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AN ACT TO PROVIDE FOR THE NATIONAL DEFENSE OF THE PHILIPPINES, PENALIZING CERTAIN VIOLATIONS THEREOF, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES.

Be it enacted by the National Assembly of the Philippines:

TITLE I. NATIONAL DEFENSE

PRELIMINARY ARTICLE. TITLE of Act

Section 1. This Act shall be known as "The National Defense Act."

ARTICLE I. NATIONAL DEFENSE POLICY

Section 2. The national defense policy of the Philippines shall be as follows:

(a) The preservation of the State is the obligation of every citizen. The security of the Philippines and the freedom, independence, and perpetual neutrality of the Philippine Republic shall be guaranteed by the employment of all citizens, without distinction of age or sex, and all resources.

(b) The employment of the nation's citizens and resources for national defense shall be effected by a national mobilization.

(c) The national mobilization shall include the execution of all measures necessary to pass from a peace to a war footing.

(d) The civil authority shall always be supreme. The President of the Philippines as the Commander-in-Chief of all military forces, shall be responsible that mobilization measures are prepared at all times.

(e) A national mobilization shall be ordered in any case of threatened or actual aggression.

(f) The national defense organization shall be adapted as closely as possible to the territorial and administrative organization of the Philippines.

(g) The mobilization plans of financial, industrial, economic, social, intellectual, and moral forces and resources of the Philippines shall conform to the provisions of the Constitution of the Philippines and shall be prepared by the executive departments concerned in accordance with the following general policies: (1) The respective responsibilities of the several executive departments in mobilization planning will be prescribed by the President; (2) forces and resources shall be employed so as to secure unity and continuity of effort until the threatened or actual aggression to the Philippines has been overcome.

(h) No profit incident to war shall accrue to any individual, corporation association or partnership.

ARTICLE II. EMPLOYMENT OF PERSONS AND RESOURCES

Section 3. Military service shall be obligatory for all citizens of the Philippines, and the methods and procedure for the classification, selection, examination, induction, training, and release of all citizens from their military obligations shall be as prescribed in Title III of this Act.

Section 4. The registration of citizens for military service shall be a civil function carried out by the civil authorities under the supervision of the Chief of Staff.1

Section 5. During a national mobilization the Government of the Philippines, acting through the appropriate governmental department, or by delegated authority, shall have the right to secure by mutual agreement or by requisition all such resources, tangible and intangible, and all such services and all other assets or possessions, public or private, as may be necessary for national defense.

ARTICLE III. THE COUNCIL OF NATIONAL DEFENSE

Section 6. There shall be a Council of National Defense which shall consist of the President, the Vice President, the head of each executive department, the Chief of Staff, and six other members to be designated by the President with the consent of the Commission on Appointments of the National Assembly,2 and a permanent secretary of the Council who shall be an officer of the Army. The Council shall advise with the President on all matters of national defense policy. It shall have a permanent staff which shall preserve a documentary record of the Council's deliberations.3

Section 7. The President of the Philippines shall be Chairman of the Council of National Defense.

Section 8. The method of operation of the Council of National Defense, its detailed duties, and its rights to summon witnesses or consultants shall be fixed in executive orders to be issued by the President. Funds for its operation shall be provided in the appropriations for the Executive Department.

ARTICLE IV. TERRITORIAL ORGANIZATION

Section 9. For the purpose of recruiting the national manpower, providing preparatory military training, executing the national mobilization plans, and supplying the needs of the armed forces in peace and war, the Philippines shall be divided into military districts as the President may direct.4

Section 10. In every military district a commissioned officer of the regular army shall be assigned as District Commander.5 He shall be provided with such assistants as the Chief of Staff may direct.

In time of peace, he shall be responsible, under the Chief of Staff, for the training,6 discipline, and tactical training of all units within his district, and for the preparation of defense plans; and in time of war, he shall be responsible, under the control of the Chief of Staff, for the defense of his district.

Section 11. In every province, The provincial governor shall execute all recruitment laws and the laws and regulations governing the mobilization of persons and resources for national defense, which the Central General Staff of the Philippine Army may prescribe from time to time. The Provincial Inspector7 of the Philippine Constabulary shall be a member of his staff to carry out this duty.8

Section 12. Recruiting areas will as far as possible conform with political subdivisions of the Philippines.

ARTICLE VII. MOBILIZATION CENTERS

Section 13. Mobilization centers shall be located in municipalities, townships and municipal districts according to their military population and the percentage of such population assigned to units of the reserve.

The Chief of Staff shall determine the location and type of mobilization centers to be provided, and the District Commander9 shall be responsible for the operation of these mobilization centers at all times.10

ARTICLE VI. NATIONAL AND PARTIAL MOBILIZATION

Section 14. A National Mobilization shall be decreed by the President of the Philippines on approval of the National Assembly.

Section 15. Whenever the safety of the Philippines is endangered, the President may decree a Partial Mobilization. He shall promptly summon and report to the National Assembly the cause for, and extent of, the Partial Mobilization. The National Assembly shall determine whether or not the Partial Mobilization so decreed shall be annulled.

ARTICLE VII. – Technical Advisers

Section 16. The President of the Philippines shall have authority to appoint and maintain such technical advisers from the Army of the United States and for such period of time as he may deem necessary, which shall in no case extend beyond his term of office.11

TITLE II. MILITARY ORGANIZATION

ARTICLE I. COMPOSITION AND ORGANIZATION OF THE ARMY

Section 17. The Army of the Philippines shall consist of the Regular Force and the Reserve Force: Provided, That, members of the Reserve Force on inactive status shall not, by reason solely of their appointments, oaths, commissions, or status as such, be held or deemed to be officers or employees in the Philippine Civil Service.12

Section 18. The organized peace establishment, including the Regular Force and the Reserves, shall comprise all organizations necessary to form the basis for a complete and prompt mobilization for the national defense. The Army shall at all times be organized in so far as practicable into battalions, regiments, divisions, and, if necessary, higher units.13

ARTICLE II. THE REGULAR FORCE

Section 19. Each young man who shall undergo training and service shall, for the duration of his training and service, receive a monthly base pay of not less than ten pesos for the first ten months, and an additional five pesos per month for service longer than ten months, in addition to meals and barracks accommodation, medical and dental attendance, clothing and transportation:14 Provided, That under such regulations as the Secretary of National Defense may prescribe, each such person shall receive allowance the value of which shall not be less than seventy-five pesos: Provided, further, That each such person who, upon completion of training, when assigned for service with a unit or units of the Regular Force on actual combat operations shall receive pay and allowances at the same rates prescribed for enlisted men of the Regular Force. For those who are not on actual combat operations but are assigned for service with any unit of the Regular Force, the Secretary of national Defense may under such regulations as he may prescribe, allow the payment of pay and allowances higher than those prescribed herein: And provided, finally, That each such person who, upon completion of training, when assigned for service overseas with a unit or units of the Regular Force shall be entitled to the same rules of pay and allowances prescribed for enlisted men of the Regular Force for overseas duty.15

Section 20. Officers and enlisted men of the Regular Force shall be assigned to the various branches, corps and services as the President may direct.

All officers and enlisted men of the Regular Force who are not assigned to duty with any branch, corps or service herein provided for shall be carried on the detached officers' list and detached enlisted men's list, respectively.

Section 21. The organization of the Regular Force shall be as follows:

(a) All other regular units shall be organized as the President may direct.16

(b) The President may attach to regular units or may assign to duty with any component of the Regular Force such number of reserve officers as he may deem necessary. All periods of such duty as do not exceed thirty days annually shall be considered as regular annual training; all periods in excess of thirty days annually shall be classed as extended tours of active duty.17

(c) The President may likewise attach for their prescribed period of military training such number of trainees to regular units as he deems necessary.18

Section 22. The appointment, promotion, and discharge of officers in the Army shall be as follows:

(a) All commissioned officers in the Army shall be citizens of the Philippines; Provided, That the President may in his discretion retain in the Army any officer now holding a commission in the Philippine Constabulary. Commissioned grades authorized in the Army of the Philippines shall include third lieutenant,19 second lieutenant, first lieutenant, captain, major, lieutenant colonel, colonel, and general officer: Provided, That the general officer grade may be further subdivided into grades as prescribed by the President: And provided, also, That individuals permanently commissioned in a grade above that of colonel shall be known as General Officers of the Line; those not so commissioned but holding an office in the Army to which the grade of general officer is attached shall be known as General officers of the Staff.

(b) Officers shall be commissioned in the Army of the Philippines subject to such examinations for the determination of fitness and proficiency as the President may prescribe. All appointments and promotions shall be made by the President, but the appointments and promotions in the Army from the rank of colonel shall be made with the consent of the Commission on Appointments of the National Assembly.20

(c) 21

(d) 22

(e)In determining the relative standing and precedence in seniority between officers of the regular force and officers of the reserve force of the armed Forces of the Philippines of the same permanent grade, the officers with the longer active commissioned service in that permanent grade shall be the senior, and in cases of the same active commissioned service in permanent grade, the officer with the longer accumulated active commissioned service in the Armed Forces of the Philippines shall be the senior, and in cases not covered by the foregoing, the Secretary of National Defense shall determine the relative seniority of officers concerned.23

(f) Promotion of regular and reserve officers shall be accomplished under such policies and procedure as the President may direct, provided that in time of peace no reserve officer may be promoted to any grade until he has served at least two years in the next lower grade.

Any reserve officer may, in the discretion of the President, be discharged at any time.

(g) 24

(h) In time of war any officer of the Regular Force may be appointed to higher temporary rank without vacating his permanent commission, such appointments in grades below that of colonel being made by the President alone, but all other appointments in time of war shall be in the Reserve force.

(i) Upon his own application and with the approval of the Chief of Staff, any officer may be transferred at any time to a branch or service other than his own without loss of rank: Provided, That no transfers to or from the Judge Advocate General's Service, The Chaplain Service or the Medical Service shall be permitted. Transfers in time of war shall be made as prescribed by the Chief of Staff.25

(j) With the approval of the American Government, not to exceed one-half of one per cent of the commissioned officers of the Regular Force below the grade of lieutenant colonel may be detailed to duty at foreign military schools.

While on such duty, officers so detailed shall receive the pay and allowances of commissioned officers of their own grade in the army of the country in which the military school is located: Provided, That such pay is equal to or higher than that received by the officer so detailed.

(k) Not to exceed one-half of one per cent of the commissioned officers of the Regular army in any fiscal year may be detailed as students at such technical, professional, and other educational institutions, or as students, observers, or investigators at such industrial plants, hospitals, and other places, as shall be best suited to enable such officers to acquire a knowledge of or experience in the specialties in which it is deemed necessary that such officers shall perfect themselves: Provided, That no expense shall be incurred by the Philippine Government in addition to the pay allowance of the officers so detailed, except for the cost of tuition at such technical, professional, and other educational institutions.

(l)The President is authorized to detail or assign to duty with units of the Reserve Force such officers of the Regular Force as he deems necessary. Commanders of divisions and larger units of the Reserve Force shall be selected from officers of the Regular Force.

(m) Transfers of reserve officers within their category shall be made under such rules as the President may prescribe.

To the extent provided for from time to time by appropriations for this specific purpose, the President may order reserve officers to active duty at any time and for any period, but, except in time of a national emergency expressly declared by the National Assembly, no reserve officer shall be employed on active duty for more than six months in each five years without his own consent: Provided, however, That reserve officers who undergo extended tours of active duty voluntarily for any length of time and receive full pay and allowances therefor, shall not, by reason solely of such service, be exempt from duty with annual maneuvers or annual active duty training. Any reserve officer who fails or refuses to report for such duty, when so ordered, shall be punished as a court-martial may direct.26

Section 23. The General Staff Corps shall consist of the Chief of Staff, the Central General Staff and the General Staff with troops.27

(a) The Chief of Staff shall be directly subordinate to the President of the Philippines.

Under the direction of the President of the Philippines, he shall cause to be made, by the Central General staff,28 the necessary plans for recruiting, organizing, supplying, equipping, mobilizing, training and demobilizing the Army in peace and in war and for the use of the military forces for national defense. He shall render annually to the President, for transmission to the National Assembly, a full report upon the condition of the Army of the Philippines including statements as to strength, cost, unexpended balances, requirements, and so on.29

(b) The Central General Staff30 shall consist of the Chief of Staff, the Deputy Chief of Staff, and such other officers of grades not below that of first lieutenant as the President may direct.

It shall be the duty of the Central General Staff31 to prepare plans for the national defense and for the mobilization of the man-power and material resources of the nation in an emergency, to investigate and report upon all matters affecting the efficiency of the Army and its state of preparation for military operations; to perform such inspections of the Army as may be necessary to insure thoroughness and uniformity in training and compliance with regulations; to perform for the infantry, cavalry, artillery and air units and the Off-shore Patrol32 such functions as the Chief of Staff may prescribe; and to render professional aid and assistance of the Chief of Staff.33

(c) The General Staff with troops shall consist of such number of officers not below the grade of first lieutenant as may be necessary to perform the General Staff duties of the headquarters of divisions and higher units.

It shall be the duty of the General Staff with troops to render professional aid and assistance to the general officers over them; to act as their agents in harmonizing the plans, duties and operations of the various organizations and services under their jurisdiction, in preparing detailed instructions for the execution of the plans of the commanding generals and in supervising the execution of such instructions.

Section 24.34

Section 25. The Services shall consist of the following: (a) The Adjutant General's Service, the Judge Advocate General's Service, the Inspector General's Service, The Quartermaster Service, The Finance Service, the Medical Service, the Ordinance Service and the Chaplain Service. Each service shall consist of a Chief of Service and such assistants as the President may direct. The head of each service shall be responsible, under the supervision of the Chief of Staff, for the efficient performance of duties herein assigned to his service, and for the execution of all instructions and orders issued him by the Chief of Staff.35

(b) The Adjutant General's Service shall be charged, under such regulations as the Chief of Staff may prescribe, with the operating functions of procurement, assignments, promotion, transfer, retirement, and discharge of all officers and enlisted men of the Regular and Reserve Forces.

(c) The Judge Advocate General's Service shall render such legal assistance as may be required by the military forces.36

(d) The Inspector General's Service shall be charged under such regulations as the Chief of staff may prescribe, with the making of such inspections, investigations and reports as may be prescribed in regulations or directed by the Chief of Staff.37

(e) The Quartermaster Service shall be charged with the purchase, procurement, storage, and issue for the Army, of all supplies, except those whose procurement is assigned to other services; with the acquisition of real estate and the issue of license in connection with government military reservations; with the transportation of the Army by land and water, and with such other duties as may be required by law or directed by the Chief of Staff: Provided, That such commissioned technical assistants from other branches or services as may be required shall be detailed to the Quartermaster Service for a period of not to exceed three years.38

(f) The Finance Service shall be charged with the disbursement of all funds for the national defense, the accounting of the same, and with such other fiscal duties as may be required by law or directed by the Chief of Staff: Provided, That under such regulations as the Chief of Staff may prescribe, officers of the Finance Service, accountable for government moneys, may entrust such moneys to other officers for the purpose of having them make disbursements as their agents, and the agent officer as well as the officer who entrusts the money to him shall be bonded and shall be held pecuniarily responsible to the Government of the Philippines.39

(g) The Medical Service shall consist of the Medical Corps, the Dental Corps, the Veterinary Corps, the Nurse Corps, the Medical Administrative Corps and such other corps as may be created by the President. It shall be charged with all matters pertaining to the physical examination, health and sanitation of personnel and animals of the army. The same pay, allowances, rights and privileges shall be granted to the members of the Nurse Corps as are given to the members of the other corps in the Medical Service.40

(g-1) All commissioned officers of the Nurse Corps who were appointed under Executive Order No. 267, dated April 15, 1940, issued pursuant to section 25 (e) of the National Defense Act, as amended by Commonwealth Act Numbered Three hundred and eighty-five, or who were appointed by the President of the Commonwealth of the Philippines and who were inducted into the United States Armed Forces in the Far East and served honorably as such with the said armed forces, shall be considered as commissioned officers of the Nurse Corps created by Republic Act Numbered Two hundred and three.41

(g-2) All said commissioned nurses shall be credited with a period of service equal to the number of years, months, and days which said nurses served on active military service either as members of the Nurse Corps created by Executive Order No. 267, issued pursuant to section 25(e) of the National Defense Act, as amended by Commonwealth Act Numbered Three hundred and eighty-five, or in the status of commissioned officers of the Army of the Philippines inducted into the United States Armed Forces of the Far East.42

(g-3) The respective ranks and grades which said commissioned nurses held under Executive Order No. 267 or in the status of commissioned nurses of the Army of the Philippines inducted into the United States Armed Forces of the Far East are hereby recognized, and the period of service credited to them, as hereinabove provided, shall be counted and construed as continuous or active service for the purpose of determining their grades and ranks, seniority, promotion and retirement as members of the Nurse Corps, Medical Service: Provided, however, That promotions made in the said corps before the approval of this Act shall not be affected thereby.43

(h) The Ordnance Service, the Medical Service, the Air Corps, the Corps of Engineers, the Signal Corps, the Off-shore Patrol,44 and the Chemical Corps45 shall be charged with the purchase, procurement, storage and issue of such special equipment, materials and supplies as apply to their respective services.

These several arms and services are charged with the study, experiment and development of all special materials and equipment pertaining to them.46

(i) The Chaplain Service shall have charge of the religious welfare of the Army.47

Section 25-A. The Corps of Engineers is charged with all construction required for the National Defense, including land and seacoast defenses, with the maintenance and repair of all such construction and with the maintenance and operation of all utilities except such construction and such utilities as may be specifically assigned to other services by the Chief of Staff.

Section 25-B. The Signal Corps shall be charged with the installation, maintenance and operation of all military signal communication systems and equipment, except the installation, maintenance and operation of such systems as may be organic to tactical units.48

Section 26. 49

ARTICLE III. ENLISTMENT AND REENLISTMENT

Section 27. Any male citizen of the Philippines between eighteen and thirty years of age, able bodied, free from disease, of good moral character and habits, of average intelligence, and possessed of such educational attainments as may be prescribed, may be enlisted in the Regular Force under the following restrictions:

(a) Enlistments shall be for a term of three years, and may be made by the recruiting officers at stations of the Regular Force: Provided, That all enlistments in force at the outbreak of the war, or other grave national emergency, or entered into during its continuation shall continue in force until six months after its termination unless sooner terminated by the President.

(b) Unmarried minors between eighteen and twenty-one years of age may be enlisted only on the written and duly attested consent of the father, the mother when she is the only surviving parent, or the publicly known guardian.

(c) Enlistments for service in any province, except for the Regular Division, the Artillery Corps, and Air Corps, shall be from among residents thereof. In so far as practicable, enlistments in those forces shall be apportioned among the various provinces of the Philippines. Any former soldier in the Philippine Army, the Philippine Constabulary, or the United States Army or Navy, of good character and faithful service, may be enlisted in the regular force: Provided, That he is physically qualified and that the difference between his age and his years of actual service shall not exceed thirty years.50

Section 28. Regulations applying to the reenlistment and to the retirement privileges of noncommissioned officers of the Regular Force shall be prescribed by the President.

Section 29. Henceforth, enlisted men of the Armed Forces of the Philippines and Filipinos commissioned or enlisted in the Armed Forces of the United States who retained or reacquired their Philippine citizenship except those discharged for physical disability, who shall have served at least three years and honorably discharged therefrom shall be incorporated in the Reserve Force in the grade in which discharged, and assigned to an organization thereof, subject to annual active duty training in the same manner as any other reservist: Provided, That any other honorably discharged personnel of the United States Armed Forces not otherwise disqualified may be mustered in the Reserve Force: And provided, further, That nothing in this provision shall prevent the dropping from the rolls of the Reserve Force of the name of any person who shall subsequently become not qualified as a reservist.51

ARTICLE IV. MILITARY ACADEMY

Section 30. There shall be established a military training school to be named the Philippine Military Academy, for the training of selected candidates for permanent commission in the Regular Force. The student body in the Military Academy shall be known as the Cadet Corps of the Army of the Philippines.

Section 31. The President is authorized to appoint to the Military Academy annually, subject to such physical and mental examination as he may prescribe, the number of cadets necessary to maintain the Cadet Corps at a strength of not to exceed three hundred and fifty at any one time. Cadets shall be selected from among candidates as hereinafter provided. Candidates for admission must be single and must never have been married, in good physical condition, not less than seventeen nor more than twenty-two years of age on the first of April of the year of admission, and shall be nominated by the members of Congress,52 except as hereinafter provided, each of whom may nominate any number of candidates. The President shall appoint from among those who pass the physical and mental examinations with the highest ratings, the number or numbers necessary to fill the existing vacancies: Provided, That a quota of three members of the Cadet Corps, hereinafter referred to as Congressional53 quota shall be alloted to each Congressional District: Provided, further, That in case no candidates from a given Congressional54 District attain the required minimum ratings, the vacancies in the Congressional55 quota shall be filled by the President from successful candidates at large with the highest ratings: Provided, the President directly, without Congressional56 nomination: Provided, still further, That a quota of eight members of the Cadet Corps shall be filled by the President directly, without Congressional57 nomination, from qualified candidates with the highest ratings who are enlisted men of the Regular Force and who have completed at least one year of active military service and are in active status at the time of admission: Provided, still further, That a quota of four members of the Cadet Corps shall be filled by the President directly, without Congressonal58 nomination, from qualified candidates with the highest ratings who are sons of enlisted men who are serving or who have honorably served for a period of at least six months in the Armed Forces of the Republic of the Philippines or of the Commonwealth of the Philippines, of duly recognized guerrilla units or of the United States Armed Forces prior to July fourth, nineteen hundred and forty-six: Provided, still further, That physically qualified sons of military personnel who have been cited for and awarded the medal for valor may be appointed as cadets by the President directly, without Congressional59 nomination, and mental examination, on the condition that the number of such cadets shall not be included in the Cadet Corps strength of three hundred and fifty as herein provided: And provided, finally, That a quota of one foreign cadet per class may be alloted to each foreign country maintaining diplomatic relations with the Republic of the Philippines on the condition that the pay and allowances, per diems and traveling expenses of such cadet be borne by his country. Foreign cadets shall pass a qualifying mental examination and the number thereof authorized to train at the Military Academy shall not be included in the Cadet Corps strength of three hundred and fifty as herein provided.

The pay and allowances of students at the Military Academy shall be fixed by the President.

Any student, except foreign cadets, who shall, after entrance to the Academy and before completion of the prescribed course of training, be found to be physically unfit for military duty by reason of injury or disease incident to the service, shall be retired with the rank of cadet and shall be entitled to the retired pay and allowances of second lieutenant of the Regular Force.

Upon satisfactory completion of the course of instruction at the Military Academy candidates, except foreign cadets, shall be commissioned second lieutenants in the Regular Forces notwithstanding the age limits for appointment in the regular force prescribed in section four (b) of Republic Act Numbered Two hundred ninety-one, with relative rank in order of final general standing as determined by the Academic Board, and approved by the Chief of Staff: Provided, That any cadet who is discharged from the Academy prior to the completion of the prescribed course of instruction shall not be commissioned in the Regular or Reserve Forces until after the members of his class have been graduated from the Military Academy and duly commissioned: Provided, further, That any cadet dismissed from the Academy for hazing shall not thereafter be eligible for appointment as commissioned officer in the Regular or Reserve Forces.

The Academic Board of the Philippine Military Academy shall be composed of the Superintendent, the Dean of the Corps of Professors, the Commandant of Cadets, and the heads of the departments and shall have the power to confer the degree of bachelor of science under such rules and regulations as the Chief of Staff may prescribe, upon all cadets who may hereafter satisfactorily complete the approved course of studies.

The Chief of Staff shall have authority to grant graduation leaves of absence with full pay to all graduates of the Military Academy, who receive commissions in the Regular Force, for a period not exceeding one month effective upon the date of graduation.

Cadets may be granted leaves of absences from the Military Academy under such rules and regulations as the Chief of Staff may prescribe.

Academic leaves of absences without deduction from pay and allowances may be authorized for the Superintendent, professors, assistant professors, instructors and other officers of the Military Academy for the entire period of the suspension of the ordinary academic studies under such rules and regulations as the Chief of Staff may prescribe: Provided, That officers of the Reserve Force assigned for duty at the Military Academy shall be entitled to the same leave privileges as are authorized the officers of the Regular Force.60

ARTICLE V. THE RESERVE FORCE

Section 32. The Reserve Force shall consist of such number of Infantry Divisions located as the President may direct of such additional sepate regiments, battalions, companies, and similar separate units as the President may authorize; of all reserve classes not assigned to the above units, and of the Reserve elements of the Offshore Patrol.61

The organization of reserve land and air units shall, in so far as practicable, be that of corresponding tactical units of the Regular Force.

SEC.33. The Chief of Staff may detail or assign to duty with Reserve units such enlisted men of the Regular Force as he deems necessary.62

ARTICLE VI. RESERVE OFFICERS AND NONCOMMISSIONED OFFICERS

Section 34. Any person who shall have completed his trainee instruction and who is selected for training as a commissioned officer shall pursue a theoretical course of training of not less than six months to be prescribed by the Chief of Staff, upon completion of which he shall be assigned to duty with a Regular unit as prohibitionary third lieutenant63 for another period of six months. At the end of this service those who have displayed qualities of leadership and who have demonstrated their fitness to command may be appointed and commissioned third lieutenants64 of the Reserve Force and assigned to an organization thereof. Those who fail to complete the course of training shall be transferred to the Reserve Force as enlisted men and shall be assigned to an organization thereof.65

Section 35. At such colleges and universities as the President may designate there shall be established and maintained Reserve Officers' Training Units of such arms and services as he shall specify, where every physically fit student shall be required to pursue a course of military instruction designed to qualify him for a commission as a third lieutenant66 of the Reserve. In so far as may be practicable, the student shall be permitted to choose the arm or service in which he wishes to train. This course of military instruction, if pursued to completion, shall exempt students from trainee instruction. It shall not exempt them from registration.67

Section 36. The Chief of Staff shall, by mutual agreement with the head of the institution, designate the senior military instructor and such commissioned and enlisted personnel as may be necessary for each institution. He is authorized to issue to such institutions the arms, equipment and other property which he deems essential to the conduct of this instruction.

Section 37. Each year the senior military instructor shall submit to the Chef of Staff the names of those members of the graduating class whom he recommends for further training. These graduates may be ordered to organizations of the Regular Force for a six months' probationary period. At the end of this service those who have displayed their fitness for Commission may be appointed and commissioned third lieutenants68 of the Reserves and assigned to an organization thereof.

Section 38. Graduates who are not recommended for training as third lieutenants69 and those who fail to qualify for appointment as such shall be assigned to the nearest age group in the Reserve and assigned to an organization thereof as private or noncommissioned officers as recommended. Students of military age who do not complete their courses of study at an institution of learning provided with a Reserve Officers' Training Unit shall be liable for trainee instruction70 immediately upon severing their connection with the institution. If more than 20 years of age, they shall be assigned to the trainee class next to be called.

Section 39. The President shall appoint and commission, upon the recommendation of the Chief of Staff, such reserve officers as shall in his opinion be needed. If deemed necessary, candidates may be required to undergo training as probationary third lieutenants,71 before being appointed and commissioned in the reserves.72

Section 40. In so far as may be practicable, original appointments by the President in grades above third lieutenant73 shall be made from among those formerly holding Reserve Commissions in the United States Army, from among former officers of the Philippine Scouts and Constabulary, from among former officers of the National Guard and from such others who possess exceptional ability or special training and skill.74

Section 41. Noncommissioned officers of the Regular Force between the ages of twenty-one and thirty years who are recommended for appointment as third lieutenants75 shall pursue the course of instruction of six months prescribed for those who have completed their trainee instruction, and who are recommended for training to qualify as reserve officers. Upon satisfactory completion of this course they may be appointed and commissioned third lieutenants76 of the Reserves and assigned to an organization of the Reserve Force. Except upon mobilization, no service as a reserve officer may be performed by an enlisted man of the Regular Force.77

Section 42. Medical reserve officers shall be procured from graduates of medical colleges and universities under such regulations as may be prescribed by the President.

Section 43. Reserve officers shall be physically examined upon each assignment to active duty. Any reserve officer found physically unfit for active field service shall be discharged.

Section 44. Young men who complete their trainee instruction78 and are selected for additional training79 to qualify them as noncommissioned officers of the Reserve Force shall pursue a prescribed course of three months. Upon satisfactory completion thereof they shall be warranted in the transferred to the Reserve Force and assigned to an organization thereof.

Section 45. noncommissioned officer grade for which they shall have qualified, and then The Chief of Staff shall be empowered to organize and establish such special and advanced school units as he may deem proper for the special training of officers of the technical and supply sections and services, and for the advanced training of selected officers for field, staff, and command duties.

Section 46. All candidates for appointment as reserve officers, except medical officers, shall be required to qualify for appointment as third lieutenants80 of the line before being permitted to pursue any special course pertaining to the technical and supply services.

ARTICLE VII. ACTIVE DUTY TRAINING OF RESERVISTS

Section 47. Periods of active duty training81 in the Reserve Force shall be as prescribed by the Chief of Staff. In so far as may be practicable, the active duty periods for the three echelons shall be as follows: First Reserves, annually, not less than ten days; Second Reserves, annually, not less than five days; and Third Reserves, every third year, not less than seven days.

During such periods of active duty training82 the reservist shall be amenable to the laws and regulations prescribed for the Regular Force. Except with his own consent, no enlisted reservist may be required in time of peace to serve more than thirty days on active duty in any calendar year.

Section 48. Any reservist who fails to report for active duty training83 as directed by the Chief of Staff shall be punished as a court-martial may direct.

