Pamumuhunan sa Condominium

Ano ba ang Condominium?

Ayon sa Section 2 ng Republic Act 4726, 

Ang isang kondominyum ay isang interes sa real estate na binubuo ng hiwalay na interes sa isang yunit sa isang tirahan, pang-industriya o komersyal na gusali at isang hindi lubos na interes sa karaniwang, direkta o hindi direkta, sa lupa kung saan ito matatagpuan at sa iba pang mga karaniwang lugar ng gusali. Ang isang kondominyum ay maaaring kasama, bukod pa, isang hiwalay na interes sa ibang mga bahagi ng naturang real estate. Ang titulo sa mga karaniwang lugar, kabilang ang lupa, o ang mga interes ng mga aplikante sa mga naturang lugar, ay maaaring hawak ng isang korporasyon na espesyal na binuo para sa layunin (na tinatawag na dito na "korporasyon ng condominium") kung saan ang mga may hawak ng hiwalay na interes ay awtomatikong magiging mga miyembro o mga shareholder, sa pagbubukod ng iba, ayon sa interes ng kanilang mga yunit sa karaniwang mga lugar.

Ang tunay na karapatan sa condominium ay maaaring pagmamay-ari o anumang iba pang interes sa tunay na ari–arian na kinikilala ng batas, sa ari-arian sa Civil Code at iba pang may kinalamang batas.

Ang isang gusali na may mga Condominium unit ay may iba’t ibang may–ari sa loob nito. Kung ang isang gusali ay may isang daang unit at ikaw ay nakabili ng cincuenta unit sa loob nito nangangahulugan na halos kalahati ng mga unit sa loob nito ay pag –aari mo subalit hindi mo pag–aari ang mga pasilyo o daanan o elevator na nasa gusaling ito.

At dahil ang mga pasilyo at lobby sa nasabing gusali ay pag–aari pa rin ng Condominium Corporation at ito ay kinakailangang mapanatiling malinis, ang bawat unit owner o tenant ay dapat magbayad ng Association Dues na kalkulado ayon sa sukat ng unit o mga unit na pag–aari mo.

Halimbawa,

Ikaw ay may 30 square meter na unit at ang Association Dues ay 50 pesos per square meter,

            30 sq.m x 50 Php = 1,500 Php

Ang pagkaunawa ng karamihang Filipino ay para ka pa ring nagbabayad ng renta sa sarili mong unit kahit ito ay nabili mo na dahil sa pagbabayad ng Association Dues. Ang kuryente na ginagamit sa gusali ay binabayaran din ng Condominium Corporation pati na rin ang pa–sueldo para sa tagalinis nito at mga guardia na nagbabantay dito veinte cuatro horas.

Ano ba ang puede mangyari sa Condominium matapos ang cincuenta taon?

Ayon sa Section 8 ng Republic Act 4726,

Where several persons own condominiums in a condominium project, an action may be brought by one or more such persons for partition thereof by sale of the entire project, as if the owners of all of the condominiums in such project were co-owners of the entire project in the same proportion as their interests in the common areas: Provided, however, That a partition shall be made only upon a showing:

(a)   That three years after damage or destruction to the project which renders material part thereof unit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction, or

(b)   That damage or destruction to the project has rendered one-half or more of the units therein untenantable and that condominium owners holding in aggregate more than thirty percent interest in the common areas are opposed to repair or restoration of the project; or

(c)   That the project has been in existence in excess of fifty years, that it is obsolete and uneconomic, and that condominium owners holding in aggregate more than fifty percent interest in the common areas are opposed to repair or restoration or remodeling or modernizing of the project; or

(d)   That the project or a material part thereof has been condemned or expropriated and that the project is no longer viable, or that the condominium owners holding in aggregate more than seventy percent interest in the common areas are opposed to continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or

(e)   That the conditions for such partition by sale set forth in the declaration of restrictions, duly registered in accordance with the terms of this Act, have been met.

Kung ikaw ay nagmamay–ari ng cincuenta unit sa isang gusali ng Condominium na may isang daan unit, ikaw ang majority shareholder nito at ikaw ang may kapangyarihang mag–decision sa kahihinatnan ng gusali matapos ang cincuenta taon.

Bilang may–ari ng isang Condominium, ikaw ay mayroong Condominium Certificate of Title

Halimbawa,

Binenta ang lupang kinatitirikan ng Condominium sa halagang 1million pesos at dahil ikaw ay nagmamay–ari ng cincuenta porciento ng mga Unit dito, ikaw ay makakatanggap ng 500,000 pesos.

Ang Republic Act 4726 ay binalangkas noong 1966 at cincuenta taon makalipas, ito ay noong 2016. Walang sapat na informacion sa ngayon kung may mga Condominium na naitayo na noong 1966 na magpapatunay ng hatian ng benta sa lupang kinatitirikan ng isang Condominium na magpapatunay sa batas na ito.

Isa bang magandang investment ang Condominium?

Ang sagot dito ay nakadepende sa kung papaano mo gagamitin ang Condominium nabili mo.

Kung ito ay gagamitin mong tirahan, meron ka bang sapat na pera pambayad ng Association Dues, kuryente at tubig? Malapit ba ito sa iyong pinagtatrabahuhan na kung saan mas Malaki ang iyong maitatabing pera para ipuhunan sa iba pang bagay.

Kung ito naman ay gagamitin mo bilang paupahan, kelan ba maibabalik ang pinuhunan mong pera dito?

Halimbawa,

Bumili ka ng 30 sq.m na Condominium sa halagang 3 million pesos at ito ay pinaupahan mo ng 15,000 Php per month.

            15,000 Php x 12 months = 180,000 Php

            3,000,000 ÷ 15,000 Php = 200 months (16 years & 8 months)

            180,000 Php ÷ 3,000,000 = 0.06 (6% interest per year)

Base sa kalkulasyon sa itaas,

Kikita ka ng Php 15,000 cada buwan o Php 180,000 cada taon kung ito ay pauupahan mo at kung ito ay dire–derecho at hindi mababakante sa susunod na labing anim na taon!

Mababawi mo ang iyong pinuhunang 3 million piso matapos ang labing anim na taon at walong buwan at ito kung ito ay nasa magandang kalagayan pa rin at hindi nasira dahil sa lindol o bagyo o kung ano pa mang desgracia.

