of the Bangko Sentral or
of the Philippine Government: (b) loans and other credit accommodations fully guaranteed by the
government as to the payment of principal and interest; (c) loans and other credit accommodations
covered by assignment of deposits maintained in the lending bank and held in the Philippines; (d)
loans, credit accommodations and acceptances under letters of credit to the extent covered by
margin deposits; and (e) other loans or credit accommodations which the Monetary Board may from
time to time, specify as non-risk items.
35.6. Loans and other credit accommodations, deposits maintained with, and usual guarantees by a
bank to any other bank or non-bank entity, whether locally or abroad, shall be subject to the limits as
herein prescribed.

35.7. Certain types of contingent accounts of borrowers may be included among those subject to
these prescribed limits as may be determined by the Monetary Board.(23a)

Section 36. Restriction on Bank Exposure to Directors, Officers, Stockholders and Their Related
Interests. - No director or officer of any bank shall, directly or indirectly, for himself or as the
representative or agent of others, borrow from such bank nor shall he become a guarantor, endorser
or surety for loans from such bank to others, or in any manner be an obligor or incur any contractual
liability to the bank except with the written approval of the majority of all the directors of the bank,
excluding the director concerned: Provided, That such written approval shall not be required for
loans, other credit accommodations and advances granted to officers under a fringe benefit plan
approved by the Bangko Sentral. The required approval shall be entered upon the records of the
bank and a copy of such entry shall be transmitted forthwith to the appropriate supervising and
examining department of the Bangko Sentral. Dealings of a bank with any of its directors, officers or
stockholders and their related interests shall be upon terms not less favorable to the bank than those
offered to others. After due notice to the board of directors of the bank, the office of any bank
director or officer who violates the provisions of this Section may be declared vacant and the director
or officer shall be subject to the penal provisions of the New Central Bank Act. The Monetary Board
may regulate the amount of loans, credit accommodations and guarantees that may be extended,
directly or indirectly, by a bank to its directors, officers, stockholders and their related interests, as
well as investments of such bank in enterprises owned or controlled by said directors, officers,
stockholders and their related interests. However, the outstanding loans, credit accommodations and
guarantees which a bank may extend to each of its stockholders, directors, or officers and their
related interests, shall be limited to an amount equivalent to their respective unencumbered deposits
and book value of their paid-in capital contribution in the bank: Provided, however, That loans, credit
accommodations and guarantees secured by assets considered as non-risk by the Monetary Board
shall be excluded from such limit: Provided, further, That loans, credit accommodations and
advances to officers in the form of fringe benefits granted in accordance with rules as may be
prescribed by the Monetary Board shall not be subject to the individual limit. The Monetary Board
shall define the term "related interests." The limit on loans, credit accommodations and guarantees
prescribed herein shall not apply to loans, credit accommodations and guarantees extended by a
cooperative bank to its cooperative shareholders. (83a)

Section 37. Loans and Other Credit Accommodations Against Real Estate. - Except as the
Monetary Board may otherwise prescribe, loans and other credit accommodations against real
estate shall not exceed seventy-five percent (75%) of the appraised value of the respective real
estate security, plus sixty percent (60%) of the appraised value of the insured improvements, and
such loans may be made to the owner of the real estate or to his assignees. (78a)

Section 38. Loans And Other Credit Accommodations on Security of Chattels and Intangible
Properties. - Except as the Monetary Board may otherwise prescribe, loans and other credit
accommodations on security of chattels and intangible properties such as, but not limited to, patents,
trademarks, trade names, and copyrights shall not exceed seventy-five percent (75%) of the
appraised value of the security, an such loans and other credit accommodation may be made to the
title-holder of the chattels and intangible properties or his assignees. (78a)

Section 39. Grant and Purpose of Loans and Other Credit Accommodations. - A bank shall grant
loans and other credit accommodations only in amounts and for the periods of time essential for the
effective completion of the operations to be financed. Such grant of loans and other credit
accommodations shall be consistent with safe and sound banking practices. (75a) The purpose of all
loans and other credit accommodations shall be stated in the application and in the contract between
the bank and the borrower. If the bank finds that the proceeds of the loan or other credit
accommodation have been employed, without its approval, for purposes other than those agreed
upon with the bank, it shall have the right to terminate the loan or other credit accommodation and
demand immediate repayment of the obligation. (77)

Section 40. Requirement for Grant Of Loans or 0ther Credit Accommodations. - Before granting a
loan or other credit accommodation, a bank must ascertain that the debtor is capable of fulfilling his
commitments to the bank. Toward this end, a bank may demand from its credit applicants a
statement of their assets and liabilities and of their income and expenditures and such information as
may be prescribed by law or by rules and regulations of the Monetary Board to enable the bank to
properly evaluate the credit application which includes the corresponding financial statements
submitted for taxation purposes to the Bureau of Internal Revenue. Should such statements prove to
be false or incorrect in any material detail, the bank may terminate any loan or other credit
accommodation granted on the basis of said statements and shall have the right to demand
immediate repayment or liquidation of the obligation. In formulating rules and regulations under this
Section, the Monetary Board shall recognize the peculiar characteristics of micro financing, such as
cash flow-based lending to the basic sectors that are not covered by traditional collateral. (76a)

Section 41. Unsecured Loans or Other Credit Accommodations. - The Monetary Board is hereby
authorized to issue such regulations as it may deem necessary with respect to unsecured loans or
other credit accommodations that may be granted by banks. (n)

Section 42. Other Security Requirements for Bank Credits. - The Monetary Board may, by
regulation, prescribe further security requirements to which the various types of bank credits shall be
subject, and, in accordance with the authority granted to it in Section 106 of the New Central Bank
Act, the Board may by regulation, reduce the maximum ratios established in Sections 36 and 37 of
this Act, or, in special cases, increase the maximum ratios established therein. (78)

Section 43. Authority to Prescribe Terms and Conditions of Loans and Other Credit
Accommodations. - The Monetary Board, may, similarly in accordance with the authority granted to it
in Section 106 of the New Central Bank Act, and taking into account the requirements of the
economy for the effective utilization of long-term funds, prescribe the maturities, as well as related
terms and conditions for various types of bank loans and other credit accommodations. Any change
by the Board in the maximum maturities, as well as related terms and conditions for various types of
bank loans and other credit accommodations. Any change by the Board in the maximum maturities
shall apply only to loans and other credit accommodations made after the date of such action. The
Monetary Board shall regulate the interest imposed on micro finance borrowers by lending investors
and similar lenders such as, but not limited to, the unconscionable rates of interest collected on
salary loans and similar credit accommodations. (78a)

Section 44. Amortization on Loans and Other Credit Accommodations. - The amortization schedule
of bank loans and other credit accommodations shall be adapted to the nature of the operations to
be financed. In case of loans and other credit accommodations with maturities of more than five (5)
years, provisions must be made for periodic amortization payments, but such payments must be
made at least annually: Provided, however, That when the borrowed funds are to be used for
purposes which do not initially produce revenues adequate for regular amortization payments
therefrom, the bank may permit the initial amortization payment to be deferred until such time as
said revenues are sufficient for such purpose, but in no case shall the initial amortization date be
later than five (5) years from the date on which the loan or other credit accommodation is granted.
(79a) In case of loans and other credit accommodations to micro finance sectors, the schedule of
loan amortization shall take into consideration the projected cash flow of the borrower and adopt this
into the terms and conditions formulated by banks. (n)

Section 45. Prepayment of Loans and Other Credit Accommodations. - A borrower may at any time
prior to the agreed maturity date prepay, in whole or in part, the unpaid balance of any bank loan
and other credit accommodation, subject to such reasonable terms and conditions as may be agreed
upon between the bank and its borrower. (80a)

Section 46. Development Assistance Incentives. - The Bangko Sentral shall provide incentives to
banks which, without government guarantee, extend loans to finance educational institutions
cooperatives, hospitals and other medical services, socialized or low-cost housing, local government
units and other activities with social content. (n)

Section 47. Foreclosure of Real Estate Mortgage. - In the event of foreclosure, whether judicially or
extra-judicially, of any mortgage on real estate which is security for any loan or other credit
accommodation granted, the mortgagor or debtor whose real property has been sold for the full or
partial payment of his obligation shall have the right within one year after the sale of the real estate,
to redeem the property by paying the amount due under the mortgage deed, with interest thereon at
rate specified in the mortgage, and all the costs and expenses incurred by the bank or institution
from the sale and custody of said property less the income derived therefrom. However, the
purchaser at the auction sale concerned whether in a judicial or extra-judicial foreclosure shall have
the right to enter upon and take possession of such property immediately after the date of the
confirmation of the auction sale and administer the same in accordance with law. Any petition in
court to enjoin or restrain the conduct of foreclosure proceedings instituted pursuant to this provision
shall be given due course only upon the filing by the petitioner of a bond in an amount fixed by the
court conditioned that he will pay all the damages which the bank may suffer by the enjoining or the
restraint of the foreclosure proceeding. Notwithstanding Act 3135, juridical persons whose property
is being sold pursuant to an extrajudicial foreclosure, shall have the right to redeem the property in
accordance with this provision until, but not after, the registration of the certificate of foreclosure sale
with the applicable Register of Deeds which in no case shall be more than three (3) months after
foreclosure, whichever is earlier. Owners of property that has been sold in a foreclosure sale prior to
the effectivity of this Act shall retain their redemption rights until their expiration. (78a)

Section 48. Renewal or Extension of Loans and Other Credit Accommodations. - The Monetary
Board may, by regulation, prescribe the conditions and limitations under which a bank may grant
extensions or renewals of its loans and other credit accommodations. (81)

Section 49. Provisions for Losses and Write-Offs. - All debts due to any bank on which interest is
past due and unpaid for such period as may be determined by the Monetary Board, unless the same
are welt-secured and in the process of collection shall be considered bad debts within the meaning
of this Section. The Monetary Board may fix, by regulation or by order in a specific case, the amount
of reserves for bad debts or doubtful accounts or other contingencies. Writing off of loans, other
credit accommodations, advances and other assets shall be subject to regulations issued by the
Monetary Board. (84a)

Section 50. Major Investments. - For the purpose or enhancing bank supervision, the Monetary
Board shall establish criteria for reviewing major acquisitions of investments by a bank including
corporate affiliations or structures that may expose the bank to undue risks or in any way hinder
effective supervision.

