Arellano University School of Law

Taft Avenue, Pasay City

Investment Law
Final Exams

Submitted by: Rich L. Almario

Submitte to! Atty" #ary $u e %" Cantorias

To From (e *ate

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Atty. Teresita R. Capacillo Senior Partner, Ca&acillo ' Almario Law offices Atty. Rich L. Almario Associate, Ca&acillo ' Almario Law offices Le)al #emoran um on o&enin) a Call center business #arch +,, +-.+ LEGAL MEMORAND M

STATE#E/T 0F FACTS 0n February .,, +-.1 a clientele from Cana a an the Unite 2in) om a&&roache the Law office thru its senior &artner an manifeste their intention to o&erate a call center business an 3or bac45office o&eration in the Phili&&ines" Sai clientele as4e the le)al re6uirements for o&enin) u& a business in the country an thereafter, the Senior Partner imme iately irecte its associates throu)h Atty" (ich L" Almario to lay own im&ortant consi erations for the client before the sai business can o&erate in the country com&lyin) with existin) laws, rules an re)ulations" After extensive research an iscussions, the hea of the le)al team for the client, Atty" Almario now submits the followin) &oints to consi er for the client! i7 ii7 iii7 iv7 v7 vi7 #inimum Ca&ital (e6uirement Cor&orate Structure an %otin) ri)hts Lan 0wnershi& Tax 8enefits Em&loyment contracts3 com&liance with labour laws (e)istration an licensin) (e6uirements

*ISCUSSI0/ The country is in )reat nee of em&loyment o&&ortunities for its citi9ens in res&onse of )rowin) &o&ulation of unem&loye wor4 force who are able an willin) but still yearnin) to )ra&&le with low em&loyment rate in the Phili&&ines" 8usiness &rocess outsourcin) at &resent is a boomin) enter&rise where it coul )enerate a lot of em&loyment o&&ortunities not only to our fresh )ra uates but also to the youn) wor4force who esire to be em&loye while currently stu yin) or venturin) in other en eavor" International com&anies fin the Asia5 Pacific re)ion to be a source of man &ower in o&eratin) their res&ective outsourcin) businesses, in which the Phili&&ines is a &art of" (e&ublic Act /o " :-,+ otherwise 4nown as the Forei)n Investments Act an The 0mnibus Investments co e of .;<: are the basic laws that )overn the &artici&ation of forei)n entities in economic an commercial activities in the Phili&&ines" The Forei)n Investments Act, eclare that it is the &olicy of the State to attract, &romote, an welcome &ro uctive investments from

forei)n in ivi uals, &artnershi&s, cor&orations, an )overnments, inclu in) their &olitical sub ivisions, in activities which si)nificantly contribute to national in ustriali9ation an socioeconomic evelo&ment to the extent that forei)n investment is allowe in such activity by the constitution an relevant laws" It is also eclare in Section + of the 0mnibus Investments co e that =the state consi ers the &rivate sector as the &rime mover for economic )rowth>" ?ith this, it is no oubt that the &artici&ation of the &rivate sector in businesses is of &aramount im&ortance in &um&in) u& the economic fun amentals of the country" In res&ect of forei)n &artici&ation, it must be note that forei)ners may hol interests in cor&orations, &artnershi&s, an other entities in the Phili&&ines, &rovi e that they are not en)a)e in an activity that is reserve by law only to Phili&&ine citi9ens or to entities that are wholly owne by Phili&&ine citi9ens" I" #I/I#U# CAPITAL (E@UI(E#E/TS In re)ar of the minimum ca&ital of a non5 Phili&&ine national the forei)n investments act allows that they can invest in a omestic enter&rise to the extent of .-- of its ca&ital, &rovi e that they o not fall within the /e)ative list" Since the business inten e to be o&ene by the client will re6uire or involve a vance technolo)y, the ca&itali9ation re6uirements of this omestic enter&rise is at least US A.--,---"--" Consultation an certification must be secure to the *e&artment of Science an Technolo)y" The omestic mar4et enter&rise is efine as =an enter&rise which &ro uces )oo s for sale or ren ers service or otherwise en)a)es in any business in the Phili&&ines, of which a 8usiness Process 0utsourcin) s6uarely falls" II" C0(P0(ATI0/ ST(UCTU(E A/* %0TI/B (IBCTS For the inten e 8usiness Process 0utsourcin) business at least D but not more than .D natural &ersons, of le)al a)e an maEority of whom must be resi ents of the Phili&&ines shall be the number of incor&orators to form a cor&oration for any lawful &ur&ose, &ursuant to the Cor&oration co e of the Phili&&ines" It is further re6uire that sai incor&orators must be an owner or subscribes of at least . share of the ca&ital stoc4 of the cor&oration" In res&ect of the votin) ri)hts, clientele is informe that there is a &resum&tion that each an every stoc4 hol er has the ri)ht to vote an to be vote u&on for the &ur&ose of electin) irectors an in re)ar of the business affairs of the cor&oration" The articles of incor&oration may in icate that the shares coul be &referre or common" III" LA/* 0?/E(SCIP The Phili&&ine Constitution man ates that the ownershi& of &rivate lan s is limite Fili&inos or Cor&orations in that at least F- &ercent of the outstan in) ca&ital is owne but Fili&ino Citi9ens" It is to be note that forei)ners are instea allowe to lease &rivate lan s only for a &erio of :D years" An with re)ar to con ominium an townhouses they can &urchase or own u& to ,- &ercent available units in a &ro&rietary bloc4"

