BIR Clarifies the Provisions to be Included in RMC No. 050-2018

On 11 May 2018, the Bureau of Internal Revenue “BIR” issued Revenue Memorandum Circular “RMC” No. 050-2018 to address the frequently asked questions “FAQs” related to the income tax and withholding tax provisions of the TRAIN Law and its subsequent implementing revenue regulations. However, certain FAQs were included which were not actually part of the TRAIN Law nor its implementing revenue regulations. In view of the foregoing, the BIR deleted the queries on group health insurance premiums Q7/A7 and director’s fees Q34/A34 from RMC No. 0...

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Philippine Securities Regulator Now Requires Disclosure of Beneficial Ownership

The Securities and Exchange Commission SEC now requires disclosure of beneficial owners of shares of stock in Philippine corporations. Corporate shareholdings have always been disclosed through the annual General Information Sheet, but prior to the issuance of SEC Memorandum Circular No. 17 dated November 27, 2018, disclosure of shareholders with legal title over the shares of stock was sufficient. This new Circular is intended to further tighten anti-money laundering regulations and prevent the use of corporate structures for money laundering and terrorist financing. Significantly, t...

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Easing Restrictions on Foreign Participation: The Philippine 11th Regular Foreign Investment Negative List

By: Maria Concepcion P. Simundac and Mandy Therese M. Anderson On 29 October 2018, President Rodrigo R. Duterte, through Executive Secretary Salvador C. Medialdea, signed Executive Order No. 65, Series of 2018 promulgating the Eleventh Regular Foreign Investment Negative List 11th FINL . The 11th FINL takes effect fifteen 15 days from its publication in the Manila Bulletin on 30 October 2018, or on 14 November 2018. It has been three 3 years since the issuance of the Tenth Regular Foreign Investment Negative List 10th FINL by then President Benigno S. Aquino I...

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Procuring Infrastructure PPPs 2018 (Assessing Government Capability to Prepare, Procure, and Manage PPPs)

Villaraza & Angangco’s Senior Partner Franchette M. Acosta and Senior Associate Paul B. Imperial contribute to the The World Banks’ publication Procuring Infrastructure PPPs 2018 Assessing Government Capability to Prepare, Procure, and Manage PPPs . The report is available online at http://bpp.worldbank.org/ and athttps://pppknowledgelab.org/. The following hyperlinks may be used to directly download the PIP3 2018 Executive Summary and PIP3 2018 Full Report. Highlights of the report may also be read in the following blog: http://blogs.worldbank.org/ppps/why-we-need...

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Importers and Customs Brokers Are No Longer Required to Obtain BIR Clearance

The Department of Finance, through Department Order No. 011-2018, removed the Bureau of Internal Revenue Import Clearance Certificate and Brokers Clearance Certificate BIR-ICC/BCC requirement for importer and customs broker accreditation. The authority to accredit and register importers and customs brokers is reverted solely to the Bureau of Customs BOC to simplify the accreditation process. The BIR is no longer accepting applications for the BIR-ICC/BCC and the BOC has already published the new requirements for accreditation of importers and customs brokers on its official ...

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Guidelines for the Handling of Complaints Filed Against Health Maintenance Organizations

The Insurance Commission IC has issued Circular Letter CL No. 2018-14 which provides the guidelines for handling complaints filed against Health Maintenance Organizations HMOs . The guidelines provide that: 1. All complaints filed against an HMO received by the IC, including its district offices, shall be: a. Endorsed to the Association of Health Maintenance Organizations of the Philippines' AHMOPI grievance machinery involving their members; or b. Endorsed to the Philippine Association of Health Maintenance Organization Companies, Inc...

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Insurance Companies are Mandated to Submit the Particulars of Reinsurance Treaties

The Insurance Commission IC is now requiring the submission of the particulars of reinsurance treaties. All authorized insurance companies doing business in the Philippines are mandated to submit to the IC a duly accomplished Particulars of Reinsurance Treaty form within three 3 months from the effectivity of any new treaty or changes in the existing treaty. The form for the Particulars of Reinsurance Treaty is provided in Circular Letter No. 2018-13. The full text of CL No. 2018-13, including the Particulars of Reinsurance Treaty form, is available here . ...