Section 51. Ceiling on Investments in Certain Assets. - Any bank may acquire real estate as shall
be necessary for its own use in the conduct of its business: Provided, however, That the total
investment in such real estate and improvements thereof including bank equipment, shall not exceed
fifty percent (50%) of combined capital accounts: Provided, further, That the equity investment of a
bank in another corporation engaged primarily in real estate shall be considered as part of the bank's
total investment in real estate, unless otherwise provided by the Monetary Board. (25a)

Section 52. Acquisition of Real Estate by Way of Satisfaction of Claims. - Notwithstanding the

limitations of the preceding Section, a bank may acquire, hold or convey real property under the
following circumstances:

52.1. Such as shall be mortgaged to it in good faith by way of security for debts;

52.2. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of
its dealings, or

52.3. Such as it shall purchase at sales under judgments, decrees, mortgages, or trust deeds held
by it and such as it shall purchase to secure debts due it.

Any real property acquired or held under the circumstances enumerated in the above paragraph
shall be disposed of by the bank within a period of five (5) years or as may be prescribed by the
Monetary Board: Provided, however, That the bank may, after said period, continue to hold the
property for its own use, subject to the limitations of the preceding Section. (25a)

Section 53. Other Banking Services. - In addition to the operations specifically authorized in this Act,
a bank may perform the following services:

53.1. Receive in custody funds, documents and valuable objects;

53.2. Act as financial agent and buy and sell, by order of and for the account of their customers,
shares, evidences of indebtedness and all types of securities;

53.3. Make collections and payments for the account of others and perform such other services for
their customers as are not incompatible with banking business;

53.4 Upon prior approval of the Monetary Board, act as managing agent, adviser, consultant or
administrator of investment management/advisory/consultancy accounts; and

53.5. Rent out safety deposit boxes.

The bank shall perform the services permitted under Subsections 53.1, 53.2,53.3 and 53.4 as
depositary or as an agent. Accordingly, it shall keep the funds, securities and other effects which it
receives duly separate from the bank's own assets and liabilities: The Monetary Board may regulate
the operations authorized by this Section in order to ensure that such operations do not endanger
the interests of the depositors and other creditors of the bank. In case a bank or quasi-bark notifies
the Bangko Sentral or publicly announces a bank holiday, or in any manner suspends the payment
of its deposit liabilities continuously for more than thirty (30) days, the Monetary Board may
summarily and without need for prior hearing close such banking institution and place it under
receivership of the Philippine Deposit Insurance Corporation. (72a)

Section 54. Prohibition to Act as Insurer. - A bank shall not directly engage in insurance business as
the insurer. (73)
Section 55. Prohibited Transactions.

55.1. No director, officer, employee, or agent of any bank shall -

(a) Make false entries in any bank report or statement or participate in any fraudulent
transaction, thereby affecting the financial interest of, or causing damage to, the bank or any
person;

(b) Without order of a court of competent jurisdiction, disclose to any unauthorized person
any information relative to the funds or properties in the custody of the bank belonging to
private individuals, corporations, or any other entity: Provided, That with respect to bank
deposits, the provisions of existing laws shall prevail;

(c) Accept gifts, fees, or commissions or any other form of remuneration in connection with
the approval of a loan or other credit accommodation from said bank;

(d) Overvalue or aid in overvaluing any security for the purpose of influencing in any way the
actions of the bank or any bank; or

(e) Outsource inherent banking functions.

55.2. No borrower of a bank shall -

(a) Fraudulently overvalue property offered as security for a loan or other credit
accommodation from the bank;

(b) Furnish false or make misrepresentation or suppression of material facts for the purpose
of obtaining, renewing, or increasing a loan or other credit accommodation or extending the
period thereof;

(c) Attempt to defraud the said bank in the event of a court action to recover a loan or other
credit accommodation; or

(d) Offer any director, officer, employee or agent of a bank any gift, fee, commission, or any
other form of compensation in order to influence such persons into approving a loan or other
credit accommodation application.

55.3 No examiner, officer or employee of the Bangko Sentral or of any department, bureau, office,
branch or agency of the Government that is assigned to supervise, examine, assist or render
technical assistance to any bank shall commit any of the acts enumerated in this Section or aid in
the commission of the same. (87-Aa)

The making of false reports or misrepresentation or suppression of material facts by personnel of the
Bangko Sental ng Pilipinas shall be subject to the administrative and criminal sanctions provided
under the New Central Bank Act.

55.4. Consistent with the provisions of Republic Act No. 1405, otherwise known as the Banks
Secrecy Law, no bank shall employ casual or non regular personnel or too lengthy probationary
personnel in the conduct of its business involving bank deposits.
Section 56. Conducting Business in an Unsafe or Unsound Manner - In determining whether a
particular act or omission, which is not otherwise prohibited by any law, rule or regulation affecting
banks, quasi-banks or trust entities, may be deemed as conducting business in an unsafe or
unsound manner for purposes of this Section, the Monetary Board shall consider any of the following
circumstances:

56.1 The act or omission has resulted or may result in material loss or damage, or abnormal risk or
danger to the safety, stability, liquidity or solvency of the institution;

56.2 The act or omission has resulted or may result in material loss or damage or abnormal risk to
the institution's depositors, creditors, investors, stockholders or to the Bangko Sentral or to the public
in general;

56.3 The act or omission has caused any undue injury, or has given any unwarranted benefits,
advantage or preference to the bank or any party in the discharge by the director or officer of his
duties and responsibilities through manifest partiality, evident bad faith or gross inexcusable
negligence; or

56.4 The act or omission involves entering into any contract or transaction manifestly and grossly
disadvantageous to the bank, quasi-bank or trust entity, whether or not the director or officer profited
or will profit thereby.

Whenever a bank, quasi-bank or trust entity persists in conducting its business in an unsafe or
unsound manner, the Monetary Board may, without prejudice to the administrative sanctions
provided in Section 37 of the New Central Bank Act, take action under Section 30 of the same Act
and/or immediately exclude the erring bank from clearing, the provisions of law to the contrary
notwithstanding. (n)

Section 57. Prohibition on Dividend Declaration. - No bank or quasi-bank shall declare dividends, if

at the time of declaration:

57.1 Its clearing account with the Bangko Sentral is overdrawn; or

57.2 It is deficient in the required liquidity floor for government deposits for five (5) or more
consecutive days, or

57.3 It does not comply with the liquidity standards/ratios prescribed by the Bangko Sentral for
purposes of determining funds available for dividend declaration; or

57.4 It has committed a major violation as may be determined by the Bangko Sentral (84a)

Section 58. Independent Auditor. - The Monetary Board may require a bank, quasi-bank or trust
entity to engage the services of an independent auditor to be chosen by the bank, quasi-bank or
trust entity concerned from a list of certified public accountants acceptable to the Monetary Board.
The term of the engagement shall be as prescribed by the Monetary Board which may either be on a
continuing basis where the auditor shall act as resident examiner, or on the basis of special
engagements; but in any case, the independent auditor shall be responsible to the bank's, quasi-
bank's or trust entity's board of directors. A copy of the report shall be furnished to the Monetary
Board. The Monetary Board may also direct the board of directors of a bank, quasi-bank, trusty
entity and/or the individual members thereof; to conduct, either personally or by a committee created
by the board, an annual balance sheet audit of the bank, quasi-bank or trust entity to review the
internal audit and control system of the bank, quasi-bank or trust entity and to submit a report of
such audit. (6-Da)

Section 59. Authority to Regulate Electronic Transactions. - The Bangko Sentral shall have full
authority to regulate the use of electronic devices, such as computers, and processes for recording,
storing and transmitting information or data in connection with the operations of a bank; quasi-bank
or trust entity, including the delivery of services and products to customers by such entity. (n)

Section 60. Financial Statements. - Every bank, quasi-bank or trust entity shall submit to the
appropriate supervising and examining department of the Bangko Sentral financial statements in
such form and frequency as may be prescribed by the Bangko Sentral. Such statements, which shall
be as of a specific date designated by the Bangko Sentral, shall show thee actual financial condition
of the institution submitting the statement, and of its branches, offices, subsidiaries and affiliates,
including the results of its operations, and shall contain such information as may be required in
Bangko Sentral regulations. (n)

