Assignment No.

1. Retail Trade Liberalization Law

REPUBLIC ACT NO. 8762

AN ACT LIBERALIZING THE RETAIL TRADE BUSINESS, REPEALING FOR THE PURPOSE REALING
FOR THE PURPOSE REPUBLIC ACT NO. 1180, AS AMENDED, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines of Representatives of the
Philippines in Congress assembled:

Section 1. Title – This Act shall be known as the "Retail Trade Liberalization Act of 2000."

Section 2. Declaration of Policy. – It is the policy of the State to promote consumer welfare in attracting
promoting and welcoming productive investment that will bring down price for the Filipino consumer, create
more jobs, promote tourism, assist small manufacturers, stimulate economic growth and enable Philippine
goods and services to become globally competitive through the liberalization of the retail trade sector.

Pursuant to this policy, the Philippine retail industry is hereby liberalized to encourage Filipino and
competitive retail trade sector in the interest of empower the Filipino consumer through lower prices, higher
quality goods, better services and wider choices.

Section 3. Definition. - As used in this Act.

(1) "Retail trade" shall mean any act, occupation or calling of habitually selling direct to the general
public merchandise, commodities or good for consumption, but the restriction of this law shall not
apply to the following:

(a) Sales by manufacturer, processor, laborer, or worker, to the general public the products
manufactured, processed or products by him if his capital dose not exceed One hundred
thousand pesos(100,000.00);

(b) Sales by a farmer or agriculturist selling the products of his farm;

(c) Sales in restaurant operations by a hotel owner or inn-keeper irrespective of the amount
capital: provided, that the restaurant is incidental to the hotel business; and

(d) Sales which are limited only to products manufactured, processed or assembled by a
manufactured, processed or assembled by a manufacturer though a single outlet,
irrespective of capitalization.

(2) "High-end or luxury goods" shall refer to goods which are not necessary for life maintenance and
whose demand is generated in large part by the higher income groups. Luxury goods shall include,
but are not limited to products such as; jewelry, branded or designer clothing and footwear, wearing
apparel, leisure and sporting goods, electronics and other personal effects.

Section 4. Treatment of Natural Born Citizen Who Has Lost His Philippine Citizenship. - A natural-born
citizen of the Philippines who resides in the Philippines shall be granted the same rights as Filipino citizens
for purposes of this Act.

Section 5. Foreign Equity Participation. - Foreign-owned partnerships, associations and corporation formed
and organized under the laws of the Philippines may, upon registration with the Securities and Exchange
Commission (SEC) and the Department of Trade and Industry (DTI), or in case of foreign owned single
proprietorships, with the DTI, Engage or invest in the retail trade business, subject to the following
categories.
 Category A – Enterprises with paid-up capital of the equivalent in Philippine Peso of the
than Two million five hundred thousand US dollars (US$2,500,000.00) shall be reserved
exclusively for Filipino citizens and corporations wholly owned by Filipino citizens.

Category B – Enterprises with a minimum paid-up capital of the equivalent in Philippine
Pesos of two million five hundred thousand US dollar (US$2,500,000.00) but less than
Seven million five hundred thousand US dollars (US$7,500,000.00) may be wholly owned by
foreigners except for the first two (2) years after the effectivity of this Act wherein foreign
participation shall be limited to not more than sixty percent (60%) of total equity.

Category C – Enterprises with a paid-up capital of the equivalent in Philippine Pesos of
Seven million five hundred thousand US dollars (US$7,500,000.00), or more may be wholly
owned by foreigners: Provided, however, That in no case shall the investments for
establishing a store in vestments for establishing a store in Categories B and C be less than
the equivalent in Philippine pesos of Eight hundred thirty thousand US dollars
(US$830,000.00).

Category D – Enterprises specializing in high-end or luxury products with a paid-up capital
of the equivalent in Philippine Pesos of Two hundred fifty thousand US dollars
(US$250,000.00) per store may be wholly owned by foreigners.

The foreign investor shall be required to maintain in the Philippines the full amount of the prescribed
minimum capital unless the foreign investor has notified the SEC and the DTI of its intention to repatriate its
capital and cease operations in the Philippines. The actual use in Philippine operations of the inwardly
remitted minimum capital requirement shall be monitored by the SEC.

Failure to maintain the full amount of the prescribed minimum capital prior to notification of the SEC and the
DTI, shall subject the foreign investor to penalties or restrictions on any future trading activities/business in
the Philippines.