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Guidelines on the Infusion of Real Property to Cover Net Worth Deficiencies and Capital Impairment of Insurance Companies

The Insurance Commission IC issued Circular Letter CL No. 2018-12 which provides the rules governing the infusion of real property to cover net worth deficiencies and capital impairment of insurance companies. Under CL No. 2018-12, whenever the paid-up capital or net worth of an insurance company doing business in the Philippines is found to be less than the amount required under the Insurance Code, and before said company shall exercise its option to cover its deficiency/ies in the form of non-cash contributions, said company's president must first certify under oath that all effo...

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Rules on Licensing Requirements During the Pendency of a Merger or Consolidation of Insurance Companies

On January 25, 2018, the Insurance Commission IC issued Circular Letter CL No. 2018-11 which provides the following rules in relation to licensing requirements during the pendency of a merger or consolidation of insurance companies: a. From the notification of the intent to merge or consolidate until such time that the existing Certificates of Authority of the concerned domestic insurance companies are surrendered pursuant to Section 13 of CL No. 2015-11 dated 18 March 2015, the concerned companies shall maintain their respective Certificates of Authority in order to be a...

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Tax Base in Sale of Real Property

The Bureau of Internal Revenue has issued Revenue Memorandum Circular No. 19-2018 which mandates that Revenue District Officers RDO are not authorized to consider the prior mortgage value of a property as basis for computation of Capital Gains Tax CGT and Documentary Stamp Tax DST in sales transactions, especially when such mortgage values are higher than the present zonal or fair market value. RDOs are required to follow the provisions of law and use either the selling price, zonal value, or fair market value as shown in the schedule of values of the Provincial or City Assessor, whi...

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Legal Updates - Vietnam

RHTLaw TaylorWessing Vietnam, a member of the ASEAN Plus Group, recently released a compilation of legal updates on commercial and tax laws in Vietnam, a rapidly growing market in the ASEAN region. A copy of the compilation is available here . ...

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DICT Issues Policy Guidelines For the Entry of a New Major Player in the Public Telecommunications Market

On 08 January 2018, the Department of Information and Communication Technology DICT issued its “Policy Guidelines for the Entry of a New Major Player in the Public Telecommunications Market”, pursuant to President Rodrigo R. Duterte’s order that a new major player in the telecommunications industry should be able to enter the market at the end of the 1st quarter of 2018. Memorandum Order No. 001 Series of 2008 has been issued by the DICT in order to address the need to improve telecommunication services all over the country given that there are currently o...

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Timing for Notification under the PCC Rules on Merger Procedure

By: Franchette M. Acosta, Senior Partner, Villaraza & Angangco E: fm.acosta@thefirmva.com l http://www.thefirmva.com The Philippine Competition Commission published its Rules on Merger Procedure on 23 November 2017. These Rules will take effect 15 days after publication. Significantly, the Rules revise the prescribed timing for filing the required transaction notice under the Philippine Competition Act. Under the law, mergers, acquisitions and joint ventures satisfying transaction thresholds must be notified prior to consummation. Relevant thresholds include ...

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RECENT ISSUANCES OF THE GOVERNMENT PROCUREMENT POLICY BOARD (GPPB)

GPPB Circular No. 04-2016 Published on 20 October 2017 GPPB Circular No. 04-2016 e xplains negotiated procurement under the Emergency Cases modality which may be resorted to in the following instances: 1. In case of imminent danger to life or property during a state of calamity; 2. When time is of the essence arising from natural or man-made calamities; or 3. Other causes where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public u...

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Tax Identification Number is a Requirement for One-Time Transactions

The Bureau of Inter Revenue BIR recently issued Revenue Memorandum Circular No. 90-2017 which formally requires the donee s in donor’s tax transactions, heir s in estate tax transactions, and buyer s in sales of shares of stock to obtain a Tax Identification Number TIN prior to their application for an Electronic Certificate Authorizing Registration eCAR . The TIN requirement is a mandatory field in the eCAR System. Thus, taxpayers may no longer contest the BIR in requiring a TIN for these transactions for the reason that the same is not listed as a requirement....