Eh paano kung ibenta mo ang Condominium matapos ang limang taon sa halagang 4 million pesos,

Php 15,000 x 12 x 5 = 900,000 Php (kita sa pagpapaupa) + 4,000,000 Php = 4.9 million pesos

Ang 4 million ay kinalkula base sa hypothetical na 5% na appreciation value ng unit.

Paano ba ang kalakaran sa pagpapaupa ng Condominium?

Kung ikaw ay may isang unit lang at may oras para humarap sa mga prospective tenant, maaring ikaw na ang mag–manage ng paupahan.

Subalit kung ikaw ay may trabajo o isang OFW, puede kang gumamit ng real estate agent na may mga opisina sa ground floor or lobby ng mga Condominium.

Sa pagpapaupa ng Condominium, ang mangungupahan ay magi–issue ng one month deposit at one month advance at 12 post–dated cheque. Kung ikaw ay gagamit ng real estate agent upang humarap sa mangungupahan, ang “service fee” niya ay katumbas ng isang buwang upa ng iyong Condominium unit para sa servicio niya sa buong taon. Siya ang magaasikaso ng papirmhan ng contrata, magpapaayos kung ano man ang sira sa loob ng Condominium at siya ang haharap sa lahat ng problema ng nangungupahan.

Nakasaad sa Section 7 ng Republic Act No. 9653,

Section 7

Ang Rent at ang Kinakailangang Deposito sa Banco

Ang paupahan ay dapat bayaran nang maaga sa loob ng unang limang (5) araw ng bawat kasalukuyang buwan o sa simula ng kasunduan sa paupahan maliban kung ang kontrata ng paupahan ay nagbibigay para sa ibang petsa ng pagbabayad. Hindi maaaring humingi ng mas mababa sa isang (1) buwan na upa sa paupahan ang lessor. Hindi rin siya maaaring humingi ng higit sa dalawang (2) buwan na deposito na dapat itago sa isang bangko sa ilalim ng pangalan ng account ng lessor sa panahon ng buong tagal ng kasunduan ng lease. Anuman at lahat ng interes na naipon dito ay ibabalik sa lessee sa pag-expire ng kontrata ng lease.

Gayunpaman, kung ang lesee ay nabigo na bayaran ang upa, elektrisidad, telepono, tubig o iba pang mga bayarin sa utility o sirain ang anumang mga sangkap ng bahay at mga accessories, ang mga deposito at mga interes sa loob nito ay mawawalan ng pabor sa huli sa halagang katumbas sa pinsala sa pera na ginawa ng nauna.

Section 3

Definition of Terms

Owner/Lessor – kinabibilangan ng may-ari o tagapangasiwa o ahente ng may-ari ng yunit ng tirahan.

Lessee – ay nangangahulugan na ang taong umuupa ng isang yunit ng tirahan.

Maraming real estate agent o may–ari ng Condominium ang sumusuway sa batas na ito. Kung ang nangungupahan ay may “advance deposit” na Php 15,000 noong June 2017 at ito ay kumita ng interes sa pagtatapos ng contrata ng June 2018, dapat ibalik pati “interes” ng pera sa nangungupahan pero ang nangyayari ay pawang 2 months advance ang bayad dahil ginagastos na rin ng may–ari ng Condominium ang nai– advance na pera o bilang pambayad sa real estate agent na humaharap sa kanya.

Nung ako ay minsan nangupahan sa Condominium, ang aking pakiusap sa may–ari ng Condominium ay ibibigay ko ang deposit sa pamamagitan ng post–dated cheque sa ika–siyam na buwan ng aking pangungupahan upang sa gayon ay magamit ko pa ang pera para ipuhunan sa ibang bagay tulad ng Stock Market. Pumayag ang may– ari dahil alam niyang protektado siya ng Section 1 ng Batas Pambansa 22 na nakasaad na,

Section 1

Checks without sufficient funds

Any person who makes or draws and issues any check to apply on account or for value, knowing at the time of issue that he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment, which check is subsequently dishonored by the drawee bank for insufficiency of funds or credit or would have been dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop payment, shall be punished by imprisonment of not less than thirty days but not more than one (1) year or by a fine of not less than but not more than double the amount of the check which fine shall in no case exceed Two Hundred Thousand Pesos, or both such fine and imprisonment at the discretion of the court.

The same penalty shall be imposed upon any person who, having sufficient funds in or credit with the drawee bank when he makes or draws and issues a check, shall fail to keep sufficient funds or to maintain a credit to cover the full amount of the check if presented within a period of ninety (90) days from the date appearing thereon, for which reason it is dishonored by the drawee bank.

Where the check is drawn by a corporation, company or entity, the person or persons who actually signed the check in behalf of such drawer shall be liable under this Act.

Nakasaad din sa Article 315 ng Revised Penal Code na,

Article 315

Swindling (estafa)

(a)  By post-dating a check or issuing a check in payment of an obligation when the offender therein were not sufficient to cover the amount of the check. The failure of the drawer of the check to deposit the amount necessary to cover his check within three (3) days from receipt of notice from the bank and/or the payee or holder that said check has been dishonored for lack of insufficiency of funds shall be prima facie evidence of deceit constituting false pretence or fraudulent act. (As amended by R.A. 4885, approved June 17, 1967.)

Nakasaad din sa Section 4 ng Republic Act 9653,

Section 4

Limitasyon sa pagtaas ng upa
                    
Sa loob ng isang (1) taon mula sa pagiging epektibo nito, walang dagdag na dapat ipataw sa renta ng anumang yunit ng tirahan na saklaw ng Batas na ito: sa kondisyon na pagkatapos ng naturang panahon hanggang Disyembre 31, 2013, ang upa ng anumang yunit ng tirahan na saklaw ng Batas na ito ay hindi mapapataas ng higit sa pitong porsiyento (7%) taun-taon hangga't ang yunit ay inookupahan ng parehong lessee: sa karagdagang kondisyon, Na kapag ang tirahan yunit ay naging bakante, ang lessor ay maaaring magtakda ng unang upa para sa susunod Lessee: Ibig sabihin, gayunpaman, na sa kaso ng mga boarding house, mga dormitoryo, mga silid at bedspaces na inaalok para sa upa sa mga mag-aaral, walang pagtaas sa pag-upa nang higit sa isang beses bawat taon ang pahihintulutan.