Foreign retail stores shall secure a certification from the Bangko Sentral ng Pilipinas (BSP) and the DTI,
which will verify or confirm inward remittance of the minimum required capital investments.

Section 6. Foreign Investors Acquiring Shares of Stock of Local Retailers. - Foreign investors acquiring
shares from existing retail stores whether or not publicly listed whose net worth is in the excess of the peso
equivalent of Two million five hundred thousand US dollars (US$2,500,000.00) may purchase only up to a
maximum of sixty percent (60%) of the equity thereof within the first two (2) years from the effectivity of this
Act and thereafter, they may acquire the remaining percentage consistent with the allowable foreign
participation as herein provided.

Section 7. Public Offering of Shares of Stock. – All retail trade enterprises under Categories B and C in
which foreign ownership exceeds eighty percent (80%) of equity shall offer a minimum of thirty percent
(30%) of their equity to the public through any stock exchange in the Philippine within eight (8) years from
their start of operations.

Section 8. Qualification of Foreign Retailers. - No foreign retailer shall be allowed to engage in retail trade
in the Philippine unless all the following qualifications are met:

(a) A minimum of Two hundred million US dollar (US$200,000,000.00) net worth in its parent
corporation for Categories B and C, and Fifty million US dollar (US$50,000,000.00) net worth in its
parent corporation for category D;

(b) (5) retailing branches or franchises in operation anywhere around the word unless such retailer
has at least one (1) store capitalized at a minimum of Twenty-five million US dollars
(US$25,000,000.00);

(c) Five (5)-year track record in retailing; and

 (d) Only nationals from, or juridical entities formed or incorporated in Countries which allow the entry
of Filipino retailers shall be allowed to engage in retail trade in the Philippines.

The DTI is hereby authorized to pre-qualify all foreign retailers, subject to the provisions of this Act, before
they are allowed to conduct business in the Philippine.

The DTI shall keep a record of Qualified foreign retailers who may, upon compliance with law, establish
retail stores in the Philippine. It shall ensure that parent retail trading company of the foreign investor
complies with the qualifications on capitalization and track record prescribed in this section

The Inter- Agency Committee on Tariff and Related Matters Authority (NEDA) Board shall formulate and
regularly update a list of foreign retailers of high-end or luxury goods and render an annual report on the
same to Congress.

Section 9. Promotion of Locally Manufactured Products. - For ten (10) year after the effectivity of this Act,
at least thirty percent (30%) of the aggregate cost of the stock inventory of foreign retailers falling under
Categories B and C and ten percent (10%) for category D shall be made in the Philippines.

Section 10. Prohibited Activities of Qualified Foreign Retailers. – Qualified foreign retailers shall not be
allowed to engage in certain retailing activities outside their accredited stores through the use of mobile or
rolling stores or carts, the use of sales representatives, door-to-door selling, restaurants and sari-sari stores
and such other similar retailing activities: Provided, That a detailed list of prohibited activities shall hereafter
be formulated by the DTI

Section 11. Implementing Agency: Rule and Regulations. – The monitoring and regulation of foreign sole
proprietorships, partnerships, associations or corporations allowed to engage in retail trade shall be the
responsibility of the DTI. This shall include resolution of conflicts.

The DTI, in coordination with the SEC, the NEDA and the BSP, shall formulate and issue the implementing
rules and regulation necessary to implement this Act within ninety (90) days after its approval.

Section 12. Penalty Clause. - Any person who shall be Found guilty of Violation of any provision of this Act
shall be punished by imprisonment of not less that six (2) years and one (1) day but not more than eight (8)
years, and a fine of not less than One million pesos

(P1,000,000.00) but not more that Twenty million pesos (P20,000,000.00) In the case of associations,
partnerships or corporations, the penalty shall be imposed upon its partners, president, directors, manager
and other officers responsible for the violation. If the offender is not a citizen of the Philippines he shall be
deported immediately after service of sentence. If the Filipino of fender is a public officer or employee, he
shall, in addition to the penalty prescribed herein, suffer dismissal and permanent disqualification from
public office

Section 13. Repealing Clause. – Republic Act No. 1180, as amended, is hereby repealed. Republic Act
No. 3018, as amended, and all other laws, executive orders, rules and regulations or parts thereof
inconsistent with this Act are repealed or modified accordingly.

Section 14. Separability Clause. – If any provisions of this Act shall be held unconstitutional, the other
provisions not otherwise affected thereby shall remain in force and effect.