Section 61. Publication of Financial Statements. - Every bank, quasi-bank or trust entity, shall
publish a statement of its financial condition, including those of its subsidiaries and affiliates, in such
terms understandable to the layman and in such frequency as may be prescribed Bangko Sentral, in
English or Filipino, at least once every quarter in a newspaper of general circulation in the city or
province where the principal office, in the case of a domestic institution or the principal branch or
office in the case of a foreign bank, is located, but if no newspaper is published in the same
province, then in a newspaper published in Metro Manila or in the nearest city or province. The
Bangko Sentral may by regulation prescribe the newspaper where the statements prescribed herein
shall be published. The Monetary Board may allow the posting of the financial statements of a bank,
quasi-bank or trust entity in public places it may determine, lieu of the publication required in the
preceding paragraph, when warranted by the circumstances. Additionally, banks shall make
available to the public in such form and manner as the Bangko Sentral may prescribe the complete
set of its audited financial statements as well as such other relevant information including those on
enterprises majority-owned or controlled by the bank, that will inform the public of the true financial
condition of a bank as of any given time. In periods of national and/or local emergency or of
imminent panic which directly threaten monetary and banking stability, the Monetary Board, by a
vote of at least five (5) of its members, in special cases and upon application of the bank, quasi-bank
or trust entity, may allow such bank, quasi-bank or trust entity to defer for a stated period of time the
publication of the statement of financial condition required herein. (n)

Section 62. Publication of Capital Stock. - A bank, quasi-bank or trust entity incorporated under the
laws of the Philippines shall not publish the amount of its authorized or subscribed capital stock
without indicating at the same time and with equal prominence, the amount of its capital actually paid
up. No branch of any foreign bank doing business in the Philippines shall in any way announce the
amount of the capital and surplus of its head office, or of the bank in its entirety without indicating at
the same time and with equal prominence the amount of the capital, if any, definitely assigned to
such branch, such fact shall be stated in, and shall form part of the publication. (82)

Section 63. Settlement of Disputes. - The provisions of any law to the contrary notwithstanding, the
Bangko Sentral shall be consulted by other government agencies or instrumentalities in actions or
proceedings initiated by or brought before them involving controversies in banks, quasi-banks or
trust entities arising out of and involving relations between and among their directors, officers or
stockholders, as well as disputes between any or all of them and the bank, quasi-bank or trust entity
of which they are directors, officers or stockholders. (n)
Section 64. Unauthorized Advertisement or Business Representation. - No person, association, or
corporation unless duly authorized to engage in the business of a bank, quasi-bank, trust entity, or
savings and loan association as defined in this Act, or other banking laws, shall advertise or hold
itself out as being engaged in the business of such bank, quasi-bank, trust entity, or association, or
use in connection with its business title, the word or words "bank", "banking", "banker", "quasi-bank",
"quasi-banking", "quasi-banker", "savings and loan association", "trust corporation", "trust company"
or words of similar import or transact in any manner the business of any such bank, corporation or
association. (6)

Section 65. Service Fees. - The Bangko Sentral may charge equitable rates, commissions or fees,
as may be prescribed by the Monetary Board for supervision, examination and other services which
it renders under this Act. (n)

Section 66. Penalty for Violation of this Act. - Unless otherwise herein provided, the violation of any
of the provisions of this Act shall be subject to Sections 34, 35, 36 and 37 of the New Central Bank
Act. If the offender is a director or officer of a bank, quasi-bank or trust entity, the Monetary Board
may also suspend or remove such director or officer. If the violation is committed by a corporation,
such corporation may be dissolved by quo warranto proceedings instituted by the Solicitor General.
(87)

CHAPTER V
PLACEMENT UNDER CONSERVATORSHIP

Section 67. Conservatorship. - The grounds and procedures for placing a bank under
conservatorship, as well as, the powers and duties of the conservator appointed for the bank shall
be governed by the provisions of Section 29 and the last two paragraphs of Section 30 of the New
Central Bank Act: Provided, That this Section shall also apply to conservatorship proceedings of
quasi-banks. (n)

CHAPTER VI
CESSATION OF BANKING BUSINESS

Section 68. Voluntary Liquidation. - In case of voluntary liquidation of any bank organized under the
laws of the Philippines, or of any branch or office in the Philippines of a foreign bank, written notice
of such liquidation shall be sent to the Monetary Board before such liquidation shall be sent to the
Monetary Board before such liquidation is undertaken, and the Monetary Board shall have the right
to intervene and take such steps as may be necessary to protect the interests of creditors. (86)

Section 69. Receivership and Involuntary Liquidation. - The grounds and procedures for placing a
bank under receivership or liquidation, as well as the powers and duties of the receiver or liquidator
appointed for the bank shall be governed by the provisions of Sections 30, 31, 32, and 33 of the New
Central Bank Act: Provided, That the petitioner or plaintiff files with the clerk or judge of the court in
which the action is pending a bond, executed in favor of the Bangko Sentral, in an amount to be
fixed by the court. This Section shall also apply to the extent possible to the receivership and
liquidation proceedings of quasi-banks. (n)

Section 70. Penalty for Transactions After a Bank Becomes Insolvent. - Any director or officer of any
bank declared insolvent or placed under receivership by the Monetary Board who refuses to turn
over the bank's records and assets to the designated receivers, or who tampers with banks records,
or who appropriates for himself for another party or destroys or causes the misappropriation and
destruction of the bank's assets, or who receives or permits or causes to be received in said bank
any deposit, collection of loans and/or receivables, or who pays out or permits or causes to be
transferred any securities or property of said bank shall be subject to the penal provisions of the New
Central Bank Act. (85a)

CHAPTER VII
LAWS GOVERNING OTHER TYPES OF BANKS

Section 71. Other Banking Laws. - The organization, the ownership and capital requirements,
powers, supervision and general conduct of business of thrift banks, rural banks and cooperative
banks shall be governed by the provisions of the Thrift Banks Act, the Rural Banks Act, and the
Cooperative Code, respectively. The organization, ownership and capital requirements, powers,
supervision and general conduct of business of Islamic banks shall be governed by special laws.
The provisions of this Act, however, insofar as they are not in conflict with the provisions of the Thrift
Banks Act, the Rural Banks Act, and the Cooperative Code shall likewise apply to thrift banks, rural
banks, and cooperative banks, respectively. However, for purposes of prescribing the minimum ratio
which the net worth of a thrift bank must bear to its total risk assets, the provisions of Section 33 of
this Act shall govern. (n)

CHAPTER VIII
FOREIGN BANKS

Section 72. Transacting Business in the Philippines. - The entry of foreign banks in the Philippines
through the establishment of branches shall be governed by the provisions of the Foreign Banks
Liberalization Act. The conduct of offshore banking business in the Philippines shall be governed by
the provisions of the Presidential Decree No. 1034, otherwise known as the "Offshore Banking
System Decree." (14a)

Section 73. Acquisition of Voting Stock in a Domestic Bank. - Within seven (7) years from the
effectivity of this act and subject to guidelines issued pursuant to the Foreign Banks Liberalization
Act, the Monetary Board may authorize a foreign bank to acquire up to one hundred percent (100%)
of the voting stock of only one (1) bank organized under the laws of the Republic of the Philippines.
Within the same period, the Monetary Board may authorize any foreign bank, which prior to the
effectivity of this Act availed itself of the privilege to acquire up to sixty percent (60%) of the voting
stock of a bank under the Foreign Banks Liberalization Act and the Thrift Banks Act, to further
acquire voting shares such bank to the extent necessary for it to own one hundred percent (100%) of
the voting stock thereof. In the exercise of the authority, the Monetary Board shall adopt measures
as may be necessary to ensure that at all times the control of seventy percent (70%) of the
resources or assets of the entire banking system is held by banks which are at least majority-owned
by Filipinos. Any right, privilege or incentive granted to a foreign bank under this Section shall be
equally enjoyed by and extended under the same conditions to banks organized under the laws of
the Republic of the Philippines. (Secs. 2 and 3, RA 7721

Section 74. Local Branches of Foreign Banks. - In the case of a foreign bank which has more than
one (1) branch in the Philippines, all such branches shall be treated as one (1) unit for the purpose
of this Act, and all references to the Philippine branches of foreign banks shall be held to refer to
such units. (68)

Section 75. Head Office Guarantee. - In order to provide effective protection of the interests of the
depositors and other creditors of Philippine branches of a foreign bank, the head office of such
branches shall fully guarantee the prompt payment of all liabilities of its Philippine branch. (69)
Residents and citizens of the Philippines who are creditors of a branch in the Philippines of a foreign
bank shall have preferential rights to the assets of such branch in accordance with the existing laws.
(19)
Section 76. Summons and Legal Process. - Summons and legal process served upon the Philippine
agent or head of any foreign bank designated to accept service thereof shall give jurisdiction to the
courts over such bank, and service of notices on such agent or head shall be as binding upon the
bank which he represents as if made upon the bank itself. Should the authority of such agent or
head to accept service of summons and legal processes for the bank or notice to it be revoked, or
should such agent or head become mentally incompetent or otherwise unable to accept service
while exercising such authority, it shall be the duty of the bank to name and designate promptly
another agent or head upon whom service of summons and processes in legal proceedings against
the bank and of notices affecting the bank may be made, and to file with the Securities and
Exchange Commission a duly authenticated nomination of such agent. In the absence of the agent
or head or should there be no person authorized by the bank upon whom service of summons,
processes and all legal notices may be made, service of summons, processes and legal notices may
be made upon the Bangko Sentral Deputy Governor In-Charge of the supervising and examining
departments and such service shall be as effective as if made upon the bank or its duly authorized
agent or head. In case of service for the bank upon the Bangko Sentral Deputy Governor In-charge
of the supervising and examining departments, the said deputy Governor shill register and transmit
by mail to the president or the secretary of the bank at its head or principal office a copy, duly
certified by him, of the summons, process, or notice. The sending of such copy of the summons,
process, or notice shall be a necessary part of the services and shall complete the service. The
registry receipt of mailing shall be prima facie evidence of the transmission of the summons, process
or notice. All costs necessarily incurred by the said Deputy Governor for the making and mailing and
sending of a copy of the summons, process, or notice to the president or the secretary of the bank at
its head or principal office shall be paid in advance by the party at whose instance the service is
made. (17)