Paano kung nakapaghulog ka na ng ilang buwan sa iyong Condominium unit at nagbago ang iyong isip, maibabalik pa ba ng iyong mga hinulog?

Ito ay nakadepende sa dami ng iyong hinulog, maaring mong basahin ang Maceda Law o ang “Realty Installment Buyer Act” ng Republic Act No. 6552.

Ito ang aking mga personal na karanasan sa Condominium:

1. Magandang umupa ka muna ng Condominium ng isang taon para malaman mo kung ito ba ay pabor sayo o hindi.

2. Napansin ko na mas mataas ang singil sa kuryente kapag ikaw ay nasa Condominium. Nung ako ay nangungupahan, ang tanging gamit ko lang ay refrigerator, desktop, microwave at washing machine dahil ito ay 25 square meters lamang pero ang aking kuryente ay umaabot ng 800 Php per month.

3. Kung gagamit ka ng Real Estate agent, seguraduhin na ito ay katiwa–tiwala. May mga pagkakataon na kung saan ang unit ay nababakante ng ilang buwan at ito ay pinauupahan sa mga “transient occupant”. Ang mga transient occupant ay yung mga vacacionista o turista na ayaw pumalagi sa hotel dahil sa kakulangan ng amenities kaya’t sila ay umuupa ng mga unit katulad ng sa Condominium na kung saan puede nila ito magamit na hindi limitado ang kanilang kilos. Sila ay maaring pumirme dito ng isang linggo o hanggang isang buwan.

4. Mas mainam na bumili ng Condominium ng cash kesa sa instalment dahil nasasayangan ako sa interes na ibabayad dito. Ako ay nakabili ng Condominium sa Valenzuela subalit ang aking trabajo ay nasa Ortigas kaya’t pinaupahan ko na lang ang aking unit sa halagang Php 10,000 at umupa naman ako ng Condominium sa Ortigas sa halagang Php 12,000. Sa gayon, pawang lumalabas na ang aking upa ay Php 2,000 lang plus ang Association Dues na Php 1,500 na di hamak na mas mababa kung ako ay uupa ng apartment at mamasahe pa ako papunta sa trabajo. Kaya naman kahit Php 16,000 lang ang aking sueldo ay marami pa rin akong naitatabing pera para ipuhunan sa iba pang investment.

5. Pabor ang Condominium para sa mga single. Para sa mga de familia at may mga anak, madalas ang mga bata ay nakakulong lamang sa loob ng Condominium unit at hindi na nagkakaroon ng pagkakataon na makipaglaro sa ibang bata na importante para sa kanilang pakikihalubilong social.

6. Maraming ipinagbabawal sa loob ng Condominium tulad ng pagaalaga ng hayop at paninigarilyo sa loob ng unit.

7. Kung ikaw ay nasa mataas na palapag ng Condominium, minsan ay matagal ang paghihintay sa elevator lalo na kung rush hour at kung huminto man sa iyong palapag, ito ay puno na!

Nakasalalay sa iyo kung paano magiging pabor ang pagbili ng isang Condominium. Walang perpektong reseta para dito dahil iba–iba ang pangangailangan at adhikain ng bawat isa. Ang layunin ng lathalang ito ay magbigay linaw ng mga bagay na maaaring mong asahan sa iyong pagde–decision.

FINANCE, CONSTRUCTION, OPERATION AND MAINTENANCE OF INFRASTRUCTURE BY PRIVATE SECTOR

Republic Act No. 6957

AN ACT AUTHORIZING THE FINANCING, CONSTRUCTION, OPERATION AND MAINTENANCE OF INFRASTRUCTURE PROJECTS BY THE PRIVATE SECTOR, AND FOR THE OTHER PURPOSES

Section 1

Declaration of Policy

It is the declared policy of the State to recognize the indispensable role of the private sector as the main engine for national growth and development and provide the most appropriate favorable incentives to mobilize private resources for the purpose.

Section 2

Definition of Terms

The following terms used in this Act shall have the meanings stated below:

(a)Build–operate–and–transfer scheme

A contractual arrangement whereby the contractor undertakes the construction, including financing, of a given infrastructure facility, and the operation and maintenance thereof. The contractor operates the facility over a fixed term during which it is allowed to charge facility users appropriate tolls, fees, rentals, and charges sufficient to enable the contractor to recover its operating and maintenance expenses and its investment in the project plus a reasonable rate of return thereon. The contractor transfers the facility to the government agency or local government unit concerned at the end of the fixed term which shall not exceed fifty (50) years. For the construction stage, the contractor may obtain financing from foreign and/or domestic sources and/or engage the services of a foreign and/or Filipino constructor: provided, that the ownership structure of the contractor of an infrastructure facility whose operation requires a public utility franchise must be in accordance with the Constitution: provided, however, that, in the case of corporate investors in the build-operate-and-transfer corporation, the citizenship of each stockholder in the corporate investors shall be the basis for the computation of Filipino equity in the said corporation: provided, further, that, in the case of foreign constructors, Filipino labor shall be employed or hired in the different phases of the construction where Filipino skills are available: provided, furthermore, that the financing of a foreign or foreign-controlled contractor from Philippine government financing institutions shall not exceed twenty percent (20%) of the total cost of the infrastructure facility of project: provided, finally, that financing from foreign sources shall not require a guarantee by the Government or by government-owned or controlled corporations. The build-operate-and-transfer scheme shall include a supply-and-operate situation which is a contractual arrangement whereby the supplier of equipment and machinery for a given infrastructure facility, if the interest of the Government so requires, operates the facility providing in the process technology transfer and training to Filipino nationals.

(b) Build–and–transfer scheme

A contractual arrangement whereby the contractor undertakes the construction, including financing, of a given infrastructure facility, and its turnover after completion to the government agency or local government unit concerned which shall pay the contractor its total investment expended on the project, plus a reasonable rate of return thereon. This arrangement may be employed in the construction of any infrastructure project including critical facilities which, for security or strategic reasons, must be operated directly by the Government.