Section 15. Effectivity. – This act shall take effect fifteen (150 days after its approval and publication in at
least two (2) newspapers of general circulation in the Philippines.

Approved: March 07, 2000

(SGD.) JOSEPH E. ESTRADA
President of the Philippines
2. Foreign Investments Act with IRR

Republic Act No. 7042             June 13, 1991

AN ACT TO PROMOTE FOREIGN INVESTMENTS, PRESCRIBE THE PROCEDURES FOR

REGISTERING ENTERPRISES DOING BUSINESS IN THE PHILIPPINES, AND FOR OTHER
PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Title. - This Act shall be known as the, "Foreign Investments Act of 1991".

Section 2. Declaration of Policy. - It is the policy of the State to attract, promote and welcome productive
investments from foreign individuals, partnerships, corporations, and governments, including their political
subdivisions, in activities which significantly contribute to national industrialization and socioeconomic
development to the extent that foreign investment is allowed in such activity by the Constitution and
relevant laws. Foreign investments shall be encouraged in enterprises that significantly expand livelihood
and employment opportunities for Filipinos; enhance economic value of farm products; promote the welfare
of Filipino consumers; expand the scope, quality and volume of exports and their access to foreign
markets; and/or transfer relevant technologies in agriculture, industry and support services. Foreign
investments shall be welcome as a supplement to Filipino capital and technology in those enterprises
serving mainly the domestic market.

As a general rule, there are no restrictions on extent of foreign ownership of export enterprises. In domestic
market enterprises, foreigners can invest as much as one hundred percent (100%) equity except in areas
included in the negative list. Foreign owned firms catering mainly to the domestic market shall be
encouraged to undertake measures that will gradually increase Filipino participation in their businesses by
taking in Filipino partners, electing Filipinos to the board of directors, implementing transfer of technology to
Filipinos, generating more employment for the economy and enhancing skills of Filipino workers.

Section 3. Definitions. - As used in this Act:

a) The term "Philippine national" shall mean a citizen of the Philippines or a domestic partnership or
association wholly owned by citizens of the Philippines; or a corporation organized under the laws of
the Philippines of which at least sixty percent (60%) of the capital stock outstanding and entitled to
vote is owned and held by citizens of the Philippines; or a trustee of funds for pension or other
employee retirement or separation benefits, where the trustee is a Philippine national and at least
sixty (60%) of the fund will accrue to the benefit of the Philippine nationals: Provided, That where a
corporation and its non-Filipino stockholders own stocks in a Securities and Exchange Commission
(SEC) registered enterprise, at least sixty percent (60%) of the capital stocks outstanding and
entitled to vote of both corporations must be owned and held by citizens of the Philippines and at
least sixty percent (60%) of the members of the Board of Directors of both corporations must be
citizens of the Philippines, in order that the corporations shall be considered a Philippine national;

b) The term "investment" shall mean equity participation in any enterprise organized or existing
under the laws of the Philippines;

c) The term "foreign investment" shall mean as equity investment made by a non-Philippine national
in the form of foreign exchange and/or other assets actually transferred to the Philippines and duly
registered with the Central Bank which shall assess and appraise the value of such assets other
than foreign exchange;
 d) The praise "doing business" shall include soliciting orders, service contracts, opening offices,
whether called "liaison" offices or branches; appointing representatives or distributors domiciled in
the Philippines or who in any calendar year stay in the country for a period or periods totalling one
hundred eighty (180) days or more; participating in the management, supervision or control of any
domestic business, firm, entity or corporation in the Philippines; and any other act or acts that imply
a continuity of commercial dealings or arrangements, and contemplate to that extent the
performance of acts or works, or the exercise of some of the functions normally incident to, and in
progressive prosecution of, commercial gain or of the purpose and object of the business
organization: Provided, however, That the phrase "doing business: shall not be deemed to include
mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do
business, and/or the exercise of rights as such investor; nor having a nominee director or officer to
represent its interests in such corporation; nor appointing a representative or distributor domiciled in
the Philippines which transacts business in its own name and for its own account;

e) The term "export enterprise" shall mean an enterprise which produces goods for sale, or renders
services to the domestic market entirely or if exporting a portion of its output fails to consistently
export at least sixty percent (60%) thereof; and

g) The term "Foreign Investments Negative List" or "Negative List" shall mean a list of areas of
economic activity whose foreign ownership is limited to a maximum of forty ownership is limited to a
maximum of forty percent (40%) of the equity capital of the enterprise engaged therein.

