On 29 October 2019, the Philippine Stock Exchange ("PSE") released a circular which proposes amendments to the Philippine Mineral Reporting Code of 2007 ("PMRC"). PMRC sets out minimum standards, recommendations, and guidelines for Public Reporting in the Philippines of Exploration Results, Mineral Resources, and Ore Reserves.
The proposed changes to the PMRC include (among other reporting and technical requirements): (a) a requirement to complete and document a review of all legal and permit requirements; and (b) a requirement to discuss environmental, social, and health and safety impacts that are expected during the development and operation of mineral resources and ore reserves, and after their closure, and how these will affect employees, contractors, neighbouring communities and customers.
The Philippine Mineral Reporting Code Committee ("PMRCC") was formed in November 2018 to maintain and improve the standards for public mineral reporting in the Philippines, and to ensure that the PMRC is aligned and substantially comparable with internationally recognised reporting standards. The PRMCC modelled the draft PMRC after the Committee for Mineral Reserves International Reporting Standards (CRIRSCO) International Reporting Template 2019 and Australasian Joint Ore Reserves Committee (JORC) Code of 2012.
The draft was released for comments from the public until 15 December 2019. To date, the PSE and Securities and Exchange Commission ("SEC") have not adopted the latest draft of the PMRC. Once the SEC approves and adopts the amendments to the PMRC, the implementation is intended to take effect two years from the date of its approval.
On 27 December 2019, the Securities and Exchange Commission ("SEC") issued Memorandum Circular No. 25, Series of 2019, which promulgates the 2019 Guidelines for the Protection of SEC Registered Organizations from Money Laundering and Terrorist Financing Abuse ("2019 NPO Guidelines").
The 2019 NPO Guidelines were adopted to establish the regulatory framework for the protection of SEC registered non-profit organisations ("NPOs") from money laundering and terrorist financing abuse.
The 2019 NPO Guidelines adopt risk-based measures to protect NPOs without being unduly disruptive of the legitimate activities of NPO. The 2019 NPO Guidelines encourage NPOs to make available to the public accurate, current and complete material information about the entities via online platforms. This include information regarding their status, finances, expenses, projects, activities, the identities of those who control or direct such activities, the composition of their governing boards and their beneficial owners. NPOs should also adopt policies on good governance to promote accountability, integrity and public confidence in the administration and management of NPOs.
The 2019 NPO Guidelines impose compliance requirements on NPOs at Risk, such as: (a) the audit of the NPOs by an independent Certified Public Accountant of their annual financial statements; (b) the conduct of mandatory background checks of officers and trustees of the NPOs; (c) the mandatory audit by the SEC of the NPOs; (d) the establishment of an internal audit system; and (e) the mandatory attendance in sustained outreach programs of the SEC. Moreover, the 2019 NPO Guidelines require all non-stock corporations to complete the revised Mandatory Disclosure Form and submit updates on their activities and projects.
Non-compliance with the 2019 NPO Guidelines may result in the imposition of sanctions and penalties, such as fine up to PhP2 million, the suspension or revocation of the Certificate of Incorporation of the NPOs, and other penalties within the power of the SEC to impose.
The Monetary Board extended the registration deadline for operators of payment systems ("OPS") provided in BSP Circular No. 1049 (Rules and Regulations on the Registration of Operators of Payment Systems) ("BSP Circular") to 1 April 2020. The extension is intended to give OPS more time to register and address various concerns that they may have concerning registration.
OPSs operating at the time of the effectivity of R.A. No. 11127 or the National Payment Systems Act are required under the BSP Circular to register with the Bangko Sentral ng Pilipinas ("BSP" or the Philippine central bank) no later than three months from the effectivity or by 1 January 2020. Under the new simplified registration process, the BSP aims to facilitate and encourage compliance of all payment systems operators, particularly the previously unregulated non-financial institutions that are unfamiliar with regulatory compliance. According to BSP Deputy Governor Francisco Dakila Jr., the new regulation is part of the implementation of R.A. No. 11127 which was approved in February 2019.
R.A. No. 11127 endows the BSP with the power to oversee the payment systems in the Philippines and exercise supervisory and regulatory powers over them for the purpose of ensuring the stability and effectiveness of the monetary and financial system. BSP-registered/licensed institutions such as banks and non-bank electronic money issuers, which are now considered as OPS under the law, will have to submit a notification to BSP.
The Intellectual Property Office of the Philippines ("IPOPHL") released a copy of the draft bill for the New Intellectual Property Act, which was opened to comments from the general public until 20 December 2019. The draft bill contains draft amendments to the current Republic Act No. 8293 or the Intellectual Property Code of the Philippines (IP Code).
The amendments are intended to promote and support creation, innovation, utilisation, and commercialisation of intellectual property ("IP"). Notable changes include the following:
- inclusion of protected new plant varieties provided under the Philippine Plant Variety Protection Act of 2002 in the scope of IP;
- reorganisation of the IPOPHL and institutionalisation of several offices such as the Intellectual Property Academy, Bureau of Copyright and Related Rights, Bureau of Innovation and Business Development, Bureau of Regional Operations, and Information Technology Services;
- creation of the National Council on Intellectual Property Rights (NCIPR) which will act as the primary inter-agency body on efforts against IP rights violations; and
- creation of a Sub-Committee on Enforcement of IP Rights in the Digital Environment which is tasked to adjudicate complaints of online infringement activities.
To date, the bill has yet to be filed in either house of Congress.
Long-term negotiable certificates of time deposit ("LTNCTDs") are peso-denominated deposit instruments with a term of at least five years. The issuance of LTNCTDs, which effectively “lengthen” the maturity profile of funds sourced by banks, are subject to the Monetary Board's ("MB") approval.