Section 3

Private Initiative in Infrastructure

All government infrastructure agencies, including government-owned and controlled corporations and local government units, are hereby authorized to enter into contract with any duly prequalified private contractor for the financing, construction, operation and maintenance of any financially viable infrastructure facilities through the build-operate-and-transfer or build-and-transfer scheme, subject to the terms and conditions hereinafter set forth.

Section 4

Priority Projects

All concerned infrastructure agencies, including government-owned and controlled corporations and local government units, shall include in their infrastructure programs those priority projects that may be financed, constructed, operated and maintained by the private sector under the provisions of this Act. It shall be the duty of all concerned infrastructure agencies to give wide publicity to all projects eligible for financing under this Act, including publication in national newspapers of general circulation once every six (6) months and official notification of contractors registered with them. The lists of all such national projects must be part of the medium-term infrastructure programs of the agencies concerned and must be duly approved by Congress. Local projects funded and implemented by the local government units concerned shall be submitted to the local development councils for confirmation or approval.

Section 5

Public Bidding of Projects

Upon approval of the projects mentioned in Section 4 of this Act, the concerned head of the infrastructure agency or local government unit shall forthwith cause to be published, once every week for three (3) consecutive weeks, in at least two (2) newspapers of general circulation and in at least one (1) local newspaper which is circulated in the region, province, city or municipality in which the project is to be constructed a notice inviting all duly prequalified infrastructure contractors to participate in a public bidding for the projects so approved. In the case of a build-operate-and-transfer arrangement, the contract shall be awarded to the lowest complying bidder based on the present value of its proposed tolls, fees, rentals, and charges over a fixed term or the facility to be constructed, operated, and maintained according to the prescribed minimum design and performance standards, plans, and specifications. For this purpose, the winning contractor shall be automatically granted by the infrastructure agency or local government unit the franchise to operate and maintain the facility, including the collection of tools, fees, rentals, and charges in accordance with Section 6 hereof.

In the case of build-and-transfer arrangement, the contract shall be awarded to the lowest complying bidder based on the present value of its proposed schedule of amortization payments for the facility to be constructed according to the prescribed minimum design and performance standards, plans and specifications: provided, however, that a Filipino constructor who submits an equally advantageous bid shall be given preference.

A copy of each build-operate-and-transfer or build-and-transfer contract shall forthwith be submitted to Congress for its information.

Section 6

Repayment Scheme

For the financing, construction, operation, and maintenance of any infrastructure project undertaken pursuant to the provisions of this Act, the contractor shall be entitled to a reasonable return of its investment and operating and maintenance costs in accordance with its bid proposal as accepted by the concerned contracting infrastructure agency or local government unit and incorporated in the contract's terms and conditions. In the case of a build-operate-and-transfer arrangement, this repayment scheme is to be effected by authorizing the contractor to charge and collect reasonable tools, fees, rentals, and charges for the use of the project facility not exceeding those proposed in the bid and incorporated in the contract: provided, that the government infrastructure agency or local government unit concerned shall approve the fairness and equity of the tolls, fees, rentals and charges except in case of tolls for national highways, roads, bridges and public thoroughfares which shall be approved by the Toll Regulatory Board: provided, further, that the imposition and collection of tolls, fees, rentals and charges shall be for a fixed term as proposed in the bid and incorporated in the contract but in no case shall this term exceed fifty (50) years: provided, finally, that during the lifetime of the franchise, the contractor shall undertake the necessary maintenance and repair of the facility in accordance with standards prescribed in the bidding documents and in the contract. In the case of a build-and-transfer arrangement, the repayment scheme is to be effected through amortization payments by the government infrastructure agency or local government unit concerned to the contractor according to the scheme proposed in the bid and incorporated in the contract.

In the case of land reclamation or the building of industrial estates, the repayment scheme may consist of the grant of a portion or percentage of the reclaimed land or industrial estate built, subject to the constitutional requirements with respect to the ownership of lands.

Section 7

Contract Termination and Adjustment

In the event that a project is revoked, cancelled or terminated by the Government through no fault of the contractor or by mutual agreement, the Government shall compensate the said contractor for its actual expenses incurred in the project plus a reasonable rate of return thereon not exceeding that stated in the bidding documents and in the contract as of the date of such revocation, cancellation or termination: provided, that the interest of the Government in these instances shall be duly insured with the Government Service Insurance System or any other insurance entity duly accredited by the Office of the Insurance Commissioner: provided, finally, that the cost of the insurance coverage shall be included in the terms and conditions of the bidding referred to above. The tolls, fees, rentals and charges on the facility are subject to adjustment according to a formula related to official government price indices which shall be defined before the bidding, through the bidding documents, and incorporated in the contract.

Section 8

Toll Regulatory Board

The Toll Regulatory Board is hereby attached to the Department of Public Works and Highways with the Secretary of Public Works and Highways as Chairman.

Section 9

Project Supervision

Every infrastructure project undertaken under the provisions of this Act shall be constructed, operated and maintained by the contractor concerned in accordance with the plans, specifications, standards, and costs approved by the concerned government infrastructure agency and under the technical supervision of the said agency.

Section 10

Implementing Rules and Regulations

A committee composed and representatives from the Department of Public Works and Highways, the Department of Finance, the Department of Local Government, the National Economic and Development Authority, and duly accredited organizations representing the private Philippine construction industry shall formulate and prescribe, after public hearing and publication as required by law, the implementing rules and regulations, including, among others, the criteria and guidelines for evaluation of bid proposals, provisions to subject the facility collections to audit by the Commission on Audit, and conditions for the cancellation of contracts, in order to carry out the provisions of this Act.

Section 11

Repealing Clause

All laws or parts of any law inconsistent with the provisions of this Act are hereby repealed or modified accordingly.

Section 12

Separability Clause

If any provision of this Act is held invalid, the other provisions not affected thereby shall continue in operation.

Section 13

Effectivity

This Act shall take effect fifteen (15) days after its publication in at least two (2) newspapers of general circulation.

Approved:

July 9, 1990

REALTY INSTALLMENT BUYER ACT

REPUBLIC ACT No. 6552

AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS

  

Section 1

This Act shall be known as the "Realty Installment Buyer Act"

Section 2

It is hereby declared a public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions.

Section 3

In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:

(a)  To pay, without additional interest, the unpaid installments due within the total grace period earned by him which is hereby fixed at the rate of one month grace period for every one year of installment payments made: Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any.