Section 4. Scope. - This Act shall not apply to banking and other financial institutions which are governed
and regulated by the General Banking Act and other laws under the supervision of the Central Bank.

Section 5. Registration of Investments of Non-Philippine Nationals. - Without need of prior approval, a

non-Philippine national, as that term is defined in Section 3 a), and not otherwise disqualified by law may
upon registration with the Securities and Exchange Commission (SEC), or with the Bureau of Trade
Regulation and Consumer Protection (BTRCP) of the Department of Trade and Industry in the case of
single proprietorships, do business as defined in Section 3 (d) of this Act or invest in a domestic enterprise
up to one hundred percent (100%) of its capital, unless participation of non-Philippine nationals in the
enterprise is prohibited or limited to a smaller percentage by existing law and/or limited to a smaller
percentage by existing law and/or under the provisions of this Act. The SEC or BTRCP, as the case may
be, shall not impose any limitations on the extent of foreign ownership in an enterprise additional to those
provided in this Act: Provided, however, That any enterprise seeking to avail of incentives under the
Omnibus Investment Code of 1987 must apply for registration with the Board of Investments (BOI), which
shall process such application for registration in accordance with the criteria for evaluation prescribed in
said Code: Provided, finally, That a non-Philippine national intending to engage in the same line of
business as an existing joint venture in his application for registration with SEC. During the transitory period
as provided in Section 15 hereof, SEC shall disallow registration of the applying non-Philippine national if
the existing joint venture enterprise, particularly the Filipino partners therein, can reasonably prove they are
capable to make the investment needed for they are competing applicant. Upon effectivity of this Act, SEC
shall effect registration of any enterprise applying under this Act within fifteen (15) days upon submission of
completed requirements.

Section 6. Foreign Investments in Export Enterprises. - Foreign investment in export enterprises whose
products and services do not fall within Lists A and B of the Foreign Investment Negative List provided
under Section 8 hereof is allowed up to one hundred percent (100%) ownership.

Export enterprises which are non-Philippine nationals shall register with BOI and submit the reports that
may be required to ensure continuing compliance of the export enterprise with its export requirement. BOI
shall advise SEC or BTRCP, as the case may be, of any export enterprise that fails to meet the export ratio
requirement. The SEC or BTRCP shall thereupon order the non-complying export enterprise to reduce its
sales to the domestic market to not more than forty percent (40%) of its total production; failure to comply
with such SEC or BTRCP order, without justifiable reason, shall subject the enterprise to cancellation of
SEC or BTRCP registration, and/or the penalties provided in Section 14 hereof.

Section 7. Foreign Investments in Domestic Market Enterprises. - Non-Philippine nationals may own
up to one hundred percent (100%) of domestic market enterprises unless foreign ownership therein is
prohibited or limited by existing law or the Foreign Investment Negative List under Section 8 hereof.
A domestic market enterprise may change its status to export enterprise if over a three (3) year period it
consistently exports in each year thereof sixty per cent (60%) or more of its output.

Section 8. List of Investment Areas Reserved to Philippine Nationals (Foreign Investment Negative

List). - The Foreign Investment Negative List shall have three (3) component lists: A, B, and C:

a) List A shall enumerate the areas of activities reserved to Philippine nationals by mandate of the
Constitution and specific laws.

b) List B shall contain the areas of activities and enterprises pursuant to law:

1) Which are defense-related activities, requiring prior clearance and authorization from
Department of National Defense (DND) to engage in such activity, such as the manufacture,
repair, storage and/or distribution of firearms, ammunition, lethal weapons, military
ordnance, explosives, pyrotechnics and similar materials; unless such manufacturing or
repair activity is specifically authorized, with a substantial export component, to a non-
Philippine national by the Secretary of National Defense; or

2) Which have implications on public health and morals, such as the manufacture and
distribution of dangerous drugs; all forms of gambling; nightclubs, bars, beerhouses, dance
halls; sauna and steambath houses and massage clinics.

Small and medium-sized domestic market enterprises with paid-in equity capital less than
the equivalent of five hundred thousand US dollars (US$500,000) are reserved to Philippine
nationals, unless they involve advanced technology as determined by the Department of
Science and Technology. Export enterprises which utilize raw materials from depleting
natural resources, with paid-in equity capital of less than the equivalent of five hundred
thousand US dollars (US$500,000) are likewise reserved to Philippine nationals.

