AMENDING FURTHER SECTION TWELVE OF REPUBLIC ACT NUMBERED SEVENTEEN HUNDRED AND EIGHTY-NINE, AS AMENDED, OTHERWISE KNOWN AS THE REPARATIONS LAW.

• Number: Presidential Decree No. 618
• Sections: 4

Preamble

WHEREAS, under the present provisions of the Reparations Law

(Republic Act No. 1789, as amended), the acquisition and use of

reparations goods is limited to Filipino citizens and entities wholly

owned by Filipino citizens;

WHEREAS, the same law provides that groups, associations and

corporations which are recipient of reparations goods shall not permit a

subsequent change in ownership or control as shall at any time

thereafter, change the control or ownership wholly held therein by

Filipino citizens;

WHEREAS, entities that have fully paid for their reparations

goods are included in, and subject to the above restriction, and

cannot, therefore, avail of foreign investments for purposes of

expansion and development;

WHEREAS, due to the scarcity or non-availability of

financing from local sources, and in line with the declared policy of

the State of encourage foreign investments in certain areas of business

activity in order to accelerate the economic development of the country,

there is a need to amend the Reparations Law, in order to allow foreign

investments in certain cases;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, by virtue of the powers vested in me by the Constitution,

do hereby decree and order, and make as part of the law of the land the

amendment of Section 12 of Republic Act No. 1789, as amended, as

follows:

Section 1

SECTION 1. The fifth paragraph of Section 12 of Republic Act

No. 1789, as amended, is hereby amended to read as follows:

"SEC. 12. * * *

"The contract of sale shall bear the conditions that no capital

goods thus acquired shall be resold, leased or in any other manner

disposed of except to Filipino citizens, or to entities wholly owned by

Filipino citizens who shall continue the utilization thereof in the

projects for which the goods were originally intended or in similar

projects, included in the economic development program of a similar

priority, subject, however, to the further condition that, groups,

associations and corporations which are recipient of such goods shall

not permit any subsequent change in ownership or control as shall at any

time thereafter change the control or ownership wholly held therein by

Filipino citizens: Provided, however, That, subject to the approval

of the President of the Philippines on a case to case basis upon

recommendation of the National Economic and Development Authority,

recipient corporations or associations which have fully paid for such

goods may allow foreign equity participation therein when the same is

necessary for further development and expansion, on condition that the

corporation or association shall maintain Filipino ownership of at least

seventy per centum of the capital stock outstanding and entitled to

vote, and that seventy per centum of the members or the Board of

Directors shall be Filipino citizens: Provided, further, That the

corporation or association in which such foreign investment has been

made shall report the same to the Board of Investments within thirty day

after the investment is received by it, and investments made in the

form of foreign exchange or other assets actually transferred to the

Philippines shall also be registered with the Central Bank of the

Philippines pursuant to Section 2(2) of Republic Act No. 5455, as

amended. It shall further contain a provision that any transfer of

ownership, whether by virtue of a private contract or through court

proceedings shall be to Filipino citizens or to entities wholly owned by

Filipino citizens; Provided, however, That, subject to the approval

of the President of the Philippines on a case to case basis upon

recommendation of the National Economic and Development Authority,

transfer of ownership of such capital goods which have already been

fully paid for may be made to corporations or associations organized and

existing under the laws of the Philippines of which at least seventy

per centum, of the capital stock outstanding and entitled to vote is

owned and held by Filipino citizens, and at least seventy per centum of

the Board of Directors are Filipino citizens, who shall begin

utilizing them in such projects as the National Economic and Development

Authority shall determine within one year from notice of the

Authority's decision."

Section 2

SEC. 2. All provisions of existing laws, decrees orders, rules

and regulations, or parts thereof, in conflict or inconsistent

herewith, are hereby repealed or modified accordingly.

Section 3

SEC. 3. This Decree shall take effect immediately.

Done in the City of Manila, this 20th day of December, in the

year of Our Lord, nineteen hundred seventy-four.

(Sgd.)

FERDINAND E. MARCOS

President of the Philippines

By the President:

(Sgd.)

ALEJANDRO MELCHOR

Executive Secretary