Section 49. Any employee of the Government called for trainee instruction, or for regular annual active duty training, or for extended tour of active duty, shall not lose his position or suffer a loss of pay due to his absence in the fulfillment of his military obligations. A reserve officer on extended tour of active duty, regardless of the amount of his compensation in the civil position, shall be entitled to quarters or rental allowance as may be prescribed for his grade by Army regulations.84

Section 50. Mobilization centers shall be constituted as follows:

(a) Mobilization centers shall be established for the purpose of providing storage for the arms, equipment, clothing, and records of units, other than those of the Regular Force, to be mobilized in a national emergency, of making provision in advance of mobilization for the necessary shelter for men and animals of such units during mobilization, and of reducing to a minimum the period necessary for mobilization.

(b) One mobilization center shall be established for each battalion or similar unit or, when for the best interests of the Philippines, for regiments or larger units.85

TITLE III. MILITARY SERVICE

ARTICLE I. OBLIGATION TO SERVE AND LENGTH OF SERVICE

Section 51. All Filipinos are liable to military service.

Section 52. The obligation to undergo military training shall begin with youth in school, commencing at the age of ten years, and shall extend through his schooling until he shall reach the age of twenty-one years when he shall become subject to service with the colors. If at eighteen to twenty-one years of age the youth is not attending any school or college he shall enter the Junior Reserve subject to the exemptions prescribed in section eighty-seven of this Act. The training which he may undergo prior to the calendar year in which he attains twenty-one years of age shall be termed "Preparatory Military Training."

All school girls shall receive such instruction and training as the Chief of Staff may deem necessary for auxiliary service.

All able-bodied male citizens between the ages of twenty years and fifty-one years, both inclusive, except those specifically exempted, shall be classified as follows:

Trainees.- Those between the ages of twenty and twenty-one years who have been selected to receive military training.

First Reserve. – Those between the ages of twenty-two and thirty-one years both inclusive, and including also all those who have completed trainee instruction or its equivalent even though they may not have attained the age of twenty-two.

Second Reserve. – Those between the ages of thirty-two years and forty-one years, both inclusive.

Third Reserve. – Those between the ages of forty-two years and fifty-one years, both inclusive.86

Section 53. Young men shall be required to register for military training and service in the Armed Forces of the Philippines—Philippine Army, Philippine Constabulary, Philippine Air Force, Philippine navy, and separate Armed Forces of the Philippines units—in the calendar year in which they will attain twenty years of age. The period of such training and service shall be for eighteen consecutive months. Each such person shall receive military training for a period of at least six months. After such training, he may be assigned for duty and service with elements of the Regular Force.87

ARTICLE II. PROCUREMENT OF TRAINEES

Section 54. On January first, 1936, or as soon thereafter as may be practicable, the President shall issue a proclamation calling upon all young men, citizens of the Philippines, who shall attain the age of twenty years in that calendar year, to register for military instruction. Registration shall take place in suitable registration places to be prescribed by the city, municipality, or municipal district government in which they reside, between the dates of April first and seventh. Annual registration shall be held during the same period in succeeding years.

Section 55. The President shall provide by proclamation all necessary rules and regulations for the method and procedure of registration and the selection of trainees for military service.

Section 56. On May fifteenth of each year, the Chief of Staff shall conduct a drawing which shall determine those registrants who are to be called for trainee instruction in the next calendar year He shall cause immediate and thorough publication to be given of the names of those who shall have been drawn. Provincial Governors shall be responsible that each young man in their province who shall have been drawn is notified at once of this fact.88

Section 57. No person convicted of a crime against the Government or of an offense involving moral turpitude shall be permitted to register for military service unless he shall have been previously pardoned by the President.

Section 58. The following persons are exempt from registration:

(a) Members of the Philippine Scouts and the Philippine Army.

(b)Young men, citizens of the Philippines who are residing abroad. These persons shall register within five days after their return to the Philippines in order to determine their obligation for military training.

If under thirty years of age on their return, they shall be liable for military service, and shall enter thereon if drawn at the next national drawing for military service following their return.

(c)Persons who, because of incarceration awaiting trial or undergoing sentece of a court of law, are prevented from registering. They shall upon their release from custody register for military trainee instruction with the president89 of the municipality or township90 in which they reside. If under thirty years of age at the time of release, they shall be liable for trainee instruction; if over that age, they shall not be required to serve with the colors.

Section 59. The following registrants are exempted from trainee instruction:

(a) Ecclesiastic regularly ordained and serving as a member of the clergy and seminary students of a recognized church or sect.

(b) Physicians properly certified and practicing as such.

(c) Superintendents of penitentiaries, corrective prisons, and insane asylums.

(d) The personnel of the coast guard revenue cutter and lighthouse inspection services.

(e) Pilots, navigators and marine superintendents.

(f) Filipino citizens who are civil service eligibles and who are employed regularly by the United States Government:91 Provided, That those of trainee age who have been drafted for military instruction, upon cessation of their employment in the United States Government, shall enter upon such instruction should they be below thirty years of age.92

Section 60.93

ARTICLE III. EXAMINATION, CLASSIFICATION, DEFERMENTS

Section 61. Acceptance Board shall be appointed by the Secretary of National Defense for a term of three years. Boards shall be appointed for such municipalities and municipal districts as the population may require. The Secretary of National Defense shall determine the number and location of Boards required for the administration of this law. They shall consist of five regular members and two or more alternates. Two regular members shall be physicians and where practicable two shall be officers of the Philippine Army stationed in the province. The Secretary of National Defense shall designate the Chairman of the Board. The alternates shall serve and attend the meetings of the Board, in the event of the absence, sickness or other inability of the regular members, upon call of the Chairman of the Board.94

Section 62. The medical members shall advise the board in cases where the young man's physical condition for military service is in question. Decision by the board as to action on such cases and upon all other matters shall be by majority vote.

Section 63. Young men who have been called for trainee instruction,95 upon reporting to the Acceptance Boards, shall be required to complete a questionnaire of a prescribed form, and to undergo a physical examination. The board shall then classify the young men into the following classes:

(a) Class I—Fit for unlimited service.

(b) Class II—Fit for limited service only.

(c) Class III—Deferred until a later date.

(d) Class IV—Exempted for physical reasons.

Section 64. The following, during the period of their employment or functions, may have their trainee instruction96 deferred for not to exceed three years:

(a) Such officers and employees of the insular,97 provincial, municipal, and municipal district governments, as the President may designate in executive orders.

(b) Officials and agents of organized police forces.

(c) Officials of land, air, and marine transport.

The persons above mentioned shall be exempted from all military service except trainee instruction98 and except for active service in a national emergency, expressly declared by the National Assembly when they shall be liable for military service or special assignment as directed by the President.

Section 65. Deferments may likewise be granted by the Acceptance Boards for those who are indispensable to the support of their dependent families, for agricultural reasons, and for certain key men in industry, commerce or agriculture; provided that such deferments shall not exceed one year, after which they shall be liable to such training99 in the same manner as that prescribed for any other citizen.

Section 66. Deferments for any cause whatsoever shall be made only upon presentation to the Acceptance Boards of supporting evidence either by testimony of witnesses or by documentary evidence or both.

Section 67. The Acceptance Board shall be responsible for the prompt forwarding of the trainee's name, together will all documents and records pertaining to him, to his future station.

Section 68. Where the Acceptance Board denies the claim for deferment of any individual, he may, within ten days, appeal his case to the Central Review Board in Manila.

Section 69. Where dependency was the cause for deferment and that condition continues after the termination of the period of deferment, the young man shall be liable to trainee instruction,100 and shall enter upon such instruction. During the period of his absence undergoing instruction, an allowance for the partial support of his dependent or dependents, who have no other means of support, shall be made by the Philippine Government. The corresponding acceptance board shall determine the dependent or dependents entitled to this allowance, which shall be fixed by Executive Order.101

Section 70. The expenses incident to the administration of the Acceptance Boards shall be borne by the Government. Except for governmental officials, the salaries of members of the Board shall not exceed P500 per annum, provided that no governmental official, whose salary is paid from the Philippine Government Treasury, shall receive any additional compensation by reason of service on such Boards.

Section 71. The District Commanders102 or their duly appointed assistants shall supervise the recruitment of the man-power in their districts. This responsibility shall extend to a supervision of registration and the administration and operation of all Acceptance Board within the territorial limits of their commands. They shall have access at all times to the records pertaining to registration, examination, and classification. They shall report all irregularities coming to their attention to the Chief of Staff.103

ARTICLE IV. CENTRAL REVIEW BOARD

Section 72. The Central Review Board shall consist of five citizens appointed by the Secretary of National Defense who shall designate the Chairman of the Board. One member shall be an officer of the Philippine Army, representing the Chief of Staff. Initially, one member shall be appointed for five years, one member for four years, one member for three years, one member for two years, and the remaining year. Thereafter, all appointments shall be for five years. In occurs before the expiration of the term of office of any member, his successor shall serve only the unexpired portion of said term. No member shall be eligible for reappointment. Upon the expiration of the term of office of the Chairman, that office shall devolve upon the member having the longest service on the Board. The Board shall hold its session in the City of Manila.104

Section 73. Decision in all matters before the Board shall be by majority vote. The Board shall have authority to employ such staff of assistants and the services of necessary medical examiners as may be authorized by the Secretary of National Defense.105

Section 74. All cases of appeal from the decision of the Acceptance Boards which shall be forwarded by the Provincial Governors shall be reviewed by the Central Review Board. The appellant shall be authorized to be represented by legal counsel, and to present such facts and evidence in support of his case as he shall deem advisable. The decision of the Board shall be rendered without unnecessary delay and shall be final.

Section 75. The salaries of the members of the Board shall not exceed three thousand pesos per annum, except that the military member shall receive the pay and allowance of his rank and service. These salaries and those of the assistants and medical examiners as well as all expenses incident to the operation of the Board, shall be borne by the Philippine Government. Officers and employees of the Government serving as members of the Board or as assistants or examiners thereof, if any, shall not receive any additional compensation.

ARTICLE V. INCORPORATION INTO SERVICE

Section 76. Upon reporting at the designated training station the young man shall be examined physically, and, if fit for the service of his classification, he shall be assigned to duty with an organization and sworn in. If the examination discloses any cause for a change in his classification, the change shall be effected by the local Commander immediately and his assignment o training instruction varied accordingly. Where a change of station is necessary to provide the requisite training, the Commanding Officer shall be empowered to issue the necessary orders covering his transportation. Upon joining his organization, he shall be sworn in. In case of physical disability disqualifying him for military service, he shall be returned to his home and prompt report made of such action to the Chief of Staff and to the Mayor of the municipality or municipal district of his residence.106

Section 76-A. Any person failing to register for military service herein provided, or who shall fail to report to the corresponding Acceptance Board or to a designated training camp after having been duly notified to do so shall, upon conviction, be sentenced to serve not more than six months in prison or to pay a fine of not to exceed two hundred pesos, or both, at the discretion of the Court. Conviction for this offense shall not exempt the person convicted from the military service herein required.

The municipalities and chartered cities shall be exempt from the payment of all court and sheriff's fees in the prosecution of cases falling under this section.107

ARTICLE VI. TRANSFER TO RESERVE FORCE

Section 77. Upon competition of the prescribed course of trainee instruction108 and, unless the soldier shall enlist in the Regular Force or shall be selected for further training to qualify him as a commissioned or noncommissioned officer, he shall be transferred to the Reserve Force and assigned to an organization thereof by the Adjutant General. From this time his name shall be carried on the rosters of the Reserve force.

Upon transfer to the Reserve Force, such arms, accountrements and clothing as shall be prescribed, shall be transferred to the mobilization center of his organization.

Section 78. On completion of his training instruction the trainee shall pass into the First Reserve where he shall be assigned to an organization. He shall continue to serve in the First Reserve to include the calendar year in which he shall reach thirty-one years of age. On December thirty-first of the year in which he shall become thirty-one years of age, he shall be transferred to the Second Reserve where he shall be assigned to an organization in that echelon. He shall serve in the Second Reserve to include the calendar year in which he shall become forty-one years of age. On December thirty-first of the calendar year in which he shall become forty-one years of age, he shall be transferred to the Third Reserve in which he may be assigned to an organization. He shall serve in this class until he shall be fifty-one years of age.109

Section 78-A. It shall be the duty of all reservists, between the ages of twenty-one and fifty-one years, inclusive, whether they belong to the commissioned, enlisted or other relative grades, to register their names with the municipal secretary of the municipality or city of their temporary or permanent residence. For the purpose of this registration, each municipal secretary shall be furnished a registry book by the Chief of Staff. The registry book will contain such data as the Chief of Staff may prescribe: Provided, however, that the duties herein prescribed for municipal secretaries shall be performed by the Chiefs of Police in chartered cities.110

Section 79. Enlisted men of the Reserve Force shall report for physical examination as may be required by the Secretary of National Defense.111

ARTICLE VII. PREPARATORY MILITARY TRAINING

Section 80. The purpose of preparatory military training113 shall be as follows: To develop the national spriti; to make the youth physically strong; to make the youth morally confident, and to prepare the youth for military service.

Section 81. Preparatory military training114 shall begin with the youth in elementary grade school at the age of ten years and shall extend through the remainder of his schooling into college or the university as set forth hereinbefore. In case the youth ceases to attend school, or for any reason shall have no schooling, he shall become liable for service in the Junior Reserve on reaching the age of eighteen years.

Section 82. Preparatory military training115 is compulsory upon the youth attending school and upon others when they shall become eighteen years of age.

Section 83. The physically unfit shall not be required to undergo military training.116 Physical fitness shall be determined by a board of medical officers which shall be appointed by the District Commander.117

Section 84. The District Commander118 is charged with the supervision of preparatory military training which shall be divided by age and school classes, as follows:

(a) Junior cadets; above ten years of age, attending primary and intermediate schools.

(b) High school cadets; attending high or vocational schools.

(c) Junior Reserves; Eighteen to twenty years of age, both inclusive; young men not attending school or college.119

Section 85. Instructors for cadets shall be assigned from qualified male teachers in school who are members of the Reserve Force or who have satisfactorily completed any course of military instruction which would qualify a person for a commission in the Armed Forced of the Philippines.

Instructors for the Junior Reserve shall be assigned from the officers and men of the Regular Force or of the Reserve Force.

Qualified instructors in the Preparatory Military Training may be required by the Chief of Staff to undergo annual active duty training for not more than thirty days in any calendar year. While undergoing such training they shall be furnished subsistence, suitable quarters and transportation furnishable to reserve officers on annual active duty training.120

Section 86. Courses of instruction shall be prescribed by the Chief of Staff.

Section 87. The following persons are exempted from training in the Junior Reserve: Those who are found physically unfit by a medical board; those who are living abroad; and those undergoing any other form of authorized military instruction.121

Section 88. Parents and employers shall be required to compel attendance at preparatory military training. Upon conviction of deliberate failure to discharge this obligation, the responsible parent or employer or both shall be subject to a fine of not to exceed one hundred pesos.

Enrollment in each category of preparatory military training shall be accomplished at such times and under regulations as the Secretary of National Defense may prescribe.122

TITLE IV. GRADES, PAY AND ALLOWANCES

Section 89.123

Section 90. The annual rates of pay and allowances, to be paid monthly, for officers of the Regular Force, Female Nurses and for reserve officers ordered to extended tours of active duty, except probationary third lieutenants,124 shall be as may be prescribed by the President in Executive Orders.125 Pending issue of appropriate Executive Orders, the rates of pay and allowances now prescribed for officers of the Constabulary shall apply to the officers designated in this section: Provided, That due to the high mortality rate among flying personnel, officers whose duty requires regular and frequency aerial flights, shall receive an additional compensation equivalent to twenty-five per centum of the monthly pay received by non-flying personnel of the same rank and grade.126

Section 90-A. When an officer of the Regular Force or a Reserve Officer ordered to extended tour of active duty suffers some injury or disease shall not be counted against the annual leave allowance provided in sections five and seven of Commonwealth Act Numbered Two hundred twenty. An injury or disease shall be considered as acquired in line of duty when it is contracted in the service for reasons other than the officer's own misconduct, willful failure, the intemperature use of drugs or alcoholic liquor, or through vicious or immoral habits.127

Section 90-B. in the case of an enlisted man of the Regular Force, an injury or disease shall be considered as contracted in line of duty when it is acquired in the service for reasons other than his own misconduct, willful failure, the intemperate use of drugs or alcoholic liquor, or through vicious or immoral habits.128

Section 91. 129

Section 91-A. 130

Section 92. Individuals undergoing training in the grade of probationary second lieutenant shall receive pay as provided in the preceding section for trainees of more than ten months service, except that they shall receive such allowances in cash or in kind as the Chief of Staff may prescribe.131

Section 93. The members of the Reserve Officers' Training Units shall receive no pay. They shall receive such clothing allowance for uniforms as the Chief of Staff shall direct.

While undergoing instruction as probationary third lieutenants132 to qualify as Reserve Officers, they shall receive the pay of trainees and the subsistence allowance prescribed for their grade.

Section 94. Reserve Officers and enlisted members of the Reserve Force on annual active duty training shall receive no pay.133 They shall be furnished subsistence and suitable quarters while engaged on such duty. They shall be furnished transportation or reimbursement therefor, for the travel from their home to the place of active duty and return thereto.134

Section 95. Reserve Officers on extended active duty with the Regular Force shall receive pay and allowance, leave with pay, free medical treatment, and other privileges as prescribed by law or regulation for Regular Officers of their respective grades.

Officers of the Army of the United States serving as members of the National Defense Mission may be given during their period of such service, such military offices, rank, command and emoluments as the President of the Philippines may elect. The Commissions conferred upon the officers originally serving as technical advisers shall include one Field Marshall, who shall be known as the Military Adviser.135

Section 96. The Junior Cadets, High School Cadets, and Junior Reservists shall receive no pay.

TITLE V. APPROPRIATION OF FUNDS

ARTICLE I. METHOD OF APPROPRIATING, EXPANDING, AND ACCOUNTING FOR NATIONAL DEFENSE FUNDS

Section 97. Public funds for the defense of the Philippines shall be appropriated, expended, and accounted for according to six purposes, as follows:

I Pay and Allowances of Personnel.

II. Maintenance of Personnel.

III. Transportation.

IV. Armament, Equipment, and Supplies.

V. Construction.

VI. Miscellaneous.

Provided, That each purpose shall be divided into items as hereinafter described: Provided, further, That for a period of ten years following the passage of this Act, all funds appropriated for any of the above purposes and remaining unexpended at the end of each fiscal year shall be available in succeeding fiscal years for expenditure under the same purposes only, unless otherwise authorized by the President: Provided, finally, That the President may authorize and direct that purchases of any or all items needed by the Army under any of the above purposes shall be made under the direction of the Chief of Staff without the intervention of the Division of Purchase and Supply of the Department of Finance,136 any provision of existing law to the contrary nothwithstanding.137

PURPOSE I. Personnel

This purpose shall include the following items: Base pay, longevity pay, commutation of quarters, and clothing allowance of officers and enlsited men of the Regular and Reserve and Reserve Forces, the pay and allowance of cadets at the Military Academy, the wages and salaries of civilian employees, agents, and unskilled laborers, the allowances provided by law for persons undergoing trainee instruction, Reserve Officers Training Corps instruction, and Preparatory Military Training and the amount or amounts annually appropriated for the Pension and Retirement Fund of the Army.138

PURPOSE II. Maintenance of Personnel

This purpose shall include the following items: Subsistence, sanitation and hospitalization, and quartering of the Regular Force and of the Reserve Force when on active duty, including the lighting, heating, and upkeep of all buildings necessary to the National Defense; the training and education of the Regular and Reserve Forces and of persons undergoing trainee instruction, Reserve Officers Training Corps instruction, and Preparatory Military education for the welfare of the Army, and for burial of members of the Army who die in active service.139

PUROSE III. Transportation

This purpose shall include the following items: The authorized travel expenses as fixed by regulations of the civil and military personnel of the army, the authorized transportation of trainees to and from their homes, the authorized travel expenditure of members of the Reserve Force on active duty or when called for regular annual training, the purchase and maintenance of animal and water transportation, the maintenance and upkeep of motor transportation, and the packing and transportation of all armament, equipment, and supplies.

PURPOSE IV. Armament, Equipment, and Supplies

This purpose shall include the following items: Weapons and their component parts, signal, and engineer equipment and supplies, ammunition, quartermaster, medical and air corps supplies and equipment, the supplies for the maintenance and upkeep of mobilization centers, and all items necessary in the development of the National Defense forces.

PURPOSE V. Construction

This purpose shall include the construction of land and sea-coast defenses, the construction of barracks, quarters, hospitals, depots, arsenals and all other building required for the National Defense, and the acquisition of real estate.

PURPOSE VI. Miscellaneous Expenditures

This purpose shall include the miscellaneous expenditures of the various arms and services of the Military Establishment and of the Central General Staff as determined by the President, and the contingencies of the Army; Provided, That all moneys derived from the sale of products and other activities shall be expended as the Chief of Staff may direct, subject to the approval of the Secretary of National Defense.140

Section 98. 141

TITLE VI. FINAL PROVISIONS

Section 99. All laws and parts of laws which are inconsistent with this Act, are hereby repealed.

Section 100-101. 141

Section 102. This Act shall take effect upon its approval.

Approved, December 21, 1935.

AN ACT PROVIDING FOR THE SUBDIVISION AND SALE OF ALL THE PORTIONS OF THE FRIAR LANDS ESTATES REMAINING UNDISPOSED OF

Section 1. As soon as practicable, the Director of Lands, under the direction of the Secretary of Agriculture and Commerce,1 shall proceed with the subdivision of all the lands acquired by the Government under the provisions of Act Numbered Eleven hundred and twenty, known as the "Friar Lands Act", as amended, and still undisposed of, and shall sell the same, as provided in said Act, at the original prices fixed when said lands were for the first time offered for sale, to purchasers who are not disqualified to acquire public lands and who, at the time of the sale, are not delinquent in the payment of any installment price or interest in accordance with said Act. Any and all interests which have accrued to the said original prices up to the time in which the lands are sold are hereby cancelled and shall not be added to the said prices.

Section 2. The purchasers shall be allowed ten years from the date of purchase within which to pay purchase price in ten equal installments, with annual interest at the rate of four per centum on all installments due and payable. The persons who, at the time of the subdivision survey, are actual and bona fide occupants of any portion of the Friar Lands Estates, not exceeding ten hectares, shall be given preference to purchase the portion occupied at a private sale and at a price to be fixed, in such case, by the Director of Lands, subject to the approval of the Secretary of Agriculture and Natural Resources,2 after taking into consideration its location, quality, and any other circumstances as may affect its value, the provisions of Section twelve of Act Numbered Eleven hundred and twenty, as amended, to the contrary, notwithstanding.

Land acquired under the provisions of this Section shall not, except in favor of the Government or any of its branches or institutions, or legally constituted banking corporations, be subject to encumbrance or alienation before five years after the date of issuance of the transfer certificate of title to the purchaser, nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period; but temporary improvements or crops on the land may be mortgaged or pledged to qualified persons, association, or corporations.

Every conveyance shall be subject to repurchase by the original purchaser or his legal heirs within a period of five years from the date of the conveyance.

Any contract or agreement made or executed in violation of this Section shall cause the reversion of the property and its improvements and the forfeiture of all payments made on account of the purchase price thereof to the state.

The provisions of the second, third and fourth paragraphs of this Section shall not apply to Friar lands located in cities and acquired by purchasers in accordance with the provisions of the first paragraph of this Section.3

Section 3. This Act shall take effect upon its approval.

Approved, September 15, 1936.

*As Amended by CA 316, RA 3102.

1Now Secretary of Natural Resources.

2Id..

3Words in bold in the text above are amendments introduced by RA 3102, section 1, approved June 17, 1961.

Statutory History of section 2:

a) Original text - The original provisions of section 2, being similar to the amended provisions infra, except for the word in bold, are not reproduced here.

b) Words in bold in the text immediately following are amendments introduced by CA 316, section 1, approved June 9, 1938.

SECTION 2. The purchasers shall be allowed ten years from the date of purchase within which to pay the purchase price in ten equal installments, with annual interest at the rate of four per centumon all installments due and payable. The persons who, at the time of the subdivision survey, are actual and bona fide occupants of any portion of the Friar Land Estates, not exceeding ten hectares, shall be given preference to purchase the portion occupied at a private sale and at a price to be fixed, in such case, by the Director of lands, subject to the approval of the Secretary of Agriculture and [Commerce,] after taking into consideration its location, quality, and any other circumstances as may affect its value, the provisions of section twelve of Act Numbered Eleven hundred and twenty, as amended, to the contrary, notwithstanding:

Lands acquired under the provisions of this section shall not, except in favor of the Government or any of its branches or institutions, or legally constituted banking corporations, be subject to encumbrance or alienation before before five years after the date of the issuance of the transfer certificate of title to the purchaser; nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period; but temporary improvements or crops on the land may be mortgaged or pledgeto qualified persons, associations, or corporations.

Every conveyance shall be subject to repurchase by the original purchaser or his legal heirs within a period of five years from the date of the conveyance.

Any contract or agreement made or executed in violation of this section shall cause the reversion of the property and its improvements and the forfeiture of all payments made on account of the purchase price thereof to the states. (Ed. Note: Word in brackets was deleted in RA 3102, supra.)

AN ACT DIRECTING THE SECRETARY OF AGRICULTURE AND COMMERCE, THE PHILIPPINE NATIONAL BANK, AND THE NATIONAL DEVELOPMENT COMPANY TO ESTABLISH, OPERATE, AND MAINTAIN WAREHOUSES FOR COPRA AND OTHER MARKETABLE PRODUCTS.

Be it enacted by the National Assembly of the Philippines:

Section 1. The Secretary of Agriculture and Commerce,1 the Philippine National Bank, and the National Development Company are hereby directed to establish, operate, and maintain warehouses wherein copra, and, if space is available, other marketable products shall be accepted for deposit at reasonable rates of fees under such rules and regulations as they shall promulgate. For this purpose they are directed to acquire, by lease or otherwise, suitable warehouses in places where, in their opinion, the establishment and operation of such warehouses are justified, and they may employ the services of any officer or employee of the Government with the approval of the respective Department head, or if such officer or employee is not available, they may employ the services of any other suitable person. Any officer or employee or person in charge of any of the warehouses created under this Act shall have the privilege of being bonded in the Fidelity Fund.

Section 2. Quedans and receipts shall be issued for the products so deposited in accordance with the Warehouse Receipts Act.

Section 3. the Philippine National Bank and the National Development Company are hereby directed to invest out of the funds under their control such amount as may be needed for the establishment, operation, and maintenance of the warehouses herein provided for, under such regulations and in accordance with such arrangement as may be agreed upon between them and the Secretary of Agriculture and Commerce.2 Upon the request of the municipality, the latter may require and operate any of the warehouses located within its jurisdiction and established pursuant to this Act, and operate and maintain the same in accordance with Acts Numbered Three thousand nine hundred and twenty-nine and Three thousand nine hundred and thirty-two, and under such arrangement as may be agreed upon between said municipality and the Government institutions and authorities concerned for the reimbursement of the money invested in the establishment of said warehouses.

Section 4. This Act shall take effect upon its approval.

Approved, October 14, 1936.

Footnote

1 Now Secretary of Agriculture.

2 Id.

AN ACT TO AMEND SECTION ONE OF ACT NUMBERED THIRTY-SEVEN HUNDRED AND THIRTY-SIX, BY PROVIDING THAT THE PROVISIONS OF THE SAID ACT SHALL NOT APPLY TO CASES INVOLVING LIABILITY FOR ANY TAX, DUTY, OR CHARGE COLLECTIBLE UNDER ANY LAW ADMINISTERED BY THE BUREAU OF CUSTOMS OR THE BUREAU OF INTERNAL REVENUE

Be it enacted by the National Assembly of the Philippines:

Section 1. Section one of Act Numbered Thirty-seven hundred and thirty-six is hereby amended so as to read as follows:

"SECTION 1. Construction. — Any person interested under a deed, contract or other written instrument, or whose rights are affected by a statute, may bring an action in a Court of First Instance to determine any question of construction or validity arising under such deed, contract, instrument or statute and for a declaration of his rights or duties thereunder: Provided, however, That the provisions of this Act shall not apply to cases where a taxpayer questions his liability for the payment of any tax, duty, or charge collectible under any law administered by the Bureau of Customs or the Bureau of Internal Revenue."

Section 2. This Act shall take effect upon its approval.

Approved, October 17, 1936.

Words in bold in the text above are amendments introduced by CA 55 to Act 3736. The Supreme Court held in the case of National Dental Supply Co. v. Meer, 90 Phil. 265-269 (1951) that the above amendments are "still in full force and effect."

According to the Court:"the failure to incorporate the above proviso in section 1, rule 66, is not due to an intentional to repeal it but rather to the desire to leave its application to the sound discretion of the court, which is the sole arbiter to determine whether a case is a meritorious or not. And even if it be desire to incorporate it in rule 66, it is doubted if it could be done under the rule-making power of the Supreme Court considering that the nature of said proviso is substantive and not adjective, its purpose being to lay down a policy as to the right of a taxpayer to contest the collection of taxes on the part of a revenue officer or of the Government. With the adoption of said proviso, our law-making body has asserted its policy on the matter, which is to prohibit a taxpayer to question his ability for the payment of any tax that may be collected by the Bureau of Internal Revenue. xxx"

The ruling in the above cited case was reiterated in the case of Rodriguez v. Blaquera, L-13941, September 30, 1960, 60 O.G. No. 11, pp. 1563-1566.