Amendments to List B may be made upon recommendation of the Secretary of National Defense, or
the Secretary of Health, or the Secretary of Education, Culture and Sports, indorsed by the NEDA,
or upon recommendation motu propio of NEDA, approved by the President, and promulgated by
Presidential Proclamation.

c) List C shall contain the areas of investment in which existing enterprises already serve
adequately the needs of the economy and the consumer and do not require further foreign
investments, as determined by NEDA applying the criteria provided in Section 9 of this Act,
approved by the President and promulgated in a Presidential Proclamation.

The Transitory Foreign Investment Negative List established in Sec. 15 hereof shall be replaced at
the end of the transitory period by the first Regular Negative List to the formulated and
recommended by the NEDA, following the process and criteria provided in Section 8 and 9 of this
Act. The first Regular Negative List shall be published not later than sixty (60) days before the end
of the transitory period provided in said section, and shall become immediately effective at the end
of the transitory period. Subsequent Foreign Investment Negative Lists shall become effective
fifteen (15) days after publication in two (2) newspapers of general circulation in the Philippines:
Provided, however, That each Foreign Investment Negative List shall be prospective in operation
and shall in no way affect foreign investments existing on the date of its publication.

Amendments to List B and C after promulgation and publication of the first Regular Foreign
Investment Negative List at the end of the transitory period shall not be made more often than once
every two (2) years.

Section 9. Determination of Areas of Investment for Inclusion in List C of the Foreign Investment
Negative List. - Upon petition by a Philippine national engage therein, an area of investment may be
recommended by NEDA for inclusion in List C of the Foreign Investment Negative List upon determining
that it complies with all the following criteria:

a) The industry is controlled by firms owned at least sixty percent (60%) by Filipinos;
 b) Industry capacity is ample to meet domestic demand;

c) Sufficient competition exists within the industry;

d) Industry products comply with Philippine standards of health and safety or, in the absence of
such, with international standards, and are reasonably competitive in quality with similar products in
the same price range imported into the country;

e) Quantitative restrictions are not applied on imports of directly competing products;

f) The leading firms of the industry substantially comply with environmental standards; and

g) The prices of industry products are reasonable.

The petition shall be subjected to a public hearing at which affected parties will have the opportunity to
show whether the petitioner industry adequately serves the economy and the consumer, in general, and
meets the above stated criteria in particular. NEDA may delegate evaluation of the petition and conduct of
the public hearing to any government agency having cognizance of the petitioner industry. The delegated
agency shall make its evaluation report and recommendations to NEDA which retains the right and sole
responsibility to determine whether to recommend to the President to promulgate the area of investment in
List C of the Negative List. An industry or area of investment included in List C of the Negative List by
Presidential Proclamation shall remain in the said List C for two (2) years, without prejudice to re-inclusion
upon new petition, and due process.

Section 10. Strategic Industries. - Within eighteen (18) months after the effectivity of this Act, the NEDA
Board shall formulate and publish a list of industries strategic to the development of the economy. The list
shall specify, as a matter of policy and not as a legal requirement, the desired equity participation by
Government and/or private Filipino investors in each strategic industry. Said list of strategic industries, as
well as the corresponding desired equity participation of government and/or private Filipino investors, may
be amended by NEDA to reflect changes in economic needs and policy directions of Government. The
amended list of strategic industries shall be published concurrently with publication of the Foreign
Investment Negative List.

The term "strategic industries" shall mean industries that are characterized by all of the following:

a) Crucial to the accelerated industrialization of the country,

b) Require massive capital investments to achieve economies of scale for efficient operations;

c) Require highly specialized or advanced technology which necessitates technology transfer and
proven production techniques in operations;

d) Characterized by strong backward and forward linkages with most industries existing in the
country, and

e) Generate substantial foreign exchange savings through import substitution and collateral foreign
exchange earnings through export of part of the output that will result with the establishment,
expansion or development of the industry.

Section 11. Compliance with Environmental Standards. - All industrial enterprises regardless of

nationality of ownership shall comply with existing rules and regulations to protect and conserve the
environment and meet applicable environmental standards.

Section 12. Consistent Government Action. - No agency, instrumentality or political subdivision of the

Government shall take any action on conflict with or which will nullify the provisions of this Act, or any
certificate or authority granted hereunder.

Section 13. Implementing Rules and Regulations. - NEDA, in consultation with BOI, SEC and other
government agencies concerned, shall issue the rules and regulations to implement this Act within one
hundred and twenty (120) days after its effectivity. A copy of such rules and regulations shall be furnished
the Congress of the Republic of the Philippines.