(b)  If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.

Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.

Section 4

In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due. 

If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.

Section 5

Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.

Section 6

The buyer shall have the right to pay in advance any installment or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property.

Section 7

Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5 and 6, shall be null and void.

Section 8

If any provision of this Act is held invalid or unconstitutional, no other provision shall be affected thereby. 

Section 9

This Act shall take effect upon its approval.

SWINDLING & REMOVAL OF PROPERTY UNDER PENAL CODE

 

Chapter Six

SWINDLING AND OTHER DECEITS

Article 315

Swindling (estafa)

Any person who shall defraud another by any of the means mentioned herein below shall be punished by:

1^st

The penalty of prision correccional in its maximum period to prision mayor in its minimum period, if the amount of the fraud is over 12,000 pesos but does not exceed 22,000 pesos, and if such amount exceeds the latter sum, the penalty provided in this paragraph shall be imposed in its maximum period, adding one year for each additional 10,000 pesos; but the total penalty which may be imposed shall not exceed twenty years. In such cases, and in connection with the accessory penalties which may be imposed under the provisions of this Code, the penalty shall be termed prision mayor or reclusion temporal, as the case may be.

2^nd

The penalty of prision correccional in its minimum and medium periods, if the amount of the fraud is over 6,000 pesos but does not exceed 12,000 pesos;

3^rd

The penalty of arresto mayor in its maximum period to prision correccional in its minimum period if such amount is over 200 pesos but does not exceed 6,000 pesos; and

4^th

By arresto mayor in its maximum period, if such amount does not exceed 200 pesos, provided that in the four cases mentioned, the fraud be committed by any of the following means:

1. With unfaithfulness or abuse of confidence, namely:

(a) By altering the substance, quantity, or quality or anything of value which the offender shall deliver by virtue of an obligation to do so, even though such obligation be based on an immoral or illegal consideration.

(b) By misappropriating or converting, to the prejudice of another, money, goods, or any other personal property received by the offender in trust or on commission, or for administration, or under any other obligation involving the duty to make delivery of or to return the same, even though such obligation be totally or partially guaranteed by a bond; or by denying having received such money, goods, or other property.

(c) By taking undue advantage of the signature of the offended party in blank, and by writing any document above such signature in blank, to the prejudice of the offended party or of any third person.

2. By means of any of the following false pretences or fraudulent acts executed prior to or simultaneously with the commission of the fraud:

(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications, property, credit, agency, business or imaginary transactions, or by means of other similar deceits.

(b) By altering the quality, fineness or weight of anything pertaining to his art or business.

(c) By pretending to have bribed any Government employee, without prejudice to the action for calumny which the offended party may deem proper to bring against the offender. In this case, the offender shall be punished by the maximum period of the penalty.

(d)  By post-dating a check or issuing a check in payment of an obligation when the offender therein were not sufficient to cover the amount of the check. The failure of the drawer of the check to deposit the amount necessary to cover his check within three (3) days from receipt of notice from the bank and/or the payee or holder that said check has been dishonored for lack of insufficiency of funds shall be prima facie evidence of deceit constituting false pretence or fraudulent act. (As amended by R.A. 4885, approved June 17, 1967.)

(e) By obtaining any food, refreshment or accommodation at a hotel, inn, restaurant, boarding house, lodging house, or apartment house and the like without paying therefor, with intent to defraud the proprietor or manager thereof, or by obtaining credit at hotel, inn, restaurant, boarding house, lodging house, or apartment house by the use of any false pretence, or by abandoning or surreptitiously removing any part of his baggage from a hotel, inn, restaurant, boarding house, lodging house or apartment house after obtaining credit, food, refreshment or accommodation therein without paying for his food, refreshment or accommodation.

3. Through any of the following fraudulent means:

(a) By inducing another, by means of deceit, to sign any document.

(b) By resorting to some fraudulent practice to insure success in a gambling game.

(c) By removing, concealing or destroying, in whole or in part, any court record, office files, document or any other papers.

Article 316

Other forms of swindling

The penalty of arresto mayor in its minimum and medium period and a fine of not less than the value of the damage caused and not more than three times such value, shall be imposed upon:

1. Any person who, pretending to be owner of any real property, shall convey, sell, encumber or mortgage the same.

2. Any person, who, knowing that real property is encumbered, shall dispose of the same, although such encumbrance be not recorded.

3. The owner of any personal property who shall wrongfully take it from its lawful possessor, to the prejudice of the latter or any third person.

4. Any person who, to the prejudice of another, shall execute any fictitious contract.

5. Any person who shall accept any compensation given him under the belief that it was in payment of services rendered or labor performed by him, when in fact he did not actually perform such services or labor.

6. Any person who, while being a surety in a bond given in a criminal or civil action, without express authority from the court or before the cancellation of his bond or before being relieved from the obligation contracted by him, shall sell, mortgage, or, in any other manner, encumber the real property or properties with which he guaranteed the fulfilment of such obligation.

Article 317

Swindling a minor

Any person who taking advantage of the inexperience or emotions or feelings of a minor, to his detriment, shall induce him to assume any obligation or to give any release or execute a transfer of any property right in consideration of some loan of money, credit or other personal property, whether the loan clearly appears in the document or is shown in any other form, shall suffer the penalty of arresto mayor and a fine of a sum ranging from 10 to 50 per cent of the value of the obligation contracted by the minor.

Article 318

Other deceits

The penalty of arresto mayor and a fine of not less than the amount of the damage caused and not more than twice such amount shall be imposed upon any person who shall defraud or damage another by any other deceit not mentioned in the preceding articles of this chapter.

Any person who, for profit or gain, shall interpret dreams, make forecasts, tell fortunes, or take advantage of the credulity of the public in any other similar manner, shall suffer the penalty of arresto mayor or a fine not exceeding 200 pesos.

Chapter Seven

CHATTEL MORTGAGE

Article 319

Removal, sale or pledge of mortgaged property

The penalty or arresto mayor or a fine amounting to twice the value of the property shall be imposed upon:

1. Any person who shall knowingly remove any personal property mortgaged under the Chattel Mortgage Law to any province or city other than the one in which it was located at the time of the execution of the mortgage, without the written consent of the mortgagee, or his executors, administrators or assigns.