AN ACT PROVIDING FOR THE WAYS IN WHICH PHILIPPINE CITIZENSHIP MAY BE LOST OR REACQUIRED

Be it enacted by the National Assembly of the Philippines:

Section 1. How citizenship may be lost. – A Filipino citizen may lose his citizenship in any of the following ways and/or events:

(1) By naturalization in a foreign country;

(2) By express renunciation of citizenship;

(3) By subscribing to an oath of allegiance to support the constitution or laws of a foreign country upon attaining twenty-one years of age or more: Provided, however, That a Filipino may not divest himself of Philippine citizenship in any manner while the Republic of the Philippines is at war with any country;

(4) By rendering services to, or accepting commission in, the armed forces of a foreign country: Provided, That the rendering of service to, or the acceptance of such commission in, the armed forces of a foreign country, and the taking of an oath of allegiance incident thereto, with the consent of the Republic of the Philippines, shall not divest a Filipino of his Philippine citizenship if either of the following circumstances is present:

(a) The Republic of the Philippines has a defensive and/or offensive pact of alliance with the said foreign country; or

(b) The said foreign country maintains armed forces on Philippine territory with the consent of the Republic of the Philippines: Provided, That the Filipino citizen concerned, at the time of rendering said service, or acceptance of said commission, and taking the oath of allegiance incident thereto, states that he does so only in connection with his service to said foreign country: And provided, finally, That any Filipino citizen who is rendering service to, or is commissioned in, the armed forces of a foreign country under any of the circumstances mentioned in paragraph (a) or (b), shall not be permitted to participate nor vote in any election of the Republic of the Philippines during the period of his service to, or commission in, the armed forces of said foreign country. Upon his discharge from the service of the said foreign country, he shall be automatically entitled to the full enjoyment of his civil and political rights as a Filipino citizen;

(5) By cancellation of the of the certificates of naturalization;

(6) By having been declared by competent authority, a deserter of the Philippine armed forces in time of war, unless subsequently, a plenary pardon or amnesty has been granted; and

(7) In the case of a woman, upon her marriage to a foreigner if, by virtue of the laws in force in her husband's country, she acquires his nationality.1

The provisions of this section notwithstanding, the acquisition of citizenship by a natural born Filipino citizen from one of the Iberian and any friendly democratic Ibero-American countries or from the United Kingdom shall not produce loss or forfeiture of his Philippine citizenship if the law of that country grants the same privilege to its citizens and such had been agreed upon by treaty between the Philippines and the foreign country from which citizenship is acquired.2

Section. 2. How citizenship may be reacquired. – Citizenship may be reacquired:

(1) By naturalization: Provided, That the applicant possess none of the disqualification's prescribed in section two of Act Numbered Twenty-nine hundred and twenty-seven,3

(2) By repatriation of deserters of the Army, Navy or Air Corp: Provided, That a woman who lost her citizenship by reason of her marriage to an alien may be repatriated in accordance with the provisions of this Act after the termination of the marital status;4 and

(3) By direct act of the National Assembly.

Section 3. Procedure incident to reacquisition of Philippine citizenship. – The procedure prescribed for naturalization under Act Numbered Twenty-nine hundred and twenty-seven,5 as amended, shall apply to the reacquisition of Philippine citizenship by naturalization provided for in the next preceding section: Provided, That the qualifications and special qualifications prescribed in section three and four of said Act shall not be required: And provided, further,

(1) That the applicant be at least twenty-one years of age and shall have resided in the Philippines at least six months before he applies for naturalization;

(2) That he shall have conducted himself in a proper and irreproachable manner during the entire period of his residence in the Philippines, in his relations with the constituted government as well as with the community in which he is living; and

(3) That he subscribes to an oath declaring his intention to renounce absolutely and perpetually all faith and allegiance to the foreign authority, state or sovereignty of which he was a citizen or subject.

Section 4. Repatriation shall be effected by merely taking the necessary oath of allegiance to the Commonwealth6 of the Philippines and registration in the proper civil registry.

Section 5. The Secretary of Justice shall issue the necessary regulations for the proper enforcement of this Act. Naturalization blanks and other blanks required for carrying out the provisions of this Act shall be prepared and furnished by the Solicitor General, subject to approval of the Secretary of Justice.

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

Approved, October 21, 1936.

*As Amended by RA 106, RA 2639 and RA 3834.

Words in bold in the text above are amendments introduced by RA 106, section 1, approved June 2, 1947.

Statutory History of section 1:

Original text- SECTION 1. How citizenship may be lost. - A Filipino citizen may lose his citizenship in any of the following ways and/or events: (1) By naturalization in a foreign country;

(2) By express renunciation of citizenship;

(3) By subscribing to an oath of allegiance to support the constitution or laws of a foreign country upon attaining twenty-one years of age or more;

(4) By accepting commission in the [military, naval or air service] of a foreign country;

(5) By cancellation of the certificate of naturalization;

(6) By having been declared by competent authority, a deserted of the Philippine [army, navy or air corps] in time of war, unless subsequently a plenary partdon or amnesty has been granted; and

(7) In the case of a woman, upon her marriage to a foreigner if, by virtue of the law in force in her husband's country, she acquires his nationality. (Ed. Note: Words in brackets were deleted in RA 106 supra.)

Words in bold in the text above are amendments introduced by RA 3834, section 1, approved June 22, 1963 to the last paragraph of section 1. Said paragraph was inserted as an amendment by RA 2639, section 1, approved June 18, 1960..

Statutory History of (last paragraph of section 1):

The provisions of the paragraph as inserted by RA 2639, being similar to the amemded provisions, supra, except for the words in bold, are not reproduced here.

Now Ca 473.

See PD 725 promulgated June 5, 1975 providing for repatriation of filipino women who had lost their Philippine citizenship by marriage to aliens.

Now CA 473.

Now Republic.

IN ACT TO DECLARE THAT PUBLIC ACT NUMBERED FIVE HUNDRED AND TWENTY-ONE, KNOWN AS "CARRIAGE OF GOODS BY SEA ACT," ENACTED BY THE SEVENTY-FOURTH CONGRESS OF THE UNITED STATES, BE ACCEPTED, AS IT IS HEREBY ACCEPTED BY THE NATIONAL ASSEMBLY

WHEREAS, the Seventy-fourth Congress of the United States enacted Public Act Numbered Five hundred and twenty-one, entitled:

"Carriage of Goods by Sea Act";

WHEREAS, the primordial purpose of the said Acts is to bring about uniformity in ocean bills of lading and to give effect to the Brussels Treaty, signed by the United States with other powers;

WHEREAS, the Government of the United States has left it to the Philippine Government to decide whether or not the said Act shall apply to carriage of goods by sea in foreign trade to and from Philippine ports;

WHEREAS, the said Act of Congress contains advanced legislation, which is in consonance with modern maritime rules and the practices of the great shipping countries of the world;

WHEREAS, shipping companies, shippers, and marine insurance companies, and various chambers of commerce, which are directly affected by such legislation, have expressed their desire that said Congressional Act be made applicable and extended to the Philippines; therefore,

Be it enacted by the National Assembly of the Philippines:

Section 1. That the provisions of Public Act Numbered Five hundred and twenty-one of the Seventy-fourth Congress of the United States, approved on April sixteenth, nineteen hundred and thirty-six, be accepted, as it is hereby accepted to be made applicable to all contracts for the carriage of goods by sea to and from Philippine ports in foreign trade: Provided, That nothing in the Act shall be construed as repealing any existing provision of the Code of Commerce which is now in force, or as limiting its application.

Section 2. This Act shall take effect upon its approval.

Approved: October 22,1936.

An Act Relating to the Carriage of Goods by Sea.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That every bill of landing or similar document of title which is evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade, shall have effect subject to the provisions of the Act.

TITLE I

Section 1. When used in this Act —

(a) The term "carrier" includes the owner or the charterer who enters into a contract of carriage with a shipper.

(b) The term "contract of carriage" applies only to contracts of carriage covered by a bill of lading or any similar document of title, insofar as such document relates to the carriage of goods by sea, including any bill of lading or any similar document as aforesaid issued under or pursuant to a charter party from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a holder of the same.

(c) The term "goods" includes goods, wares, merchandise, and articles of every kind whatsoever, except live animals and cargo which by the contract of carriage is stated as being carried on deck and is so carried.

(d) The term "ship" means any vessel used for the carriage of goods by sea.

(e) The term "carriage of goods" covers the period from the time when the goods are loaded on to the time when they are discharged from the ship.

RISKS

Section 2. Subject to the provisions of section 6, under every contract of carriage of goods by sea, the carrier in relation to the loading handling, stowage, carriage, custody, care, and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities hereinafter set forth.

RESPONSIBILITIES AND LIABILITIES

Section 3. (1) The carrier shall be bound, before and at the beginning of the voyage, to exercise due diligence to —

(a) Make the ship seaworthy;

(b) Properly man, equip, and supply the ship;

(c) Make the holds, refrigerating and cooling chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception carriage and preservation.

(2) The carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.

(3) After receiving the goods into his charge the carrier, or the master or agent of the carrier, shall, on demand of the shipper, issue to the shipper a bill of lading showing among other things —

(a) The leading marks necessary for identification of the goods as the same are furnished in writing by the shipper before the loading of such goods starts, provided such marks are stamped or otherwise shown clearly upon the goods if uncovered, or on the cases or coverings in which such goods are contained, in such a manner as should ordinarily remain legible until the end of the voyage.

(b) Either the number of packages or pieces, or the quantity or weight, as the case may be, as furnished in writing by the shipper.

(c) The apparent order and condition of the goods: Provided, That no carrier, master, or agent of the carrier, shall be bound to state or show in the bill of lading any marks, number, quantity, or weight which he has reasonable ground for suspecting not accurately to represent the goods actually received, or which he has had no reasonable means of checking.

(4) Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as therein described in accordance with paragraphs (3) (a), (b), and (c) of this section: Provided, That nothing in this Act shall be construed as repealing or limiting the application of any part of the Act, as amended, entitled "An Act relating to bills of lading in interstate and foreign commerce," approved August 29, 1916 (U. S. C. title 49, secs. 81-124), commonly known as the "Pomerene Bills of Lading Act."

(5) The shipper shall be deemed to have guaranteed to the carrier the accuracy at the time of shipment of the marks, number, quantity, and weight, as furnished by him; and the shipper shall indemnify the carrier against all loss damages, and expenses arising or resulting from inaccuracies in such particulars. The right of the carrier to such indemnity shall in no way limit his responsibility and liability under the contract of carriage or to any person other than the shipper.

(6) Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not apparent, the notice must be given within three days of the delivery.

Said notice of loss or damage maybe endorsed upon the receipt for the goods given by the person taking delivery thereof.

The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection.

In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered: Provided, That if a notice of loss or damage, either apparent or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods or the date when the goods should have been delivered

In the case of any actual or apprehended loss or damage the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods.

(7) After the goods are loaded the bill of lading to be issued by the carrier, master, or agent of the carrier to the shipper shall, if the shipper so demands, be a "shipped" bill of lading Provided, That if the shipper shall have previously taken up any document of title to such goods, he shall surrender the same as against the issue of the "shipped" bill of lading, but at the option of the carrier such document of title may be noted at the port of shipment by the carrier, master, or agent with name or name the names of the ship or ships upon which the goods have been shipped and the date or dates of shipment, and when so noted the same shall for the purpose of this section be deemed to constitute a "shipped" bill of lading.

(8) Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods, arising from negligence, fault, or failure in the duties and obligations provided in this section, or lessening such liability otherwise than as provided in this Act, shall be null and void and of no effect. A benefit of insurance in favor of the carrier, or similar clause, shall be deemed to be a clause relieving the carrier from liability.

RIGHTS AND IMMUNITIES

Section 4. (1) Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy, and to secure that the ship is properly manned, equipped, and supplied, and to make to the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried fit and safe for their reception, carriage, and preservation in accordance with the provisions of paragraph (1) of section 3. Whenever loss or damage has resulted from unseaworthiness, the burden of proving the exercise of due diligence shall be on the carrier or other persons claiming exemption under the section.

(2) Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from —

(a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship;

(b) Fire, unless caused by the actual fault or privity of the carrier;

(c) Perils, dangers, and accidents of the sea or other navigable waters;

(d) Act of God;

(e) Act of war,

(f) Act of public enemies;

(g) Arrest or restraint of princes, rulers, or people, or seizure under legal process;

(h) Quarantine restrictions;

(i) Act or omission of the shipper or owner of the goods, his agent or representative;

(j) Strikes or lockouts or stoppage or restraint of labor from whatever cause, whether partial or general; Provided, That nothing herein contained shall be construed to relieve a carrier from responsibility for the carrier's own acts;

(k) Riots and civil commotions

(l) Saving or attempting to save life or property at sea;

(m) Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality, or vice of the goods;

(n) Insufficiency of packing;

(o) Insufficiency of inadequacy of marks;

(p) Latent defects not discoverable by due diligence; and

(q) Any other cause arising without the actual fault and privity of the carrier and without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.

(3) The shipper shall not be responsible for loss or damage sustained by the carrier or the ship arising from any cause without the act, fault, or neglect of the shipper, his agents, or servants.

(4) Any deviation in saving or attempting to save life or property at sea, or any reasonable deviation shall not be deemed to be an infringement or breach of this Act or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting therefrom: Provided, however, That if the deviation is for the purpose of loading cargo or unloading cargo or passengers it shall, prima facie, be regarded as unreasonable.

(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $600 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier.

By agreement between the carrier, master, or agent of the carrier, and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided, That such maximum shall not be less than the figure above named. In no event shall the carrier be liable for more than the amount of damage actually sustained.

Neither the carrier nor the ship shall be responsible in any event for loss or damage to or in connection with the transportation of the goods if the nature or value thereof has been knowingly and fraudulently misstated by the shipper in the bill of lading.

(6) Goods of an inflammable, explosive, or dangerous nature to the shipment whereof the carrier, master or agent of the carrier, has not consented with knowledge of their nature and character, may at any time before discharge be landed at any place or destroyed or rendered innocuous by the carrier without compensation, and the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment. If any such goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they may in like manner be landed at any place, or destroyed or rendered innocuous by the carrier without liability on the part of the carrier except to general average, if any.

SURRENDER OF RIGHTS AND IMMUNITIES AND INCREASE OF RESPONSIBILITIES AND LIABILITIES

Section 5. A carrier shall be at liberty to surrender in whole or in part all or any of his rights and immunities or to increase any of his responsibilities and liabilities under this Act, provided such surrender or increase shall be embodied in the bill of lading issued to the shipper.

The provisions of this Act shall not be applicable to charter parties; but if bills of lading are issued in the case of a ship under charter party, they shall comply with the terms of this Act. Nothing in this Act shall be held to prevent the insertion in a bill of lading of any lawful provision regarding general average.

SPECIAL CONDITIONS

Section 6. Notwithstanding the provisions of the preceding sections, a carrier, master or agent of the carrier, and a shipper shall, in regard to any particular goods be at liberty to enter into any agreement in any terms as to the responsibility and liability of the carrier for such goods, and as to the rights and immunities of the carrier in respect of such goods, or his obligation as to seaworthiness (so far as the stipulation regarding seaworthiness is not contrary to public policy), or the care or diligence of his servants or agents in regard to the loading, handling stowage, carriage, custody, care, and discharge of the goods carried by sea: Provided, That in this case no bill of lading has been or shall be issued and that the terms agreed shall be embodied in a receipt which shall be a non-negotiable document and shall be marked as such.

Any agreement so entered into shall have full legal effect: Provided, That this section shall not apply to ordinary commercial shipments made in the ordinary course of trade but only to other shipments where the character or condition of the property to be carried or the circumstances, terms, and conditions under which the carriage is to be performed are such as reasonably to justify a special agreement.

Section 7. Nothing contained in this Act shall prevent a carrier or a shipper from entering into any agreement, stipulation, condition, reservation, or exemption as to the responsibility and liability of the carrier or the ship for the loss or damage to or in connection with the custody and care and handling of goods prior to the loading on and subsequent to the discharge from the ship on which the goods are carried by sea.

Section 8. The provisions of this Act shall not affect the rights and obligations of the carrier under the provisions of the Shipping Act, 1916, or under the provisions of section 4281 to 4289, inclusive, of the Revised Statutes of the United States, or of any amendments thereto; or under the provisions of any other enactment for the time being in force relating to the limitation of the liability of the owners of seagoing vessels.

TITLE II

Section 9. Nothing contained in this Act shall be construed as permitting a common carrier by water to discriminate between competing shippers similarly place in time and circumstances, either (a) with respect to the right to demand and receive bills of lading subject to the provisions of this Act; or (b) when issuing such bills of lading, either in the surrender of any of the carrier's rights and immunities or in the increase of any of the carrier's responsibilities and liabilities pursuant to section 6, title I, of this Act or (c) in any other way prohibited by the Shipping Act, 1916, s amended.

Section 10. Section 25 of the Interstate Commerce Act is hereby amended by adding the following proviso at the end of paragraph 4 thereof: "Provided, however, That insofar as any bill of lading authorized hereunder relates to the carriage of goods by sea, such bill of lading shall be subject to the provisions of the Carriage of Goods by Sea Act."

Section 11. Where under the customs of any trade the weight of any bulk cargo inserted in the bill of lading is a weight ascertained or accepted by a third party other than the carrier or the shipper, and the fact that the weight is so ascertained or accepted is stated in the bill of lading, then, notwithstanding any thing in this Act, the bill of lading shall not be deemed to be prima facie evidence against the carrier of the receipt of goods of the weight so inserted in the bill of lading, and the accuracy thereof at the time of shipment shall not be deemed to have been guaranteed by the shipper.

Section 12. Nothing in this Act shall be construed as superseding any part of the Act entitled "An act relating to navigation of vessels, bills of lading, and to certain obligations, duties, and rights in connection with the carriage of property," approved February 13,1893, or of any other law which would be applicable in the absence of this Act, insofar as they relate to the duties, responsibilities, and liabilities of the ship or carrier prior to the time when the goods are loaded on or after the time they are discharged from the ship.

Section 13. This Act shall apply to all contracts for carriage of goods by sea to or from ports of the United States in foreign trade. As used in this Act the term "United States" includes its districts, territories, and possessions: Provided, however, That the Philippine legislature may by law exclude its application to transportation to or from ports of the Philippine Islands. The term "foreign trade" means the transportation of goods between the ports of the United States and ports of foreign countries. Nothing in this Act shall be held to apply to contracts for carriage of goods by sea between any port of the United States or its possessions, and any other port of the United States or its possession: Provided, however, That any bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea between such ports, containing an express statement that it shall be subject to the provisions of this Act, shall be subjected hereto as fully as if subject hereto as fully as if subject hereto by the express provisions of this Act: Provided, further, That every bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea from ports of the United States, in foreign trade, shall contain a statement that it shall have effect subject to the provisions of this Act.

Section 14. Upon the certification of the Secretary of Commerce that the foreign commerce of the United States in its competition with that of foreign nations is prejudiced the provisions, or any of them, of Title I of this Act, or by the laws of any foreign country or countries relating to the carriage of goods by sea, the President of the United States, may, from time to time, by proclamation, suspend any or all provisions of Title I of this Act for such periods of time or indefinitely as may be designated in the proclamation. The President may at any time rescind such suspension of Title I hereof, and any provisions thereof which may have been suspended shall thereby be reinstated and again apply to contracts thereafter made for the carriage of goods by sea. Any proclamation of suspension or rescission of any such suspension shall take effect on a date named therein, which date shall be not less than ten days from the issue of the proclamation.

Any contract for the carriage of goods by sea, subject to the provisions of this Act, effective during any period when title I hereof, or any part thereof, is suspended, shall be subject to all provisions of law now or hereafter applicable to that part of Title I which may have thus been suspended.

Section 15. This Act shall take effect ninety days after the date of its approval; but nothing in this Act shall apply during a period not to exceed one year following its approval to any contract for the carriage of goods by sea, made before the date on which this Act is approved, nor to any bill of lading or similar document of title issued, whether before or after such date of approval in pursuance of any such contract as aforesaid.

Section 16. This Act may be cited as the "Carriage of Goods by Sea Act."

Approved, April 16, 1936.

AN ACT TO PROHIBITING THE KILLING, HUNTING, WOUNDING OR TAKING AWAY OF BUBALUS MINDORENSIS, COMMONLY KNOWN AS TAMARAW.

Be it enacted by the National Assembly of the Philippines:

Section 1. The killing, hunting, wounding, or taking away of bubalus mindorensis, commonly known as tamaraw, for any purpose other than for the protection of person or property, or for scientific ends duly authorized by the Secretary of Agriculture and Commerce,1 is hereby prohibited.

Section 2. Any person violating this Act shall be punished for each offense by imprisonment of not less than three nor more than six months or by find of not less than six hundred nor more than one thousand pesos, or by both such imprisonment and fine, in the discretion of the court.2

Section 3. This Act shall take effect upon its approval.

Approved, October 23, 1936.

RELATED STATUTES

Act 2590 (Effective February 4, 1916)

Providing for the protection of game and fish.

Act 3915 (Effective February 1, 1932)

Providing for the establishment of National Parks.

Footnote

* As amended by RA 1086.

1 Now Secretary of Natural Resources.

2 Words in bold in the text above are amendments introduced by RA 1056, section 1, approved June 15, 1954.

Statutory History of section 2:

Original text –

Sec. 2. Any person violating this Act shall be punished for each offense by imprisonment of not [exceeding thirty days] or by fine of not [exceeding two] hundred pesos, or by both such imprisonment and fine, in the discretion of the court. (Ed. Note: Words in brackets were deleted in RA 1056, supra.)

AN ACT CREATING THE OFFICE OF ADULT EDUCATION, ENUMERATING ITS DUTIES, DEFINING ITS OBJECTIVES, AND PROVIDING FUNDS FOR ITS OPERATION.

Be it enacted by the National Assembly of the Philippines:

Section 1. For the purpose of carrying out the provisions of the Constitution regarding adult education, there is hereby created under the Department of Public Instruction1 an office to be known as the Office of Adult Education.

Section 2. This office shall:

(a) Initiate and conduct surveys to determine the extent and distribution of illiteracy among adults;

(b) Enlist the interest and cooperation of organizations on adult education activities;

(c) Prepare a comprehensive program for adult education work;

(d) Organize and supervise schools and classes for adults;

(e) Disseminate instructive cultural and vocational information;

(f) Secure lecturers, demonstrators, extension and follow-up workers for adult education;

(g) Train teachers and community organizers for adult education;

(h) Cooperate with the Bureaus of Education,2 Health, Science,3 Plant Industry, Commerce4 and Labor in undertakings concerned with vocational training and the improvements of living conditions;

(i) Cooperate with the Philippine Library Association for the establishment of public libraries which can better serve the educational needs of adults;

(j) Prepare statistics and reports on its activities and the means for carrying out its objectives.

Section 3. The objectives of adult education shall be to eliminate illiteracy and to give vocational and citizenship training.

Section 4. The Chief of the Office of Adult Education shall be known as the Director of Adult Education. He shall receive an annual compensation not exceeding five thousand pesos5 to be fixed by the President of the Commonwealth, and shall have subordinate personnel, whose aggregate salaries, to be fixed by the Secretary of Public Instruction,6 shall not exceed ten thousand pesos per annum.

The Director of Adult Education shall be appointed by the President of the Philippines, with the consent of the Commission on Appointments of the National Assembly, and the subordinate personnel shall be appointed by the Director of Adult Education with the approval of the Secretary of Public Instruction.7

Section 5. No salary shall be paid from the funds which may be appropriated by the National Government for the promotion of adult education, to teachers or other persons engaged in adult education work: Provided, however, That the Director of Adult Education8 may, in his discretion, authorize the payment of moderate allowances to persons who regularly hold classes from month to month.

Section 6. Any amount which may be set aside by the National Assembly for this purpose shall be spent mainly for the printing of charts, books, pamphlets and other school materials and for defraying the travelling and other necessary expenses of persons who may engage in this work.

Section 7. For the purpose of carrying out the provisions of this Act, there is hereby appropriated out of any funds of the Philippine Treasury not otherwise appropriated, the sum of one hundred thousand pesos.

Section 8. The publications of the Office of Adult Education9 such as charts, books, pamphlets, circulars, diplomas and leaflets shall have free use of the mails.

Section 9. This Act shall take effect upon its approval.

Approved, October 26, 1936.

Footnote

1 Now Department of Education and Culture.

2 Now Bureau of Elementary Education.

3 Now National Institute of Science and Technology.

4 Now Bureau of Domestic Trade.

5 Now P12,516.00 per annum per RA 5432.

6 Now Secretary of Education and Culture.

7 Office of Adult Education was converted into a division of the Bureau of Public Schools under Executive Order No. 94 series of 1947.

8 Now Chief of the Division of Adult Education.

9 Now Division of Adult Education.

AN ACT TO REGULATE THE SALE OF SECURITIES, TO CREATE A SECURITIES AND EXCHANGE COMMISSION TO ENFORCE THE PROVISIONS OF THE SAME, AND TO APPROPRIATE FUNDS THEREFOR

Be it enacted by the National Assembly of the Philippines:

CHAPTER I. Short Title and Definitions

Section 1. Short Title - This Act may be cited as "Securities Act."

Section 2. Definitions - When used in this Act, the following terms shall, unless the context otherwise indicates, have the following respective meanings:

(a) "Securities" shall include stock certificates, treasury stock certificates, bonds, debentures; certificates of participation in, or right to subscribe to, any of the foregoing; certificates of participation, collateral trust certificates, investment contracts, voting trust certificates, certificates of deposit for a security, premium or gift sharing certificates or tickets, preorganization certificates or subscriptions; certificates evidencing shares of, or interest in, trust estates or associations; certificates of interest or participation in any profit sharing agreement or in an agreement to incorporate or to form an association or in mutual incorporation or association contracts involving more than fifteen proposed incorporators or associates; any certificate, contract, or instrument whatsoever representing or constituting evidence of, or secured by, title to, or interest in, or any lien or charge upon, the capital or any property or assets of the issuer thereof, or in any oil, gas or mining lease and/or holding; and interest, units or shares in any such lease or leases and/or holdings or in an association, partnership, corporation, or combination of persons having interest in such lease or leases and/or holdings; contracts or bonds for the sale and conveyance of land on deferred payments or installment plan, or other instruments in the nature thereof by whatsoever name they may be known or called; promissory notes of any individual, firm, partnership, corporation, or association of any kind, the proceeds from the sale of which are to be used in capitalizing, furthering or promoting any manufacturing, selling, distributing, industrial, mercantile, mining, drilling for oil or gas, or development enterprise of any kind or nature whatsoever, where said promissory notes are accompanied by any oral or written promise or representation that the purchasers of said promissory note shall share in any of the profits of said enterprise, or benefit from the success of said enterprise either directly or indirectly; and, in general, certificates or instruments evidencing beneficial interest in title to property, profits, or earnings, or any other instrument commonly known as a security; including an interim or temporary bond, debenture, note certificate, or receipt for a security or for subscription to a security.

Commercial papers evidencing indebtedness of any person, financial or non-financial entity, irrespective of maturity, issued, endorsed, sold, transferred or in any manner conveyed to another, with or without recourse, such as promissory notes, repurchase agreements, certificate of assignments, certificate of participations, trust certificates or similar instruments.1

(b) "Speculative securities" shall mean and include:

1. All securities to promote or induce the sale of which profit, gain, or advantage unusual in the ordinary course of legitimate business is in any way advertised or promised;

2. All securities the value of which materially depends upon proposed or promised future promotion or development rather than on present tangible assets and conditions;

3. All securities for promoting the sale of which a commission of more than five per centum is offered or paid;

4. All securities into the value of which the elements of chance or hazard or speculative profit or possible loss equals or predominates over the elements of reasonable certainty or safety of investment;

5. The securities of any enterprise or corporation which has included, or proposes to include, in its assets, as a material part thereof, patents, formulae, good-will, promotion or other intangible assets, or which has issued or proposes to issue a material part of its securities in payment for patents, formulae, good-will, promotion or other intangible assets; and

6. The securities of any enterprise engaged in the business of promoting, exploring, developing, exploiting or operating mineral properties and/or mineral rights: Provided, however, That the following class of securities shall not be deemed to be speculative securities:

(1) Securities issued by a person owning a property, business or industry which has been in continuous operation not less than three years and which has shown during a period of not less than two years next prior to the close of its last fiscal year preceding the offering of such securities, average annual net earnings, after deducting all prior charges not including the charges upon securities to be retired out of the proceeds of sale, as follows:

(a) In the case of interest-bearing securities, not less than one and one-half times the annual interest charged thereon and upon all other outstanding interest-bearing obligations of equal rank;

(b) In the case of preferred stock, not less than one and one-half times the annual dividend requirements on such preferred stock and on all other outstanding stock of equal rank;

(c) In the case of common stock, not less than five per centum upon all outstanding common stock of equal rank together with the amount of common stock then offered for sale reckoned upon the price at which such stock is then offered for sale or sold.

The ownership by a person of more than fifty per centum of the outstanding voting stock of a corporation shall be construed as the proportionate ownership of the property, business or industry of such corporation, and shall permit the inclusion of the earnings of such corporation applicable to the payment of dividends upon the stock so owned in the earnings of the person issuing the securities sought to be registered.

(d) "Person" shall mean and include a natural person, firm, corporation, copartnership, limited partnership; sociedad anonima, joint stock company, syndicate, unincorporated organization or association, trust and trustee of a trust, excepting a trust created or a trustee designated by law or by a last will or by judicial authority, or any public charitable trust; or a government or political subdivision thereof. As used herein, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security.