Section 14. Administrative Sanctions. - A person who violates any provision of this Act or of the terms
and conditions of registration or of the rules and regulations issued pursuant thereto, or aids or abets in any
manner any violation shall be subject to a fine not exceeding One hundred thousand pesos (P100,000).

If the offense is committed by a juridical entity, it shall be subject to a fine in an amount not exceeding ½ of
1% of total paid-in capital but not more than Five million pesos (P5,000,000). The president and/or officials
responsible therefor shall also be subject to a fine not exceeding Two hundred thousand pesos (P200,000).

In addition to the foregoing, any person, firm or juridical entity involved shall be subject to forfeiture of all
benefits granted under this Act.

SEC shall have the power to impose administrative sanctions as provided herein for any violation of this Act
or its implementing rules and regulations.

Section 15. Transitory Provisions. - Prior to effectivity of the implementing rules and regulations of this
Act, the provisions of Book II of Executive Order 226 and its implementing rules and regulations shall
remain in force.

During the initial transitory period of thirty-six (36) months after issuance of the Rules and Regulations to
implement this Act, the Transitory Foreign Investment Negative List shall consist of the following:

A. List A:

1. All areas of investment in which foreign ownership is limited by mandate of Constitution and
specific laws.

B. List B:

1. Manufacture, repair, storage and/or distribution of firearms, ammunitions, lethal weapons, military
ordinance, explosives, pyrotechnics and similar materials required by law to be licensed by and under the
continuing regulation of the Department of National Defense; unless such manufacturing or repair activity is
specifically authorized with a substantial export component, to a non-Philippine national by the Secretary of
National Defense;

2. Manufacture and distribution of dangerous drugs; all forms of gambling; nightclubs, bars,
beerhouses, dance halls; sauna and steam bathhouses, massage clinic and other like activities regulated
by law because of risks they may pose to public health and morals;

3. Small and medium-size domestic market enterprises with paid-in equity capital or less than the
equivalent of US$500,000, unless they involve advanced technology as determined by the Department of
Science and Technology, and

4. Export enterprises which utilize raw materials from depleting natural resources, and with paid-in
equity capital of less than the equivalent US$500,000.

C. List C:

1. Import and wholesale activities not integrated with production or manufacture of goods;

2. Services requiring a license or specific authorization, and subject to continuing regulations by

national government agencies other than BOI and SEC which at the time of effectivity of this Act are
restricted to Philippine nationals by existing administrative regulations and practice of the regulatory
agencies concerned: Provided, That after effectivity of this Act, no other services shall be additionally
subjected to such restrictions on nationality of ownership by the corresponding regulatory agencies, and
such restrictions once removed shall not be reimposed; and
 3. Enterprises owned in the majority by a foreign licensor and/or its affiliates for the assembly,
processing or manufacture of goods for the domestic market which are being produced by a Philippine
national as of the date of effectivity of this Act under a technology, know-how and/or brand name license
from such licensor during the term of the license agreement: Provided, That, the license is duly registered
with the Central Bank and/or the Technology Transfer Board and is operatively in force as of the date of
effectivity of this Act.

NEDA shall make the enumeration as appropriate of the areas of the investment covered in this Transitory
Foreign Investment Negative List and publish the Negative List in full at the same time as, or prior to, the
publication of the rules and regulations to implement this Act.

The areas of investment contained in List C above shall be reserved to Philippine nationals only during the
transitory period. The inclusion of any of them in the regular Negative List will require determination by
NEDA after due public hearings that such inclusion is warranted under the criteria set forth in Section 8 and
9 hereof.

Section 16. Repealing Clause. - Articles forty-four (44) to fifty-six (56) of Book II of Executive Order No.
226 are hereby repealed.

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

Section 17. Separability. - If any part or section of this Act is declared unconstitutional for any reason
whatsoever, such declaration shall not in any way affect the other parts or sections of this Act.

Section 18. Effectivity. - This Act shall take effect fifteen (15) days after approval and publication in two
(2) newspaper of general circulation in the Philippines.