Section 77. Laws Applicable. - In all matters not specifically covered by special provisions
applicable only to a foreign bank or its branches and other offices in the Philippines any foreign bank
licensed to do business in the Philippines shall be bound by the provisions of this Act, all other laws,
rules and regulations applicable to banks organized under the laws of the Philippines of the same
class, except those that provide for the creation, formation, organization or dissolution of
corporations or for the fixing of the relations, liabilities, responsibilities, or duties of stockholders,
members, directors or officers of corporations to each other or to the corporation. (18)

Section 78. Revocation of License of a Foreign Bank - The Monetary Board may revoke the license
to transact business in the Philippines of, any foreign bank, if it finds that the foreign bank is
insolvent or in imminent danger thereof or that its continuance in business will involve probable loss
to those transacting business with it. After the revocation of its license, it shall be unlawful for any
such foreign banks to transact business in the Philippines unless its license is renewed or reissued.
After the revocation of such license, the Bangko Sentral shall take the necessary action to protect
the creditors of such foreign bank and the public. The provisions of the New Central Bank Act on
sanctions and penalties shall likewise be applicable. (16)

CHAPTER IX
TRUST OPERATIONS

Section 79. Authority to Engage in Trust Business. - Only a stock corporation or a person duly
authorized by the Monetary Board to engage in trust business shall act as a trustee or administer
any trust or hold property in trust or on deposit for the use, benefit, or behoof of others. For purposes
of this Act, such a corporation shall be referred to as a trust entity. (56a; 57a)

Section 80. Conduct of Trust Business. - A trust entity shall administer the funds or property under
its custody with the diligence that a prudent man would exercise in the conduct of an enterprise of a
like character and with similar aims. No trust entity shall, for the account of the trustor or the
beneficiary of the trust, purchase or acquire property from, or sell, transfer, assign, or lend money or
property to, or purchase debt instruments of, any of the departments, directors, officers,
stockholders, or employees of the trust entity, relatives within the first degree of consanguinity or
affinity, or the related interests, of such directors, officers and stockholders, unless the transaction is
specifically authorized by the trustor and the relationship of the trustee and the other party involved
in the transaction is fully disclosed to the trustor of beneficiary of the trust prior to the transaction.
The Monetary Board shall promulgate such rules and regulations as may be necessary to prevent
circumvention of this prohibition or the evasion of the responsibility herein imposed on a trust entity.
(56)

Section 81. Registration of Articles of Incorporation and By-Laws of a Trust Entity. - The Securities
and Exchange Commission shall not register the articles of incorporation and by-laws or any
amendment thereto, of any trust entity, unless accompanied by a certificate of authority issued by
the Bangko Sentral. (n)

Section 82. Minimum Capitalization. - A trust entity, before it can engage in trust or other fiduciary
business, shall comply with the minimum paid-in capital requirement which will be determined by the
Monetary Board. (n)

Section 83. Powers of a Trust Entity. - A trust entity, in addition to the general powers incident to
corporations, shall have the power to:

83.1 Act as trustee on any mortgage or bond issued by any municipality, corporation, or any body
politic and to accept and execute any trust consistent with law;

83.2 Act under the order or appointment of any court as guardian, receiver, trustee, or depositary of
the estate of any minor or other incompetent person, and as receiver and depositary of any moneys
paid into court by parties to any legal proceedings and of property of any kind which may be brought
under the jurisdiction of the court;

83.3. Act as the executor of any will when it is named the executor thereof;

83.4 Act as administrator of the estate of any deceased person, with the will annexed, or as
administrator of the estate of any deceased person when there is no will;

83.5. Accept and execute any trust for the holding, management, and administration of any estate,
real or personal, and the rents, issues and profits thereof; and

83.6. Establish and manage common trust funds, subject to such rules and regulations as may be
prescribed by the Monetary Board.

Section 84. Deposit for the Faithful Performance of Trust Duties. - Before transacting trust business,
every trust entity shall deposit with the Bangko Sentral, as security for the faithful performance of its
trust duties, cash or securities approved by the Monetary Board in an amount equal to or not less
than Five hundred thousand pesos (P500,000.00) or such higher amount as may fixed by the
Monetary Board: Provided, however, That the Monetary Board shall require every trust entity to
increase the amount of its cash or securities on deposit with the Bangko Sentral in accordance with
the provisions of this paragraph. Should the capital and surplus fall below said amount, the Monetary
Board shall have the same authority as that granted to it under the provisions of the fifth paragraph
of Section 34 of this Act. A trust entity so long as it shall continue to be solvent and comply with laws
or regulations shall have the right to collect the interest earned on such securities deposited with the
Bangko Sentral and, from time to time, with the approval of the Bangko Sentral, to exchange the
securities for others. If the trust entity fails to comply with any law or regulation, the Bangko Sentral
shall retain such interest on the securities deposited with it for the benefit of rightful claimants. Al
claims rising out of the trust business of a trust entity shall have priority over all other claims as
regards the cash or securities deposited as above provided. The Monetary Board may not permit the
cash or securities deposited in accordance with the provisions of this Section to be reduced below
the prescribed minimum amount until the depositing entity shall discontinue its trust business and
shall satisfy the Monetary Board that it has complied with all its obligations in connection with such
business. (65a)

Section 85. Bond of Certain Persons for the Faithful Performance of Duties. - Before an executor,
administrator, guardian, trustee, receiver or depositary appointed by the court enters upon the
execution of his duties, he shall, upon order of the court, file a bond in such sum as the court may
direct. Upon the application of any executor, administrator, guardian, trustee, receiver, depositary or
any other person in interest, the court may, after notice and hearing, order that the subject matter of
the trust or any part, thereof be deposited with a trust entity. Upon presentation of proof to the court
that the subject matter of the trust has been deposited with a trust entity. Upon presentation of proof
to the court that the subject matter of the trust has been deposited with a trust entity, the court may
order that the bond given by such persons for the faithful performance of their duties be reduced to
such sums as it may deem proper: Provided, however, That the reduced bond shall be sufficient to
secure adequately the proper administration and care of any property remaining under the control of
such persons and the proper accounting for such property. Property deposited with any trust entity in
conformity with this Section shall be held by such entity under the orders and direction of the court.
(59)

Section 86. Exemption of Trust Entity from Bond Requirement. - No bond or other security shall be
required by the court from a trust entry for the faithful performance of its duties as court-appointed
trustee, executor, administrator, guardian, receiver, or depositary. However, the court may, upon
proper application with it showing special cause therefore, require the trust entity to post a bond or
other security for the protection of funds or property confided to such entity. (59)

Section 87. Separation of Trust Business from General Business. - The trust business and all funds,
properties or securities received by any trust entity as executor, administrator, guardian, trustee,
receiver, or depositary shall be kept separate and distinct from the general business including all
other funds, properties, and assets of such trust entity. The accounts of all such funds, properties, or
securities shall likewise be kept separate and distinct from the accounts of the general business of
the trust entity. (61)

Section 88. Investment Limitations of a Trust Entity. - Unless otherwise directed by the instrument
creating the trust, the lending and investment of funds and other assets acquired by a trust entity as
executor, administrator, guardian, trustee, receiver or depositary of the estate of any minor or other
incompetent person shall be limited to loans or investments as may be prescribed by law, the
Monetary Board or any court of competent jurisdiction. (63a)

Section 89. Real Estate Acquired by a Trust Entity. - Unless otherwise specifically directed by the
trustor or the nature of the trust, real estate acquired by a trust entity in whatever manner and for
whatever purposes, shall likewise be governed by the relevant provisions of Section 52 of this Act.
(64a)
Section 90. Investment of Non-Trust Funds. - The investment of funds other than trust funds of a
trust entity which is a bank, financing company or an investment house shall be governed by the
relevant provisions of this Act and other applicable laws. (64)

Section 91. Sanctions and Penalties. - A trust entity or any of its officers and directors found to have
willfully violated any pertinent provisions of this Act, shall be subject to the sanctions and penalties
provided tinder Section 66 of this Act as well as Sections 36 and 37 of the New Central Bank Act.