(e) "Sale" or "sell" shall include every disposition, or attempt to dispose of a security or interest in a security for value. Any security given or delivered with, or as a bonus on account of, any purchase of securities or any other thing, shall be conclusively presumed to constitute a part of the subject of such purchase and to have been sold for value. "Sale" and "sell" shall also include a contract to sell, an exchange, an attempt to sell, an option of sale, a solicitation of a sale, a subscription or an offer to sell, directly or by an agent, or by a circular; letter, advertisement or otherwise: Provided, That a privilege pertaining to a security giving the holder the privilege to convert such security into another security of the same issuer shall not be deemed a sale of such other security within the meaning of this definition, and such privilege shall not be construed as affecting the status of the security to which such privilege pertains with respect to exemption or registration or licensing under the provisions of this Act, but when such privilege of conversion shall be exercised, such conversion shall be subject to the limitations hereinafter provided in subsection (g) of section six of Chapter III hereof: And provided, further, That the issue or transfer of a right pertaining to a security and entitling the holder of such right to subscribe to another security of the same issuer, when such right is issued or transferred with the security to which it pertains, shall not be deemed a sale of such other security within the meaning of this definition and such right shall not be construed as affecting the status of the security to which such right pertains with respect to exemption or registration or licensing under the provisions of this Act; but the sale of such other security upon the exercise of such right shall be subject to the provisions of this Act.

(f) The terms "buy" and "purchase" shall include any contract to buy, purchase, or otherwise acquire.

(g) "Dealer" shall include every person other than a salesman who engages either for all or part of his time, directly or through an agent, in the business of selling any securities issued by another person or purchasing or otherwise acquiring such securities from another for the purpose of reselling them or of offering them for sale to the public, or offering, buying, selling or otherwise dealing or trading in securities for a profit, or who deals in futures or differences in market quotations of price or values of any securities, or accepts margins on purchases or sales or pretended purchases or sales of securities: Provided, That the word "dealer" shall not include a person having no place of business for the purpose, who sells or offers to sell securities exclusively to brokers or dealers actually engaged in buying and selling securities as a business.

(h) "Issuer" means every person who issues or proposes to issue any security; except that with respect to certificates of deposit, voting trust certificates, or collateral trust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors (or persons performing similar functions), or of the fixed restricted management, or unit type, the term "issuer" means the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement or instrument under which such securities are issued; except that in the case of an unincorporated association which provides by its articles for limited liability of any or all of its members, or in the case of a trust, committee or other legal entity, the trustees or members thereof shall not be individually liable as issuers of any security issued by the association, trust, committee, or other legal entity; and except that with respect to fractional undivided rights in oil, gas, or other mineral rights, or claims or properties, the term "issuer" means the owner of any such right or property or of any interest therein (whether whole or fractional) who creates fractional interests therein for the purpose of public offering.

(i) "Salesman" shall include every natural person, other than a dealer, employed or appointed or authorized by a dealer or issuer, to sell securities in any manner. The partners of a partnership and the executive officers of a corporation or other association registered as a dealer shall not be salesmen within the meaning of this definition.

(j) "Broker" means any person engaged in the business of effecting transactions in securities for the account of others, but does not include a bank.

(k) "Exchange" means any organization, association, or group of persons, whether incorporated or unincorporated, which constitutes, maintains, or provides a market place or facilities for bringing together purchasers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange as that term is generally understood, and includes the market place and the market facilities maintained by such exchange.

(l) "Facility," when used with respect to an exchange, includes its premises, tangible or intangible property whether on the premises or not, any right to the use of such premises or property or any service thereof for the purpose of effecting or reporting a transaction on an exchange (including, among other things, any system of communication to or from the exchange, by ticker or otherwise, maintained by or with the consent of the exchange), and any right of the exchange to the use of any property or service.

(m) "Member," when used with respect to an exchange, means any person who is permitted either to effect transactions on the exchange without the services of another person acting as broker, or to make use of the facilities of an exchange for transactions thereon without payment of a commission or fee or with the payment of a commission or fee which is less than that charged the general public, and includes any firm transacting a business as broker or dealer of which a member is a partner, and any partner of any such firm.

(n) "Bank" means (1) a banking or trust institution organized under the laws of the Philippines or of the United States, or any state, territory or possession thereof, or of a foreign country, whether incorporated or not, doing business in the Philippines, a substantial portion of the business of which consists of receiving deposits or exercising fiduciary powers, and which is not operated for the purpose of evading the provisions of this Act, and (2) a receiver, or other liquidating agent of any banking or trust institution.

(o) "Director" means any director of a corporation or any person performing similar functions with respect to any organization, whether incorporated or unincorporated.

(p) "Commission" means the Securities and Exchange Commission established by this Act.

(q) The Commission hereby established shall have power, by rules and regulations, to define any technical, trade or accounting term used in this Act in so far as such definitions are not inconsistent with the provisions hereof.

CHAPTER II. Securities and Exchange Commission

Section 3. Securities and Exchange Commission -

(a) There is hereby established a Securities and Exchange Commission (hereinafter referred to as the "Commission") to be under the direction of a commissioner to be appointed by the President with the consent of the Commission on Appointments of the National Assembly. The commissioner shall not engage in any other business, vocation, or employment than that of serving as commissioner, nor shall he participate, directly or indirectly, in any stock market operations or transactions of a character subject to regulation by the Commission pursuant to this Act. The commissioner shall receive a salary at the rate of ten thousand pesos a year and shall hold office during good behavior. The Commissioner shall be under the executive supervision of the Department of Justice.

(b) The Commission is authorized to appoint and fix the compensation of such officers, attorneys, examiners, engineers, and other technical staff as may be necessary for carrying out its functions under this Act, and may, subject to the Civil Service laws, appoint such employees as are likewise necessary in the execution of its functions and fix their salaries, with the approval of the Secretary of Justice. Such officers, attorneys, examiners, engineers, employees and technical staff shall not participate directly or indirectly in any stock market operations or transactions of a character subject to regulation by the Commission pursuant to this Act. The President of the Philippines may transfer to the Commission all or some of the personnel of the various bureaus and offices of the Government who are now engaged in the enforcement of laws regulating securities and exchanges, together with such corresponding appropriations, record, equipment and other properties as may be necessary or convenient to carry out the provisions of this Act.

(c) The Commission shall report to the President annually or oftener as he may require. The report shall contain an account of the work of the Commission during the period covered and such further data and information as may be deemed necessary or appropriate or may be called for by the President.

CHAPTER III. Registration of Securities

Section 4. Sale and Registration of Securities - No securities except of a class exempt under any of the provisions of section five hereof or unless sold in any transaction exempt under any of the provisions of section six hereof shall be sold within the Philippines unless such securities shall have been registered and/or licensed as hereinafter provided. Registration of stock shall be deemed to include the registration of rights to subscribe to such stock if the registration statement filed pursuant to section seven of this Act includes a statement that such rights are to be issued. A record of the registration of securities shall be kept in a Register of Securities to be kept in the office of the Commission, in which Register of Securities shall also be recorded any orders entered by the Commission with respect to such securities. Such register, and all information with respect to the securities registered therein, shall be opened to public inspection.

Notwithstanding the provisions of the preceding paragraph regarding exemptions, and any other provisions of this Act or other existing laws, commercial papers as defined in Section 1a hereof shall be registered in accordance with the rules and regulations that shall be promulgated by the Security Exchange Commission, after approval by the Monetary Board which shall also have the power of suspension in the enforcement of these provisions, it being understood that such rules may provide for opened registration provided certain limits be made in the public interest and for the protection of investors. The rules may also provide exemptions from registration of inter-bank call loans under such guidelines as may be necessary in the interest of the public.3

Section 5. Exempt Securities - (a) Except as hereinafter expressly provided, the provisions of this Act shall not apply to any of the following classes of securities:

1. Any security which, prior to the taking effect of this Act, has been sold or disposed of by the issuer or bona fide offered to the public.

2. Any security issued or guaranteed by the Government of the Philippines, or by the United States or any territory thereof, or by any political subdivision or agency of said Government, or by any of its public instrumentalities, or by any person controlled or supervised by, and acting as an instrumentality of, said Governments, or any certificate of deposit for any of the foregoing, or any security issued or guaranteed by any banking institution authorized to do business in the Philippines, the business of which is substantially confined to banking, and is supervised by the Bureau of Banking.4

3. Any security issued or guaranteed by any foreign government with which the Philippines is, at the time of the sale or offer of sale thereof, maintaining diplomatic relations, or by any state, province or political subdivision thereof having the power of taxation or assessment, which security is recognized at the time it is offered for sale in the Philippines as a valid obligation by such foreign government or by such state, province or political subdivision thereof issuing the same.5

4. Any security issued or guaranteed either as to principal, interest or dividend by a corporation owning or operating public service, whose financial transactions, including the issue and guaranteeing of securities, are subject to regulation and supervision by the Public Service Commission6 or by a board or officer of the Government of the Philippines.

5. Any security issued by a building and loan association, savings and loan association, or similar institution, substantially all the business of which is confined to the making of loans to members (but the foregoing exemption shall not apply with respect to any such security where the issuer takes from the total amount paid or deposited by the purchaser, by way of any fee, cash value or other device whatsoever, either upon termination of the investment at maturity or before maturity, an aggregate amount in excess of 3 per centum of the face value of such security), or any security issued by rural credit associations or by cooperative marketing associations.

6. Certificates issued by a receiver or by a trustee in bankruptcy, with the approval of the court.

7. Any insurance or endowment policy or annuity contract or optional annuity contract, issued by a corporation subject to the supervision of the Insurance Commissioner.

8. Any security exchanged by the issuer with its existing security holders exclusively, where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange.

9. Certificate or titles issued to its members by any charitable or mutual aid and benefit society or association, where such society or association is provided with a permit issued by the Treasurer of the Philippines under the provisions of the Administrative Code.7

(b) The Commission may, from time to time, by its rules and regulations and subject to such terms and conditions as may be prescribed therein, add any class of securities to the securities exempted as provided in this section, if it finds that the enforcement of this Act with respect to such securities is not necessary in the public interest and for the protection of investors by reason of the small amount involved or the limited character of the public offering; but no issue of securities shall be exempted under this subsection where the aggregate amount at which such issue is offered to the public exceeds two hundred thousand pesos.

Section 6. Exempt Transactions - The provisions of this Act shall not apply to the sale of any security in any of the following transactions:

(a) At any judicial, executor's, administrator's, guardian's, or at any sale by a receiver or trustee in insolvency or bankruptcy.

(b) By or for the account of a pledge holder or mortgagee, selling or offering for sale or delivery in the ordinary course of business and not for the purpose of avoiding the provisions of the Act, to liquidate a bona fide debt, a security pledged in good faith as security for such debt.

(c) An isolated transaction in which any security is sold, offered for sale, subscription or delivery by the owner thereof, or by his representative for the owner's account, such sale or offer for sale, subscription or delivery not being made in the course of repeated and successive transactions of a like character by such owner, or on his account by such representative, and such owner or representative not being the underwriter of such security.

(d) The distribution by a corporation, actively engaged in the business authorized by its charter, of securities to its stockholders or other security holders as a stock dividend or other distribution out of earnings or surplus; or the issuance of securities to the security holders or other creditors of a corporation in the process of a bona fide reorganization of such corporation made in good faith and not for the purpose of avoiding the provisions of this Act, either in exchange for the securities of such security holders or claims of such creditors or partly for cash and partly in exchange for the securities or claims of such security holders or creditors; or the issuance of additional capital stock of a corporation sold or distributed by it among its own stockholders exclusively, where no commission or other remuneration is paid or given directly or indirectly in connection with the sale or distribution of such increased capital stock.

(e) The transfer or exchange by one corporation to another corporation of their own securities in connection with a consolidation or merger of such corporations.

(f) Bonds or notes secured by mortgage upon real estate or tangible personal property, where the entire mortgage together with all of the bonds or notes secured thereby are sold to a single purchaser at a single sale.

(g) The issue and delivery of any security in exchange for any other security of the same issuer pursuant to a right of conversion entitling the holder of the security surrendered in exchange to make such conversion, provided that the security so surrendered has been registered or its sale licensed under this Act or was, when sold, exempt from the provisions of this Act, and that the security issued and delivered in exchange, if sold at the conversion price, would at the time of such conversion fall within the class of securities entitled to registration and licensing under this Act. Upon such conversion, the par value of the security surrendered in such exchange shall be deemed the price at which the securities issued and delivered in such exchange are sold.

(h) The sale, transfer or delivery of any securities to any bank, savings institution, trust company, insurance company or to any corporation or to any broker or dealer; Provided, that such broker or dealer is actually engaged in buying and selling securities as a business.

(i) Brokers' transactions, executed upon customers' orders on any exchange or in the open or counter market, but not the solicitation of such orders.

(j) Subscriptions for shares of the capital stock of a corporation prior to the incorporation thereof under the general Corporation Law, when no expense is incurred, or no commission, compensation or remuneration is paid or given in connection with the sale or disposition of such securities, and only when the purpose for soliciting, giving or taking, of such subscriptions is to comply with the requirements of such law as to the percentage of the capital stock of a proposed corporation which should be subscribed before it can be registered and duly incorporated, and only to such extent.

Section 7. Procedure for Registration - (a) All securities shall be registered through the filing by the issuer or by any dealer interested in the sale thereof, in the office of the Commission, of a sworn registration statement with respect to such securities, containing or having attached thereto, the following:

(1) Name of issuer and, if incorporated, place of incorporation.

(2) The location of the issuer's principal business office, and if such issuer is a nonresident or its place of office is outside of the Philippines, the name and address of its agent in the Philippines authorized to receive notice.

(3) The names and addresses of the directors or persons performing similar functions, and the chief executive, financial and accounting officers, chosen or to be chosen, if the issuer to be a corporation, association, trust, or other entity; of all the partners, if the issuer be a partnership; and of the issuer if the issuer be an individual; and of the promoters in the case of a business to be formed.

(4) The names and addresses of the underwriters.

(5) The general character of the business actually transacted or to be transacted by the issuer.

(6) A statement of the capitalization of the issuer, including the authorized and outstanding amounts of its capital stock and the proportion thereof paid up; the number and classes of shares in which such capital stock is divided; par value thereof, or if it has no par value, the stated or assigned value thereof; a description of the respective voting rights, preferences, conversion and exchange rights, rights to dividends, profits, or capital of each class, with respect to each other class, including the retirement and liquidation rights or values thereof.

(7) A copy of the security for the registration of which application is made.

(8) A copy of any circular, prospectus, advertisement letter, or communication to be used for the public offering of the security.

(9) The specific purposes in detail and the approximate amounts to be devoted to such purposes, so far as determinable, for which the security to be offered is to supply funds, and if the funds are to be raised in part from other sources, the amounts thereof and the sources thereof shall be stated.

(10) A statement of the amount of the issuer's income, expenses, and fix charges during the last fiscal year, or if in actual business less than one year, then for such time as the issuer has been in actual business.

(11) A balance sheet showing the amount and general character of its assets and liabilities on a day not more than sixty days prior to the date of such balance sheet.

(12) The remuneration, paid or estimated to be paid, by the issuer or its predecessor, directly or indirectly, during the past year and ensuing year to (a) the directors or persons performing similar functions, and (b) its officers and other persons, naming them wherever such remuneration exceeded six thousand pesos during any such year.

(13) The amount of issue of the security to be offered.

(14) The estimated net proceeds to be derived from the security to be offered.

(15) A statement showing the price at which such security is proposed to be sold, together with the maximum amount of commission or other form of remuneration to be paid in cash or otherwise, directly or indirectly, for or in connection with the sale or offering for sale of such security.

(16) The amount or estimated amounts, itemized in reasonable detail, of expenses, other than commissions specified in the next preceding paragraph, incurred or to be borne by or for the account of the issuer in connection with the sale of the security to be offered or properly chargeable thereto, including legal, engineering, certification, authentication, and other charges.

(17) A detailed statement showing the items of cash, property, services, patents, good-will, and any other consideration for which securities have been or are to be issued in payment.

(18) The amount of cash to be paid as promotion fees, or of capital stock which is to be set aside and disposed of as promotion stock, and a statement of all stock issued from time to time as promotion stock.

(19) In connection with speculative securities issued by a person engaged in the business of developing, exploiting or operating mineral claims, a sworn statement of a mining engineer stating the ore possibilities of the mine and such other information in connection therewith as the Commission may, by regulations, require, which will show the quality of the ore in such claim, and the unit cost of extracting it.

(20) Unless previously filed and registered under the provisions of this Act, and brought up to date, (a) a copy of its articles of incorporation, with all amendments thereof and its existing by-laws or instruments corresponding thereto, whatever the name, if the issuer be a corporation; (b) copy of all instruments by which the trust is created or declared and in which it is accepted and acknowledged, if the issuer is a trust; (c) a copy of its articles of partnership or association and all the papers pertaining to its organization, if the issuer is a partnership, unincorporated association, joint-stock company, syndicate, or any other form of organization.

(b) In case of certificates of deposit, voting trust certificates, collateral trust certificates, certificates of interest or shares in unincorporated investment trusts, equipment trust certificates, interim or other receipts for certificates, and like securities, the Commission shall establish rules and regulations requiring the submission of information of a like character applicable to such cases, together with such other information as it may deem appropriate and necessary regarding the character, financial or otherwise, of the actual issuer of the securities and/or the person performing the acts and assuming the duties of depositor or manager.

(c) However, the Commission may by rules or regulations provide that any of the above information or document need not be included in respect of any class of issuer of securities, if it finds that the requirement of such information or document is inapplicable to such class and that disclosure fully adequate for the protection of investors is otherwise included in a registration statement filed in accordance with such rules.

Upon filing of such registration statement, the issuer or dealer shall pay to the Treasury of the Philippines a fee of one-tenth of one per centum of the maximum aggregate price at which such securities are proposed to be offered, but in no case shall such fee be less than fifty pesos or more than one thousand pesos; and the fact of such filing shall be immediately published by the Commission, at the expense of the issuer or dealer, in two newspapers of general circulation in the Philippines, one published in English and another, in Spanish, once a week for two consecutive weeks, reciting that a registration statement for the sale of such security has been filed with it, and that the aforesaid registration statement, as well as the papers attached thereto, are open to inspection during business hours, by interested parties, under such regulations as the Commission may prescribe; and copies thereof, photostatic or otherwise, shall be furnished to every applicant at such reasonable charge as the Commission may prescribe.

The filing of such statement in the office of the Commission, the payment of the fee hereinabove prescribed, and the publication made as above stated, shall constitute the registration of such security, and seven days after the expiration of the period for publication above referred to, the registration shall take effect, and the security, if not a speculative security, may be sold in the Philippines, subject, however, to the further orders of the Commission as hereinafter provided. The Commission shall, upon the filing of the registration statement above referred to, determine, by order, whether or not the security sought to be registered is speculative within the meaning of this Act, and shall forthwith advise the issuer or dealer.

Section 8. Suspension of Registration - If, at any time, in the opinion of the Commission, the information contained in the statement filed is or has become misleading, incorrect, inadequate or incomplete, or the sale or offering for sale of the security may work or tend to work a fraud, the Commission may require from the person filing such statement such further information as may in its judgment be necessary to enable the Commission to ascertain whether the registration of such security should be revoked on any ground specified in section twelve, and the Commission may also suspend the right to sell such security pending further investigation, by entering an order specifying the grounds for such action, and by notifying by mail, or personally, or by telephone confirmed in writing, or by telegraph, the person filing such statement and every dealer who shall have notified the Commission of an intention to sell such security. The refusal to furnish information required by the Commission within a reasonable time to be fixed by Commission, may be a proper ground for the entry of such order of suspension. Upon the entry of any such order of suspension, no further sales of such security shall be made until the further order of the Commission.

In the event of the entry of such order of suspension, the Commission shall give a prompt hearing to the parties interested. If upon such hearing, the commission shall determine that the sale of any such security should be revoked on any ground specified in section twelve, it shall enter a final order prohibiting sales of such security, with its findings with respect thereto. Until the entry of such final order, the suspension of the right to sell, though binding upon the persons notified thereof, shall be deemed confidential, and shall not be published, unless is shall appear that the order of suspension has been violated after notice. Appeals from such final order may be taken to the President of the Philippines, within the period of thirty days from the date of notification of such order. If, however, upon such hearing, the Commission shall find that the sale of the security will neither be fraudulent nor result in fraud, it shall forthwith enter an order revoking such order of suspension, and such security shall be restored to its status as a security registered under this Act, as of the date of such order of suspension.8

Section 9. License to Sell Speculative Securities - With respect to speculative securities, if the Commission shall find after an examination of the registration statement filed by the issuer or dealer, together with all the other papers and documents attached thereto, that the issuers is of good repute, and that the sale of the security would not be fraudulent and would not work or tend to work a fraud upon the purchaser, and that the enterprise or business of the issuer is not based upon unsound business principles, it shall record the registration of such security in the Register of Securities, and, after the effective date of such registration as above stated, it shall issue to the issuer or dealer a license to sell those securities in the Philippines, and shall issue to such issuer a certificate of permit reciting that such person, its brokers or agents, are entitled to offer the securities named in said certificate for sale in the Philippines. Every permit shall recite in bold type that the issuance thereof is permissive only and does not constitute a recommendation or endorsement of the securities permitted to be issued.

With respect to speculative securities, the Commission shall, by order duly recorded, fix the amount of commission or other form of remuneration to be paid in cash or otherwise, directly or indirectly, for or in connection with the sale or offering for sale of such securities in the Philippines in no case to exceed ten per centum of the value of the securities sold; and shall fix the maximum amount of compensation which the issuer shall pay for mining claims and/or mineral rights for which provision is made by the issuer for payment in cash or securities. It may issue the permit subject to other conditions, to the end that this power may become effective. The amount of compensation which shall be paid the owner and/or holder of such mining claims and/or mineral rights shall be a fair valuation thereof, as may be fixed by the Commission, after consultation with the Bureau of Mines, and after receiving such technical information as the issuer or dealer and/or the owner or owners of such claims may care to submit in the premises.

Section 10. Consent to Service - Upon any application for registration, whether made by an issuer or registered dealer, where the issuer is not domiciled in the Philippines, there shall be filed with such application the irrevocable written consent of the issuer that in suits, proceedings and actions growing out of the violation of any provision of this Act, the service of the Commission of any notice, process, or pleading therein, authorized by the laws of the Philippines, shall be as valid and binding as if due service had been made on the issuer. Any such action shall be brought either in the province of the plaintiff's residence or in the City of Manila. Said written consent shall be authenticated by the seal of issuer, if it has a seal, and by the acknowledged signature of a member of the co-partnership or company, or by the acknowledged signature of any officer of the incorporated or unincorporated association, if it be an incorporated or unincorporated association, duly authorized by resolution of the board of directors, trustees or managers of the corporation or association, and shall in such case be accompanied by a duly certified copy of the resolution of the board of directors, trustees or managers of the corporation or association, authorizing the officers to execute the same. In case any process or pleading mentioned in this Act are served upon the Commission, they shall be duplicate copies, one of which shall be filed in the office of the Commission and another immediately forwarded by the Commission by registered mail to the principal office of the issuer against which said process or pleadings are directed.

Section 11. Financial Statements, Circulars, and so forth, Filing of . - While any person, whose securities have been sold pursuant to registration and/or permit issued hereunder, is engaged in business in the Philippines, such person shall file with the Commission not later than February fifteen of each year, a statement under oath of assets and liabilities as of December thirty-first of the last previous year. Provided, That at the request of such person or his duly authorized agent or of a member or duly authorized officer or agent of such person, the Commission may grant an extension of time not to exceed thirty days within which such statement shall be submitted to it. Such person shall also file with the Commission, before or at the time of their issuance for publication, copies of all circulars, prospectuses and other advertising matter to be issued from time to time by or on behalf of such person.

Section 12. Revocation of Registration of Securities and of License to Sell. - The Commission may revoke the registration of any security and the license to sell a speculative security by entering an order to this effect, with its findings in respect thereto, if upon examination into the affairs of the issuer of such security, it shall appear that the issuer:

(a) Is insolvent; or

(b) Has violated any of the provisions of this Act or any order of the Commission of which the issuer has notice; or

(c) Has been or is engaged or is about to engage in fraudulent transactions; or

(d) Is in any other way dishonest or has made any fraudulent representations in any prospectus or in any circular or other literature that has been distributed concerning the issuer or its securities; or

(e) Is of bad business repute; or

(f) Does not conduct its business in accordance with law; or

(g) Has its affair in an unsound condition; or

(h) Has his enterprise or business based upon unsound business principles.

In making such examination, the Commission shall have access to and may compel the production of all the books and papers of such issuer, and may administer oaths to, and examine the officers of, such issuer of any other person connected therewith as to its business and affairs, and may also require a balance sheet exhibiting the assets and liabilities of any such issuer or his income statement, or both, to be certified to by a certified public accountant.

Whenever the Commission may deem it necessary, it may also require such balance sheet or income statement, or both, to be made more specific in such particulars as the Commission shall point out or to be brought down to the latest practicable date.

If any issuer shall refuse to permit an examination to be made by the Commission, it shall be proper ground for revocation of registration and license.

If the Commission shall deem it necessary, it may enter an order suspending the right to sell securities pending any investigation, provided that the order shall state the grounds for taking such action, but such order of suspension, although binding upon the persons notified thereof, shall be deemed confidential, and shall not be published. Upon the entry of such order of suspension, no further sale of such security shall be made until further order of the Commission.

Notice of the entry of such order shall be given by mail, or personally, or by telephone, confirmed in writing, or by telegraph, to the issuer and every dealer who shall have notified the Commission of an intention to sell such security.

Before such order is made final, the issuer or dealer shall be entitled to a hearing; and such order may, within thirty days after notification thereof to the issuer and/or dealer, be appealed to the Supreme Court in the manner provided in this Acts.9

Section 13. Promotion Fees - If the statement containing information as to securities to be registered, as provided for in section seven of this Act, shall disclose that any such securities or any securities senior thereto shall have been or shall be intended to be issued for good-will, or for organization or promotion fees or expenses, or that payment in cash shall have been or will be made for organization or promotion fees or for good-will, the amount and nature thereof shall be fully set forth in the notification published by the Commission as required in section seven of this Act, and in all prospectuses, circulars, or other advertisements of the issuer, and should also appear upon the face or on the back of the security itself.

CHAPTER IV. Brokers, Dealers, and Salesmen

Section 14. Registration of Brokers, Dealers, and Salesmen - No broker, dealer or salesman shall engage in business in the Philippines as such broker, dealer or salesman or sell any securities, including securities exempted in section five of this Act, except in transactions exempt under section six of this Act, unless he has been registered as a broker, dealer or salesman in the office of the Commission pursuant to the provisions of this section.*

An application for registration in writing shall be filed in the office of the Commission in such form as the Commission may prescribe, duly verified by oath, which shall state the principal office of the applicant, wherever situated, and the location of its principal office and all branch offices in the Philippines, if any; the name or style of doing business, the names, residence and business addresses of all persons interested in the business as principals, copartners, officers and directors, specifying as to each his capacity and title; the general plan and character of business and the length of time the dealer has been engaged in business. The Commission may also require such additional information as to applicant's previous history, record and association, as it may deem necessary to establish the good repute in business of the applicant.

There shall be filed with such application an irrevocable written consent to the service of process upon the Commission in actions against such broker or dealer in manner and form as hereinabove provided in section ten.

If the Commission shall find that the applicant is of good repute and has complied with the provisions of this section, including the payment of the fee hereinafter provided, he shall register such applicant as a broker or dealer upon his filing a bond or other security in lieu thereof, in such sum as may be fixed by the Commission based upon its judgment as to the amount required for the due protection of the public, running to the Government of the Philippines, and conditioned upon the faithful compliance with the provisions of this Act by said broker or dealer and by all salesmen registered by the latter while acting for him. Such bond shall be executed by a surety company authorized to do business in the Philippines. In lieu of such bond, he may file bonds of the Government of the Philippines or of the United States, or other security acceptable to the Commission. If a bond is filed, any person damaged by the failure of such broker or dealer or of any salesman registered by the latter while acting for him, to comply with the provisions of this Act, shall be entitled to sue the sureties under such bond and to recover the damages so suffered thereunder. If other securities are filed in lieu thereof, such person may subject such securities to the payment of such damage.

Upon the written application of a registered dealer or broker and general satisfactory showing as to good character and the payment of the fee prescribed in this Act, the Commission shall register as salesmen of such dealer or broker such natural persons as the dealer or broker may request. Such registration shall cease upon the termination of the employment of such salesmen by such dealer or broker.

The names and addresses of all persons approved for registration as brokers, dealers or salesmen and all orders with respect thereto shall be recorded in a Register of Brokers, Dealers and Salesmen kept in the office of the Commission which shall be opened to public inspection. Every registration under this section shall expire on the thirty-first day of December in each year, but new registration for the succeeding year shall be issued upon written application and upon payment of the fee as hereinafter provided, without filing of further statements or furnishing any further information unless specifically required by the Commission. Application for renewals must be made not less than thirty nor more than sixty days before the first day of the ensuing year, otherwise they shall be treated as original applications. The fee for such registration and for each annual renewal shall be fifty pesos in the case of brokers, fifty pesos in the case of dealers and ten pesos in the case of salesmen.

Changes in registration occasioned by changes in the personnel of a partnership or in the principals, copartners, officers or directors of any broker or dealer may be made from time to time by written application setting forth the facts with respect to such change.

Every registered broker or dealer who intends to offer any security for sale shall notify the Commission in writing of his intention so to do. The notice shall contain the name of the broker or dealer and shall state the name of the security to be offered for sale, and whenever a broker or dealer shall have prepared such notice and shall have forwarded the same by registered mail, postage prepaid and properly addressed to the Commission, such dealer or broker, as to the contents of such notice and the filing thereof, shall be deemed to have complied with the requirements of this paragraph. Any issuer of a security required to be registered under the provisions of this Act, selling such securities except in exempt transactions as defined in section six hereof, shall be deemed a dealer within the meaning of this section and required to comply with all the provisions hereof.