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TAG 8E/EFITS For &roEects with minimum investment cost of US A +,D--"-- &er seat an minimum investment cost of D #illion US* that are re)istere with the 8oar of Investments there is an incentive of Income tax holi ay HITC7 for a &erio of six years for &ioneer &roEects an four H,7 years for non5&ioneer &roEects, rec4one from the start of commercial o&erations" After the Income tax holi ay &erio , the 8P0 shall be covere by the re)ular cor&orate income tax" %alue5a e tax5 Ex&ort of services by a 80I5re)istere 8P0 shall be 9ero5rate for %AT" Ex&ort sales &ertain to services ren ere by the 8P0 to forei)n clients that are not oin) business in the Phili&&ines an are &ai for in inwar ly remitte forei)n currency" The sale of service to local customers shall be subEect to .+ &ercent %AT" Purchases by a 80I5re)istere 8P0 enter&rises from %ATre)istere su&&liers or contractors shall be effectively 9ero rate without nee of &rior 8I( a&&roval"

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E#PL0I#E/T C0/T(ACT3 C0#PLIA/CE ?ITC TCE LA80( LA?S For 8P0s the followin) &rovisions of labor laws must be consi ere ! =/i)ht wor4erJ means any em&loye &erson whose wor4 re6uires &erformance of a substantial number of hours of ni)ht wor4 which excee s a s&ecifie limit" This limit shall be fixe by the Secretary of Labor after consultin) the wor4ersJ re&resentatives3labor or)ani9ations an em&loyers" =Art" .DD" Cealth Assessment" ' At their re6uest, wor4ers shall have the ri)ht to un er)o a health assessment without char)e an to receive a vice on how to re uce or avoi health &roblems associate with their wor4! =Ha7 8efore ta4in) u& an assi)nment as a ni)ht wor4erK =Hb7 At re)ular intervals urin) such an assi)nmentK an =Hc7 If they ex&erience health &roblems urin) such an assi)nment which are not cause by factors other than the &erformance of ni)ht wor4" =?ith the exce&tion of a fin in) of unfitness for ni)ht wor4, the fin in)s of such an assessments shall not be transmitte to others without the wor4ersJ consent an shall not be use to their etriment"> =Art" .DF" #an atory Facilities ' Suitable first5 ai facilities shall be ma e available for wor4ers &erformin) ni)ht wor4, inclu in) arran)ements where such wor4ers, where necessary, can be ta4en imme iately to a &lace

for a&&ro&riate treatment" The em&loyers are li4ewise re6uire to &rovi e safe an healthful wor4in) con itions an a e6uate or reasonable facilities such as slee&in) or restin) 6uarters in the establishment an trans&ortation from the wor4 &remises to the nearest &oint of their resi ence subEect to exce&tions an )ui elines to be &rovi e by the *0LE"> =Art" .D:" Transfer" ' /i)ht wor4ers who are certifie as unfit for ni)ht wor4, ue to health reasons, shall be transferre , whenever &racticable, to a similar Eob for which they are fit to wor4" =If such transfer to a similar Eob is not &racticable, these wor4ers shall be )rante the same benefits as other wor4ers who are unable to wor4, or to secure em&loyment urin) such &erio " =A ni)ht wor4er certifie as tem&orarily unfit for ni)ht wor4 shall be )iven the same &rotection a)ainst ismissal as other wor4ers who are &revente from wor4in) for reasons of health"> =Art" .D;" Com&ensation" ' The com&ensation for ni)ht wor4ers in the form of wor4in) time, &ay or similar benefits shall reco)ni9e the exce&tional nature of ni)ht wor4"> =Art" .F-" Social Services" ' A&&ro&riate social services shall be &rovi e for ni)ht wor4ers an , where necessary, for wor4ers &erformin) ni)ht wor4"> =Art" .F." /i)ht ?or4 Sche ules" ' 8efore intro ucin) wor4 sche ules re6uirin) the services of ni)ht wor4ers, the em&loyer shall consult the wor4ersJ re&resentatives3labor or)ani9ations concerne on the etails of such sche ules an the forms of or)ani9ation of ni)ht wor4 that are best a a&te to the establishment an its &ersonnel as well as on the occu&ational health measures an social services which are re6uire " In establishments em&loyin) ni)ht wor4ers, consultation shall ta4e &lace re)ularly"> %I" (EBIST(ATI0/ A/* LICE/SI/B (E@UI(E#E/TS #ust be re)istere with SSS, Pa)5ibi), Come *evelo&ment #utual Fun HC*#F7 an Phili&&ine Cealth Insurance Cor&" HPhilCealth7 before commencement of business o&eration" It must secure business &ermits, mayorJs &ermit an other relate license in the local )overnment where such cor&oration inten s to &ut u& the business +" The su&reme court is inconsistent on the followin) cases!

In Barcia v" 80I, the Court hel that the 8ataan Petrochemical Cor&oration oes not have the final say in the choice of location in &uttin) u& a &etrochemical &lant from 8ataan to 8atan)as" The Court therein eclare the 8ataan Petrochem Lone as the only &ossible site for the sai s&ecific economic activity" Cowever, in the subse6uent Barcia v" $B Summit case, the Court a&&arently ma e a turnaroun when it ismisse &etitionerJs o&&osition to the &uttin) u& a &etrochemical &lant site in 8atan)as, citin) as basis the sai earlier ecision which annulle the 80IJs a&&roval of the chan)e of &lant site" In that subse6uent case, the Court rule that the &etrochemical in ustry is not exclusive to 8ataan" 1" This treaty facilitates businesses not only in the country but it is with res&ect to other nei)hborin) countries" The 8ilateral Investment Treaty is an a)reement which establishes the terms an con itions for &rivate investment by nationals an com&anies of one state in another state" This inclu e for an e6uitable treatment, &rotection for ex&ro&riation, free transfer of means, an full &rotection an security"