Section 92. Exemption of Trust Assets from Claims. - No assets held by a trust entity in its capacity
as trustee shall be subject to any claims other than those of the parties interested in the specific
trusts. (65)

Section 93. Establishment of Branches of a Trust Entity. - The ordinary business of a trust entity
shall be transacted at the place of business specified in its articles of incorporation. Such trust entity
may, with prior approval of the Monetary Board, establish branches in the Philippines and the said
entity shall be responsible for all business conducted in such branches to the same extent and in the
same manner as though such business had all been conducted in the head office. For the purpose
of this Act, the trust entity and its branches shall be treated as one unit. (67)

CHAPTER X
FINAL PROVISIONS

Section 94. Phase Out of Bangko Sentral Powers Over Building and Loan Associations. - Within a
period of three (3) years from the effectivity of this Act, the Bangko Sentral shall phase out and
transfer its supervising and regulatory powers over building and loan associations to the Home
Insurance and Guaranty Corporation which shall assume the same. Until otherwise provided bylaw1
building and loan associations shall continue to be governed by Sections 39 to 55, Chapter VI of the
General Banking Act, as amended, including such rules and regulations issued pursuant thereto.
Upon assumption by the Home Insurance and Guaranty Corporation of supervising and regulatory
powers over building and loan associations, a references in Sections 39 to 55 of the General
Banking Act, as amended, to the Bangko Sentral and the Monetary Board shall be deemed to refer
to the Home Insurance and Guaranty Corporation and its board of directors, respectively. (n)

Section 95. Repealing Clause. - Except as may be provided for in Sections 34 and 94 of this Act,
the General Banking Act, as amended, and the provisions of any other law, special charters, rule or
regulation issued pursuant to said General Banking Act, as amended, or parts thereof, which may be
inconsistent with the provisions of this Act are hereby repealed. The provisions of paragraph 8,
Section 8, Republic Act No. 3591, as amended by republic Act No. 7400, are likewise repealed.
(90a)

Section 96. Separability Clause. - If any provision or section of this Act or the application thereof to
any person or circumstance is held invalid, the other provisions or sections of this Act, and the
application of such provision or section to other persons or circumstances shall not be affected
thereby. (n)

Section 97. Effectivity Clause - This Act shall take effect fifteen (15) days following its publication in
the Official Gazette or in two (2) national newspapers of general circulation. (91)
REPUBLIC ACT No. 1405

AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH ANY BANKING

INSTITUTION AND PROVIDING PENALTY THEREFOR.

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

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

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

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

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

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

 [REPUBLIC ACT NO. 9160]

AN ACT DEFINING THE CRIME OF MONEY LAUNDERING, PROVIDING

PENALTIES THEREFOR AND FOR OTHER PURPOSES

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

Congress assembled.

SECTION 1. Short Title. — This Act shall be known as the “Anti-Money Laundering Act
of 2001.”

SEC. 2. Declaration of Policy. — It is hereby declared the policy of the State to protect
and preserve the integrity and confidentiality of bank accounts and to ensure that the
Philippines shall not be used as a money laundering site for the proceeds of any
unlawful activity. Consistent with its foreign policy, the State shall extend cooperation in
transnational investigations and prosecutions of persons involved in money laundering
activities wherever committed.

SEC. 3. Definitions. — For purposes of this Act, the following terms are hereby defined
as follows:

(a) “Covered institution” refers to:

(1) banks, non-banks, quasi-banks, trust entities, and all other institutions and their
subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas
(BSP);

(2) insurance companies and all other institutions supervised or regulated by the
Insurance Commission; and

(3) (i) securities dealers, brokers, salesmen, investment houses and other similar
entities managing securities or rendering services as investment agent, advisor, or
consultant, (ii) mutual funds, closed-end investment companies, common trust funds,
pre-need companies and other similar entities, (iii) foreign exchange corporations,
money changers, money payment, remittance, and transfer companies and other similar
entities, and (iv) other entities administering or otherwise dealing in currency,
commodities or financial derivatives based thereon, valuable objects, cash substitutes
and other similar monetary instruments or property supervised or regulated by
Securities and Exchange Commission.

(b) “Covered transaction” is a single, series, or combination of transactions involving a

total amount in excess of Four million Philippine pesos (Php4,000,000.00) or an
equivalent amount in foreign currency based on the prevailing exchange rate within five
(5) consecutive banking days except those between a covered institution and a person
who, at the time of the transaction was a properly identified client and the amount is
commensurate with the business or financial capacity of the client; or those with an
underlying legal or trade obligation, purpose, origin or economic justification.

It likewise refers to a single, series or combination or pattern of unusually large and

complex transactions in excess of Four million Philippine pesos (Php4,000,000.00)
especially cash deposits and investments having no credible purpose or origin,
underlying trade obligation or contract.

(c) “Monetary instrument” refers to:

(1) coins or currency of legal tender of the Philippines, or of any other country;

(2) drafts, checks and notes;

(3) securities or negotiable instruments, bonds, commercial papers, deposit certificates,

trust certificates, custodial receipts or deposit substitute instruments, trading orders,
transaction tickets and confirmations of sale or investments and money market
instruments; and

(4) other similar instruments where title thereto passes to another by endorsement,
assignment or delivery.

(d) “Offender” refers to any person who commits a money laundering offense.

(e) “Person” refers to any natural or juridical person.

(f) “Proceeds” refers to an amount derived or realized from an unlawful activity.

(g) “Supervising Authority” refers to the appropriate supervisory or regulatory agency,

department or office supervising or regulating the covered institutions enumerated in
Section 3(a).

(h) “Transaction” refers to any act establishing any right or obligation or giving rise to
any contractual or legal relationship between the parties thereto. It also includes any
movement of funds by any means with a covered institution.

(i) “Unlawful activity” refers to any act or omission or series or combination thereof
involving or having 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 3, 4, 5, 7, 8 and 9 of Article Two of Republic Act No. 6425, as amended,
otherwise known as the Dangerous Drugs Act of 1972;
(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;

(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.

SEC. 4. Money Laundering Offense. — Money laundering is a crime whereby the

proceeds of an unlawful activity 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.

SEC. 5. Jurisdiction of Money Laundering Cases. — The regional trial courts shall have
jurisdiction to try all cases on money laundering. Those committed by public officers and
private persons who are in conspiracy with such public officers shall be under the
jurisdiction of the Sandiganbayan.

SEC. 6. Prosecution of Money Laundering.

(a) Any person may be charged with and convicted of both the offense of money
laundering and the unlawful activity as herein defined.

(b) Any proceeding relating to the unlawful activity shall be given precedence over the
prosecution of any offense or violation under this Act without prejudice to the freezing
and other remedies provided.

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 transaction reports from covered institutions;

(2) to issue orders addressed to the appropriate Supervising Authority or the covered
institution to determine the true identity of the owner of any monetary instrument or
property subject of a covered transaction report or request for assistance from a foreign
State, or believed by the Council, on the basis of substantial evidence, to be, in whole or
in part, wherever located, representing, involving, or related to, directly or indirectly, in
any manner or by any means, the proceeds of an unlawful activity;

(3) to institute civil forfeiture proceedings and all other remedial proceedings through the
Office of the Solicitor General;

(4) to cause the filing of complaints with the Department of Justice or the Ombudsman
for the prosecution of money laundering offenses;

(5) to initiate investigations of covered transactions, money laundering activities and

other violations of this Act;

(6) to freeze any monetary instrument or property alleged to be proceeds of any

unlawful activity;
(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; and

(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.

SEC. 8. Creation of a Secretariat. — The AMLC is hereby authorized to establish a

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

SEC. 9. Prevention of Money Laundering; Customer Identification Requirements and

Record Keeping. — (a) Customer Identification. — Covered institutions shall establish
and record the true identity of its clients based on official documents. They shall
maintain a system of verifying the true identity of their clients and, in case of corporate
clients, require a system of verifying their legal existence and organizational structure,
as well as the authority and identification of all persons purporting to act on their behalf.

The provisions of existing laws to the contrary notwithstanding, anonymous accounts,

accounts under fictitious names, and all other similar accounts shall be absolutely
prohibited. Peso and foreign currency non-checking numbered accounts shall be
allowed. The BSP may conduct annual testing solely limited to the determination of the
existence and true identity of the owners of such accounts.

(b) Record Keeping. — All records of all transactions of covered institutions shall be
maintained and safely stored for five (5) years from the dates of transactions. With
respect to closed accounts, the records on customer identification, account files and
business correspondence, shall be preserved and safely stored for at least five (5)
years from the dates when they were closed.
(c) Reporting of Covered Transactions. — Covered institutions shall report to the AMLC
all covered transactions within five (5) working days from occurrence thereof, unless the
Supervising Authority concerned prescribes a longer period not exceeding ten (10)
working days.

When reporting covered transactions to the AMLC, covered institutions and their
officers, employees, representatives, agents, advisors, consultants or associates 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 transaction report was made, the contents thereof, or any
other information in relation thereto. In case of violation thereof, the concerned officer,
employee, representative, agent, advisor, consultant or associate of the covered
institution, shall be criminally liable. However, no administrative, criminal or civil
proceedings, shall lie against any person for having made a covered transaction report
in the regular performance of his duties and in good faith, whether or not such reporting
results in any criminal prosecution under this Act or any other Philippine law.

When reporting covered transactions to the AMLC, covered institutions and their
officers, employees, representatives, agents, advisors, consultants or associates are
prohibited from communicating, directly or indirectly, in any manner or by any means, to
any person, entity, the media, the fact that a covered 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, employee,
representative, agent, advisor, consultant or associate of the covered institution, or
media shall be held criminally liable.

SEC. 10. Authority to Freeze. — Upon determination that probable cause exists that
any deposit or similar account is in any way related to an unlawful activity, the AMLC
may issue a freeze order, which shall be effective immediately, on the account for a
period not exceeding fifteen (15) days. Notice to the depositor that his account has been
frozen shall be issued simultaneously with the issuance of the freeze order. The
depositor shall have seventy-two (72) hours upon receipt of the notice to explain why
the freeze order should be lifted. The AMLC has seventy-two (72) hours to dispose of
the depositor’s explanation. If it fails to act within seventy-two (72) hours from receipt of
the depositor’s explanation, the freeze order shall automatically be dissolved. The
fifteen (15)-day freeze order of the AMLC may be extended upon order of the court,
provided that the fifteen (15)-day period shall be tolled pending the court’s decision to
extend the period.

No court shall issue a temporary restraining order or writ of injunction against any freeze
order issued by the AMLC except the Court of Appeals or the Supreme Court.