3. Anti-Dummy Law

PRESIDENTIAL DECREE No. 715 May 28, 1975

AMENDING COMMONWEALTH ACT NO. 108, AS AMENDED, OTHERWISE KNOWN AS "THE ANTI-
DUMMY LAW"

WHEREAS, there have been conflicting interpretations as to whether Section 2-A of Commonwealth Act No.
108, as amended, otherwise known as the Anti-Dummy Law, allows aliens to become members of the board of
directors or governing body of corporations or associations engaging in partially nationalized activities;

WHEREAS, it is fair and equitable and in line with the constitutional policy expressed in Article XIV, Section 5 of
the Constitution, that foreign investors be allowed limited representation in the governing board or body of
corporations or associations in proportion to their allowable participation in the equity of the said entities;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested
in me by the Constitution, do hereby order and decree:

Section 1. Section 2-A of Commonwealth Act No. 108, as amended, is hereby further amended to read as
follows:

"Section 2-A. Any person, corporation, or association, which, having in its name or under its control, a right,
franchise, privilege, property or business, the exercise or enjoyment of which is expressly reserved by the
Constitution or the laws to citizens of the Philippines or of any other specific country, or to corporations or
associations at least sixty per centum of the capital of which is owned by such citizens, permits or allows the
use, exploitation or enjoyment thereof by a person, corporation or association not possessing the requisites
prescribed by the Constitution or the laws of the Philippines; or leases, or in any other way, transfers or conveys
said right, franchise, privilege, property or business to a person, corporation or association not otherwise
qualified under the Constitution, or the provisions of the existing laws; or in any manner permits or allows any
person, not possessing the qualifications required by the Constitution, or existing laws to acquire, use, exploit or
enjoy a right, franchise, privilege, property or business, the exercise and enjoyment of which are expressly
reserved by the Constitution or existing laws to citizens of the Philippines or of any other specific country, to
intervene in the management, operation, administration or control thereof, whether as an officer, employee or
laborer therein with or without remuneration except technical personnel whose employment may be specifically
authorized by the Secretary of Justice, and any person who knowingly aids, assists, or abets in the planning,
consummation or perpetration of any of the acts herein above enumerated shall be punished by imprisonment
for not less than five nor more than fifteen years and by a fine of not less than the value of the right, franchise or
privilege enjoyed or acquired in violation of the provisions hereof but in no case less than five thousand pesos:
Provided, however, that the president, managers or persons in violating the provisions of this section shall be
criminally liable in lieu thereof: Provided, further, That any person, corporation or association shall, in addition to
the penalty imposed herein, forfeit such right, franchise, privilege and the property provisions of this Act; and
Provided, finally, That the election of aliens as members of the board of directors or governing body of
corporations or associations engaging in partially nationalized activities shall be allowed in proportion to their
allowable participation or share in the capital of such entities.

Section 2. This Decree shall take effect immediately.

DONE in the City of Manila, this 28th day of May, in the year of Our Lord, nineteen hundred and seventy-five.

4. Foreign Investment Negative List

WHAT IS THE FOREIGN NEGATIVE LIST

As stated earlier, the Foreign Investment Negative List is a list which outline the scope and limitations of
foreign ownership in businesses is specific industries. The list is divided into LIST A: FOREIGN
OWNERSHIP IS LIMITED BY MANDATE OF THE CONSTITUTION AND SPECIFIC LAWS and LIST B:
FOREIGN OWNERSHIP IS LIMITED FOR REASONS OF SECURITY, DEFENSE, RISK TO HEALTH,
AND MORALS AND PROTECTION OF SMALL AND MEDIUM SCALE ENTERPRISES.

THE 11th FOREIGN INVESTMENT NEGATIVE LIST

LIST A: FOREIGN OWNERSHIP IS LIMITED BY MANDATE OF THE

CONSTITUTION AND SPECIFIC LAWS

NO FOREIGN EQUITY
1. Mass media, except recording and internet business
2. Practice of professions, including radiologic and x-ray technology, law, criminology, and marine deck
officers and marine engine officers.
A. subject to the Annex on Professions indicating professions where foreigners are allowed to practice
in the Philippines subject to reciprocity and where corporate practice is allowed
B. foreigners may teach at higher education levels if subject being taught is not a professional subject
(included in a government board or bar examination)4.
3. Retail trade enterprises with paid-up capital of less than US$2.5 million
4. Cooperatives
5. Organization and operation of private detective, watchmen or security guards agencies
6. Small-scale mining
7. Utilization of marine resources in archipelagic waters, territorial sea, and exclusive economic zone as
well as small-scale utilization of natural resources in rivers, lakes, bays and lagoons
8. Ownership, operation and management of cockpits
9. Manufacture, repair, stockpiling and/or distribution of nuclear weapons
10. Manufacture, repair, stockpiling and/or distribution of biological, chemical and radiological weapons and
anti-personnel mines
11. Manufacture of firecrackers and other pyrotechnic devices