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PAGCOR's Tax-Exempt Status Extends to Other Entities

In Perception Gaming, Inc. v. Commissioner of Internal Revenue CTA EB Nos. 1315 and 1356, 7 July 2017 , the Court of Tax Appeals En Banc held that Perception Gaming, Inc.’s PGI lease of gaming machines and rendition of related technical services to the Philippine Amusement and Gaming Corporation PAGCOR and to PAGCOR-Authorized Bingo Operators are effectively subject to zero percent 0% value-added tax VAT . The Court cited Section 13 2 of the PAGCOR Charter which provides that three 3 entities shall enjoy exemption from taxes: 1 PAGCOR; 2 corporations w...

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Age Discrimination in the Workplace Prohibited

The Department of Labor and Employment DOLE issued Department Order DO No. 170, Series of 2017, promulgating the Implementing Rules and Regulations IRR of Republic Act RA No. 10911, otherwise known as the “Anti-Age Discrimination in Employment Act”. The law seeks to promote equality in the workplace by mandating companies to hire workers based on their competence, and not on their age. The IRR apply to all employers, publishers, labor contractors or subcontractors, and labor organizations, whether or not registered. Unlawful Acts A. It sh...

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Joint Venture Agreements with Philippine Local Government Units as Public-Private Partnership Modality

By: Franchette M. Acosta, Senior Partner, Villaraza & Angangco E: fm.acosta@thefirmva.com l http://www.thefirmva.com The Duterte Administration is poised to fund its aggressive infrastructure program internally and through official development assistance. In reaction to the shift in paradigm, the PPP Center has announced an intention to refocus public-private partnership on projects of local government units LGUs . Considering the broad powers of LGUs to promote the general welfare of its constituents, PPP at the local level has much potentia...

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Casinos Are Now Covered By The Anti-Money Laundering Act

Republic Act No. 10927 expanded the coverage of the Anti-Money Laundering Act of 2001 AMLA to include land, ship and internet-based casinos with respect to their casino cash transactions that are related to gaming operations. Casino cash transactions are transactions which involve the payment of cash by casinos to their customers or to any person acting on behalf of a customer and the receipt of cash by casinos paid by or on behalf of a customer. The AMLA now covers single casino cash transactions amounting to more than Five Million Pesos P5,000,000.00 or its equivalent i...

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Non-Life Insurance Companies May Invest In Real Properties

With a view of enhancing the capital build up program of insurance companies and to provide a new investment option for non-life insurance companies, the Insurance Commission IC allows non-life insurance companies to invest in real properties. IC Circular Letter No. 2017-43 provides the guidelines for non-life insurance companies which will invest in income-producing real properties, other than those utilized as their main place of business or offices. Only non-life insurance companies with a minimum net worth of Five Hundred Fifty Million Pesos PhP550,000,0...

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The 2017 Rules of Procedure of the Philippine Competition Commission

On 11 September 2017, the Philippine Competition Commission PCC , through Commission Resolution No. 20-2017, approved and adopted its 2017 Rules of Procedure. The rules apply to investigations, hearings and proceedings of the PCC, except to matters involving mergers and acquisitions, unless otherwise provided in the issuances and guidelines governing the same. The rules took effect on 30 September 2017. The copy of the rules can be downloaded at the PCC website, www.phcc.gov.ph . ...

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In-House Community Online Update/Client Alert: Update on Data Privacy Law Compliance in the Philippines

Automated Decision-Making Operations, Institutions Likely to Pose Threats to Data Subjects and Phase 1 and Phase 2 of Registration with the NPC By Franchette M. Acosta, Senior Partner, Villaraza & Angangco Email: fm.acosta@thefirmva.com On 31 July 2017 the National Privacy Commission NPC issued a Circular to further clarify the implementing rules and regulations of the Data Privacy Act. The Circular will take effect upon full compliance with publication requirements. Under the Data Privacy Act and its rules, all Personal Information C...