Section 15. Revocation Brokers', Dealers and Salesmen's Registration. - Registration under section fourteen may be refused or any registration granted may be revoked by the Commission if, after a reasonable notice and a hearing, the Commission determines that such applicant or registrant so registered:

(1) Has violated any provision of this Act or any regulation made hereunder; or

(2) Has made a material false statement in the application for registration; or

(3) Has been guilty of a fraudulent act in connection with any sale of securities, or has been or is engaged or is about to engage in making fictitious or pretended sales or purchases of any of such securities or has been or is engaged or is about to engage in any practice or sale of securities which is fraudulent or in violation of the law; or

(4) Has demonstrated his unworthiness to transact the business of broker, dealer or salesman.

In cases of charges against a salesman, notice thereof shall also be given the broker or dealer employing such salesman.

Pending the hearing, the Commission shall have the power to order the suspension of such broker's, dealer's or salesman's registration; provided, that such order shall state the case for such suspension.

Until the entry of a final order, the suspension of such broker's or dealer's registration, though binding upon the persons notified thereof, shall be deemed confidential, and shall not be published, unless it shall appear that the order of suspension has been violated after notice.

In the event the Commission determines to refuse or revoke a registration as hereinabove provided, he shall enter a final order with his findings on the Register of Brokers, Dealers and Salesmen; and suspension or revocation of the registration of a dealer or broker shall also suspend or revoke the registration of all his salesmen.

It shall be sufficient cause for refusal or cancellation of registration in case of a partnership or corporation or any unincorporated association, if any member of a partnership or any officer or director of the corporation or association has been guilty of any act or omission which would be cause for refusing or revoking the registration of an individual dealer, broker or salesman.

CHAPTER V. Registration of Exchanges

Section 16. Use of Facilities of Unregistered Exchanges Prohibited. - It shall be unlawful for any broker, dealer, salesman or exchange, directly or indirectly, to make use of any facility of an exchange in the Philippines to effect any transaction in a security or to report such transaction, unless such exchange is registered as a securities exchange under section seventeen of this Act, or is exempted from such registration upon application by the exchange because, in the opinion of the Commission, by reason of the limited volume of transactions effected on such exchange, it is not practicable and not necessary or appropriate in the public interest or for protection of investors to require such registration.

Section 17. Registration of Exchanges - (a) Any exchange may be registered with the Commission as a securities exchange under the terms and conditions hereinafter provided in this section, by filing a registration statement in such form as the Commission may prescribe, containing the agreements, setting forth the information, and accompanied by the documents below specified:

(1) An Agreement (which shall not be construed as a waiver of any constitutional right or any right to contest validity of any rule or regulation) to comply, and to enforce, so far as is within its powers, compliance by its members, with the provisions of this Act, and any amendment thereto, and any rule or regulation made or to be made thereunder;

(2) Such data as to its organization, rules of procedure, and membership, and such other information as the Commission may by rules and regulations require as being necessary or appropriate in the public interest or for the protection of investors;

(3) Copies of its constitution, articles of incorporation with all amendments thereto, and of its existing by-laws or rules or instruments corresponding thereto, whatever the name, which are hereinafter collectively referred to as the "rules of the exchange"; and

(4) An agreement to furnish to the Commission copies of any amendments to the rules of the exchange forthwith upon their adoption.

(b) No registration of an exchange shall be granted or remain in force unless the rules thereof include provision for the expulsion, suspension, or disciplining of a member for conduct or proceeding inconsistent with just and equitable principles of fair trade, and declare that the willful violation of any provision of this Act or any rule or regulation thereunder shall be considered conduct or proceeding inconsistent with just and equitable principles of fair trade.

(c) Nothing in this Act shall be construed to prevent any exchange from adopting and enforcing any rule not inconsistent with this Act and with the rules and regulations thereunder, or with any other law.

(d) If it appears to the Commission that the exchange applying for registration is so organized as to be able to comply with the provisions of this Act and the rules and regulations thereunder, and that the rules of the exchange are just and adequate to insure fair dealing and to protect investors, the Commission shall cause such exchange to be registered as a securities exchange.

(e) Within thirty days after the filing of the application, the Commission shall enter an order either granting or, after appropriate notice and opportunity for hearing, denying registration as a securities exchange, unless the exchange applying for registration shall withdraw its application or shall consent to the Commission's deferring action on its application for a stated period after the date of filing. The filing with the Commission of an application for registration by an exchange shall be deemed to have taken place upon the receipt thereof. Amendments to an application may be made upon such terms as the Commission may prescribe.

(f) Upon the registration of a securities exchange pursuant to the provision of this Act, it shall pay a registration fee of one thousand pesos.

(g) An exchange may, upon appropriate application in accordance with the rules and regulations of the Commission and upon such terms as the Commission may deem necessary for the protection of investors, withdraw its registration.

Section 18. Margin Requirements - (a) For the purpose of preventing the excessive use of credit for the purchase or carrying of securities, the Commission shall prescribe rules and regulations with respect to the amount of credit that may be initially extended and subsequently maintained on any security (other than an exempted security) registered on a securities exchange. For the initial extension of credit, such rules and regulations shall be based upon the following standard:

An amount not greater than whichever is the higher of -

(1) Fifty per centum of the current market price of the security, or

(2) One hundred per centum of the lowest market price of the security during the preceding thirty-six calendar months, but not more than sixty-five per centum of the current market price.

(b) It shall be unlawful for any member of a securities exchange or any broker or dealer who transacts a business in securities through the medium of any such member, directly or indirectly to extend or maintain credit or arrange for the extension or maintenance of credit to or for any customer -

(1) On any security (other than an exempted security) registered on a securities exchange, in contravention of the rules and regulations which the Commission shall prescribe under the provisions of this section.

(c) This section and the rules and regulations thereunder shall not apply (A) to a loan made by a person not in the ordinary course of his business, (B) to a loan on an exempted security, (C) to a loan to a dealer to aid in the financing of the distribution of securities to customers not through the medium of a securities exchange, (D) to a loan by a bank on a security, or (E) to such other loans as the Commission shall, by such rules and regulations as it may deem necessary or appropriate in the public interest or for the protection of investors, exempt, either unconditionally or upon specified terms and conditions, or for stated periods, from the operation of this section and the rules and regulations thereunder.

(d) The provisions of this section or the rules and regulations thereunder shall not apply to any loan or extension of credit made prior to the effective date of this Act.

Section 19. Restriction on Borrowing by Members, Brokers, and Dealers - It shall be unlawful for any member of a securities exchange, or any broker or dealer who transacts a business in securities through the medium of any such member, directly or indirectly -

(a) To permit in the ordinary course of business as a broker his aggregate indebtedness to all persons, including customers' credit balances (but excluding indebtedness secured by exempted securities), to exceed such percentage of the net capital (exclusive of fixed assets and value of exchange membership) employed in the business, but not exceeding in any case two thousand per centum, as the Commission may by rules and regulations prescribe as necessary or appropriate in the public interest or for the protection of investors.

(b) In contravention of such rules and regulations as the Commission shall prescribe for the protection of investors, to hypothecate or arrange for the hypothecation of any security carried for the account of any customer under circumstances -

(1) That will permit the commingling of his securities, without his written consent, with the securities of any other customer;

(2) That will permit such securities to be commingled with the securities of any person other than a bona fide customer; or

(3) That will permit such securities to be hypothecated or subjected to any lien or claim of the pledge, or for a sum in excess of the aggregate indebtedness of such customers in respect of such securities.

(c) To lend or arrange for the lending of any security carried for the account of any customer without the written consent of such customer.

Section 20. Manipulation of Security Prices - (a) It shall be unlawful for any person, directly or indirectly -

(1) For the purpose of creating a false or misleading appearance of active trading in any security registered on a securities exchange, or a false or misleading appearance with respect to the market for any such security:

(A) To effect any transaction in such security which involves no change in the beneficial ownership thereof, or

(B) To enter an order or orders for the purchase of such security with the knowledge that an order or orders of substantially the same size, at substantially the same time, and at substantially the same price, for the sale of any such security, has been or will be entered by or for the same or different parties, or

(C) To enter any order or orders for the sale of any such security with the knowledge that an order or orders of substantially the same size, at substantially the same time, and at substantially the same price, for the purchase of such security, has been or will be entered by or for the same or different parties.

(2) To effect, alone or with one or more other persons, a series of transactions in any security registered on a securities exchange creating actual or apparent active trading in such security or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others.

(3) If a dealer or broker, or other person selling or offering for sale, or purchasing or offering to purchase, the security, to induce the purchase or sale of any security registered on a securities exchange by the circulation or dissemination in the ordinary course of business of information to the effect that the price of any such security will or is likely to rise or fall because of market operations of any one or more persons, conducted for the purpose of raising or depressing the prices of such security.

(4) If a dealer or broker or other person selling or offering for sale or purchasing or offering to purchase the security, to make, regarding any such security, for the purpose of inducing the purchase or sale thereof, any statement which was at the time and in the light of the circumstances under which it was made, false or misleading with respect to any material fact, and which he knew or had reasonable ground to believe was so false or misleading.

(5) For a consideration received directly or indirectly from a dealer or broker or other person selling or offering for sale or purchasing or offering to purchase the security, to induce the purchase or sale of such security by the circulation or dissemination of information to the effect that the price of any such security will or is likely to rise or fall because of the market operations of any one or more persons conducted for the purpose of raising or depressing the price of such security.

(6) To effect, either alone or with one or more other persons, any series of transactions for the purchase or sale of any security registered on a securities exchange for the purpose of pegging, fixing or stabilizing the price of such security in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

(b) It shall be unlawful for any person to effect, by the use of any facility of a securities exchange, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors -

(1) Any transaction in connection with any security whereby any party to such transaction acquires any put, call, straddle, or other option or privilege of buying the security from or selling the security to another without being bound to do so; or

(2) Any transaction in connection with any security with relation to which he has, directly or indirectly, any interest in any such put, call, straddle, option or privilege; or

(3) Any transaction in any security for the account of any person who he has reason to believe has, and who actually has, directly or indirectly, any interest in any such put, call, straddle, option, or privilege with relation to such security.

(c) It shall be unlawful for any member of a securities exchange, directly or indirectly, to endorse or guarantee the performance of any put, call, straddle, option or privilege in relation to any security registered on a securities exchange, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

(d) The terms "put," "call," "straddle," "option," or "privilege" as used in this section shall not include any registered warrant, right or convertible security.

(e) Any person who wilfully participates in any act or transaction in violation of subsection (a), (b) or (c) of this section shall be liable to any person who shall purchase or sell any security at a price which was affected by such act or transaction, and the person injured may sue in any court of competent jurisdiction to recover the damages sustained as a result of any such act or transaction. In any such suit, the court may assess reasonable costs, including reasonable attorney's fees, against either party litigant. Every person who becomes liable to make payment under this subsection may recover contribution as in cases of contract from any person who, if joined in the original suit, would have been liable to make the same payment. No action shall be maintained to enforce any liability created under this section, unless brought within one year after the discovery of the facts constituting the violation and within three years after such violation.

(f) The provisions of this section shall not apply to an exempted security.

Section 21. Manipulative and Deceptive Devices. - It shall be unlawful for any person, directly or indirectly, by the use of any facility of any securities exchange -

(a) To effect a short sale, or to use or employ any stop-loss order in connection with the purchase or sale or any security registered on a securities exchange, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

(b) To use or employ, in connection with the purchase or sale of any security, any manipulative or deceptive device or contrivance, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

Section 21-A Artificial measures of price control - It shall be unlawful for any securities exchange to adopt and enforce artificial measures of price control of any nature whatsoever without the prior approval of the Commission, which may be given only if it benefits the investors.11

Section 22. Segregation and Limitation of Functions of Members, Brokers, and Dealers. - (a) The Commission shall prescribe such rules and regulations as it deems necessary or appropriate in the public interest or for the protection of investors (1) to regulate floor trading by members of securities exchanges, directly or indirectly for their own account or for discretionary accounts, and (2) to prevent such excessive trading on the exchange but off the floor by members, directly or indirectly for their own account, as the Commission may deem detrimental to the maintenance of a fair and orderly market. It shall be unlawful for a member to effect any transaction in a security in contravention of such rules and regulations, but such rules and regulations may make such exemptions for arbitrage transactions, for transactions in exempted securities, and, within the limitations of subsection (b) of this section, for transactions by odd-lot dealers and specialists, as the Commission may deem necessary or appropriate in the public interest or for the protection of investors.

(b) When not in contravention of such rules and regulations as it deems necessary or appropriate in the public interest or for the protection of investors (1) to regulate floor trading by members of securities exchanges directly or indirectly for their own account or for discretionary accounts, and (2) to prevent such excessive trading on the exchange but off the floor by members, directly or indirectly for their own account, as the Commission may deem detrimental to the maintenance of a fair and orderly market. It shall be unlawful for a member to effect any transaction in a security in contravention of such rules and regulations, but such rules and regulations may make such exemptions for arbitrage transactions, for transactions in exempted securities, and, within the limitations of subsection (b) of this section, for transactions by odd-lot dealers and specialist, as the Commission may deem necessary or appropriate in the public interest or for the protection of investors.

(c) When not in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors, the rules of a securities exchange may permit -

(1) A member to be registered as an odd-lot dealer and as such to buy and sell for his own account so far as may be reasonably necessary to carry on such odd-lot transactions, or

(2) A member to be registered as a specialist. If under the rules and regulations of the Commission, a specialist is permitted to act as a dealer, or is limited to acting as a dealer, such rules and regulations shall restrict his dealings so far as practicable to those reasonably necessary to permit him to maintain a fair and orderly market, or to those necessary to permit him to act as an odd-lot dealer. It shall be unlawful for a specialist or an official of the exchange to disclose information in regard to orders placed with such specialist which is not available to all members of the exchange, to any person other than an official of the exchange, a representative of the Commission, or a specialist who may be acting for such specialist; but the Commission shall have power to require disclosure to all members of the exchange of all orders placed with specialists, under such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. It shall also be unlawful for a specialist acting as a broker to effect on the exchange any transaction except upon a market or limited price order.

(d) If, because of the limited volume of transactions effected on an exchange, it is, in the opinion of the Commission, impracticable and not necessary or appropriate in the public interest or for the protection of investors to apply any of the foregoing provisions of this section or the rules and regulations thereunder, the Commission shall have power, upon application of the exchange and on a showing that the rules of such exchange are otherwise adequate for the protection of investors, to exempt such exchange and its members from any such provision or rules and regulations.

(e) It shall be unlawful for a member of a securities exchange who is both a dealer and a broker, or for any person who both as a broker and a dealer transacts a business in securities through the medium of a member or otherwise, to effect through the use of any facility of a securities exchange, or otherwise, in the case of a member -

(1) Any transaction in connection with which, directly or indirectly, he extends or maintains or arranges for the extension or maintenance of credit to or for a customer on any security (other than an exempted security) which was a part of a new issue in the distribution of which he participated as a member of a selling syndicate or group within six months prior to such transaction: Provided. That credit shall not be deemed extended by reason of a bona fide delayed delivery of any security against full payment of the entire purchase price thereof upon such delivery within thirty-five days after such purchase, or

(2) Any transaction with respect to any security (other than an exempted security) unless, if the transaction is with a customer, he discloses to such customer in writing at or before the completion of the transaction whether he is acting as a dealer for his own account, as a broker for such customer, or as a broker for some other person.

Section 23. Transactions in Unregistered Securities on Securities Exchange Prohibited. - It shall be unlawful for any member, broker or dealer to effect any transaction in any security (other than an exempted security) on a securities exchange unless a registration is effective as to such security in accordance with the provisions of this Act and the rules and regulations thereunder.

Section 24. Proxies. - It shall be unlawful for any member of a securities exchange or any broker or dealer who transacts a business in securities through the medium of any such member, to give a proxy, consent or authorization in respect of any security carried for the account of a customer in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

Section 25. Over-the-Counter Markets. - It shall be unlawful, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or to insure to investors protection comparable to that provided by and under authority of this Act in the case of securities exchanges -

(1) For any broker or dealer, singly or with any other person or persons, to make or create, or enable another to make or create, a market, otherwise than on a securities exchange, for both the purchase and sale of any security, other than an exempted security or commercial paper, bankers' acceptances, or commercial bills, or securities which have not previously been registered or listed with an exchange, or

(2) For any broker or dealer to use any facility of any such market.

Such rules and regulations may provide for the regulation of all transactions by brokers and dealers on any such market, for the registration with the Commission of dealers or brokers making or creating such a market, and for the registration of the securities for which they make or create a market, and may make special provision with respect to securities or specified classes thereof listed, or entitled to unlisted trading privileges, upon any exchange on the effective date of this Act, which securities are not registered under the provisions hereof.

Section 26. Directors, Officers, and Principal Stockholders. - (a) Every person who is directly or indirectly the beneficial owner of more than ten per centum of any class of security (other than an exempted security), or who is a director or an officer of the issuer of such security, shall file, at the time of the registration of such security or within ten days after he becomes such beneficial owner, director, or officer, a statement with the exchange (and a duplicate original thereof with the Commission) of the amount of all securities of such issuer of which he is the beneficial owner, and within ten days after the close of each calendar month thereafter, if there has been any change in such ownership during such month, shall file with the exchange a statement (and a duplicate original thereof with the Commission) indicating his ownership at the close of the calendar month and such changes in his ownership as have occurred during such calendar month.

(b) Any profit realized by a beneficial owner, director, or officer, through the unfair use of information received as such, from any purchase and sale, or any sale and purchase, of any security of such issuer (other than an exempted security), within any period of less than six months of the issue thereof, unless such security was acquired in good faith in connection with a debt previously contracted, shall inure to and be recoverable by the issuer.

Section 27. Account and Records, Reports, Examinations of Exchanges, Members, and Others. - (a) Every securities exchange, every member thereof, every broker or dealer who transacts a business in securities through the medium of any such member, shall make, keep and preserve for such periods, such accounts, correspondence, memoranda, papers, books and other records, and make such reports as the Commission by its rules and regulations may prescribe as necessary or appropriate in the public interest or for the protection of investors. Such accounts, correspondence, memoranda, papers, books, and other records shall be subject at any time or from time to time to such reasonable, periodic, special or other examinations by examiners or other representatives of the Commission as the Commission may deem necessary or appropriate in the public interest or for the protection of investors, provided that the Commission give notice of the purpose of such examination, and if such examination is for the purpose of investigating any complaint filed with the Commission or any information received by the Commission, that a copy of such complaint or a statement of such information be furnished by the Commission to such exchange, member, broker or dealer at least five days prior to the commencement of such examination.

(b) Any broker, dealer or other person extending credit, who is subject to the rules and regulations prescribed by the Commission pursuant to this Act, shall make such reports to the Commission as may be necessary or appropriate to enable it to perform the functions conferred upon it by this Act.

Section 28. Powers with Respect to Exchanges and Securities. - (a) The Commission is authorized, if in its opinion such action is necessary or appropriate for the protection of investors:

(1) After appropriate notice and opportunity for hearing, by order, to suspend for a period not exceeding twelve months or to withdraw the registration of a securities exchange, if the Commission finds that such exchange has wilfully violated any provision of this Act or of the rules and regulations thereunder, or has wilfully failed to enforce, so far as is within its power, compliance therewith by a member or by an issuer of a security registered thereon.

(2) After appropriate notice and opportunity for hearing, by order, to suspend for a period not exceeding twelve months or to expel from a securities exchange any member or officer thereof whom the Commission finds has wilfully violated any provision of this Act or the rules and regulations thereunder, or has effected any transaction for any person who, he has reason to believe, is violating in respect of such transaction any provision of this Act or the rules and regulations thereunder.

(3) And if in its opinion the public interest so requires, summarily to suspend trading in any registered security on any securities exchange for a period not exceeding ten days or, with the approval of the President, summarily to suspend all trading on any securities exchange for a period not exceeding ninety days.

(b) The Commission is further authorized, if after making appropriate request in writing to a securities exchange that such exchange effect on its own behalf specified changes in its rules and practices and, after appropriate notice and opportunity for hearing, the Commission determines that such exchange has not made the changes so requested, and that such changes are necessary or appropriate for the protection of investors or to insure fair dealing in securities traded in upon such exchange or to insure fair administration of such exchange, by rules or regulations or by order, to alter or supplement the rules of such exchange (insofar as necessary or appropriate to effect such changes) in respect of such matters as -

(1) Safeguards in respect of the financial responsibility of members and adequate provision against the evasion of financial responsibility through the use of corporate forms or special partnerships;

(2) The limitation or prohibition of the registration or trading in any security within a specified period after the issuance or primary distribution thereof;

(3) The listing or striking from listing of any security;

(4) Hours of trading;

(5) The manner, method, and place of soliciting business;

(6) Fictitious accounts;

(7) The time and method of making settlements, payments, and deliveries, and of closing accounts;

(8) The reporting of transactions on the exchange and upon tickers maintained by or with the consent of the exchange, including the method of reporting short sales, stopped sales, sales of securities of issuers in default, bankruptcy or receivership, and sales involving other special circumstances;

(9) The fixing of reasonable rates of commission, interest, listing, and other charges;

(10) Minimum units of trading;

(11) Odd-lot purchases and sales; and

(12) Minimum deposits on margin accounts.

(c) Wherever two or more exchanges exist, the Commission, by order, shall require and enforce uniformity of trading regulations in and/or between said exhange. 12

CHAPTER VI. General

Section 29. Liabilities of Controlling Persons. - (a) Every person who, directly or indirectly, controls any person liable under any provision of this Act or of any rule or regulation thereunder shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action.

(b) It shall be unlawful for any person, directly or indirectly, to do any act or thing which it would be unlawful for such person to do under the provisions of this Act or any rule or regulation thereunder through or by means of any other person.

(c) It shall be unlawful for any director or officer of, or any owner of any of the securities issued by, any issuer of any security registered in accordance with this Act, without just cause, to hinder, delay, or obstruct the making or filing of any document, report, or information required to be filed under this Act or any rule or regulation thereunder.

Section 30. Remedies. - (a) Every sale made in violation of any of the provisions of this Act or wherein the purchaser shall have relied upon any statement which was at the time and in the light of the circumstances under which it was made false and misleading with respect to any material fact contained in any application, report, or document filed pursuant to this Act or any rule or regulation thereunder, shall be voidable at the election of the purchaser; and the person making such sale and every director, officer or agent of or for such seller, if such director, officer or agent shall have personally participated or aided in any way in making such sale, shall be jointly and severally liable to such purchaser in an action in any court of competent jurisdiction upon tender of the securities sold or of the contract made for the full amount paid by such purchaser, with interest, together with all taxable court costs and reasonable attorney's fees: Provided, That no action shall be brought for the recovery of the purchase price after two years from the date of such sale: And provided, further, That no purchaser otherwise entitled shall claim or have the benefit of this section who shall have refused or failed within thirty days from the date thereof to accept an offer in writing of the seller to take back the security in question and to refund the full amount paid by such purchaser, together with interest on such amount for the period from the date of payment by such purchaser down to the date of repayment, such interest to be computed:

(1) In case such securities consist of interest-bearing obligations, at the same rate as provided in such obligations; and

(2) In case such securities consist of other than interest-bearing obligations, at the rate of six per centum per annum; less, in every case, the amount of any income from said securities that may have been received by such purchaser.

(b) Any person having a right of action against a dealer, broker or salesman under this section shall have a right of action under the bond provided in section fourteen.

Section 31. Investigations, Injunctions and Prosecution of Offense - (a) The Commission may, in its discretion, make such investigations as it deems necessary to determine whether any person has violated or is about to violate any provision of this Act or any rule or regulation thereunder, and may require or permit any person to file with it a statement in writing, under oath or otherwise as the Commission shall determine, as to all the facts and circumstances concerning the matter to be investigated. The Commission is authorized, in its discretion, to publish information concerning any such violations, and to investigate any fact, condition, practice, or matter which it may deem necessary or proper to aid in the enforcement of the provisions of this Act, in the prescribing of rules and regulations thereunder, or in securing information to serve as a basis for recommending further legislation concerning the matters to which this Act relates: Provided, however, That no such investigation shall be conducted unless the person investigated is furnished with a copy of any complaint which may have been the cause of the initiation of the investigation or is notified in writing of the purpose of such investigation.

(b) For the purpose of any such investigation, or any other proceeding under this Act, the Commission or any officer designated by it is empowered to administer oaths and affirmations, subpoena witnesses, compel attendance, take evidence, and require the production of any book, paper, correspondence, memorandum, or other record which the Commission deems relevant or material to the inquiry. Any person who shall, without just cause, fail or refuse to attend and testify or to answer any lawful inquiry or to produce books, papers, correspondence, memoranda, and other records, if in his power so to do, in obedience to the subpoena of the Commission, shall be guilty of an offense and, upon conviction, shall be subject to discipline as in case of contempt of court and, upon application of the Commission, shall be dealt with by the Court of First Instance where such person resides, in the manner provided by law.13

(c) No person shall be excused from attending and testifying or from producing books, papers, contracts, agreements and other records and documents before the Commission or in obedience to the subpoena of the Commission or any officer designated by it, or in any cause or proceeding instituted by the Commission, on the ground that the testimony or evidence, documentary or otherwise, required of him may tend to incriminate him or subject him to a penalty or forfeiture; but no individual shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he is compelled, after having claimed his privilege against self-incrimination, to testify or produce evidence, documentary or otherwise, except that such individual so testifying shall not be exempt from prosecution and punishment for perjury committed in so testifying.

(d) Whenever it shall appear to the Commission that any person is engaged or about to engage in any act or practice which constitutes or will constitute a violation of the provisions of this Act, or of any rule or regulation thereunder, it may in its discretion bring an action in the Court of First Instance of Manila to enjoin such acts or practices, and upon a proper showing, a permanent or temporary injunction or restraining order shall be granted without bond. The Commission may transmit such evidence as may be available concerning such acts or practices to the Secretary of Justice, who may, in his discretion, order or institute the necessary proceedings, criminal or civil, under this Act.

(e) Upon application of the Commission, the Court of First Instance of Manila shall also have jurisdiction to issue mandatory injunctions commanding any person to comply with the provisions of this Act or any order of the commission made in pursuance thereof.

Section 32. Hearing by Commission - Hearings may lie and may be held before the Commission, or any officer or officers of the Commission designated by it, and appropriate records thereof shall be kept.

Section 33. Rules and Regulations - The commission shall have power to make such rules and regulations as may be necessary for the execution of the functions vested in it by this Act.

Section 34. Revelation of Information Filed with the Commission - (a) Nothing in this Act shall be construed to require, or to authorize the Commission to require, the revealing of trade secrets or processes in any application, report, or document filed with the Commission.

(b) Any person filing any such application, report or document may make written objection to the public disclosure of information contained therein, stating the grounds for such objection, and the Commission is authorized to hear objections in any such case as it deems advisable. The Commission may, in such cases, make available to the public the information contained in any such application, report, or document only when a disclosure of such information is required in the public interest or for the protection of investors; and copies of information so made available may be furnished to any person having a legitimate interest therein at such reasonable charge and under such reasonable limitation as the Commission may prescribe.

(c) It shall be unlawful for any member, officer, or employee of the Commission to disclose to any person other than a member, officer, or employee of the Commission, or to use for personal benefit, any information contained in any application, report, or document filed with the Commission which is not made available to the public pursuant to subsection (b) of this section.

Section 35. Court Review of Orders - (a) Any person aggrieved by an order issued by the Commission in a proceeding under this Act to which such person is a party or who may be affected thereby may obtain a review of such order in the Supreme Court of the Philippines by filing in such court, within sixty days after the entry of such order, a written petition praying that the order of the Commission be modified or set aside in whole or in part. A copy of such petition shall be forthwith served upon the Commission, and thereupon the Commission shall certify and file in the court a transcript of the record upon which the order complained of was entered. Upon the filing of such transcript, such court shall have exclusive jurisdiction to affirm, modify, and enforce or set aside such order, in whole or in part. No objection to the order of the Commission shall be considered unless such objection shall have been urged before the Commission, provided that opportunity therefore has been afforded. The finding of the Commission as to the facts shall be conclusive. If either party shall apply to the court for leave to adduce additional evidence and shall show to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for failure to adduce such evidence in the hearing before the Commission, the court may order such additional evidence to be taken before the Commission and to be adduced upon the hearing in such manner and upon such terms and conditions as to the court may seem proper. The Commission may modify its findings as to the facts, by reason of the additional evidence so taken, and it shall file such modified or new findings, which shall be conclusive, and its recommendation, if any, for the modification or setting aside of the original order.

The judgment and decree of the court, affirming, modifying, and enforcing or setting aside, in whole or in part, any such order of the Commission, shall be final, subject to review by the Supreme Court of the United States in cases where and upon the grounds by which a petition for a writ of certiorari to the Supreme Court of the Philippines may be presented in the Supreme Court of the United States.

(b) The commencement of proceedings under subsection (a) hereof shall not operate as a stay of the Commission's order unless specifically ordered by the court.

Section 36. Effect of Action of Commission and Unlawful Representations with Respect thereto - No action or failure to act by the Commission in the administration of this Act shall be construed to mean that the Commission has in any way passed upon the merits of or given approval to any security or any transaction or transactions therein, nor shall such action or failure to act with regard to any statement or report filed with or examined by the Commission pursuant to this Act or the rules and regulations thereunder be deemed a finding by the Commission that such statement or report is true and accurate on its face or that it is not false or misleading. It shall be unlawful to make, or cause to be made, to any prospective purchaser or seller of a security any representation that any such action or failure to act by the commission is to be so construed or has such effect.

Section 37. Effect on Existing Law - The rights and remedies provided by this Act shall be in addition to any and all other rights and remedies that may now exist, but no person permitted to maintain a suit for damages under the provisions of this Act shall recover, through satisfaction of judgment in one or more actions, a total amount in excess of his actual damages on account of the act complained of.

Section 38. Validity of Contracts - (a) Any conditions, stipulation, or provision binding any person to waive compliance with any provision of this Act or of any rule or regulation thereunder, or of any rule of an exchange required thereby, shall be void.