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 involved are in any way related
to a money laundering offense: Provided, That this provision shall not apply to deposits
and investments made prior to the effectivity of this Act.

SEC. 12. Forfeiture Provisions.

(a) Civil Forfeiture. — When there is a covered transaction report made, and the court
has, in a petition filed for the purpose ordered seizure of any monetary instrument or
property, in whole or in part, directly or indirectly, related to said report, the Revised
Rules of Court on civil forfeiture shall apply.

(b) Claim on Forfeiture Assets. — Where the court has issued an order of forfeiture of
the monetary instrument or property in a criminal prosecution for any money laundering
offense defined under Section 4 of this Act, the offender or any other person claiming an
interest therein may apply, by verified petition, for a declaration that the same
legitimately belongs to him and for segregation or exclusion of the monetary instrument
or property corresponding thereto. The verified petition shall be filed with the court
which rendered the judgment of conviction and order of forfeiture, within fifteen (15)
days from the date of the order of forfeiture, in default of which the said order shall
become final and executory. This provision shall apply in both civil and criminal
forfeiture.

(c) Payment in Lieu of Forfeiture. — Where the court has issued an order of forfeiture of
the monetary instrument or property subject of a money laundering offense defined
under Section 4, and said order cannot be enforced because any particular monetary
instrument or property cannot, with due diligence, be located, or it has been
substantially altered, destroyed, diminished in value or otherwise rendered worthless by
any act or omission, directly or indirectly, attributable to the offender, or it has been
concealed, removed, converted or otherwise transferred to prevent the same from being
found or to avoid forfeiture thereof, or it is located outside the Philippines or has been
placed or brought outside the jurisdiction of the court, or it has been commingled with
other monetary instruments or property belonging to either the offender himself or a
third person or entity, thereby rendering the same difficult to identify or be segregated
for purposes of forfeiture, the court may, instead of enforcing the order of forfeiture of
the monetary instrument or property or part thereof or interest therein, accordingly order
the convicted offender to pay an amount equal to the value of said monetary instrument
or property. This provision shall apply in both civil and criminal forfeiture.

SEC. 13. Mutual Assistance among States.

(a) Request for Assistance from a Foreign State. — Where a foreign State makes a
request for assistance in the investigation or prosecution of a money laundering offense,
the AMLC may execute the request or refuse to execute the same and inform the
foreign State of any valid reason for not executing the request or for delaying the
execution thereof. The principles of mutuality and reciprocity shall, for this purpose, be
at all times recognized.

(b) Powers of the AMLC to Act on a Request for Assistance from a Foreign State. —
The AMLC may execute a request for assistance from a foreign State by: (1) tracking
down, freezing, restraining and seizing assets alleged to be proceeds of any unlawful
activity under the procedures laid down in this Act; (2) giving information needed by the
foreign State within the procedures laid down in this Act; and (3) applying for an order of
forfeiture of any monetary instrument or property in the court: Provided, That the court
shall not issue such an order unless the application is accompanied by an authenticated
copy of the order of a court in the requesting State ordering the forfeiture of said
monetary instrument or property of a person who has been convicted of a money
laundering offense in the requesting State, and a certification or an affidavit of a
competent officer of the requesting State stating that the conviction and the order of
forfeiture are final and that no further appeal lies in respect of either.

(c) Obtaining Assistance from Foreign States. — The AMLC may make a request to any
foreign State for assistance in (1) tracking down, freezing, restraining and seizing assets
alleged to be proceeds of any unlawful activity; (2) obtaining information that it needs
relating to any covered transaction, money laundering offense or any other matter
directly or indirectly related thereto; (3) to the extent allowed by the law of the foreign
State, applying with the proper court therein for an order to enter any premises
belonging to or in the possession or control of, any or all of the persons named in said
request, and/or search any or all such persons named therein and/or remove any
document, material or object named in said request: Provided, That the documents
accompanying the request in support of the application have been duly authenticated in
accordance with the applicable law or regulation of the foreign State; and (4) applying
for an order of forfeiture of any monetary instrument or property in the proper court in
the foreign State: Provided, That the request is accompanied by an authenticated copy
of the order of the regional trial court ordering the forfeiture of said monetary instrument
or property of a convicted offender and an affidavit of the clerk of court stating that the
conviction and the order of forfeiture are final and that no further appeal lies in respect
of either.

(d) Limitations on Request for Mutual Assistance. — The AMLC may refuse to comply
with any request for assistance where the action sought by the request contravenes any
provision of the Constitution or the execution of a request is likely to prejudice the
national interest of the Philippines unless there is a treaty between the Philippines and
the requesting State relating to the provision of assistance in relation to money
laundering offenses.

(e) Requirements for Requests for Mutual Assistance from Foreign States. — A request
for mutual assistance from a foreign State must (1) confirm that an investigation or
prosecution is being conducted in respect of a money launderer named therein or that
he has been convicted of any money laundering offense; (2) state the grounds on which
any person is being investigated or prosecuted for money laundering or the details of
his conviction; (3) give sufficient particulars as to the identity of said person; (4) give
particulars sufficient to identify any covered institution believed to have any information,
document, material or object which may be of assistance to the investigation or
prosecution; (5) ask from the covered institution concerned any information, document,
material or object which may be of assistance to the investigation or prosecution; (6)
specify the manner in which and to whom said information, document, material or object
obtained pursuant to said request, is to be produced; (7) give all the particulars
necessary for the issuance by the court in the requested State of the writs, orders or
processes needed by the requesting State; and (8) contain such other information as
may assist in the execution of the request.

(f) Authentication of Documents. — For purposes of this Section, a document is

authenticated if the same is signed or certified by a judge, magistrate or equivalent
officer in or of, the requesting State, and authenticated by the oath or affirmation of a
witness or sealed with an official or public seal of a minister, secretary of State, or
officer in or of, the government of the requesting State, or of the person administering
the government or a department of the requesting territory, protectorate or colony. The
certificate of authentication may also be made by a secretary of the embassy or
legation, consul general, consul, vice consul, consular agent or any officer in the foreign
service of the Philippines stationed in the foreign State in which the record is kept, and
authenticated by the seal of his office.

(g) Extradition. — The Philippines shall negotiate for the inclusion of money laundering
offenses as herein defined among extraditable offenses in all future treaties.

SEC. 14. Penal Provisions. — (a) Penalties for the Crime of Money Laundering. The
penalty of imprisonment ranging from seven (7) to fourteen (14) years and a fine of not
less than Three million Philippine pesos (Php3,000,000.00) but not more than twice the
value of the monetary instrument or property involved in the offense, shall be imposed
upon a person convicted under Section 4(a) of this Act.

The penalty of imprisonment from four (4) to seven (7) years and a fine of not less than
One million five hundred thousand Philippine pesos (Php1,500,000.00) but not more
than Three million Philippine pesos (Php3,000,000.00), shall be imposed upon a person
convicted under Section 4(b) of this Act.

The penalty of imprisonment from six (6) months to four (4) years or a fine of not less
than One hundred thousand Philippine pesos (Php100,000.00) but not more than Five
hundred thousand Philippine pesos (Php500,000.00), or both, shall be imposed on a
person convicted under Section 4(c) of this Act.

(b) Penalties for Failure to Keep Records. The penalty of imprisonment from six (6)
months to one (1) year or a fine of not less than One hundred thousand Philippine
pesos (Php100,000.00) but not more than Five hundred thousand Philippine pesos
(Php500,000.00), or both, shall be imposed on a person convicted under Section 9(b) of
this Act.

(c) Malicious Reporting. Any person who, with malice, or in bad faith, report or files a
completely unwarranted or false information relative to money laundering transaction
against any person shall be subject to a penalty of six (6) months to four (4) years
imprisonment and a fine of not less than One hundred thousand Philippine pesos
(Php100,000.00) but not more than Five hundred thousand Philippine pesos
(Php500,000.00), at the discretion of the court: Provided, That the offender is not
entitled to avail the benefits of the Probation Law.

If the offender is a corporation, association, partnership or any juridical person, the

penalty shall be imposed upon the responsible officers, as the case may be, who
participated in the commission of the crime or who shall have knowingly permitted or
failed to prevent its commission. If the offender is a juridical person, the court may
suspend or revoke its license. If the offender is an alien, he shall, in addition to the
penalties herein prescribed, be deported without further proceedings after serving the
penalties herein prescribed. If the offender is a public official or employee, he shall, in
addition to the penalties prescribed herein, suffer perpetual or temporary absolute
disqualification from office, as the case may be.

Any public official or employee who is called upon to testify and refuses to do the same
or purposely fails to testify shall suffer the same penalties prescribed herein.

(d) Breach of Confidentiality. The punishment of imprisonment ranging from three (3) to
eight (8) years and a fine of not less than Five hundred thousand Philippine pesos
(Php500,000.00) but not more than One million Philippine pesos (Php1,000,000.00),
shall be imposed on a person convicted for a violation under Section 9(c).

SEC. 15. System of Incentives and Rewards. — A system of special incentives and
rewards is hereby established to be given to the appropriate government agency and its
personnel that led and initiated an investigation, prosecution and conviction of persons
involved in the offense penalized in Section 4 of this Act.

SEC. 16. Prohibitions Against Political Harassment. — This Act shall not be used for
political persecution or harassment or as an instrument to hamper competition in trade
and commerce.

No case for money laundering may be filed against and no assets shall be frozen,
attached or forfeited to the prejudice of a candidate for an electoral office during an
election period.