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The Japanese Overseas Investment Report

SECTION 1: Market outlook 1.1 How would you summarise your jurisdiction’s attitude towards the influence of Japanese corporate culture in its industries? Over the years, the Philippines has proven to Japan its ability to be an effective platform for opportunities in trade and investments for Japanese companies. Japan has been the Philippines’ most generous donor of official development assistance for the past 23 years. Because of this symbiotic relationship, Japanese corporate culture is not only seen as desirable but is also perceived as vital to ...

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No Withholding Taxes on Income Payments Made to LGUs

In the recently decided Court of Tax Appeals CTA case of Conal Holdings Corporation vs. Commissioner of Internal Revenue CTA Case No. 9099, 17 July 2017 , Conal Holdings Corporation Conal filed a Petition for Review praying for the cancellation and withdrawal of the Bureau of Internal Revenue’s BIR deficiency assessment in the aggregate amount of Php291,875,839.72, which arose from Conal’s alleged failure to withhold taxes on the purchase of two 2 diesel power plants and machineries from the City Government of Iligan. The BIR based its assessment on Sect...

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Department of Labor and Employment Department Circular No. 01-2017: Clarifying the Applicability of Department Order No. 174-2017

On 13 June 2017, the Department of Labor and Employment DOLE issued Department Circular DC No. 01 to clarify the applicability of Department Order DO No. 174, series of 2017 which regulates contracting and subcontracting agreements. The DOLE clarified that DO No. 174 only applies to trilateral relationships between the principal, subcontractor, and the employee which characterize contracting or subcontracting arrangements. DO No. 174 does not cover information technology-enabled services involving an entire or specific business process such as Business Process Outsourci...

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THE V&A GUIDE TO PHILIPPINE COMPETITION ACT

FRAMEWORK OF PHILIPPINE COMPETITION POLICY Prior to the passage of the Philippine Competition Act, regulation of monopolistic or anti-competitive acts was not centralized. With the recent passage of the Philippine Competition Act, a more level playing field for business can be expected from a more comprehensive, centralized, and consistent approach against anti-competitive behavior. To achieve this, the Philippine Competition Act regulates or prohibits anti-competitive agreements, abuse of dominant position, and mergers and acquisitions that prevent or restrict com...

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Asean Plus Group Newsletter Q2 2017

CLick Here for the Newsletter - Issue 3, Q2 2017 ...

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ENDO The Line: The New DOLE Department Order No. 174 And The Rules On Contractualization

The Department of Labor and Employment “DOLE” issued on 16 March 2017 the new Department Order “D.O.” No. 174, Series of 2017 which revisited the existing rules and regulations implementing Articles 106 to 109 of the Labor Code on contracting and subcontracting. D.O. No. 174 effectively supersedes D.O. No. 18-A which was issued in 2011. The regime under D.O. No. 174 provides stricter guidelines for contractors. Among the notable changes is the increase in the requirement of substantial capital of contractors from Three Million Pesos PhP 3,000,000...

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SEC MC No. 4, Series of 2017: Term Limit of Independent Directors

The Securities and Exchange Commission “SEC” has issued SEC MC No. 4, Series of 2017 to provide the guidelines for the term limit of independent directors. The term limit of independent directors of registered issuers, public and mutual fund companies shall be as follows: A company’s independent directors shall serve for a maximum cumulative term of nine 9 years ; After which, the independent director shall be perpetually barred from re-election as such in the same company, but may continue to qualify as a non-independent director ; ...

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5th Asia Pacific Real Estate Investment Summit Philippines

The 5th Asia Pacific Real Estate Investment Summit Philippines was conducted at the Dusit Thani Hotel last 31 March 2017. With a theme “Unraveling the New Philippines: Heightened Optimism. Surging Investment”, the Summit featured speakers from several government agencies, including the SEC, DPWH and NEDA, as well as from several private business real estate groups. The speakers pointed out that that the current Philippine environment is ripe for the investment into Real Estate Investment Trusts “REIT” with numerous catalysts supporting the same. Howe...