(b) Every contract made in violation of any provision of this Act or of any rule or regulation thereunder, and every contract (including any contract for listing a security on an exchange) heretofore or hereafter made, the performance of which involves the violation of, or the continuance of any relationship or practice in violation of, any provision of this Act or any rule or regulation thereunder, shall be void,

(1) As regards the rights of any person who, in violation of any such provision, rule or regulation, shall have made or engaged in the performance of any such contract, and

(2) As regards the rights of any person who, not being a party to such contract, shall have acquired any right thereunder with actual knowledge of the facts by reasons of which the making or performance of such contract was in violation of any such provision, rule or regulation.

(c) Nothing in this Act shall be construed -

(1) To affect the validity of any loan or extension of credit made or of any lien created prior or subsequent to the effectiveness of this Act, unless at the time of the making of such loan or extension of credit or the creating of such lien, the person making such loan or extension of credit or acquiring such lien shall have actual knowledge of the facts by reason of which the making of such loan or extension of credit or the acquisition of such lien is a violation of the provisions of this Act or any rule or regulation thereunder, or

(2) To afford a defense to the collection of any debt, obligation or the enforcement of any lien by any person who shall have acquired such debt, obligation, or lien in good faith for value and without actual knowledge of the violation of any provision of this Act or any rule or regulation thereunder affecting the legality of such debt, obligation or lien.

Section 39. Additional Fee of Stock Exchanges - In addition to the registration fee prescribed in section seventeen of this Act, every securities exchange shall pay to the Treasurer of the Philippines, on or before March fifteen of each calendar year, a fee in an amount equal to one five-hundredth of one per centum of the aggregate amount of the sales of securities transacted on such securities exchange during the preceding calendar year, for the privilege of doing business as a securities exchange, during the preceding calendar year or any part thereof.

Section 40. Penalties - Any person who wilfully violates any provision of this Act, or any lawful rule or regulation thereunder, the violation of which is made unlawful or the observance of which is required under the terms of this Act, or any person who wilfully and knowingly makes, or causes to be made, any statement in any application, report, or document required to be filed under this Act, or any lawful rule or regulation thereunder, which statement is false or misleading with respect to any material fact, shall, upon conviction, be sentenced to suffer imprisonment for a period not exceeding two years, or a fine not exceeding twenty thousand pesos, or both, in the discretion of the court, except that when such person is an exchange, the penalty shall be a fine which shall not exceed one hundred thousand pesos.

Section 41. Separability of Provisions - If any provision of this Act shall be held invalid, the remainder of the Act shall not be affected thereby.

Section 42. Repealing Clause - All Acts or parts of Acts inconsistent with this Act, including the whole of Act Numbered Two thousand five hundred and eighty-one, otherwise known as the "Blue Sky Law," are hereby repealed.17

Section 43. Appropriation - The sum of fifty thousand pesos, together with all the collections under the provisions of this Act, or so much thereof as may be necessary, are hereby appropriated out of any funds in the Philippines Treasury not otherwise appropriated, to be disbursed upon order of the Department Head, for the payment of salaries and travel expenses of the officers and personnel of the Commission, for the purchase of equipment and supplies, and for such other incidental expenses as may necessarily be incurred to carry into effect the provisions of this Act.18

Section 44. Effective Date - Chapters, I, II, and III of this Act, and so much of Chapter VI thereof as are necessary to carry into effect the provisions of Chapter III, shall take effect on the date of the approval of this Act; all the other Chapters and provisions shall take effect on January first, nineteen hundred and thirty-seven.

Approved, October 26, 1936.

AN ACT TO FIX THE STANDARD TIME OF THE PHILIPPINES, AND TO AUTHORIZE THE PRESIDENT OF THE PHILIPPINES TO ESTABLISH A DAYLIGHT SAVINGS TIME THEREIN

Be it enacted by the National Assembly of the Philippines:

Section 1. The standard time of the Philippines shall be fixed upon the basis of the mean astronomical time at one hundred and twenty degrees East Longitude, Greenwhich Meridian: Provided, That the President of the Philippines may, when the public interest so requires, and at any time or times, within the periods from March to June and from November to January, all inclusive, establish, by proclamation, a daylight saving time, by advancing by one hour, on such date as he shall determine, the standard time herein fixed, and by retarding such daylight saving time by another hour or such other date as he shall determine, so that during certain periods of the year, as above indicated, the standard time be one hour advance of the mean astronomical time at one hundred and twenty degrees East Longitude, Greenwhich Meridian. The President shall, in such proclamation, fix the date and hour when such daylight saving time shall commence and terminate.

Section 2. The standard time of the daylight saving time herein established shall govern the movement of all common carrier. In all statutes, order, rules and regulations relating to the time of performance of an act by any officer or department of the Government of the Commonwealth,1 or relating to the time within which any right shall accrue or determine, or within which any act shall or shall not be performed by any person in the Philippines, it shall be understood that the time shall be the standard or the daylight saving time as herein established, as the case may be.

This act shall take effect upon its approval.

Approved, October 26, 1936.

1Now Republic.

AN ACT AUTHORIZING THE PHILIPPINE NATIONAL BANK, THE NATIONAL DEVELOPMENT COMPANY, AND THE SECRETARY OF AGRICULTURE AND COMMERCE TO ESTABLISH AND MAINTAIN WAREHOUSES FOR TOBACCO AND OTHER MARKETABLE PRODUCTS

Be it enacted by the National Assembly of the Philippines:

Section 1. The Secretary of Agriculture and Commerce,1 the Philippine National Bank, and the National Development Company are hereby authorized to establish, operate, and maintain warehouses wherein tobacco shall be accepted for deposit at reasonable rates of fees, under such rules and regulations as they shall promulgate. If space is available, marketable products other than tobacco may be accepted for deposit in said warehouses. For this purpose, they are directed to acquire, by lease or otherwise, suitable warehouses in places where, in their opinion, the establishment and operation of such warehouses are justified, and they may employ the services of any officer or employee of the Government with the approval of the respective Department Head, or if such officer or employee is not available, they may employ the services of any suitable person. Any officer or employee or person in charge of any of the warehouses created under this Act shall have the privilege of being bonded in the Fidelity Fund.

Section 2. Quedans and receipts shall be issued for the products so deposited in accordance with the Warehouse Receipts Act.

Section 3. The Philippine National Bank and the National Development Company are hereby authorized to invest out of the funds under their control such amount as may be needed for the establishment, operation and maintenance of the warehouses herein provided for, under such regulations and in accordance with such arrangement as may be agreed upon between them and the Secretary of Agriculture and Commerce:2 Provided, however, That upon the request of a municipality, the latter may acquire and operate any of the warehouses located within its jurisdiction and established pursuant to this Act, and operate and maintain the same in accordance with Act Numbered Three thousand nine hundred and twenty-nine, and under such arrangement as may be agreed upon between said municipality and the Government institutions and authorities concerned, for the reimbursement of the money invested in the establishment of said warehouses.

Section 4. This Act shall take effect upon its approval.3

Approved, October 27, 1936.

1 Now Secretary of Agriculture.

2 Id.

3 See last page of RA 1135 for list of related statutes on tobacco.

AN ACT TO PUNISH ACTS OF EVASION OF THE LAWS ON THE NATIONALIZATION OF CERTAIN RIGHTS, FRANCHISES OR PRIVILEGES

Be it enacted by the National Assembly of the Philippines

Section 1. Penalty — In all cases in which any constitutional or legal provisions requires Philippine or any other specific citizenship as a requisite for the exercise or enjoyment of a right, franchise or privilege, any citizen of the Philippines or of any other specific country who allows his name or citizenship to be used for the purpose of evading such provision, and any alien or foreigner profiting thereby, shall be punished by imprisonment for not less than five nor more than fifteen years, and by a fine of not less than the value of the right franchise or privilege, which is enjoyed or acquired in violation of the provisions hereof but in no case less than five thousand pesos.

The fact that the citizen of the Philippines or of any specific country charged with a violation of this Act had, at the time of the acquisition of his holdings in the corporations or associations referred to in section two of this Act, no real or personal property, credit or other assets the value of which shall at least be equivalent to said holdings, shall be evidence of a violation of this Act.1

Section 2. Simulation of minimum capital stock — In all cases in which a constitutional or legal provision requires that, in order that a corporation or association may exercise or enjoy a right, franchise or privilege, not less than a certain per centum of its capital must be owned by citizens of the Philippines or of any other specific country, it shall be unlawful to falsely simulate the existence of such minimum stock or capital as owned by such citizens, for the purpose of evading said provision. The president or managers and directors or trustees of corporations or associations convicted of a violation of this section shall be punished by imprisonment of not less than five nor more than fifteen years, and by a fine not less than the value of the right, franchise or privilege, enjoyed or acquired in violation of the provisions hereof but in no case less than five thousand pesos.2

Section 2-A. Unlawful use, Exploitation or enjoyment — Any person, corporation, or association which, having in its name or under its control, a right, franchise, privilege, property or business, the exercise or enjoyment of which is expressly reserved by the Constitution or the laws to citizens of the Philippines or of any other specific country, or to corporations or associations at least sixty per centum of the capital of which is owned by such citizens, permits or allows the use, exploitation or enjoyment thereof by a person, corporation or association not possessing the requisites prescribed by a the Constitution or the laws of the Philippines; or leases, or in any other way, transfers or conveys said right, franchise, privilege, property or business to a person, corporation or association not otherwise qualified under the Constitution, or the provisions of the existing laws; or in any manner permits or allows any person, not possessing the qualifications required by the Constitution, or existing laws to acquire, use, exploit or enjoy a right, franchise, privilege, property or business, the exercise and enjoyment of which are expressly reserved by the Constitution or existing laws to citizens of the Philippines or of any other specific country, to intervene in the management, operation, administration or control thereof, whether as an officer, employee or laborer therein with or without remuneration except technical personnel whose employment may be specifically authorized by the Secretary of Justice, and any person who knowingly aids, assists or abets in the planning consummation or perpetration of any of the acts herein above enumerated shall be punished by imprisonment for not less than five nor more than fifteen years and by a fine of not less than the value of the right, franchise or privilege enjoyed or acquired in violation of the provisions hereof but in no case less than five thousand pesos: Provided, however, That the president, managers or persons in charge of corporations, associations or partnerships violating the provisions of this section shall be criminally liable in lieu thereof: Provided, further, That any person, corporation or association shall, in addition to the penalty imposed herein, forfeit such right, franchise, privilege, and the property or business enjoyed or acquired in violation of the provisions of this Act: And provided, finally, That the election of aliens as members of the board of directors or governing body of corporations or associations engaging in partially nationalized activities shall be allowed in proportion to their allowable participation or share in the capital of such entities.3

Section 2-B. Any violation of the provisions of this Act by the spouse of any public official, if both live together, shall be cause for the dismissal of such public official. 4itc@lawphil

Section 2-C. The exercise, possession or control by a Filipino citizen having a common-law relationship with an alien of a right, privilege, property or business, the exercise or enjoyment of which is expressly reserved by the Constitution or the laws to citizens of the Philippines, shall constitute a prima facie evidence of violation of the provisions of Section 2-A hereof.5

Section 3. Any corporation or association violating any of the provisions of this Act shall, upon proper court proceedings, be dissolved.

Section 3-A. Reward to informer. — In case of conviction under the provisions of this Act, twenty-five per centum of any fine imposed shall accrue to the benefit of the informer who furnishes to the Government original information leading to said conviction and who shall be ascertained and named in the judgment of the court. If the informer is a dummy, who shall voluntarily take the initiative of reporting to the proper authorities any violation of the provisions of this Act and assist in the prosecution, resulting in the conviction of any person or corporation profiting thereby or involved therein, he shall be entitled to the reward hereof in the sum equivalent to twenty-five per centum of the fine actually paid to or received by the Government, and shall be exempted from the penal liabilities provided for in this Act. 6

Section 4. This Act shall take effect upon its approval.

Approved, October 30, 1936.

Footnotes

*As amended by RA 421, RA 134, RA 6084, and PD 715.

1Words in bold in the text above are amendments introduced by RA 134, section 1, approved June 14, 1947.

Statutory History of section 1:

Original text —

SEC. 1. In all cases in which any constitutional or legal provision requires Philippine or [United States] citizenship as requisite for the exercise or enjoyment of a right, franchise or privilege, any citizen of the Philippines or [the United States] who allows his name or citizenship to be used for the purpose of evading such provision, and any alien or foreigner profiting thereby, shall be punished by imprisonment for not less than [two] nor more than [ten] years, and by, fine of not less than [two thousand nor more than ten thousand pesos.]

The fact that the citizen of the Philippines or of [the United States] charged with, violation of this Act had, at the time of acquisition of his holdings in the corporations or association referred to in section two of this Act, no real or personal property, credit or other assets the value of which shall at least be equivalent to said holdings, shall be admissible as circumstantial evidence of, violation of this act. (Ed. Note: Words in brackets were deleted in RA 134, supra)

2Words in bold in the text above are amendments introduced by RA 134, section 1, approved June 14, 1947.

Statutory History of section 2:

Original text

SEC. 2. In all cases in which a constitutional or legal provisions requires that, in order that a corporation or association may exercise or enjoy a right, franchise or privilege, not less than a certain per centum of its capital must be owned by citizens of the Philippines or [the United States, or both.] It shall be unlawful to falsely simulate the existence of such minimum of stock or capital as owned by such citizens of the Philippines [or the United States or both,] for the purpose of evading said provision. The president or managers and directors or trustees of corporations or associations convicted of a violation of this section shall be punished by imprisonment [for] not less than [two] nor more than [ten] years, and by a fine of not less than [two thousand nor more than ten thousand pesos.] (Ed. Note: Words in brackets were deleted in RA 134, supra.)

3Words in bold in the text above are amendments introduced by PD 715, section 1, promulgated May 28, 1975.

Statutory History of section 2-A:

a) Original text — (inserted by CA 421)

SEC. 2-A. Any person, corporation or association which, having in its name or under its control, a right, franchise, privilege, property or business, the exercise or enjoyment of which is expressly reserved by the constitution or the laws [of the Philippines] to citizens of the Philippines or of [the United States,] or to corporations or associations at least sixty per centum of the capital of which is owned by such citizens, permits or allows the use, exploitation or enjoyment thereof by a person, corporation or association not possessing the requisites prescribed by the Constitution or the laws of the Philippines; or leases, or in any other way transfers or conveys said right, franchise, privilege, property or business to a person, corporation or association not otherwise qualified under the Constitution, or the provisions of the existing [Acts,] any person who knowingly aids, assists, or abets in the planning, consummation or perpetuation of any of the acts herein above enumerated, shall be punished by imprisonment for not less than [two] nor more than [ten] years, and by a fine of not less than [two thousand nor more than ten thousand pesos:] Provided, however, That presidents, managers, or persons in charge of corporations, associations or partnerships violating the provisions of this section shall be criminally liable in lieu thereof. (Ed, Note: Words in brackets were deleted in RA 134, infra.)

b) Words in bold in the next immediately following are amendments introduced by RA 134, section 2, approved June 14, 1947.

SEC. 2-A. Any person, corporation, or association which, having in its name or under its control, a right franchise, privilege, property or business, the exercise or enjoyment of which is expressly reserved by the Constitution or the laws to citizens of the Philippines or of any other specific country, or to corporations or associations at least sixty per centum of the capital of which is owned by such citizens, permits or allows the use, exploitation or enjoyment thereof by a person, corporation or association not possessing the requisites prescribed by the Constitution or the laws of the Philippines; or leases, or in any other way transfers or conveys said right, franchise, privilege, property or business to a person, corporation or association not otherwise qualified under the constitution, or the provisions of the existing laws; or in any manner permits or allows any person, not possessing the qualifications required by the Constitution or existing laws to acquire, use, exploit or enjoy a right, franchise, privilege, property or business, the exercise and enjoyment of which are expressly reserved by the constitution or existing laws to citizens of the Philippines or of any other specific country, to intervene in the management, operation, administration or control thereof, whether as an officer, employee or laborer therein, with or without remuneration except technical personnel whose employment may be specifically authorized by the [President of the Philippines upon recommendation of the Department Head concerned, if any,] and any person who knowingly aids, assists or abets in the planning, consummation or perpetration of any of the acts hereinabove enumerated shall be punished by imprisonment for not less than five nor more than fifteen years and by a fine of not less than the value of the right, franchise, or privilege enjoyed or acquired in violation of the provisions hereof but in no case less than five thousand pesos: Provided, however, That the president, managers, or persons in charge of corporations, associations, or partnerships violating the provisions of this section shall be criminally liable in Lieu thereof: Provided further, That any person, corporation or association shall, in addition to the penalty imposed herein, forfeit such right, franchise, privilege, and the property or business enjoyed or acquired in violation of the provisions of this Act. (Ed. Note: Words in brackets were deleted in PD 715, supra.)

4Inserted by CA 421, section 1, approved May 31, 1939.

5Inserted by RA 6084, section 1, approved August 4, 1969.

6. Inserted by RA 134, section 3, approved June 14, 1947.

AN ACT TO CREATE A PUBLIC CORPORATION TO BE KNOWN AS THE BOY SCOUTS OF THE PHILIPPINES, AND TO DEFINE ITS POWERS AND PURPOSES.

Be it enacted by the National Assembly of the Philippines:

Section 1. J. E. H. Stevenot, A. N. Luz, C. P. Romulo, Vicente Lim, Manuel Camus, Jorge B. Vargas, and G. A. Daza; all of Manila, Philippines, their associates and successors, are hereby created a body corporate and politic in deed and in law, by the name, style and title of "Boy Scouts of the Philippines" (hereinafter called the corporation). The principal office of the corporation shall be in Metropolitan Manila, Philippines.1

Section 2. The said corporation shall have perpetual succession, with power to sue and be sued; to hold such real and personal estate as shall be necessary for corporate purposes, and to receive real and personal property by gift, devise, or bequest; to adopt a seal, and the same to alter or destroy at pleasure; to have offices and conduct its business and affairs in the City of Manila and in the several provinces, cities, municipalities and barrios of the Philippines; to make and adopt by-laws, rules and regulations not inconsistent with the laws of the Philippines, and generally to do all such acts and things (including the establishment of regulations for the election of associates and successors) as may be necessary to carry into effect the provisions of this Act and promote the purposes of said corporation.

Section 3. The purpose of this corporation shall be to promote, through organization, and cooperation with other agencies, the ability of boys to do things for themselves and others, to train them in scoutcraft, and to teach them patriotism, courage, self-reliance, and kindred virtues, using the methods which are now in common use by boy scouts.

Section 4. Until such time as the corporation shall have acquired by purchase, gift or other equitable arrangement from and with the Boy Scouts of America all of the existing assets and properties of the aforesaid Boy Scouts of America in the Philippines, it shall carry on its operations in accordance with such arrangements as it may make with said Boy Scouts of America; and the corporation created by this Act shall defray and provide for any debts or liabilities to the discharge of which said assets of the Boy Scouts of America shall be applicable, but said corporation shall have no power to issue certificates of stock or to declare or pay dividends, its objects and purposes being solely of a benevolent character and not for pecuniary profit by its members.

Section 5. The governing body of the said corporation shall consist of a National Executive Board composed of (a) the President of the Philippines or his representative: (b) the charter and life members of the Boy Scouts of the Philippines; (c) the Chairman of the Board of Trustees of the Philippine Scouting Foundation; (d) the Regional Chairman of the Scout Regions of the Philippines; (e) the Secretary of Education and Culture, the Secretary of Social Welfare,2 Secretary of National Defense, the Secretary of Labor, the Secretary of Finance, the Secretary of Youth and Sports, and the Secretary of Local Government and Community Development; (f) an equal number of individuals from the private sector; (g) the National President of the Girl Scouts of the Philippines; (h) one Scout of Senior age from each Scout Region to represent the boy membership; and (I) three representatives of the cultural minorities. Except for the Regional Chairman who shall be elected by the Regional Scout Councils during their annual meetings, and the Scouts of their respective regions, all members of the National Executive Board shall be either by appointment of cooption, subject to ratification and confirmation by the Chief Scout, who shall be the Head of State. Vacancies in the Executive Board shall be filed by a majority vote of the remaining members, subject to ratification and confirmation by the Chief Scout. The by-laws may prescribe the number of members of the National Executive Board necessary to constitute a quorum of the board, which number may be less than a majority of the whole number of the board. The National Executive Board shall have power to make and to amend the by-laws, and, by a two-thirds vote of the whole board at a meeting called for this purpose, may authorize and cause to be executed mortgages and liens upon the property of the corporation.

The National Executive Board shall, by resolution passed by a majority of the whole board, designate three or more of their number to constitute an executive or governing committee, of which a majority shall constitute a quorum, which Committee, to the extent provided in said resolution or in the by-laws of the corporation, shall have and exercise the powers of the executive board in the management of the business affairs of the corporation, and may have power to authorize the seal of the corporation to be affixed to all papers which may require it. The National Executive Board, by the affirmative vote of a majority of the whole board, may appoint any other standing committees, and such standing committees shall have and may exercise such powers as shall be conferred or authorized by the by-laws. With the consent in writing and pursuant to an affirmative vote of a majority of the members of said corporation, the National Executive Board shall have authority to dispose in any manner of the whole property of the corporation.3

Section 6. The National Executive Board shall meet once every three months at a time and place to be designated in the by-laws.

The annual meeting of the incorporators, their associates and successors, shall be held once in every year after the year of incorporation at such time and place as shall be likewise prescribed in the by-laws, when the annual reports of the officers and executive board shall be presented. Special meetings of the corporation may be called upon such notice as may be prescribed in the by-laws. The number of members which shall constitute a quorum at any annual or special meeting shall be prescribed in the by-laws. The members and executive board shall have power to hold their meetings and keep the seal, books, documents, and papers of the corporation within or without the Metropolitan Manila.4

Section 7. The corporation created by this Act shall adopt distinctive badges, uniforms and insignia for the Scouts of the Philippines and once adopted shall have the sole and exclusive right to use the titles, emblems, uniforms, badges, descriptive or designating marks, words and phrases used by the Scouts of the Philippines in carrying out its program in accordance with the purposes of this Act.5

Section 8. Any donation or contribution which from time to time may be made to the Boy Scouts of the Philippines by the Government or any of its subdivisions, branches, offices, agencies or instrumentalities shall be expended by the Executive Board in pursuant of this Act.

Section 9. On or before the first of April of each year, the said corporation shall make and transmit to the President of the Philippines a report of its proceedings for the year ending December thirty-first preceding, including a full, complete, and itemized report of receipts and expenditures of whatever kind.

Section 10. From and after the passage of this Act, it shall be unlawful for any person within the jurisdiction of the Philippines to falsely and fraudulently call himself out as, or represent himself to be, a member of or an agent for, the Boy Scouts of the Philippines; and any person who violates any of the provisions of this Act shall be punished by imprisonment of not to exceed six months or a fine not exceeding five hundred pesos, or both, in the discretion of the court.

Section 10-A. Until such time as the reorganization and restructuring of the Executive Board, in accordance with Section 5 as amended is effected, the Honorable Carlos P. Romulo, Chairman of the Golden Jubilee Board and one of the founders of the Organization and a charter member thereof, is hereby appointed Interim Chairman of the Board and President of the Organization and authorized to organize an interim body to conduct the affairs of the Boy Scouts of the Philippines and to take the necessary steps to effect such reorganization within six (6) months from date of this decree.6

Section 11. This Act shall take effect upon its approval.

Approved, October 31, 1936.

Footnote

* As amended by PD 460.

1 Words in bold in the text above is the amendment introduced by PD 460 Section 1, approved promulgated May 17, 1974.

Statutory History of Section 1:

Original text – The original provisions of section 1, being similar to the amended provisions, supra, except for the word in bold, are not reproduced here.

2 Now Secretary of Social Services and Development.

3 Words in bold in the text above are amendments introduced by PD 460, section 2, promulgated May 17, 1974.

Statutory History of section 5:

Original text –

Sec. 5. The governing body of the said corporation shall consist of an executive board composed of [residents of the Philippines. The number, qualifications, and terms of office of members of the executive board shall be prescribed by the by-laws. The persons mentioned in section one of this Act shall constitute the first executive board and shall serve until their successors are elected and have qualified.] Vacancies in the executive board shall be filled by a majority vote of the remaining members [thereof.] The by-laws may prescribe the number of members of the executive board necessary to constitute a quorum of the board, which number may be less than a majority of the whole number of the board. The executive board shall have power to make and to amend the by-laws, and, by a two-thirds vote of the whole board at a meeting called for this purpose, may authorize and cause to be executed mortgages and liens upon the property of the corporation. The executive board [may], by resolution passed by a majority of the whole board, designate three or more of their number to constitute an executive or governing committee, of which a majority shall constitute a quorum, which committee to the extent provided in said resolution or in the by-laws of the corporation, shall have and exercise the power of the executive board in the management of the business affairs of the corporation, and may have power to authorize the seal of the corporation to be affixed to all papers which may require it. The executive board, by the affirmative vote of a majority of the whole board, may appoint any other standing committees, and such standing committees shall have and may exercise such powers as shall be conferred or authorized by the by-laws. With the consent in writing and pursuant to an affirmative vote of a majority of the members of said corporation, the executive board shall have authority to dispose in any manner of the whole property of the corporation. (Ed. Note: Words in brackets were deleted in Pd 460, supra.)

4 Words in bold in the text above are amendments introduced by PD 460, section 3, promulgated May 17 1974.

Statutory History of section 6:

Original text

Sec. 6. An annual meeting of the incorporators, their associate and successors, shall be held once in every year after the year of incorporation, at such time and place as shall be prescribed in the by-laws, when the annual reports of the officers and executive board shall be presented [and members of the executive board elected for the ensuing year.] Special meeting of the corporation may be called upon such notice as may be prescribed in the by-laws. The number of members which shall constitute a quorum at any annual or special meeting shall be prescribed in the by-laws. The members and executive board shall have power to hold their meetings and keep the seals, books, documents, and papers of the corporation within or without the [City of] Manila, (Ed. Note: Words in brackets were deleted in PD 460, supra.)

5 Words in bold in the text above are amendments introduced by PD 460, section 4, promulgated May 17, 1974.

Statutory History of section 7.

Original text –

Sec. 7. [Until] the corporation created by this Act shall [have adopted] distinctive badges, uniforms and insignia for the Boy Scouts of the Philippines, [it may continue to utilize for its purposes the badges, uniforms and insignia of the Boy Scouts of America,] and once adopted it shall have the sole and exclusive right [in the Philippines to have and] to use the titles, emblems, badges, [insignia,] descriptive or designating marks, words and phrases used by the [Boy] Scouts of the Philippines n carrying out its program in accordance with the purposes of this Act. (Ed. Note: Words in brackets were deleted in PD 460 supra.)

6 Section 10-A was inserted by PD 460, section 5, promulgated May 17, 1974.

THE PUBLIC SERVICE LAW

(As amended, and as modified particularly by PD No. 1, Integrated Reorganization Plan and EO 546)

CHAPTER I. ORGANIZATION

Section 1. This Act shall be known as the "Public Service Act."

Section 2. There is created under the Department of Justice a commission which shall be designated and known as the Public Service Commission, composed of one Public Service Commissioner and five Associate Commissioners, and which shall be vested with the powers and duties hereafter specified. Whenever the word "Commission" is used in this Act, it shall be held to mean the Public Service Commission, and whenever the word "Commissioner" is used in this Act it shall be held to mean the Public Service Commissioner or anyone of the Associate Commissioners. The Public Service Commissioner and the Associate Public Service Commissioners shall be natural born citizens and residents of the Philippines, not under thirty years of age; members of the Bar of the Philippines, with at least five years of law practice or five years of employment in the government service requiring a lawyer's diploma; and shall be appointed by the President of the Philippines, with the consent of the Commission on Appointments of the Congress of the Philippines: Provided, however, That the present Commissioner and the personnel of the Commission shall continue in office without the necessity of re-appointment. The Commissioners shall have the rank and privilege of retirement of Judges of the Courts of First Instance. (As amended by Republic Act Nos. 178 and 2677)

Section 3. The Commissioner and Associate Commissioners shall hold office until they reach the age of seventy years, or until removed in accordance with the procedures prescribed in section one hundred and seventy-three of Act Numbered Twenty-seven hundred and eleven, known as the Revised Administrative Code: Provided, however, That upon retirement any Commissioner of Associate Commissioner shall be entitled to all retirement benefits and privileges for Judges of the Courts of First Instance or under the retirement law to which he may be entitled on the date of his retirement. In case of the absence, for any reason, of the Public Service Commissioner, the Associate Commissioner with seniority of appointment shall act as Commissioner. If on account of absence, illness, or incapacity of any of three Commissioners, or whenever by reason of temporary disability of any Commissioner or of a vacancy occurring therein, the requisite number of Commissioners necessary to render a decision or issue an order in any case is not present, or in the event of a tie vote among the Commissioners, the Secretary of Justice may designate such number of Judges of the Courts of First Instance, or such number of attorneys of the legal division of the Commission, as may be necessary to sit temporarily as Commissioners in the Public Service Commission.

The Public Service Commission shall sit individually or as a body en banc or in two divisions of three Commissioners each. The Public Service Commissioner shall preside when the Commission sits en banc and in one division. In the other division, the Associate Commissioner with seniority of appointment in that division shall preside. Five Commissioners shall constitute a quorum for sessions en banc and two Commissioners shall constitute a quorum for the sessions of a division. In the absence of a quorum, the session shall be adjourned until the requisite number is present.