SEC. 17. Restitution. — Restitution for any aggrieved party shall be governed by the
provisions of the New Civil Code.
SEC. 18. Implementing Rules and Regulations. — Within thirty (30) days from the
effectivity of this Act, the Bangko Sentral ng Pilipinas, the Insurance Commission and
the Securities and Exchange Commission shall promulgate the rules and regulations to
implement effectively the provisions of this Act. Said rules and regulations shall be
submitted to the Congressional Oversight Committee for approval.

Covered institutions shall formulate their respective money laundering prevention

programs in accordance with this Act including, but not limited to, information
dissemination on money laundering activities and its prevention, detection and
reporting, and the training of responsible officers and personnel of covered institutions.

SEC. 19. Congressional Oversight Committee. — There is hereby created a

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

The Oversight Committee shall have the power to promulgate its own rules, to oversee
the implementation of this Act, and to review or revise the implementing rules issued by
the Anti-Money Laundering Council within thirty (30) days from the promulgation of the
said rules.

SEC. 20. Appropriations Clause. — The AMLC shall be provided with an initial
appropriation of Twenty-five million Philippine pesos (Php25,000,000.00) to be drawn
from the national government. Appropriations for the succeeding years shall be included
in the General Appropriations Act.

SEC. 21. Separability Clause. — If any provision or section of this Act or the application
thereof to any person or circumstance is held to be invalid, the other provisions or
sections of this Act, and the application of such provision or section to other persons or
circumstances, shall not be affected thereby.

SEC. 22. Repealing Clause. — All laws, decrees, executive orders, rules and
regulations or parts thereof, including the relevant provisions of Republic Act No. 1405,
as amended; Republic Act No. 6426, as amended; Republic Act No. 8791, as amended
and other similar laws, as are inconsistent with this Act, are hereby repealed, amended
or modified accordingly.

SEC. 23. Effectivity. — This Act shall take effect fifteen (15) days after its complete
publication in the Official Gazette or in at least two (2) national newspapers of general
circulation.
The provisions of this Act shall not apply to deposits and investments made prior to its
effectivity.

-
~
REPUBLIC ACT NO. 10365

AN ACT FURTHER STRENGTHENING THE ANTI-MONEY LAUNDERING LAW, AMENDING FOR

THE PURPOSE REPUBLIC ACT NO. 9160, OTHERWISE KNOWN AS THE "ANTI-MONEY
LAUNDERING ACT OF 2001″, AS AMENDED

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

assembled:

Section 1. Section 3(a) of Republic Act No. 9160, as amended, is hereby amended to read as
follows:

"(a) ‘Covered persons’, natural or juridical, refer to:

"(1) banks, non-banks, quasi-banks, trust entities, foreign exchange dealers,

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

"(2) insurance companies, pre-need companies and all other persons supervised or
regulated by the Insurance Commission (IC);

"(3) (i) securities dealers, brokers, salesmen, investment houses and other similar
persons managing securities or rendering services as investment agent, advisor, or
consultant, (ii) mutual funds, close-end investment companies, common trust funds,
and other similar persons, and (iii) other entities administering or otherwise dealing in
currency, commodities or financial derivatives based thereon, valuable objects, cash
substitutes and other similar monetary instruments or property supervised or
regulated by the Securities and Exchange Commission (SEC);

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

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

"(6) company service providers which, as a business, provide any of the following
services to third parties: (i) acting as a formation agent of juridical persons; (ii) acting
as (or arranging for another person to act as) a director or corporate secretary of a
company, a partner of a partnership, or a similar position in relation to other juridical
persons; (iii) providing a registered office, business address or accommodation,
correspondence or administrative address for a company, a partnership or any other
legal person or arrangement; and (iv) acting as (or arranging for another person to
act as) a nominee shareholder for another person; and

"(7) persons who provide any of the following services:

(i) managing of client money, securities or other assets;

(ii) management of bank, savings or securities accounts;

 (iii) organization of contributions for the creation, operation or management of
companies; and

(iv) creation, operation or management of juridical persons or arrangements,

and buying and selling business entities.

"Notwithstanding the foregoing, the term ‘covered persons’ shall exclude

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

Section 2. Section 3(i) of the same Act is hereby amended to read as follows:

"(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, 11, 12, 13, 14, 15 and 16 of Republic Act No. 9165,
otherwise known as the Comprehensive Dangerous Drugs Act of 2002;

"(3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as amended,

otherwise known as the Anti-Graft and Corrupt Practices Act;

"(4) Plunder under Republic Act No. 7080, as amended;

"(5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of
the Revised Penal Code, as amended;

"(6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No.
1602;

"(7) Piracy on the high seas under the Revised Penal Code, as amended and
Presidential Decree No. 532;

"(8) Qualified theft under Article 310 of the Revised Penal Code, as amended;

"(9) Swindling under Article 315 and Other Forms of Swindling under Article 316 of
the Revised Penal Code, as amended;

"(10) Smuggling under Republic Act Nos. 455 and 1937;

"(11) Violations of Republic Act No. 8792, otherwise known as the Electronic
Commerce Act of 2000;
"(12) Hijacking and other violations under Republic Act No. 6235; destructive arson
and murder, as defined under the Revised Penal Code, as amended;

"(13) Terrorism and conspiracy to commit terrorism as defined and penalized under
Sections 3 and 4 of Republic Act No. 9372;

"(14) Financing of terrorism under Section 4 and offenses punishable under Sections
5, 6, 7 and 8 of Republic Act No. 10168, otherwise known as the Terrorism Financing
Prevention and Suppression Act of 2012:

"(15) Bribery under Articles 210, 211 and 211-A of the Revised Penal Code, as
amended, and Corruption of Public Officers under Article 212 of the Revised Penal
Code, as amended;

"(16) Frauds and Illegal Exactions and Transactions under Articles 213, 214, 215 and
216 of the Revised Penal Code, as amended;

"(17) Malversation of Public Funds and Property under Articles 217 and 222 of the
Revised Penal Code, as amended;

"(18) Forgeries and Counterfeiting under Articles 163, 166, 167, 168, 169 and 176 of
the Revised Penal Code, as amended;

"(19) Violations of Sections 4 to 6 of Republic Act No. 9208, otherwise known as the
Anti-Trafficking in Persons Act of 2003;

"(20) Violations of Sections 78 to 79 of Chapter IV, of Presidential Decree No. 705,

otherwise known as the Revised Forestry Code of the Philippines, as amended;

"(21) Violations of Sections 86 to 106 of Chapter VI, of Republic Act No. 8550,
otherwise known as the Philippine Fisheries Code of 1998;

"(22) Violations of Sections 101 to 107, and 110 of Republic Act No. 7942, otherwise
known as the Philippine Mining Act of 1995;

"(23) Violations of Section 27(c), (e), (f), (g) and (i), of Republic Act No. 9147,
otherwise known as the Wildlife Resources Conservation and Protection Act;

"(24) Violation of Section 7(b) of Republic Act No. 9072, otherwise known as the
National Caves and Cave Resources Management Protection Act;

"(25) Violation of Republic Act No. 6539, otherwise known as the Anti-Carnapping
Act of 2002, as amended;

"(26) Violations of Sections 1, 3 and 5 of Presidential Decree No. 1866, as amended,

otherwise known as the decree Codifying the Laws on Illegal/Unlawful Possession,
Manufacture, Dealing In, Acquisition or Disposition of Firearms, Ammunition or
Explosives;

"(27) Violation of Presidential Decree No. 1612, otherwise known as the Anti-Fencing
Law;
 "(28) Violation of Section 6 of Republic Act No. 8042, otherwise known as the
Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic Act
No. 10022;

"(29) Violation of Republic Act No. 8293, otherwise known as the Intellectual
Property Code of the Philippines;

"(30) Violation of Section 4 of Republic Act No. 9995, otherwise known as the Anti-
Photo and Video Voyeurism Act of 2009;

"(31) Violation of Section 4 of Republic Act No. 9775, otherwise known as the Anti-
Child Pornography Act of 2009;

"(32) Violations of Sections 5, 7, 8, 9, 10(c), (d) and (e), 11, 12 and 14 of Republic
Act No. 7610, otherwise known as the Special Protection of Children Against Abuse,
Exploitation and Discrimination;

"(33) Fraudulent practices and other violations under Republic Act No. 8799,
otherwise known as the Securities Regulation Code of 2000; and

"(34) Felonies or offenses of a similar nature that are punishable under the penal
laws of other countries."

Section 3. Section 3 of the same Act shall have new paragraphs (j) and (k).

"(j) Precious metals’ shall mean gold, silver, platinum, palladium, rhodium, ruthenium, iridium
and osmium. These include alloys of precious metals, solders and plating chemicals such as
rhodium and palladium plating solutions and potassium gold cyanide and potassium silver
cyanide and silver cyanide in salt solution.

"(k) ‘Precious stones’ shall mean diamond, ruby, emerald, sapphire, opal, amethyst, beryl,
topaz, and garnet that are used in jewelry making, including those formerly classified as
semi-precious stones."

Section 4. Section 4 of the same Act is hereby amended to read as follows:

"SEC. 4. Money Laundering Offense. – Money laundering is committed by any person who,
knowing that any monetary instrument or property represents, involves, or relates to the
proceeds of any unlawful activity:

"(a) transacts said monetary instrument or property;

"(b) converts, transfers, disposes of, moves, acquires, possesses or uses said
monetary instrument or property;

"(c) conceals or disguises the true nature, source, location, disposition, movement or
ownership of or rights with respect to said monetary instrument or property;

"(d) attempts or conspires to commit money laundering offenses referred to in

paragraphs (a), (b) or (c);
 "(e) aids, abets, assists in or counsels the commission of the money laundering
offenses referred to in paragraphs (a), (b) or (c) above; and

"(f) performs or fails to perform any act as a result of which he facilitates the offense
of money laundering referred to in paragraphs (a), (b) or (c) above.