2. Any mortgagor who shall sell or pledge personal property already pledged, or any part thereof, under the terms of the Chattel Mortgage Law, without the consent of the mortgagee written on the back of the mortgage and noted on the record hereof in the office of the Register of Deeds of the province where such property is located.

MAGNA CARTA FOR SMALL ENTERPRISE

REPUBLIC ACT No. 6977

AN ACT TO PROMOTE, DEVELOP AND ASSIST SMALL AND MEDIUM SCALE ENTERPRISES THROUGH THE CREATION OF A SMALL AND MEDIUM ENTERPRISE DEVELOPMENT (SMED) COUNCIL, AND THE RATIONALIZATION OF GOVERNMENT ASSISTANCE PROGRAMS AND AGENCIES CONCERNED WITH THE DEVELOPMENT

as amended by R.A. 8289

Section 1

Title

This Act shall be known as the "Magna Carta for Small Enterprises"

Section 2

Declaration of Policy

Recognizing that small and medium scale enterprises have the potential for more employment generation and economic growth and therefore can help provide a self-sufficient industrial foundation for the country, it is hereby declared the policy of the State to promote, support, strengthen and encourage the growth and development of small and medium enterprises in all productive sectors of the economy particularly rural/agri-based enterprises. To this end, the Senate shall undertake the spur the growth and development of small and medium enterprises throughout the country and thereby attain countryside industrialization:

(a) By assuring, through the establishment of adequate support structure, and the creation and promotion of an environment conducive to the viability of these enterprises, establishment of mechanisms, the access and transfer of appropriate technology needed by small and medium enterprises;

(b) By intensifying and expanding programs for training in entrepreneurship and for skills, development for labor;

(c) By facilitating their access to sources of funds;

(d) By assuring to them access to a fair share of government contracts and related incentives and preferences;

(e) By complementing and supplementing financing programs for small and medium enterprises and doing away with stringent and burdensome collateral requirements that small entrepreneurs invariably find extreme difficulty complying with;

(f) By instituting safeguards for the protection and stability of the credit delivery system;

(g) By raising government efficiency and effectiveness in providing assistance to small and medium enterprises throughout the country, at the least cost;

(h) By promoting linkages between large and small enterprises, and by encouraging the establishment of common service facilities;

(i)  By making the private sector a partner in the task of building up small and medium enterprises through the promotion and participation of private voluntary organizations, viable industry associations, and cooperatives; and

(j) By assuring a balanced and sustainable development through the establishment of a feedback and evaluation mechanism that will monitor the economic contributions as well as bottlenecks and environmental effects of the development of small and medium scale enterprises.

Section 3

Small and Medium Enterprises as Beneficiaries

"Small and medium enterprise" shall be defined as any business activity or enterprise engaged in industry, agri-business and/or services, whether single proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entity's office, plant and equipment are situated, must have value falling under the following categories;

Micro:              less than P50,000

Cottage:          P50,001 to P500,000

Small:              P500,001 to P5,000,000

Medium:         P5,000,001 to P20,000,000

In a generic sense, all enterprises with total assets of Five million pesos (P5,000,000) and below shall be called small enterprises.

The above definitions shall be subject to review and adjustment by the said Council as deemed necessary, taking into account inflation and other economic factors.

Section 4

Eligibility for Government Assistance

To qualify for assistance, counselling, incentives and promotions under this Act, business falling under the above, definition must be;

(a) Duly registered with the appropriate agencies as, presently provided by law: Provided, That, in the case of micro enterprises as defined herein, registration with the office of the municipal or city treasurer shall be deemed sufficient compliance with this requirement;

(b) One hundred percent (100%) owned and capitalized by Filipino citizens if single proprietorship or partnership. If the enterprise is a juridical entity at least 60% of its capital or outstanding stocks must be owned by Filipino citizens;

(c) Primarily engaged in manufacturing, processing, and/or production excluding farm level agricultural/crop production; and

(d) It must not be a branch, subsidiary or division of a large scale enterprise nor may its policies be determined by a large scale enterprise or by persons who are not owners or employees of the enterprise.

However, this requirement shall not preclude a small and medium enterprise from accepting subcontracts from large enterprises or firms joining in cooperative activities with other small and medium enterprises.

Programs of the financing corporation as provided in subsequent Sections of this Act shall be exclusively targeted to small, cottage and micro-sized enterprises. Financing from the Philippine National Bank, Development Bank of the Philippines, Land Bank of the Philippines and other financial institutions shall be made available to medium enterprises.

Medium enterprises, however, shall be entitled to avail of the other incentives, programs and services as provided for in this Act.

Section 5

Guiding Principles

To set the pace for small and medium enterprise development, the State shall be guided by the following principles:

(a) Minimal set of rules and simplification of procedures and requirements

All government agencies having to do with small enterprises shall pursue the principles of minimum regulation to ensure stability of rules and to encourage entrepreneurial spirit among the citizenry. The agencies shall see to it that procedural rules and requirements, within their respective offices and in coordination with other agencies, are minimized in the act of registration, availment of financing and accessing other government services and assistance.

(b) Role of the private sector

In order to hasten growth and expansion of small and medium enterprises, the private sector throughout the country shall be encouraged to assist in the effective implementation of this Act by constantly policing their ranks; and by participating in government programs for small and medium enterprises strictly in accordance with law, and consistent with the attainment of the purposes hereof. The government shall encourage the organization and establishment of small and medium enterprise industry associations at the local and regional levels preferably unified under a national federation/association.

(c) Coordination of government efforts

Government efforts shall be coordinated to achieve coherence in objectives. All appropriate offices, particularly those under the Department of Trade and Industry, Finance, Budget and Management, Agriculture, Agrarian Reform, Environment and Natural Resources, Labor and Employment, Transportation and Communication, Public Works and Highways, Science and Technology, and Local Government as well as the National Economic and Development Authority and the Central Bank of the Philippines, through their national, regional and provincial offices, shall to the best of their effort and in coordination with local government units, provide the necessary support and assistance to small and medium enterprises.