All the powers herein vested upon the Commission shall be considered vested upon any of the Commissioners, acting either individually or jointly as hereinafter provided. The Commissioners shall equitably divide among themselves all pending cases and those that may hereafter be submitted to the Commissioner, in such manner and form as they may determine, and shall proceed to hear and determine the case assigned to each or to their respective divisions, or to the Commission en banc as follows: uncontested cases, except those pertaining to the fixing of rates, shall be decided by one Commissioner; contested cases and all cases involving the fixing of rates shall be decided by the Commission in division and the concurrence of at least two Commissioners in the division shall be necessary for the promulgation of a decision or non-interlocutory order in these cases: Provided, however, That any motion for reconsideration of a decision or non-interlocutory order of any Commissioner or division shall be heard directly by the Commission en banc and the concurrence of at least four Commissioners shall be necessary for the promulgation of a final decision or order resolving such motion for reconsideration. (As amended by Republic Act Nos. 723 and 2677)

Section 4. The Public Service Commissioner shall receive an annual compensation of thirteen thousand pesos; and each of the Associate Commissioners an annual compensation of twelve thousand pesos. The Commissioners shall be assisted by one chief attorney, one finance and rate regulation officer, one chief utilities regulation engineer, one chief accountant, one transportation regulation chief, one secretary of the Public Service Commission, and three public utilities advisers who shall receive an annual compensation of not less than ten thousand eight hundred pesos each; five assistant chiefs of division who shall receive an annual compensation of not less than nine thousand six hundred pesos each; twelve attorneys who shall receive an annual compensation of not less than nine thousand pesos each; and a technical and confidential staff to be composed of two certified public accounts, two electrical engineers, two mechanical or communication engineers, and two special assistants who shall receive an annual compensation of not less than seven thousand two hundred pesos each. (As amended by Republic Act Nos. 723, 2677 and 3792)

Section 5. The Public Service Commissioner, the Associate Public Service Commissioners, and all other officers and employees of the Public Service Commission shall enjoy the same privileges and rights as the officer and employees of the classified civil service of the Government of the Philippines. They shall also be entitled to receive from the Government of the Philippines their necessary travelling expenses while travelling on the business of the Commission, which shall be paid on proper voucher therefor, approved by the Secretary of Justice, out of funds appropriated for the contingent expenses of the Commission.

When the exigency of the service so requires and with the approval of the Secretary of Justice, and subject to the provisions of Commonwealth Act Numbered Two hundred forty-six, as amended, funds may be set aside from the appropriations provided for the Commission and/or from the fees collected under Section forty of this Act to defray the expenses to be incurred by the Public Service Commissioner or any of the Associate Commissioners, officers or employees of the Commission to be designated by the Commissioner, with the approval of the Secretary of Justice, in the study of modern trends in supervision and regulation of public services. (As amended by Republic Act No. 3792)

Section 6. The Secretary of Justice, upon recommendation of the Public Service Commissioner, shall appoint all subordinate officers and employees of the Commission as may be provided in the Appropriation Act. The Public Service Commissioner shall have general executive control, direction, and supervision over the work of the Commission and of its members, body and personnel, and over all administrative business. (As amended by Republic Act Nos. 178 and 3792)

Section 7. The Secretary of the Commission, under the direction of the Commissioner, shall have charge of the administrative business of the Commission and shall perform such other duties as may be required of him. He shall be the recorder and official reporter of the proceedings of the Commission and shall have authority to administer oaths in all matters coming under the jurisdiction of the Commission. He shall be the custodian of the records, maps, profiles, tariffs, itineraries, reports, and any other documents and papers filed with the Commission or entrusted to his care and shall be responsible therefor to the Commission. He shall have authority to designate from time to time any of his delegates to perform the duties of Deputy Secretary with any of the Commissioners.

Section 8. The Commission shall furnish the Secretary such of its findings and decisions as in its judgment may be of general public interest; the Secretary shall compile the same for the purpose of publication in a series of volumes to be designated "Reports of the Public Service Commission of the Philippines," which shall be published in such form and manner as may be best adapted for public information and use, and such authorized publications shall be competent evidence of the reports and decisions of the Commission therein contained without any further proof or authentication thereof.

Section 9. No member or employee of the Commission shall have any official or professional relation with any public service as herein defined, or hold any office of profit or trust with the Government of the Philippines.

Section 10. The Commission shall have its office in the City of Manila or at such other place as may be designated, and may hold hearings on any proceedings at such times and places, within the Philippines, as it may provide by order in writing: Provided, That during the months of April and May of each year, at least three Commissioners shall be on vacation in such manner that once every two years at least three of them shall be on duty during April and May: Provided, however, That in the interest of public service, the Secretary of Justice may require any or all the Commissioners not on duty to render services and perform their duties during the vacation months. (As amended by Republic Act Nos. 176 and 3792)

Section 11. The Commission shall have the power to make needful rules for its Government and other proceedings not inconsistent with this Act and shall adopt a common seal, and judicial notice shall be taken for such seal. True copies of said rules and other amendments shall be promptly furnished to the Bureau of Printing and shall be forthwith published in the Official Gazette.

CHAPTER II. JURISDICTION, POWERS AND DUTIES OF THE COMMISSION

Section 13. (a) The Commission shall have jurisdiction, supervision, and control over all public services and their franchises, equipment, and other properties, and in the exercise of its authority, it shall have the necessary powers and the aid of the public force: Provided, That public services owned or operated by government entities or government-owned or controlled corporations shall be regulated by the Commission in the same way as privately-owned public services, but certificates of public convenience or certificates of public convenience and necessity shall not be required of such entities or corporations: And provided, further, That it shall have no authority to require steamboats, motor ships and steamship lines, whether privately-owned, or owned or operated by any Government controlled corporation or instrumentality to obtain certificate of public convenience or to prescribe their definite routes or lines of service.

(b) The term "public service" includes every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, sub-way motor vehicle, either for freight or passenger, or both with or without fixed route and whether may be its classification, freight or carrier service of any class, express service, steamboat or steamship line, pontines, ferries, and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine railways, marine repair shop, [warehouse] wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power water supply and power, petroleum, sewerage system, wire or wireless communications system, wire or wireless broadcasting stations and other similar public services: Provided, however, That a person engaged in agriculture, not otherwise a public service, who owns a motor vehicle and uses it personally and/or enters into a special contract whereby said motor vehicle is offered for hire or compensation to a third party or third parties engaged in agriculture, not itself or themselves a public service, for operation by the latter for a limited time and for a specific purpose directly connected with the cultivation of his or their farm, the transportation, processing, and marketing of agricultural products of such third party or third parties shall not be considered as operating a public service for the purposes of this Act.

(c) The word "person" includes every individual, co-partnership, joint-stock company or corporation, whether domestic or foreign, their lessees, trustees, or receivers, as well as any municipality, province, city, government-owned or controlled corporation, or agency of the Government of the Philippines, and whatever other persons or entities that may own or possess or operate public services. (As amended by Com. Act 454 and RA No. 2677)

Section 14. The following are exempted from the provisions of the preceding section:

(a) Warehouses;

(b) Vehicles drawn by animals and bancas moved by oar or sail, and tugboats and lighters;

(c) Airships within the Philippines except as regards the fixing of their maximum rates on freight and passengers;

(d) Radio companies except with respect to the fixing of rates;

(e) Public services owned or operated by any instrumentality of the National Government or by any government-owned or controlled corporation, except with respect to the fixing of rates. (As amended by Com. Act 454, RA No. 2031, and RA No. 2677 )

Section 15. With the exception of those enumerated in the preceding section, no public service shall operate in the Philippines without possessing a valid and subsisting certificate from the Public Service Commission known as "certificate of public convenience," or "certificate of public convenience and necessity," as the case may be, to the effect that the operation of said service and the authorization to do business will promote the public interests in a proper and suitable manner.

The Commission may prescribe as a condition for the issuance of the certificate provided in the preceding paragraph that the service can be acquired by the Republic of the Philippines or any instrumentality thereof upon payment of the cost price of its useful equipment, less reasonable depreciation; and likewise, that the certificate shall be valid only for a definite period of time; and that the violation of any of these conditions shall produce the immediate cancellation of the certificate without the necessity of any express action on the part of the Commission.

In estimating the depreciation, the effect of the use of the equipment, its actual condition, the age of the model, or other circumstances affecting its value in the market shall be taken into consideration.

The foregoing is likewise applicable to any extension or amendment of certificates actually in force and to those which may hereafter be issued, to permit to modify itineraries and time schedules of public services, and to authorizations to renew and increase equipment and properties.

Section 16. Proceedings of the Commission, upon notice and hearing. - The Commission shall have power, upon proper notice and hearing in accordance with the rules and provisions of this Act, subject to the limitations and exceptions mentioned and saving provisions to the contrary :

(a) To issue certificates which shall be known as certificates of public convenience, authorizing the operation of public service within the Philippines whenever the Commission finds that the operation of the public service proposed and the authorization to do business will promote the public interest in a proper and suitable manner. Provided, That thereafter, certificates of public convenience and certificates of public convenience and necessity will be granted only to citizens of the Philippines or of the United States or to corporations, co-partnerships, associations or joint-stock companies constituted and organized under the laws of the Philippines; Provided, That sixty per centum of the stock or paid-up capital of any such corporations, co-partnership, association or joint-stock company must belong entirely to citizens of the Philippines or of the United States: Provided, further, That no such certificates shall be issued for a period of more than fifty years.

(b) To approve, subject to constitutional limitations any franchise or privilege granted under the provisions of Act No. Six Hundred and Sixty-seven, as amended by Act No. One Thousand and twenty-two, by any political subdivision of the Philippines when, in the judgment of the Commission, such franchise or privilege will properly conserve the public interests, and the Commission shall in so approving impose such conditions as to construction, equipment, maintenance, service, or operation as the public interests and convenience may reasonably require, and to issue certificates of public convenience and necessity when such is required or provided by any law or franchise.

(c) To fix and determine individual or joint rates, tolls, charges, classifications, or schedules thereof, as well as commutation, mileage, kilometrage, and other special rates which shall be imposed observed and followed thereafter by any public service: Provided, That the Commission may, in its discretion, approve rates proposed by public services provisionally and without necessity of any hearing; but it shall call a hearing thereon within thirty days, thereafter, upon publication and notice to the concerns operating in the territory affected: Provided, further, That in case the public service equipment of an operator is used principally or secondarily for the promotion of a private business, the net profits of said private business shall be considered in relation with the public service of such operator for the purpose of fixing the rates.

(d) To fix just and reasonable standards, classifications, regulations, practices, measurement, or service to be furnished, imposed, observed, and followed thereafter by any public service.

(e) To ascertain and fix adequate and serviceable standards for the measurement of quantity, quality, pressure, initial voltage, or other condition pertaining to the supply of the product or service rendered by any public service, and to prescribe reasonable regulations for the examination and test of such product or service and for the measurement thereof.

(f) To establish reasonable rules, regulations, instructions, specifications, and standards, to secure the accuracy of all meters and appliances for measurements.

(g) To compel any public service to furnish safe, adequate, and proper service as regards the manner of furnishing the same as well as the maintenance of the necessary material and equipment.

(h) To require any public service to establish, construct, maintain, and operate any reasonable extension of its existing facilities, where in the judgment of said Commission, such extension is reasonable and practicable and will furnish sufficient business to justify the construction and maintenance of the same and when the financial condition of the said public service reasonably warrants the original expenditure required in making and operating such extension.

(i) To direct any railroad, street railway or traction company to establish and maintain at any junction or point of connection or intersection with any other line of said road or track, or with any other line of any other railroad, street railway or traction to promote, such just and reasonable connection as shall be necessary to promote the convenience of shippers of property, or of passengers, and in like manner direct any railroad, street railway, or traction company engaged in carrying merchandise, to construct, maintain and operate, upon reasonable terms, a switch connection with any private sidetrack which may be constructed by any shipper to connect with the railroad, street railway or traction company line where, in the judgment of the Commission, such connection is reasonable and practicable and can be out in with safety and will furnish sufficient business to justify the construction and maintenance of the same.

(j) To authorize, in its discretion, any railroad, street railway or traction company to lay its tracks across the tracks of any other railroad, street railway or traction company or across any public highway.

(k) To direct any railroad or street railway company to install such safety devices or about such other reasonable measures as may in the judgment of the Commission be necessary for the protection of the public are passing grade crossing of (1) public highways and railroads, (2) public highways and streets railway, or (3) railways and street railways.

(l) To fix and determine proper and adequate rates of depreciation of the property of any public service which will be observed in a proper and adequate depreciation account to be carried for the protection of stockholders, bondholders or creditors in accordance with such rules, regulations, and form of account as the Commission may prescribe. Said rates shall be sufficient to provide the amounts required over and above the expense of maintenance to keep such property in a state of efficiency corresponding to the progress of the industry. Each public service shall conform its depreciation accounts to the rates so determined and fixed, and shall set aside the moneys so provided for out of its earnings and carry the same in a depreciation fund. The income from investments of money in such fund shall likewise be carried in such fund. This fund shall not be expended otherwise than for depreciation, improvements, new construction, extensions or conditions to the properly of such public service.

(m) To amend, modify or revoke at any time certificate issued under the provisions of this Act, whenever the facts and circumstances on the strength of which said certificate was issued have been misrepresented or materially changed.

(n) To suspend or revoke any certificate issued under the provisions of this Act whenever the holder thereof has violated or willfully and contumaciously refused to comply with any order rule or regulation of the Commission or any provision of this Act: Provided, That the Commission, for good cause, may prior to the hearing suspend for a period not to exceed thirty days any certificate or the exercise of any right or authority issued or granted under this Act by order of the Commission, whenever such step shall in the judgment of the Commission be necessary to avoid serious and irreparable damage or inconvenience to the public or to private interests.

(o) To fix, determine, and regulate, as the convenience of the state may require, a special type for auto-busses, trucks, and motor trucks to be hereafter constructed, purchased, and operated by operators after the approval of this Act; to fix and determine a special registration fee for auto-buses, trucks, and motor trucks so constructed, purchased and operated: Provided, That said fees shall be smaller than more those charged for auto-busses, trucks, and motor trucks of types not made regulation under the subsection.

Section 17. Proceedings of Commission without previous hearing. - The Commission shall have power without previous hearing, subject to established limitations and exception and saving provisions to the contrary:

(a) To investigate, upon its own initiative, or upon complaint in writing, any matter concerning any public service as regards matters under its jurisdiction; to require any public service to furnish safe, adequate, and proper service as the public interest may require and warrant; to enforce compliance with any standard, rule, regulation, order or other requirement of this Act or of the Commission, and to prohibit or prevent any public service as herein defined from operating without having first secured a certificate of public convenience or public necessity and convenience, as the case may be and require existing public services to pay the fees provided for in this Act for the issuance of the proper certificate of public convenience or certificate of public necessity and convenience, as the case may be, under the penalty, in the discretion by the Commission, of the revocation and cancellation of any acquired rights.

(b) To require any public service to pay the actual expenses incurred by the Commission in any investigation if it shall be found in the same that any rate, tool, charge, schedule, regulation, practice, act or service thereof is in violation of any provision of this Act or any certificate, order, rule, regulation or requirement issued or established by the Commission. The Commission may also assess against any public service costs not to exceed twenty-five pesos with reference to such investigation.

(c) From time to time appraise and value the property of any public service, whenever in the judgment of the Commission it shall be necessary so to do, for the purpose of carrying out any of the provisions of this Act, and in making such valuation the Commission may have access to and use any books, documents, or records in the possession of any department, bureau, office, or board of the government of the Philippines or any political subdivision thereof.

(d) To provide, on motion by or at the request of any consumer or user of a public service, for the examination and test of any appliance used for the measuring of any product or service of a public service, and for that purpose, by its agents, experts, or examiners to enter upon any premises where said appliances may be, and other premises of the public service, for the purpose of setting up and using on said premises any apparatus necessary therefor. and to fix the fees to be paid by any consumer or user who may apply to the Commission for such examination or test to be made, and if the appliance be found defective or incorrect to the disadvantage of the consumer or user to require the fees paid to be refunded to the consumer or user by the public service concerned.

(e) To permit any street railway or traction company to change its existing gauge to standard steam railroad gauge, upon such terms and conditions as the Commission shall prescribe.

(f) To grant to any public service special permits to make extra or special trips within the territory covered by its certificates of public convenience, and to make special excursion trips outside of its own territory if the public interest or special circumstances required it: Provided, however, that in case a public service cannot render such extra service on its own line or in its own territory, a special permit for such extra service may be granted to any other public service.

(g) To require any public service to keep its books, records, and accounts so as to afford an intelligent understanding of the conduct of its business and to that end to require every such public service of the same class to adopt a uniform system of accounting. Such system conform to any system approved and confirmed by the Auditor General.

(h) To require any public service to furnish annual reports of finances and operations. Such reports shall set forth in detail the capital stock issued, the amounts of said capital stock paid up and the form of payment thereof; the dividends paid, the surplus, if any and the number of stockholders, the consolidated and pending obligations and the interest paid thereon; the cost and value of the property of the operator; concessions or franchises and equipment; the number of employees and salaries paid to each class; the accidents to passengers, employees, and other person, and the causes thereof; the annual expenditures on improvements; the manner of their investment and nature of such improvements; the receipts and profits in each of the branches of the business and of whatever source; the operating and other expenses; the balance of profits and losses; and a complete statement of the annual financial operations of the operator, including an annual balance sheet. Such reports shall also contain any information which the Commission may require concerning freight and passenger rates, or agreements, compromises or contracts affecting the same. Said reports shall cover a period of twelve months, ending on December thirty-first of each year, and shall be sworn to by the officer or functionary of the public service authorized therefor. The Commission shall also have power to require from time to time special reports containing such information as above provided for or on other matters as the Commission may deem necessary or advisable.

(i) To require every public service to file with the Commission a statement in writing, verified by the oaths of the owner or the president and the secretary thereof, if a corporation, setting forth the name, title of office or portion, and post-office address, and the authority, power and duties of every officer, member of the board of directors, trustees executive committee, superintendent, chief or head of construction and operation thereof, in such form as to disclose the source and origin of each administrative act, rule, decision, order or other action of the operator of such public service; and, within ten days after any change is made in the title of, or authority, powers or duties appertaining to any such office or position, or the person holding the same, filed with the Commission a like statement, verified in like manner, setting forth such change.

(j) To require any public service to comply with the laws of the Philippines and with any provincial resolution or municipal ordinance relating thereto and to conform to the duties imposed upon it thereby or by the provisions of its own character, whether obtained under any general or special law of the Philippines.

(k) To investigate any or all accidents that may occur on the property of any public service or directly or indirectly arising from or connected with its maintenance or operation in the Philippines; to require any public service to give the Commission immediate and effective notice of all any such accidents, and to make such order or recommendation with respect thereto as the public interest may warrant or require.

(l) To require every public service s herein defined to file within complete schedules of every classification employed and of every individual or joint rate, toll fare or charge made, charged or exacted by it for any product supplied or service rendered within the Philippines and, in the case of public carriers, to file with it a statement showing the itineraries or routes served as specified in such requirement.

CHAPTER III. OPERATORS OF PUBLIC SERVICES REGULATIONS AND PROHIBITIONS

Section 18. It shall be unlawful for any individual, co-partnership, association, corporation or joint-stock company, their lessees, trustees or receivers appointed by any court whatsoever, or any municipality, province, or other department of the Government of the Philippines to engage in any public service business without having first secured from the Commission a certificate of public convenience or certificate of public convenience and necessity as provided for in this Act, except grantees of legislative franchises expressly exempting such grantees from the requirement of securing a certificate from this Commission as well as concerns at present existing expressly exempted from the jurisdiction of the Commission, either totally or in part, by the provisions of section thirteen of this Act.

Section 19. Unlawful Acts. - It shall be unlawful for any public service:

(a) To provide or maintain any service that is unsafe, improper, or inadequate or withhold or refuse any service which can reasonably be demanded and furnished, as found and determined by the Commission in a final order which shall be conclusive and shall take effect in accordance with this Act, upon appeal of otherwise.

(b) To make or give, directly or indirectly, by itself or through its agents, attorneys or brokers, or any of them, discounts or rebates on authorized rates, or grant credit for the payment of freight charges, or any undue or unreasonable preference or advantage to any person of corporation or to any locality or to any particular description of traffic or service, or subject any particular person or corporation or locality or any particular description of traffic to any prejudice or disadvantage in any respect whatsoever; to adopt, maintain, or enforce any regulation, practice or measurement which shall be found or determined by the Commission to be unjust, unreasonable, unduly preferential or unjustly discriminatory in a final order which shall be conclusive and shall take effect in accordance with the provisions of this Act, upon repeal or otherwise.

(c) To refuse or neglect, when requested by the Director of Posts or his authorized representative, to carry public mail on the regular trips of any public land transportation service maintained or operated by any such public service; upon such terms and conditions and for a consideration in such amount as may be agreed upon between the Director of Posts and the public service carrier of fixed by the Commission in the absence of an agreement between the Director of Posts and the carrier. In case the Director of Posts and public service carrier are unable to agree on the amount of the compensation to be paid for the carriage of the mail, the Director of Posts shall forthwith request the Commission to fix a just and reasonable compensation for such carriage and the same shall be promptly fixed by the Commission in accordance with Section sixteen of this Act.

Section 20. Acts requiring the approval of the Commission. - Subject to established limitations and exceptions and saving provisions to the contrary, it shall be unlawful for any public service or for the owner, lessee or operator thereof, without the approval and authorization of the Commission previously had -

(a) To adopt, establish, fix, impose, maintain, collect or carry into effect any individual or joint rates, commutation, mileage or other special rate, toll, fare, charge, classification or itinerary. The Commission shall approve only those that are just and reasonable and not any that are unjustly discriminatory or unduly preferential, only upon reasonable notice to the public services and other parties concerned, giving them a reasonable opportunity to be heard and the burden of the proof to show that the proposed rates or regulations are just and reasonable shall be upon the public service proposing the same.

(b) To establish, construct, maintain, or operate new units or extend existing facilities or make any other addition to or general extension of the service.

(c) To abandon any railroad station or stop the sale of passenger tickets, or cease to maintain an agent to receive and discharge freight at any station now or hereafter established at which passenger tickets are now or may hereafter be regularly sold, or at which such agent is now or may hereafter be maintained, or make any permanent change in its time tables or itineraries on any railroad or in its service.

(d) To lay any railroad or street railway track across any highway, so as to make a new crossing at grade, or cross the tracks of any other railroad or street railway, provided, that this subsection shall not apply to replacements of lawfully existing tracks.

(e) Hereafter to issue any stock or stock certificates representing an increase of capital; or issue any share of stock without par value; or issue any bonds or other evidence of indebtedness payable in more than one year from the issuance thereof, provided that it shall be the duty of the Commission, after hearing, to approve any such issue maturing in more than one year from the date thereof, when satisfied that the same is to be made in accordance with law, and the purpose of such issue be approved by the Commission. (f) To capitalize any franchise in excess of the amount, inclusive of any tax or annual charge, actually paid to the Government of the Philippines or any political subdivision thereof as the consideration of said franchise; capitalize any contract for consolidation, merger or lease, or issue any bonds or other evidence of indebtedness against or as a lien upon any contract for consolidation, merger, or lease: Provided, however, that the provisions of this section shall not prevent the issuance of stock, bonds, or other evidence of indebtedness subject to the approval of the Commission by any lawfully merged or consolidated public services not in contravention of the provisions of this section.

(g) To sell, alienate, mortgage, encumber or lease its property, franchises, certificates, privileges, or rights or any part thereof; or merge or consolidate its property, franchises privileges or rights, or any part thereof, with those of any other public service. The approval herein required shall be given, after notice to the public and hearing the persons interested at a public hearing, if it be shown that there are just and reasonable grounds for making the mortgaged or encumbrance, for liabilities of more than one year maturity, or the sale, alienation, lease, merger, or consolidation to be approved, and that the same are not detrimental to the public interest, and in case of a sale, the date on which the same is to be consummated shall be fixed in the order of approval: Provided, however, that nothing herein contained shall be construed to prevent the transaction from being negotiated or completed before its approval or to prevent the sale, alienation, or lease by any public service of any of its property in the ordinary course of its business.

(h) To sell or register in its books the transfer or sale of shares of its capital stock, if the result of that sale in itself or in connection with another previous sale, shall be to vest in the transferee more than forty per centum of the subscribed capital of said public service. Any transfer made in violation of this provision shall be void and of no effect and shall not be registered in the books of the public service corporation. Nothing herein contained shall be construed to prevent the holding of shares lawfully acquired. (As amended by Com. Act No. 454.)

(i) To sell, alienate or in any manner transfer shares of its capital stock to any alien if the result of that sale, alienation, or transfer in itself or in connection with another previous sale shall be the reduction to less than sixty per centum of the capital stock belonging to Philippine citizens. Such sale, alienation or transfer shall be void and of no effect and shall be sufficient cause for ordering the cancellation of the certificate.

(j) To issue, give or tender, directly or indirectly, any free ticket free pass or free or reduced rate of transportation for passengers, except to the following persons: (1) officers, agents, employees, attorneys, physicians and surgeons of said public service, and members of their families; (2) inmates of hospitals or charity institutions, and persons engaged in charitable work; (3) indigent, destitute, and homeless persons when transported by charitable societies or hospitals, and the necessary agents employed in such transportation; (4) the necessary caretakers, going and returning, of livestock, poultry, fruit, and other freight under uniform and non-discriminatory regulation; (5) employees of sleeping car corporations, express corporations and telegraph and telephone corporations, railway and marine mail service employees, when traveling in the course of their official duly; (6) post-office inspectors, customs officers and inspectors, and immigration inspectors when engaged in inspection; (7) witnesses attending any legal investigation in which the public service is an interested party; (8) persons injured in accidents or wrecks, and physicians and nurses attending such persons; (9) peace officers and men of regularly constituted fire departments. (As amended by Com. Act No. 454.)

(k) Adopt, maintain, or apply practices or measures, rules or regulations to which the public shall be subject in its relations with the public service.

CHAPTER IV. PENALTIES FOR VIOLATIONS

Section 21. Every public service violating or failing to comply with the terms and conditions of any certificate or any orders, decisions or regulations of the Commission shall be subject to a fine of not exceeding two hundred pesos per day for every day during which such default or violation continues; and the Commission is hereby authorized and empowered to impose such fine, after due notice and hearing.

The fines so imposed shall be paid to the Government of the Philippines through the Commission, and failure to pay the fine in any case within the same specified in the order or decision of the Commission shall be deemed good and sufficient reason for the suspension of the certificate of said public service until payment shall be made. Payment may also be enforced by appropriate action brought in a court of competent jurisdiction. The remedy provided in this section shall not be a bar to, or affect any other remedy provided in this Act but shall be cumulative and additional to such remedy or remedies.

Section 22. Observance of the orders, decisions, and regulations of the Commission and of the terms and conditions of any certificate may also be enforced by mandamus or injunction in appropriate cases, or by action to compel the specific performance of the orders, decisions, and regulations so made, or of the duties imposed by law upon such public service: Provided, that the Commission may compromise any case that arise under this Act in such manner and for such amount as it may deem just and reasonable.

Section 23. Any public service corporation that shall perform, commit, or do any act or thing forbidden or prohibited or shall neglect, fail or omit to do or perform any act or thing herein to be done or performed, shall be punished by a fine not exceeding twenty-five thousand pesos, or by imprisonment not exceeding five years, or both, in the discretion of the court.

Section 24. Any person who shall knowingly and willfully perform, commit, or do, or participate in performing, committing, or doing, or who shall knowingly and willfully cause, participate, or join with others in causing any public service corporation or company to do, perform or commit, or who shall advice, solicit, persuade, or knowingly and willfully instruct, direct, or order any officer, agent, or employee of any public service corporation or company to perform, commit, or do any act or thing forbidden or prohibited by this Act, shall be punished by a fine not exceeding two thousand pesos, or imprisonment not exceeding two years, or both, in the discretion of the court: Provided, however, that for operating a private passenger automobile as a public service without having a certificate of public convenience for the same the offender shall be subject to the penalties provided for in section sixty-seven (j) of Act numbered thirty-nine hundred an ninety-two.

Section 25. Any person who shall knowingly and willfully neglect, fail, or omit to do or perform, or who shall knowingly and willfully cause or join or participate with others in causing any public service corporation or company to neglect, fail or omit to do or perform, or who shall advise, solicit, or persuade, or knowingly and willfully instruct, direct, or order any officer, agent, or employee of any public service corporation or company to neglect, fail, or omit to do any act or thing required to be done by this Act, shall be published by a fine not exceeding two thousand pesos or by imprisonment not exceeding two years, or both, in the discretion of the court.

Section 26. Any person who shall destroy, injure, or interfere with any apparatus or appliance owned or operated by to in charge of the Commission or its agents, shall be deemed guilty of a misdemeanor and upon conviction shall be published by a fine not exceeding one thousand pesos or imprisonment not exceeding six months, or both in the discretion of the court.

Any public service permitting the destruction, injury to, or interference with, any such apparatus or appliances shall forfeit a sum not exceeding four thousand pesos for each offense.

Section 27. This Act shall not have the effect to release or waive any right of action by the Commission or by any person for any right, penalty, or forfeiture which may have arisen or which may arise, under any of the laws of the Philippines, and any penalty or forfeiture enforceable under this Act shall not be a bar to or affect a recovery for a right, or affect or bar any criminal proceedings against any public service or person or persons operating such public services, its officers, directors, agents, or employees.

Section 28. Violations of the orders, decisions, and regulations of the Commission and of the terms and conditions of any certificate issued by the Commission shall prescribe after sixty days, and violations of the provisions of this Act shall prescribe after one hundred and eighty days.