UP TO TWENTY-FIVE PERCENT (25%) FOREIGN EQUITY

12. Private recruitment, whether for local or overseas employment
13. Contracts for the construction of defense-related structures

UP TO THIRTY PERCENT (30%) FOREIGN EQUITY\ UP TO 30% FOREIGN EQUITY

14. Advertising

UP TO 40% FOREIGN EQUITY

15. Subject to applicable regulatory frameworks, contracts for the construction and repair of locally-funded
public works except:
A. Infrastructure/development projects covered in Republic Act No. 7718
B. Projects which are foreign-funded or assisted and required to undergo international competitive
bidding

16. Exploration, development and utilization of natural resources

17. Ownership of private lands

18. Operation of public utilities,except power generation and the supply of electricity to the contestable
market and similar businesses or services not covered by the definition of public utilities

19. Educational institutions other than those established by religious groups and mission boards, for foreign
diplomatic personnel and their dependents and other foreign temporary residents, or for short-term high-
level skills development that do not form part of the formal education system as defined in Section 20 of
Batas Pambansa No. 232 (1982)

20. Culture, production, milling, processing, trading except retailing, of rice and corn and acquiring, by
barter, purchase or otherwise, rice and corn and the by-products thereof
21. Contracts for the supply of materials, goods and commodities to government-owned or controlled
corporation, company, agency or municipal corporation
22. Operation of deep sea commercial fishing vessels
23. Ownership of condominium units
24. Private radio communications network

LIST B: FOREIGN OWNERSHIP IS LIMITED FOR REASONS OF SECURITY, DEFENSE, RISK TO

HEALTH AND MORALS AND PROTECTION OF SMALL AND MEDIUM SCALE ENTERPRISES

UP TO FORTY PERCENT (40 %) FOREIGN EQUITY

1. Manufacture, repair, storage, and/or distribution of products and/or ingredients requiring Philippine
National Police (PNP) clearance:
A. Firearms (handguns to shotguns), parts of firearms and ammunition therefor, instruments or
implements used or intended to be used in the manufacture of firearms;
B. Gunpowder;
C. Dynamite;
D. Blasting supplies;
E. Ingredients used in making explosives:
i. Chlorates of potassium and sodium;
ii. Nitrates of ammonium, potassium, sodium barium, copper (11), lead (11), calcium and cuprite;
iii. Nitric acid;
iv. Nitrocellulose;
v. Perchlorates of ammonium, potassium and sodium;
vi. Dinitrocellulose;
vii. Glycerol;
viii. Amorphous phosphorus;
ix. Hydrogen peroxide;
x. Strontium nitrate powder;
xi. Toluene; and
xii. Telescopic sights, sniper scope and other similar devices.
However, the manufacture or repair of these items may be authorized by the Chief of the PNP to non-
Philippine nationals; Provided that a substantial percentage of output, as determined by the said agency, is
exported. Provided further that the extent of foreign equity ownership allowed shall be specified in the said
authority/clearance.

1. Manufacture, repair, storage and/or distribution of products requiring Department of National Defense
(DND) clearance:
A. Guns and ammunition for warfare;
B. Military ordnance and parts thereof (e.g., torpedoes, depth charges, bombs, grenades, missiles);
 C. Gunnery, bombing and fire control systems and components;
D. Guided missiles/missile systems and components;
E. Tactical aircraft (fixed and rotary-winged), parts and components thereof;
F. Space vehicles and component systems;
G. Combat vessels (air, land and naval) and auxiliaries;
H. Weapons repair and maintenance equipment;
I. Military communications equipment;
J. Night vision equipment;
K. Stimulated coherent radiation devices, components and accessories;
L. Armament training devices; and
M. Others as may be determined by the Secretary of the DND.
However, the manufacture or repair of these items may be authorized by the Secretary of National Defense
to non-Philippine nationals; Provided that a substantial percentage of output, as determined by the said
agency, is exported. Provided further that the extent of foreign equity ownership allowed shall be specified
in the said authority/clearance

1. Manufacture and distribution of dangerous drugs

2. Sauna and steam bathhouses, massage clinics and other like activities regulated by law because of
risks posed to public health and morals, except wellness centers
3. All forms of gambling except those covered by investment agreements with PAGCOR
4. Domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000
5. Domestic market enterprises which involve advanced technology or employ at least fifty (50) direct
employees with paid-in equity capital of less than the equivalent of US$100,00