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Bangko Sentral ng Pilipinas ("BSP") CIRCULAR NO. 944, Series of 2017 Guidelines for Virtual Currency ("VC") Exchanges"

The Bangko Sentral ng Pilipinas “BSP” issued Circular No. 944, Series of 2017 or the “Guidelines for Virtual Currency Exchanges” the “Circular” . Virtual currency “VC” refers to any type of digital unit that is used as a medium of exchange or a form of digitally stored value created by agreement within the community of VC users. The Circular reiterates that VCs are not issued nor guaranteed by any jurisdiction and do not have a legal tender status. The Circular covers exchanges in the Philippines, offering services or enga...

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2017 Investment Priorities Plan

On 28 February 2017, President Rodrigo R. Duterte and Executive Secretary Salvador C. Medialdea signed Memorandum Order No. 12 approving the 2017 Investment Priorities Plan “IPP” . Under the 2017 IPP, preferred activities for investment are listed with particular focus on micro-, small-, and medium-scale enterprises “MSMEs” , manufacturing, agriculture and fisheries, and drug rehabilitation. Innovation-drive, health, and environment-conscious activities are also given priority. The 2017 IPP will consider as preferred activities the following investme...

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Jose M. Roy III vs. Securities and Exchange Commission, et al. G.R. No. 207246, 22 November 2016

The Supreme Court, in a recent case entitled “Jose M. Roy III vs. Securities and Exchange Commission, et al.” , docketed as G.R. No. 207246 and promulgated on 22 November 2016, upheld the validity of SEC Memorandum Circular No. 8 Series of 2013 “SEC MC No. 8-2013” , which prescribes the guidelines in determining compliance with the foreign equity restriction in nationalized activities. Under SEC MC No. 8-2013, the required percentage of Filipino ownership mandated by the 1987 Constitution shall be applied to both a the total number of the outstanding shares of ...

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PCC Memorandum Circular No. 16-003

The Philippine Competition Commission “PCC” issued Memorandum Circular No. 16-003, dated 22 December 2016, prescribing the filing fees to be paid by the acquiring entity for notification and review of mergers or acquisition meeting the notification threshold under the Philippine Competition Act. For the first phase of the review, the filing fee of Two Hundred Fifty Thousand Pesos PhP250,000.00 shall be paid upon submission of the Notification Review. Upon the announcement by the PCC of its decision to proceed to a second phase review, the filing fee ...

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Philippine Credit Card Industry Regulation Law

On 27 July 2015, the Philippine Congress passed into law Republic Act No. 10870 or the “Philippine Credit Card Industry Regulation Law” which seeks to regulate the country’s credit card industry by placing credit card issuers and acquirers under the supervision of the Bangko Sentral ng Pilipnas “BSP” . The BSP is granted authority to issue rules of conduct and standards of operation of the credit card industry and to impose penalties in case of non-compliance therewith. The BSP is likewise granted the authority to determine the reasonableness of fees and cha...

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PPP Listing and Disclosure Rules

On 8 December 2016 the Philippine Stock Exchange, Inc. issued the Supplemental Listing and Disclosure Riles Applicable to a PPP Company “PPP Listing and Disclosure Rules” as approved by the Securities and Exchange Commission. The PPP Listing and Disclosure rules allows for and provides the process for the application for listing under the Philippine Stock Exchange. This option is granted to corporations which were awarded a PPP contract or a special purpose company incorporated by the awarded corporation or awarded joint venture or consortium which shall assume and accede to ...

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SECURITIES AND EXCHANGE COMMISSION AND BUREAU OF INTERNAL REVENUE ISSUANCES (JULY-AUGUST 2016)

SEC Memorandum Circular No. 8, 28 June 2016 SEC Memorandum Circular No. 8 amended further ICA Rule 35-1 d 4 , as amended by SEC Memorandum Circular No. 12, series of 2013, providing exemption from the 5% liquidity requirement of mutual fund index trackers: “ ICA Rule 35-1 d 4 For liquidity purposes, unless otherwise prescribed by the Commission, at least five percent 5% of an open-end company fund shall be invested in liquid/semi-liquid assets such as: A Treasury notes or bills, Certificates of Indebtedness issued by the Bangko Sentral ng P...

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