CHAPTER V. PROCEDURE AND REVIEW

Section 29. All hearings and investigations before the Commission shall be governed by rules adopted by the Commission, and in the conduct thereof the Commission shall not be bound by the technical rules of legal evidence: Provided, That the Public Service Commissioner or associate commissioners may summarily punish for contempt by a fine not exceeding two hundred pesos or by imprisonment not exceeding ten days, or both, any person guilty of misconduct in the presence of the Commissioner or associate commissioners or so near the same as to interrupt the hearing or session or any proceeding before them, including cases in which a person present at a hearing, session, or investigation held by either of the commissioners refuses to be sworn as a witness or to answer as such when lawfully required to do so. To enforce the provisions of this section, the Commission may, if necessary, request the assistance of the municipal police for the execution of any order made for said purpose.

(1) While the Commission is authorized to make rules for the conduct of their business, it could not set at naught the fundamental rule of all proceedings that only parties having a real interest will be heard.

(2) A party not affected or prejudiced cannot file an opposition.

(3) One public service corporation cannot assume the name and be substituted in the place of another public service corporation.

(4) A legal representative of the estate of a deceased applicant may be substituted for the latter. If the right consists in the prosecution of unfinished proceedings upon an application for a certificate of public convenience of the deceased before the Public service Commission, it is but logical that the legal representative be empowered and entitled in behalf of the estate to make the right effective in that proceeding.

(5) One who has been granted a legislative franchise to operate an ice plant, although not yet an operator of such public utility, has sufficient interest or personality either to oppose an established operator's application for an increase in the capacity of his existing plant, or to ask for a joint hearing of said application and the grantee's own application for the issuance of a certificate of public convenience in order to operate under such franchise.

(6) The fact that a party is the lessee of a line does not bar him from applying for a certificate of its own in the same line. Even in cases where the owner of a certificate has sold it subject to the condition that he would not apply for a similar service on the same line sold by him, it has been held that such an argument does not bar the seller from applying and that the Public Service Commission, if it finds that there is public need for the new service applied for, may properly grant the certificate requested. In other words the primary consideration is a finding by the Commission that public interest and convenience require a given service and that parties may not by agreement deprive the Commission of its power.

(7) A case involving the grant of a Certificate of Public Convenience to the respondent becomes moot and academic where the respondent ceases to be a bus operator, and it should be dismissed.

Section 30. (a) The Commission may issue subpoenas and subpoenas duces tecum, for witnesses in any matter or inquiry pending before the Commission and require the production of all books, papers, tariffs, contracts, agreements, and all other documents, which the Commission may deem necessary in any proceeding. such process shall be issued under the seal of the Commission, signed by one of the Commissioners or by the secretary, and may be served by any person of full age, or by registered mail. In case of disobedience to such subpoena, the Commission may invoke the said of the Supreme Court or of any Court of First Instance of the Philippines in requiring the attendance and testimony of witness and the production of books, papers, and documents under the provisions of this chapter, and the Supreme Court, or any Court of First Instance of the Philippines within the jurisdiction of which such inquiry is carried on, may in case of contumacy of refusal to obey a subpoena, issue to any public service subject to the provisions of this Act, or to any person, an order requiring such public service or other person to appear before the Commission and produce and papers if so ordered and give evidence touching the matter; and any failure to obey such order of the court may be punished by such court as a contempt thereof.

(b) Any person who shall neglect or refuse to answer any lawful inquiry or produce the Commission books, paper, tariffs, contracts, agreements, and documents or other things called for by said Commission, if in his power to do so, in obedience to the subpoena or lawful inquiry of the Commission, upon conviction thereof by a court of competent jurisdiction, shall be punished by a fine not exceeding five thousand pesos or by imprisonment not exceeding one year, or both, in the discretion of the court.

(c) The Commissioner and associate commissioners, the chiefs of divisions, the attorneys of the Commission, and the deputy secretaries shall have the power to administer oaths in all matters under the jurisdiction of the Commission.

(d) Any person who shall testify falsely or make any false affidavit or oath before the Commission or before any of its members shall be guilty of perjury, and upon conviction thereof in a court of competent jurisdiction, shall be punished as provided by law.

(e) Witnesses appearing before the Commission in obedience to subpoena or subpoena duces tecum, shall be entitled to receive the same fees and mileage allowance as witnesses attending Courts of First Instance in civil cases.

(f) Any person who shall obstruct the Commission or either of the Commissioners while engaged in the discharge of Official duties, or who shall conduct himself in a rude, disrespectful or disorderly manner before the Commission or either of the Commissioners, while engaged in the discharge of official duties, or shall orally or in writing be disrespectful to, offend or insult either of the Commissioners on occasion or by reason of the performance of official duties, upon conviction thereof by a court of competent jurisdiction, shall be punished for each offense by a fine not exceeding one thousand pesos, or by imprisonment not exceeding six months, or both, in the discretion of the court.

Section 31. No person shall be excused from testifying or from producing any book, document, or paper in any investigation or inquiry by or upon the hearing before the Commission, when ordered so to do by said Commission, except when the testimony or evidence required of him may tend to incriminate him. Without the consent of the interested party no member or employee of the Commission shall be compelled or permitted to give testimony in any civil suit to which the Commission is not a party, with regard to secrets obtained by him in the discharge of his official duty.

Section 32. The Commission may, in any investigation or hearing, by its order in writing cause the deposition of witnesses residing within or without the Philippines to be taken in the manner prescribed by the Rules of Court. Where witnesses reside in places distant from Manila and it would be inconvenient and expensive for them to appear personally before the Commission, the Commission may, by proper order, commission any clerk of the Court of First Instance, municipal judge or justice of the peace of the Philippines to take the deposition of witnesses in any case pending before the Commission. It shall be the duty of the official so commissioned, to designated promptly a date or dates for the taking of such deposition, giving timely notice to the parties, and on said date to proceed to take the deposition, reducing it to writing. After the depositions have been taken, the official so commissioned shall certify to the depositions taken and forward them as soon as possible to the Commission. It shall be the duty of the respective parties to furnish stenographers for taking and transcribing the testimony taken. in case the are no stenographers available, the testimony shall be taken in long hand by such person as the clerk of court, the municipal judge or justice of the peace may designate. The Commission may also commission a notary public to take the depositions in the same manner herein provided.

The Commission may also, by proper order, authorize any of the attorneys of the legal division or division chiefs of the Commission, if they be lawyers, to hear and investigate any case filed, with the Commission and in connection therewith to receive such evidence as may be material thereto. At the conclusion of the hearing or investigation, the attorney or division chief so authorized shall submit the evidence received by him to the Commission to enable the latter to render its decision. (As amended by Rep. Act No. 723.)

Section 33. Every order made by the Commission shall be served upon the person or public service affected thereby, within ten days from the time said order is filed by personal delivery or by ordinary mail, upon the attorney of record, or in case there be no attorney of record, upon the party interested; and in case such certified copy is sent by registered mail, the registry mail receipt shall be prima facie evidence of the receipt of such order by the public service in due course of mail. All orders of the Commission to continue an existing service or prescribing rates to be charged shall be immediately operative; all other orders shall become effective upon the dates specified thereon: Provided, however, that orders, resolutions or decisions in converted matters and not referring to the continuance of an existing service or prescribing rates to be charged shall not be effective unless otherwise provided by the Commission, and shall take effect thirty days after notice to the parties.

Section 34. Any interested party may request the reconsideration of any order, ruling, or decision of the Commission by means of a petition filed not later than fifteen days after the date of the notice of the order, ruling, or decision in question. The grounds on which the request for reconsideration is based shall be clearly and specifically stated in the petition. Copies of said petition shall be served on all parties interested in the matter. It shall be the duty of the Commission to call a hearing to decide the same promptly, either denying the petition or revoking or modifying the order, ruling or decision under consideration.

Section 35. The Supreme Court is hereby given jurisdiction to review any order, ruling, or decision of the Commission and to modify or set aside such order, ruling, or decision when it clearly appears that there was no evidence before the Commission to support reasonably such order, ruling, or decision, or that the same is contrary to law, or that it was without the jurisdiction of the Commission. The evidence presented to the Commission, together with the record of the proceedings before the Commission, shall be certified by the secretary of the Commission to the Supreme Court. Any order, ruling, or decision of the Commission may likewise be reviewed by the Supreme Court upon a writ of certiorari in proper cases. The procedure for review, except as herein provided, shall be prescribed by rules of the Supreme Court.

Section 36. Any other, ruling, or decision of the may be reviewed on the application of any person or public service affected thereby, by certiorari in appropriate cases, or by petition, to be known as petition for review, which shall be filed within thirty days from the notification of such order, ruling or decision, or in case of a petition is filed in accordance with the preceding section for the reconsideration of such order, ruling or decision and the same is denied it shall be filed within fifteen days after notice of the order denying reconsideration. Said petition shall be placed on file in the office of the Clerk of the Supreme Court who shall furnish copies thereof to the Secretary of the Commission and other parties interested.

Section 37. The institution of a writ of certiorari or other special remedies in the Supreme Court shall in no case supersede or stay any order, ruling or decision of the Commission, unless the Supreme Court shall so direct, and the appellant may be required by the Supreme Court to give bond in such form and of such amount as may be deemed proper.

Section 38. The chief of the legal division or any other attorneys of the Commission shall represent the same in all judicial proceedings. It shall be the duty of the Solicitor General to represent the Commission in any judicial proceedings if, for special reason, the Commissioner shall request his intervention.

There is hereby created under the administrative supervision of the Secretary of Justice an office to be known as the Office of the People's Counsel in the Public Service Commission. The people's Counsel shall have two assistants and such number of employees as may be necessary to perform the functions hereinafter specified. The People's Counsel and his assistants shall be appointed by the President of the Philippines with the consent of the commission on appointments of the Congress of the Philippines. The employees of the office of the People's Counsel shall be appointed by the Secretary of Justice upon recommendation of the People's Counsel.

The People's Counsel and his assistants shall posses the qualifications of a provincial fiscal. The People's Counsel shall receive compensation at the rate of seven thousand two hundred pesos per annum, and the first and second assistant's People's Counsel, at the rate of six thousand pesos per annum each.

The People's Counsel, his assistants, and the employees of the Office of the People's Counsel shall not, during their continuance in office, intervene directly or indirectly in the management or control of, or be financially interested directly or indirectly in any public service as defined in this Act.

It shall be the duty of the People's Counsel (1) to institute proceedings before the Commission, in behalf of the public, for the purpose of fixing just and reasonable rates or charges to be followed and observed by public services as herein defined, whenever he has reason to believe that the existing rates or charges of such public services are unjust and unreasonable or unjustly discriminatory; (2) to represent and appear for the public before the Commission or any court of the Philippines in every case involving the interest of users of the products of, or service furnished by any public service under the jurisdiction of the Commission; (3) to represent and appear for petitioners appearing before the Commission for the purpose of complaining in matters of the rates and services; (4) to investigate the service given by the rates charged by, and the valuation of the properties of the public services under the jurisdiction of the Commission, and such other matters relating to said public services as affect the interests of users of the products or service thereof, and to take all the steps necessary for the protection of the interests of the person or persons or of the public affected thereby. In connection with such investigation he is hereby empowered to issue subpoena or subpoena duces tecum.

The People's Counsel is authorized to call upon and obtain such assistance as he may deem necessary in the performance of his duties from any officer or employee of any department, bureau, office, agency, or instrumentality of the government including corporations owned, controlled or operated by the government. (As amended by Rep. Act No. 178.)

Section 39. Any preceding in any court of the Philippines directly affecting an order of the Commission or to which the Commission is a party, shall have preference over all other civil proceedings pending in such court, except election cases.

CHAPTER VI. FEES

Section 40. The Commission is authorized and ordered to charge and collect from any public service or applicant, as the case may be, the following fees as reimbursement of its expenses in the authorization, supervision and/or regulation of public services:

(a) The charge of fifty pesos for the registration of:

(1) Applications under the provisions of Section sixteen (a), (b), (c), and (d), and twenty (a), (b) (c), (e), (f), and (h): Provided however, That in case of transportation services an additional filing fee of five pesos shall be charged for each additional unit or vehicle in excess of five units or vehicles applied for: And provided, finally, That no filing fee shall be collected for the reduction of rates if the same does not alter or modify in any way the basic rates of the schedule.

(2) Applications for the approval or modification of maximum rates under Section fourteen.

(b) Thirty pesos shall be collected from any operator of land transportation for the registration of:

(1) Applications under Section seventeen (f).

(2) Applications for the extension of time covering a period of thirty days for the registration of motor vehicles previously authorized by the Commission.

(c) The charge of thirty pesos for the filing of other applications by any public service operator not specifically provided for in the preceding paragraphs of this section other than motions of a temporary or incidental character: Provided, however, That fifteen pesos only shall be collected for each certificate of public convenience or certificate of public convenience and necessity in diploma form issued to a public service operator.

(d) For annual reimbursement of the expenses incurred by the Commission for the supervision and regulation of the operations of motor vehicle services:

(1) For each automobile, ten pesos.

(2) For each motor vehicle, truck, or trailer of less than two tons gross transportation capacity, ten pesos.

(3) For each motor vehicle, truck, or trailer of two tons or more, but less than three tons gross transportation capacity, twenty pesos.

(4) For each motor vehicle, truck, or trailer of three tons or more but less than four tons gross transportation capacity, thirty pesos.

(5) Motor vehicles, trucks, trailers or buses of four tons or more gross capacity shall pay at the rate of ten pesos per ton gross. The fees provided in paragraphs (d) and (e) hereof shall be paid on or before September thirtieth of each year with a penalty of fifty per centum in case of delinquency: Provided, further, That if the fees or any balance thereof are not paid within sixty days from the said date, the penalty shall be increased by one per centum for every month thereafter of delinquency: Provided, however, That motor vehicles registered in the Motor Vehicles Office after September thirtieth shall be exempt from payment for said year.

(e) For annual reimbursement of the expenses incurred by the Commission in the supervision of other public services and/or in the regulation or fixing of their rates, twenty centavos for each one hundred pesos or fraction thereof, of the capital stock subscribed or paid, or if no shares have been issued, of the capital invested, or of the property and equipment, whichever is higher.

(f) For the issue or increase of capital stock, twenty centavos for each one hundred pesos or fraction thereof, of the increased capital.

(g) For each permit authorizing the increase of equipment, the installation of new units or authorizing the increase of capacity. or the extension of means or general extension in the services, twenty centavos for each one hundred pesos or fraction of the additional capital necessary to carry out the permit.

(h) For the inspection or certification made in the meter laboratory of the Commission or each apparatus or meter used by any public service, four pesos, and for examination made outside the meter laboratory of the Commission, the additional expenses as may be incurred in making the examination shall also be paid.

(i) For certification of copies of official documents in the files of the Commission, fifty centavos plus fifty centavos for each page or folio so certified.

This section shall not be applicable to the Republic of the Philippines, nor to its instrumentalities.

Aside from the appropriations for the Commission under the annual General Appropriation Act, any unexpended balance of the fees collected by the Commission under this section shall be constituted receipts automatically appropriated each year, and together with any surplus in the standardizing meter laboratory revolving fund under Commonwealth Act Numbered Three hundred forty-nine, shall be disbursed by the Public Service Commissioner in accordance with special budgets to be approved by the Department of Justice, the Budget Commission and the Office of the President of the Philippines for additional needed personal services, maintenance and operating expenses, acquisition of urgently needed vehicles, furniture and equipment, maintenance of an adequate reference library, acquisition of a lot and building for the Commission, and other expenses necessary for efficient administration and effective supervision and regulation of public services. (As amended by Com. Act No. 454 and RA No. 3792, approved June 22, 1963.)

CHAPTER VII. GENERAL AND TRANSITORY PROVISIONS

Section 41. A substantial compliance with the requirements of this Act shall be sufficient to give effect to all the rules, orders, acts and regulations of the Commission and they shall not be declared inoperative, illegal, or void for any omission of a technical nature in respect thereto.

Section 42. Copies of all official documents and orders filled or deposited in the office of the Commission, certified by either of the commissioners, or by the secretary to be true copy of the original, under the seal of the Commission shall be evidence in like manner as the originals in all courts of the Philippines.

Section 43. The Commission created under this Act shall succeed the Commission created under Act numbered thirty-one hundred and eight in the dispatch, hearing, and determination of all pending matters before the latter; and shall take charge of its archives, books, furniture, equipment, and other properties of whatsoever nature.

Section 44. In addition to the sum appropriated for the former commission under Act numbered forty-one hundred and thirty-two, the General Appropriation Act for nineteen hundred and thirty-six, the sum of six thousand seven hundred and sixty-eight pesos and thirty-four centavos is hereby appropriated out of any funds in the Philippines Treasury not otherwise; and in addition to the sum appropriated under Act numbered thirty-eight, the General Appropriation Act for nineteen hundred and thirty-seven, the sum of twenty-three thousand six hundred and ten pesos, or so much thereof as may be necessary, is hereby appropriated, out of any funds in the Philippines Treasury not otherwise appropriated, for carrying out the purposes of this Act.

Section 45. If, any reason, any section, subsection, sentence, clauses or terms of this Act is held to the unconstitutional such decision shall not affect the validity of the other provisions of this Act.

Section 46. Act numbered thirty-two hundred and forty-seven and Act numbered thirty-five hundred and eighteen shall continue in force and effect; but all provisions of Act numbered thirty-one hundred and eight and amendments thereof, and all other acts or parts or acts inconsistent with the provisions of this Act are hereby repealed.

Section 47. This Act shall take effect upon its approval.

Approved: November 7, 1936

AN ACT TO PROVIDE FOR THE ACQUISITION OF PHILIPPINE CITIZENSHIP BY NATURALIZATION, AND TO REPEAL ACTS NUMBERED TWENTY-NINE HUNDRED AND TWENTY-SEVEN AND THIRTY-FOUR HUNDRED AND FORTY-EIGHT.

Be it enacted by the National Assembly of the Philippines:

Section 1. Title of Act. – This Act shall be known and may be cited as the "Revised Naturalization Law."

Section 2. Qualifications. – Subject to section four of this Act, any person having the following qualifications may become a citizen of the Philippines by naturalization:

First. He must be not less than twenty-one years of age on the day of the hearing of the petition;

Second. He must have resided in the Philippines for a continuous period of not less than ten years;

Third. He must be of good moral character and believes in the principles underlying the Philippine Constitution, and must have conducted himself in a proper and irreproachable manner during the entire period of his residence in the Philippines in his relation with the constituted government as well as with the community in which he is living.

Fourth. He must own real estate in the Philippines worth not less than five thousand pesos, Philippine currency, or must have some known lucrative trade, profession, or lawful occupation;

Fifth. He must be able to speak and write English or Spanish and any one of the principal Philippine languages; and

Sixth. He must have enrolled his minor children of school age, in any of the public schools or private schools recognized by the Office of Private Education1 of the Philippines, where the Philippine history, government and civics are taught or prescribed as part of the school curriculum, during the entire period of the residence in the Philippines required of him prior to the hearing of his petition for naturalization as Philippine citizen.

Section 3. Special qualifications. The ten years of continuous residence required under the second condition of the last preceding section shall be understood as reduced to five years for any petitioner having any of the following qualifications:

Having honorably held office under the Government of the Philippines or under that of any of the provinces, cities, municipalities, or political subdivisions thereof;

Having established a new industry or introduced a useful invention in the Philippines;

Being married to a Filipino woman;

Having been engaged as a teacher in the Philippines in a public or recognized private school not established for the exclusive instruction of children of persons of a particular nationality or race, in any of the branches of education or industry for a period of not less than two years;

Having been born in the Philippines.

Section 4. Who are disqualified. - The following cannot be naturalized as Philippine citizens:

Persons opposed to organized government or affiliated with any association or group of persons who uphold and teach doctrines opposing all organized governments;

Persons defending or teaching the necessity or propriety of violence, personal assault, or assassination for the success and predominance of their ideas;

Polygamists or believers in the practice of polygamy;

Persons convicted of crimes involving moral turpitude;

Persons suffering from mental alienation or incurable contagious diseases;

Persons who, during the period of their residence in the Philippines, have not mingled socially with the Filipinos, or who have not evinced a sincere desire to learn and embrace the customs, traditions, and ideals of the Filipinos;

Citizens or subjects of nations with whom the United States 2and the Philippines are at war, during the period of such war;

Citizens or subjects of a foreign country other than the United States 3whose laws do not grant Filipinos the right to become naturalized citizens or subjects thereof.

Section 5. Declaration of intention. – One year prior to the filing of his petition for admission to Philippine citizenship, the applicant for Philippine citizenship shall file with the Bureau of Justice4 a declaration under oath that it is bona fide his intention to become a citizen of the Philippines. Such declaration shall set forth name, age, occupation, personal description, place of birth, last foreign residence and allegiance, the date of arrival, the name of the vessel or aircraft, if any, in which he came to the Philippines, and the place of residence in the Philippines at the time of making the declaration. No declaration shall be valid until lawful entry for permanent residence has been established and a certificate showing the date, place, and manner of his arrival has been issued. The declarant must also state that he has enrolled his minor children, if any, in any of the public schools or private schools recognized by the Office of Private Education5 of the Philippines, where Philippine history, government, and civics are taught or prescribed as part of the school curriculum, during the entire period of the residence in the Philippines required of him prior to the hearing of his petition for naturalization as Philippine citizen. Each declarant must furnish two photographs of himself.

Section 6. Persons exempt from requirement to make a declaration of intention. – Persons born in the Philippines and have received their primary and secondary education in public schools or those recognized by the Government and not limited to any race or nationality, and those who have resided continuously in the Philippines for a period of thirty years or more before filing their application, may be naturalized without having to make a declaration of intention upon complying with the other requirements of this Act. To such requirements shall be added that which establishes that the applicant has given primary and secondary education to all his children in the public schools or in private schools recognized by the Government and not limited to any race or nationality. The same shall be understood applicable with respect to the widow and minor children of an alien who has declared his intention to become a citizen of the Philippines, and dies before he is actually naturalized.6

Section 7. Petition for citizenship. – Any person desiring to acquire Philippine citizenship shall file with the competent court, a petition in triplicate, accompanied by two photographs of the petitioner, setting forth his name and surname; his present and former places of residence; his occupation; the place and date of his birth; whether single or married and the father of children, the name, age, birthplace and residence of the wife and of each of the children; the approximate date of his or her arrival in the Philippines, the name of the port of debarkation, and, if he remembers it, the name of the ship on which he came; a declaration that he has the qualifications required by this Act, specifying the same, and that he is not disqualified for naturalization under the provisions of this Act; that he has complied with the requirements of section five of this Act; and that he will reside continuously in the Philippines from the date of the filing of the petition up to the time of his admission to Philippine citizenship. The petition must be signed by the applicant in his own handwriting and be supported by the affidavit of at least two credible persons, stating that they are citizens of the Philippines and personally know the petitioner to be a resident of the Philippines for the period of time required by this Act and a person of good repute and morally irreproachable, and that said petitioner has in their opinion all the qualifications necessary to become a citizen of the Philippines and is not in any way disqualified under the provisions of this Act. The petition shall also set forth the names and post-office addresses of such witnesses as the petitioner may desire to introduce at the hearing of the case. The certificate of arrival, and the declaration of intention must be made part of the petition.

Section 8. Competent court.—The Court of First Instance of the province in which the petitioner has resided at least one year immediately preceding the filing of the petition shall have exclusive original jurisdiction to hear the petition.

Section 9. Notification and appearance.—Immediately upon the filing of a petition, it shall be the duty of the clerk of the court to publish the same at petitioner's expense, once a week for three consecutive weeks, in the Official Gazette, and in one of the newspapers of general circulation in the province where the petitioner resides, and to have copies of said petition and a general notice of the hearing posted in a public and conspicuous place in his office or in the building where said office is located, setting forth in such notice the name, birthplace and residence of the petitioner, the date and place of his arrival in the Philippines, the names of the witnesses whom the petitioner proposes to introduce in support of his petition, and the date of the hearing of the petition, which hearing shall not be held within ninety days from the date of the last publication of the notice. The clerk shall, as soon as possible, forward copies of the petition, the sentence, the naturalization certificate, and other pertinent data to the Department of the Interior, 7 the Bureau of Justice,8 the Provincial Inspector9 of the Philippine Constabulary of the province and the justice of the peace10 of the municipality wherein the petitioner resides.

Section 10. Hearing of the petition.—No petition shall be heard within the thirty days preceding any election. The hearing shall be public, and the Solicitor-General, either himself or through his delegate or the provincial fiscal concerned, shall appear on behalf of the Commonwealth11 of the Philippines at all the proceedings and at the hearing. If, after the hearing, the court believes, in view of the evidence taken, that the petitioner has all the qualifications required by, and none of the disqualifications specified in this Act and has complied with all requisites herein established, it shall order the proper naturalization certificate to be issued and the registration of the said naturalization certificate in the proper civil registry as required in section ten of Act Numbered Three thousand seven hundred and fifty-three.12

Section 11. Appeal.—The final sentence may, at the instance of either of the parties, be appealed to the Supreme Court.13

Section 12. Issuance of the Certificate of Naturalization.—If, after the lapse of thirty days from and after the date on which the parties were notified of the Court, no appeal has been filed, or if, upon appeal, the decision of the court has been confirmed by the Supreme Court,14 and the said decision has become final, the clerk of the court which heard the petition shall issue to the petitioner a naturalization certificate which shall, among other things, state the following: The file number of the petition, the number of the naturalization certificate, the signature of the person naturalized affixed in the presence of the clerk of the court, the personal circumstances of the person naturalized, the dates on which his declaration of intention and petition were filed, the date of the decision granting the petition, and the name of the judge who rendered the decision. A photograph of the petitioner with the dry seal affixed thereto of the court which granted the petition, must be affixed to the certificate.

Before the naturalization certificate is issued, the petitioner shall, in open court, take the following oath:

"I, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , solemnly swear that I renounce absolutely and forever all allegiance and fidelity to any foreign prince, potentate, state or sovereignty, and particularly to the . . . . . . . . . . . . . . . . . . of which at this time I am a subject or citizen; that I will support and defend the Constitution of the Philippines and that I will obey the laws, legal orders and decrees promulgated by the duly constituted authorities of the Commonwealth15 of the Philippines; [and I hereby declare that I recognize and accept the supreme authority of the United States of America in the Philippines and will maintain true faith and allegiance thereto;16 and that I impose this obligation upon myself voluntarily without mental reservation or purpose of evasion.

"So help me God."

Section 13. Record books.—The clerk of the court shall keep two books; one in which the petition and declarations of intention shall be recorded in chronological order, noting all proceedings thereof from the filing of the petition to the final issuance of the naturalization certificate; and another, which shall be a record of naturalization certificates each page of which shall have a duplicate which shall be duly attested by the clerk of the court and delivered to the petitioner.

Section 14. Fees.—The clerk of the Court of First Instance shall charge as fees for recording a petition for naturalization and for the proceedings in connection therewith, including the issuance of the certificate, the sum of thirty pesos.

The Clerk of the Supreme Court17 shall collect for each appeal and for the services rendered by him in connection therewith, the sum of twenty-four pesos.

Section 15. Effect of the naturalization on wife and children.—Any woman who is now or may hereafter be married to a citizen of the Philippines, and who might herself be lawfully naturalized shall be deemed a citizen of the Philippines.

Minor children of persons naturalized under this law who have been born in the Philippines shall be considered citizens thereof.

A foreign-born minor child, if dwelling in the Philippines at the time of the naturalization of the parent, shall automatically become a Philippine citizen, and a foreign-born minor child, who is not in the Philippines at the time the parent is naturalized, shall be deemed a Philippine citizen only during his minority, unless he begins to reside permanently in the Philippines when still a minor, in which case, he will continue to be a Philippine citizen even after becoming of age.

A child born outside of the Philippines after the naturalization of his parent, shall be considered a Philippine citizen, unless one year after reaching the age of majority, he fails to register himself as a Philippine citizen at the

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the fault of their parents either by neglecting to support them or by transferring them to another school or schools. A certified copy of the decree canceling the naturalization certificate shall be forwarded by the clerk of the Court to the Department of the Interior20 and the Bureau of Justice.21

(e) If it is shown that the naturalized citizen has allowed himself to be used as a dummy in violation of the Constitutional or legal provision requiring Philippine citizenship as a requisite for the exercise, use or enjoyment of a right, franchise or privilege.

Section 19. Penalties for violation of this Act.—Any person who shall fraudulently make, falsify, forge, change, alter, or cause or aid any person to do the same, or who shall purposely aid and assist in falsely making, forging, falsifying, changing or altering a naturalization certificate for the purpose of making use thereof, or in order that the same may be used by another person or persons, and any person who shall purposely aid and assist another in obtaining a naturalization certificate in violation of the provisions of this Act, shall be punished by a fine of not more than five thousand pesos or by imprisonment for not more than five years, or both, and in the case that the person convicted is a naturalized citizen his certificate of naturalization and the registration of the same in the proper civil registry shall be ordered cancelled.

Section 20. Prescription.—No person shall be prosecuted, charged, or punished for an offense implying a violation of the provisions of this Act, unless the information or complaint is filed within five years from the detection or discovery of the commission of said offense.

Section 21. Regulation and blanks.—The Secretary of Justice shall issue the necessary regulations for the proper enforcement of this Act. Naturalization certificate blanks and other blanks required for carrying out the provisions of this Act shall be prepared and furnished by the Solicitor-General, subject to the approval of the Secretary of Justice.

Section 22. Repealing clause.—Act Numbered Twenty-nine hundred and twenty-seven as amended by Act Numbered Thirty-four hundred and forty-eight, entitled "The Naturalization Law", is repealed: Provided, That nothing in this Act shall be construed to affect any prosecution, suit, action, or proceedings brought, or any act, thing, or matter, civil or criminal, done or existing before the taking effect of this Act, but as to all such prosecutions, suits, actions, proceedings, acts, things, or matters, the laws, or parts of laws repealed or amended by this Act are continued in force and effect.

Section 23. Date when this Act shall take effect.—This Act shall take effect on its approval.

Approved, June 17, 1939.

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