(d) Decentralization

The State shall accelerate the decentralization process by establishing regional and provincial offices in order to enhance and attain greater efficiency in the provision of services to the countryside and the implementation of this Act, in coordination with local government units. To this end, the Government Agencies shall effect a substantial delegation of authority their regional and provincial offices to make decisions, particularly in the registration of beneficiaries of this law, qualification for availment of benefits, accreditation of private voluntary organizations, industry associations and cooperatives, and to resolve complaints for violation of applicable laws.

Section 6

Creation of a Small and Medium Enterprise Development Council

To effectively spur the growth and development of small and medium enterprises throughout the country, and to carry out the policy declared in this Act, a Small and Medium Enterprise Development (SMED) Council is hereby created. The Council shall be attached to the Department of Trade and Industry and shall be duly constituted within sixty (60) days after the approval of this Act.

The Council shall be the primary agency responsible for the promotion, growth and development of small and medium enterprises in the country by way of facilitating and closely coordinating national efforts to promote the viability and growth of small and medium enterprises, including assisting relevant agencies in the tapping of local and foreign funds for small and medium enterprise development, as well as promoting the use of existing guarantee programs.

Section 7

Composition

The Council shall be headed by the Secretary of Trade and Industry as Chairman. The members shall be the following:

(a) Director General of the National Economic and Development Authority;

(b) Secretary of Agriculture;

(c) Secretary of Labor and Employment;

(d) Secretary of Environment and Natural Resources;

(e) Secretary of Science and Technology;

(f)  Chairman of Small Business Finance and Guarantee Corporation;

(g) Chairman of the small and medium enterprises promotion body which the President shall undertake to establish under this Act; and

(h) Three (3) representatives from the private sector, all Filipino citizens, to represent Luzon, Visayas and Mindanao to be appointed by the President, one of whom shall come from the banking industry.

Cabinet-rank ex officio members of the Council shall designate an undersecretary or assistant secretary as their permanent representative in case they fail to attend meetings of the Council.

The private sector members of the Council shall initially receive per diem of One thousand pesos (P1,000.00) per meeting.

The Department of Trade and Industry shall allocate Five million pesos (P5,000,000.00) out of its savings for the initial operating expenses of the Council, after which the Council's budget shall be included in the annual appropriation of the Department of Trade and Industry.

The council may, from time to time, call upon the participation of any government agency or association of local government officials in its deliberation especially when such agency is directly or indirectly concerned with and/or affecting the growth and development of small and medium enterprises in any particular area or manner.

Section 8

Powers and Functions

The Small and Medium Enterprise Development (SMED) Council shall have the following powers, duties and functions:

(a) To help establish the needed environment and opportunities conducive to the growth and development of the small and medium sector;

(b) To recommend to the President and the Congress all policy matters affecting small and medium sale enterprises;

(c) To formulate a comprehensive small and medium enterprise development plan to be integrated into the National Economic and Development Authority Development Plans;

(d) To coordinate and integrate various government and private sector activities relating to small and medium enterprise development;

(e) To review existing policies of government agencies that would affect the growth and development of small and medium enterprises and recommend changes to the President and/or to the Congress whenever deemed necessary. This shall include efforts to simplify rules and regulations as well as procedural and documentary requirements in the registration, financing, and other activities relevant to small and medium enterprises;

(f) To monitor and determine the progress of various agencies geared towards the development of the sector. This shall include overseeing, in coordination with local government units and the Department of Local Government as well as private sector groups/associations, the developments among small and medium enterprises, particularly the cottage and micro-sized firms;

(g) To promulgate implementing guidelines, programs, and operating principles as may be deemed proper and necessary in the light of government policies and objectives of this Act;

(h) To provide the appropriate policy and coordinative framework in assisting relevant government agencies, in coordination with the National Economic and Development Authority and the Coordinating Council for the Philippine Assistance Program, as may be necessary, in the tapping of local and foreign funds for small and medium enterprise development

(i)  To promote the productivity and viability of small and medium enterprises by way of directing and/or assisting relevant government agencies and institutions at the national, regional and provincial levels towards the;

(1) Provision of business training courses, technical training for technicians and skilled laborers and continuing skills upgrading programs;

(2) Provision of labor-management guidance, assistance and improvement of the working conditions of employees in small and medium-sized firms;

(3) Provision of guidance and assistance regarding product quality/product development and product diversification;

(4) Provision of guidance and assistance for the adoption of improved production techniques and commercialization of appropriate technologies for the product development and for increased utilization of indigenous raw materials;

(5) Provision of assistance in marketing and distribution of products of small and medium scale enterprises through local supply-demand information, industry and provincial profiles, overseas marketing promotion, domestic market linkaging and the establishment of common service facilities such as common and/or cooperative bonded warehouse, grains storage, agro-processing and drying facilities, ice plants, refrigerated storage, cooperative trucking facilities, etc.;

(6) Intensification of assistance and guidance to enable greater access to credit through a simplified multiagency financing program; to encourage development of other models of financing such as leasing and venture capital activities; to provide effective credit guarantee systems, and encourage for formation of credit guarantee associations, including setting up of credit records and information systems and to decentralize loan approval mechanisms;

(7) Provision of concessional interest rates, lower financing fees, which may include incentives for prompt credit payments, arrangements tying amortizations to business cash flows, effective substitution of government guarantee cover on loans for the borrower's lack of collateral;

(8) Provision of bankruptcy preventive measures through the setting up of a mutual relief system for distressed enterprises, and the establishment of measures such as insurance against extraordinary disaster;

(9) Intensification of information dissemination campaigns and entrepreneurship education activities;

(10)  Easier access to and availment of tax credits and other tax and duty incentives as provided by the Omnibus investment Code and other laws;

(11) Provision of support for product experimentation and research and development activities as well as access to information on commercialized technologies; and

(12)  Provision of more infrastructure facilities and public utilities to support operations of small and medium enterprises;

(j)  To submit to the President and the Congress a yearly report on the status of small and medium enterprises in the country, including the progress and impact of all relevant government policies, programs and legislation as well as private sectors activities;

(k) To assist in the establishment of modern industrial estates outside urban centers; and

(l) Generally, to exercise all powers and functions necessary for the objectives and purposes of this Act.