The MB approved the amendments to the rules on the issuance of LTNCTDs, bonds and commercial papers (CPs), allowing related companies of the issuing universal/commercial banks ("U/KBs") and quasi-banks ("QBs") to arrange these financial instruments subject to certain conditions.
The amended rules require the participation of third-party underwriters/arrangers who are unrelated to the issuing U/KB or QB. Additionally, parties must ensure that an objective conduct of the due diligence review is not undermined and that appropriate safeguards and controls on related-party transactions are instituted to prevent conflict of interest.
These reforms were introduced to promote efficiency in the issuance of the said instruments by U/KBs and QBs, to protect the interests of the investing public, and to contribute to the development of the capital market. The amended rules became effective 15 calendar days from its publication in a newspaper of general circulation on 2 December 2019 or on 17 December 2019.
Nevertheless, the MB has set an indefinite moratorium on the issuance of LTNCTDs, which will commence on 1 January 2021. Banks are given until 30 September 2020 to submit their request for authority to issue LTNCTDs. The moratorium is seen to shift the banks’ funding channel from LTNCTDs to bond issuances.
On 13 December 2019, the Securities and Exchange Commission ("SEC") released a draft Memorandum Circular on the Revision of the General Information Sheet (GIS) of Foreign Corporations ("draft Memorandum Circular"), that includes a page for the indication of Beneficial Ownership Information. The SEC sought comments from the public on the draft Memorandum Circular until 10 January 2020.
The draft Memorandum Circular imposes the responsibility to conduct due diligence on information relating to a foreign corporation's beneficial ownership on the resident agent and country or regional head of the foreign corporation. Such a responsibility includes the duty to obtain, keep, report and update such information. Any changes to the information relating to beneficial ownership must be indicated in the Notification Update Form and submitted to the SEC within 30 calendar days after the changes occurred or became effective.
On 19 November 2019, the Philippine Competition Commission ("PCC") and the State Administration for Market Regulation (SAMR) of the People’s Republic of China signed a memorandum of understanding ("MoU") with the aim of strengthening bilateral ties on competition law enforcement.
According to the PCC, the MoU lays down a general framework for cooperation in competition enforcement, marking the start of a productive partnership related to an exchange of information, coordination of enforcement activities, notification of cases of mutual interest, as well as technical cooperation and capacity building. The MoU also provides for a mechanism for the conduct of joint dialogues on economic issues and developments in their respective competition policies and matters of mutual interest.
The move is part of PCC’s efforts to work closely with its international counterparts, including the ASEAN Experts Group on Competition, the International Competition Network (ICN), the United Nations Conference on Trade and Development (UNCTAD) and the Organisation for Economic Co-operation and Development (OECD) Competition Division.
The Supreme Court issued a Resolution dated 10 September 2019 governing the rules on administrative searches and inspections under the Philippine Competition Act ("PCA"), strengthening the Philippine Competition Commission’s ("PCC's") ability to carry out dawn raids on entities suspected of violating the country’s antitrust law.
Beginning 16 November 2019, the Rules on Administrative Search and Inspection under the PCA took effect ("Dawn Raid Rules"), enabling the PCC to exercise its power to conduct dawn raids pursuant to an order of a special commercial court under section 12(g) of the PCA.
The Dawn Raid Rules govern the application, issuance and enforcement of inspection orders for administrative investigations of alleged violations of the PCA. Under the Rules, an application for examination must be acted upon within 24 hours from its filing. Furthermore, an inspection order issued by the court will allow the PCC and its deputised agents to search and inspect business premises, offices, land and vehicles to examine, copy, photograph, record or print information in order to prevent the removal, concealment, tampering with or destruction of such information. This inspection order, which is effective for an initial period determined by the court (not exceeding 14 days from its issuance), may be extended upon a motion for a period not exceeding 14 days from the expiration of the initial period. Notably, any person or entity that fails or refuses to comply with an inspection order may be cited for contempt of court.
According to the PCC, dawn raids or unannounced on-site inspections are widely used by competition authorities around the world to uncover evidence in aid of investigation and prosecution of anticompetitive agreements and conduct, such as cartels and abuses of dominance. This is because cartels operate on clandestine arrangements. The Dawn Raid Rules are expected to strengthen the PCC’s ability to uncover anticompetitive behaviour and pin down such offence covered by the PCA.
On 7 October 2019, the Philippine government approved the Implementing Rules and Regulations ("IRR") of the Simulated Birth Rectification Act ("SBRA"), which was passed by the Philippine Congress on 21 February 2019. The aim of the SBRA is to simplify adoption proceedings and encourage adoption and rectification of simulated births. The IRR took effect on 10 December 2019, after the lapse of 15 days from its publication in the Official Gazette on 25 November 2019.
Under the SBRA and its IRR, a person who simulated the birth of a child for the child’s best interest on or before the effectivity of the SBRA on 28 March 2019, is exempt from criminal, civil and administrative liability and is granted amnesty, provided that: (a) a Petition for Adoption with an application for the rectification of the simulated birth record is filed on or before 29 March 2029; (b) the child has been consistently considered and treated as his or her own; and (c) the child has been living with or under the custody of the prospective adoptive parents for at least three years.
Under the SBRA and its IRR, the administrative adoption order has the same effect as a judicial decree of adoption, whereby the adoptee is considered the adopter’s legitimate child for all intents and purposes. Thus, in lieu of going through court proceedings, a person seeking to adopt a child may file a petition with the Office of the Social Welfare and Development Officer where the child resides. Nonetheless, the SBRA imposes the penalty of imprisonment for six years and one day to 12 years and/or a fine of not less than PhP200,000 on any person who fails to comply with the procedure for adoption provided by the law.