"Money laundering is also committed by any covered person who, knowing that a covered or
suspicious transaction is required under this Act to be reported to the Anti-Money Laundering
Council (AMLC), fails to do so."

Section 5. Section 6(a) of the same Act is hereby amended to read as follows:

"SEC. 6. Prosecution of Money Laundering. –

"(a) Any person may be charged with and convicted of both the offense of money
laundering and the unlawful activity as herein defined.

"(b) The prosecution of any offense or violation under this Act shall proceed
independently of any proceeding relating to the unlawful activity."

Section 6. Section 7 of the same Act is hereby amended to read 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:

"x x x

"(6) to apply before the Court of Appeals, ex parte, for the freezing of any monetary
instrument or property alleged to be laundered, proceeds from, or instrumentalities used in or
intended for use in any unlawful activity as defined in Section 3(i) hereof;

"x x x

"(12) to require the Land Registration Authority and all its Registries of Deeds to submit to
the AMLC, reports on all real estate transactions involving an amount in excess of Five
hundred thousand pesos (P500,000.00) within fifteen (15) days from the date of registration
of the transaction, in a form to be prescribed by the AMLC. The AMLC may also require the
Land Registration Authority and all its Registries of Deeds to submit copies of relevant
documents of all real estate transactions."

Section 7. Section 9(c), paragraphs 1 and 4 of the same Act are hereby amended to read as
follows:

"SEC. 9. Prevention of Money Laundering; Customer Identification Requirements and

Record Keeping. –

"(a) x x x
 "(b) x x x

"(c) Reporting of Covered and Suspicious Transactions. – Covered persons shall report to
the AMLC all covered transactions and suspicious transactions within five (5) working days
from occurrence thereof, unless the AMLC prescribes a different period not exceeding fifteen
(15) working days.

"Lawyers and accountants acting as independent legal professionals are not required to
report covered and suspicious transactions if the relevant information was obtained in
circumstances where they are subject to professional secrecy or legal professional privilege.

"x x x

"x x x

"When reporting covered or suspicious transactions to the AMLC, covered persons 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 has been reported or is about to be reported, the contents of the
report, 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 person and
media shall be held criminally liable."

Section 8. Section 10 of the same Act, as amended by Republic Act No. 10167, is hereby amended
to read as follows:

"SEC. 10. Freezing of Monetary Instrument or Property. – Upon a 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,
and which shall not exceed six (6) months depending upon the circumstances of the
case: Provided, That if there is no case filed against a person whose account has been
frozen within the period determined by the court, the freeze order shall be deemed ipso
facto lifted: Provided, further, That this new rule shall not apply to pending cases in the
courts. 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 freeze order.

"No court shall issue a temporary restraining order or a writ of injunction against any freeze
order, except the Supreme Court."

Section 9. Section 12 of the same Act is hereby amended to read as follows:

"(a) Civil Forfeiture. – Upon determination by the AMLC 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) or a money laundering offense under Section 4 hereof, the AMLC shall file with
 the appropriate court through the Office of the Solicitor General, a verified ex parte petition
for forfeiture, and the Rules of Court on Civil Forfeiture shall apply.

"The forfeiture shall include those other monetary instrument or property having an
equivalent value to that of the monetary instrument or property found to be related in any
way to an unlawful activity or a money laundering offense, when with due diligence, the
former cannot be located, or it has been substantially altered, destroyed, diminished in value
or otherwise rendered worthless by any act or omission, or it has been concealed, removed,
converted, or otherwise transferred, or it is located outside the Philippines or has been
placed or brought outside the jurisdiction of the court, or it has been commingled with other
monetary instrument or property belonging to either the offender himself or a third person or
entity, thereby rendering the same difficult to identify or be segregated for purposes of
forfeiture.

"(b) Claim on Forfeited Assets. – Where the court has issued an order of forfeiture of the
monetary instrument or property in a criminal prosecution for any money laundering offense
defined under Section 4 of this Act, the offender or any other person claiming an interest
therein may apply, by verified petition, for a declaration that the same legitimately belongs to
him and for segregation or exclusion of the monetary instrument or property corresponding
thereto. The verified petition shall be filed with the court which rendered the judgment of
forfeiture, within fifteen (15) days from the date of the finality of the order of forfeiture, in
default of which the said order shall become final and executor. This provision shall apply in
both civil and criminal forfeiture.

"(c) Payment in Lieu of Forfeiture. – Where the court has issued an order of forfeiture of the
monetary instrument or property subject of a money laundering offense defined under
Section 4, and said order cannot be enforced because any particular monetary instrument or
property cannot, with due diligence, be located, or it has been substantially altered,
destroyed, diminished in value or otherwise rendered worthless by any act or omission,
directly or indirectly, attributable to the offender, or it has been concealed, removed,
converted, or otherwise transferred to prevent the same from being found or to avoid
forfeiture thereof, or it is located outside the Philippines or has been placed or brought
outside the jurisdiction of the court, or it has been commingled with other monetary
instruments or property belonging to either the offender himself or a third person or entity,
thereby rendering the same difficult to identify or be segregated for purposes of forfeiture,
the court may, instead of enforcing the order of forfeiture of the monetary instrument or
property or part thereof or interest therein, accordingly order the convicted offender to pay an
amount equal to the value of said monetary instrument or property. This provision shall apply
in both civil and criminal forfeiture."

Section 10. Section 14 of the same Act, as amended, is hereby further amended to read as follows:

"SEC. 14. Penal Provisions. – (a) Penalties for the Crime of Money Laundering. The penalty
of imprisonment ranging from seven (7) to fourteen (14) years and a fine of not less than
Three million Philippine pesos (Php3,000,000.00) but not more than twice the value of the
monetary instrument or property involved in the offense, shall be imposed upon a person
convicted under Section 4(a), (b), (c) and (d) of this Act.

"The penalty of imprisonment from four (4) to seven (7) years and a fine of not less than One
million five hundred thousand Philippine pesos (Php1,500,000.00) but not more than Three
million Philippine pesos (Php3,000,000.00), shall be imposed upon a person convicted under
Section 4(e) and (f) of this Act.
 "The penalty of imprisonment from six (6) months to four (4) years or a fine of not less than
One hundred thousand Philippine pesos (Php100,000.00) but not more than Five hundred
thousand Philippine pesos (Php500,000.00), or both, shall be imposed on a person
convicted under the last paragraph of Section 4 of this Act.

"(b) x x x

"(c) x x x

"(d) x x x

"(e) The penalty of imprisonment ranging from four (4) to seven (7) years and a fine
corresponding to not more than two hundred percent (200%) of the value of the monetary
instrument or property laundered shall be imposed upon the covered person, its directors,
officers or pesonnel who knowingly participated in the commission of the crime of money
laundering.

"(f) Imposition of Administrative Sanctions. The imposition of the administrative sanctions

shall be without prejudice to the filing of criminal charges against the persons responsible for
the violation.

"After due notice and hearing, the AMLC shall, at its discretion, impose sanctions, including
monetary penalties, warning or reprimand, upon any covered person, its directors, officers,
employees or any other person for the violation of this Act, its implementing rules and
regulations, or for failure or refusal to comply with AMLC orders, resolutions and other
issuances. Such monetary penalties shall be in amounts as may be determined by the AMLC
to be appropriate, which shall not be more than Five hundred thousand Philippine pesos
(P500,000.00) per violation. 1âwphi1

"The AMLC may promulgate rules on fines and penalties taking into consideration the
attendant circumstances, such as the nature and gravity of the violation or irregularity.

"(g) The provision of this law shall not be construed or implemented in a manner that will
discriminate against certain customer types, such as politically-exposed persons, as well as
their relatives, or against a certain religion, race or ethnic origin, or such other attributes or
profiles when used as the only basis to deny these persons access to the services provided
by the covered persons. Whenever a bank, or quasi-bank, financial institution or whenever
any person or entity commits said discriminatory act, the person or persons responsible for
such violation shall be subject to sanctions as may be deemed appropriate by their
respective regulators."

Section 11. New sections are hereby inserted after Section 19 of the same Act, as amended, to
read as follows:

"SEC. 20. Non-intervention in the Bureau of Internal Revenue (BIR) Operations. – Nothing

contained in this Act nor in related antecedent laws or existing agreements shall be
construed to allow the AMLC to participate in any manner in the operations of the BIR."

"SEC. 21. The authority to inquire into or examine the main account and the related accounts
shall comply with the requirements of Article III, Sections 2 and 3 of the 1987 Constitution,
which are hereby incorporated by reference. Likewise, the constitutional injunction
 against ex post facto laws and bills of attainder shall be respected in the implementation of
this Act."

Section 12. The succeeding sections are hereby renumbered accordingly.

Section 13. Separability Clause. – If any provision of this Act is declared unconstitutional, the same
shall not affect the validity and effectivity of the other provisions hereof.

Section 14. Repealing Clause. – All laws, decrees, orders, and issuances or portions thereof, which
are inconsistent with the provisions of this Act, are hereby repealed, amended or modified
accordingly.

Section 15. Effectivity. – This Act shall take effect fifteen (15) days following its publication in at
least two (2) national newspapers of general circulation.