Section 9

Designation of the Bureau of Small and Medium Business Development as Council Secretariat

The Bureau of Small and Medium Business Development of the Department of Trade and Industry, in addition to its current activities and functions, is hereby designated to act as the Council Secretariat. The Secretariat shall have the following duties and functions:

(1) To prepare, in coordination with local government units and/or associations of local government officials, and recommend annual as well as medium-term small and medium enterprise development plans for approval of the Council;

(2) To coordinate the preparation of position papers and background materials for discussion or approval during Council meetings;

(3) To assist the Council in coordinating and monitoring small and medium enterprise policies and programs and activities of all government agencies with respect to small and medium enterprises;

(4) To repair, collate and integrate all inputs to the Council's yearly report on the status of small and medium enterprises in the country;

(5) To submit periodic reports to the Council on the progress and accomplishment of its work programs; and

(6) To perform ad\hoc functions as authorized by the Council.

Section 10

Rationalization of Existing Small and Medium Enterprise Programs and Agencies

The Small and Medium Enterprise Development Council shall within one hundred eighty (180) days from its establishment, recommend to the President, measure/s to rationalize and integrate under a unified Institutional frameworks all government programs for the promotion and development of small and medium enterprises.

The President is hereby also empowered to establish a small and medium enterprise promotion body which shall be the principal government agency that will formulate, implement, coordinate and monitor all non-financing government programs, including fee-based services, to support and promote micro, small and medium enterprises. It shall be attached to the Department of Trade and Industry and shall be under the policy, program and administrative supervision of the SMED Council. The said offices shall receive no less than fifty percent (50%) of the assets, and budgetary allocations of the agencies for promotion, development and financing of small and medium enterprises that may be henceforth dissolved and/or abolished and absorbed, incorporated and integrated into the SMED Council.

Section 11

Creation of Small Business Guarantee and Finance Corporation

There is hereby created a body corporate to be known as the Small Business Guarantee and Finance Corporation, hereinafter referred to as SBGFC, which shall provide, promote, develop and widen in both scope and service reach various alternative modes of financing for small enterprises, including, but not limited to, direct and indirect project lending, venture capital, financial leasing, secondary mortgage and/or rediscounting of loan papers to small businesses secondary/regional stock markets: Provided, that crop production financing shall not be serviced by the Corporation.

The Corporation shall guarantee loans obtained by qualified small enterprises, local and/or regional associations small enterprises and industries, private voluntary organizations and/or cooperatives, under such terms and conditions adopted by its Board. It may guarantee loans up to one hundred percent (100%). It may also provided second level guarantee (i.e., re-insurance) on the credit and/or investment guarantees made by credit guarantee associations and other institutions in support of small entrepreneurs.

The Corporation shall become liable under its guarantees upon proof that the loan has become past due under such terms and guidelines adopted by its Board and printed on the contract of guarantee.

The Small Business Guarantee and Finance Corporation shall:

(a) Be attached to the Department of Trade and Industry and shall be under the policy, program and administrative supervision of the SMED Council;

(b) Have its principal place of business in Metro Manila and endeavor to have one or more branch offices in every province of the country;

(c) Exercise all the general powers conferred by law upon corporations under the Corporation Code as are incidental or conducive to the attainment of the objectives of this Act; and

(d) Have a board of directors upon which the powers of the Corporation shall be vested, to be composed of five (5) members including:

(1) Three (3) members from the private sector appointed by the President upon recommendation of the SMED Council and from among whom the Chairman of the Board shall be appointed by the President to serve on a full-time basis;

(2) The Secretary of Trade and Industry or his Undersecretary; and

(3) A representative of the five (5) government financial institutions mandated in this Act to provide the initial capital of the Corporation, who shall be designated, under guidelines agreed upon by the Board Chairman of said institutions.

Section 12

Capitalization and Funding

The Small Business Guarantee and Finance Corporation shall have an authorized capital stock of Five billion pesos (P5,000,000,000.00. The initial capital of One billion pesos (P1,000,000,000.00) shall be established from a pool of funds to be contributed in the form of equity investments in common stock by the Land Bank of the Philippines (LBP), the Philippines National Bank (PNB), the Development Bank of the Philippines (DBP) in the amount of Two hundred million pesos (P200,000,000.00) each. The Social Security System (SSS) and the Government Service Insurance System (GSIS) shall also set aside Two hundred million pesos (200,000,000.00) each to be placed in preferred stocks of the SBGFC. Additional funding shall come from trust placements of excess and unused funds of existing government agencies, bilateral and multilateral official development assistance funds, subscription from government-owned or controlled corporations, and investments of private financial institutions and corporations.

Section 13

Mandatory Allocation of Credit Resources to Small Enterprises

All lending institutions as defined under Central Bank rules, whether public or private, shall, set aside a portion of their total loan portfolio based on their balance sheet as of the end of the previous quarter, and make it available for small enterprise credit as herein contemplated. The portion mandated to be so set aside shall at least be, five per cent (5%) by the end of the year of the effectivity of this Act, ten percent (10%) by the end of the second year through the end of the fifth year, and five percent (5%) by the end of sixth year and may come down to zero by the end of the seventh year.

The Central Bank in consultation with the Council, shall formulate rules for the effective implementation of this provision: Provided, That the purchase of government notes, securities, and other negotiable instruments, with the exception of such instruments as may be offered by the SBGFC, shall not be deemed compliance with the foregoing provision.

The SMED Council shall set up the appropriate systems to monitor all loan applications of small enterprises in order to account for the absorptive capacity of the small enterprise sector.

The Central Bank shall furnish to the Small and Medium Development Council on a semestral basis regular reports on the lending institutions compliance with the above provisions on the mandatory credit allocation for small enterprises.

Section 14

Penal Clause

The Central Bank shall impose administrative sanctions and other penalties on the lending institution for non-compliance with provisions of Act. In addition, the president, members of boards of directors, and other officers of the erring lending institutions shall be individually liable for imprisonment of not less than six (6) months and a fine of not less than Five hundred thousand (P500,000) each.

Section 15

Separability Clause

The provisions of this Act are hereby declared to be separable. If any provisions of this Act shall be held unconstitutional, the remainder of the Act not otherwise affected shall remain in full force and effect.

Section 16

Repealing Clause

All laws, executive orders, rules and regulations, or parts thereof, inconsistent herewith are hereby repealed or modified accordingly.

Section 17

Effectivity

This Act shall take effect upon its approval.

Approved:

January 24, 1991