Click icon to add picture

Investments
and
Incentives Law
Claudine S. Uanan
 Click icon to add picture

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
with its Implementing Rules
And
Regulations

2
Policy of the State
“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.”
(Sec. 2, par. 1, RA 8762)

03
 “ 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.”
(Sec. 2, par. 2, RA 8762)

Click icon to add picture

04
"Retail trade"
• “shall mean any act, occupation or calling
of habitually selling direct to the general
public merchandise, commodities or
good for consumption.

Click icon to add picture

05
 Marsman & Company Inc. v. First
Coconut Central Company Inc., GR
No. L- 39841, June 20, 1988.
For a sale to be considered as retail, the following
elements should concur:

(1) The seller should be habitually engaged in selling;

(2) The sale must be direct to the general public; and

(3) The object of the sale is limited to merchandise,

commodities or goods for consumption.

Click icon to add picture

6
 “but the restriction of this law shall not apply to the following:
Sec. 3, RA 8762, in connection with Rule I, Section 2 of its IRR
(a) Sales by manufacturer, processor, (c) Sales in restaurant operations by a
laborer, or worker, to the general public hotel owner or inn-keeper irrespective
the products manufactured, processed or of the amount capital: provided, that
products by him if his capital does not the restaurant is incidental to the
exceed One hundred thousand hotel business; and
pesos(100,000.00);

(b) Sales by a farmer or agriculturist (d) Sales which are limited only to
selling the products of his farm; products manufactured, processed or
assembled by a manufactured,
processed or assembled by a
manufacturer though a single outlet,
irrespective of capitalization.
Click icon to add picture

07
Sales to industrial and Sales to the government
commercial users or consumers and/or its agencies and
who use the products bought by government-owned and
them to render service to the controlled corporations.
general public and/or produce
or manufacture of goods
which are in turn sold by
them; or

8
 What are examples of sales that are not considered retail?

• The Commission has previously

• The sale of chemical reagents,
opined that the sale of or control,
equipment and instruments
automatic and revolving door, glass
directly to hospitals and
fittings and systems, room dividing
laboratories cannot systems and the like, to the real
be considered as retail trade because estate developer, which shall be used
it is not a sale of goods for by the same in the construction of
consumption to the general buildings and other infrastructure,
public as end-user. ( is not considered as retail trade. (
SEC-OGC Opinion No. 12-14, SEC-OGC Opinion No. 07-13, [July
[June 2, 2014])
Click icon to add picture
30, 2013])
9
 "High-end or luxury goods"

Luxury Goods
shall refer to shall include, but are
goods which are not limited to
not necessary for products such as;
life maintenance jewelry, branded or
designer clothing
and whose
and footwear,
demand is
wearing apparel,
generated in large leisure and
part by the higher sporting goods,
An annual list of foreign retailers selling high-end or luxury goods
income groups. shall be formulated and regularly updated by the Inter-Agency electronics and
Committee on Tariff and Related Matters of the National Economic
Development Authority (NEDA) Board, in coordination with the other personal
0
relevant organizations and the private sector concerned. (Sec. 1, effects. 10
Rule VI, IRR)
Who may engage in Retail Trade in the Philippines?

Click icon to add picture

0
11
“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.” (Sec. 4, RA 8762)

RULE II Section 1. Rights of Sec. 2. Documentary

RIGHTS OF FORMER Former Natural born
NATURAL BORN Filipinos
Any natural born Filipino citizen
FILIPINOS
who has lost his Philippine
TO ENGAGE IN citizenship and who has legal
capacity to enter into a contract
RETAIL TRADE under Philippine laws may be
allowed to engage in retail trade,
(IRR) provided that he resides in the
Click icon to add picture
Philippines.
Evidences
1. Copy of birth certificate;
1. If born abroad,
2. If lost or destruction of
record.
-Any document executed or issued
abroad must be authenticated by
the Philippine Embassy/Consulate
having jurisdiction over the place
of execution or issuance of the
document.
0
12
 May foreigners engage in retail trading in the country?
Yes, 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: (Sec. 5, RA 8762 & Sec. 1 of Rule III, Capitalization and Equity of
IRR )

CATEGORY A CATEGORY B

$2.5 Million $2.5 Million

If the paid-up capital is less than the peso equivalent
Retail trade is exclusive only for Filipino citizens
and corporations wholly owned by Filipino citizens.
NOTE: A minimum of Two hundred million US
dollar (US$200,000,000.00) net worth in its
parent corporation for Categories B and C. (Sec.
8, par. A, RA 8762)
If the minimum paid-up capital is equal to or
more than the peso equivalent but not more
than USD 7.5 M
the retail corporation may now be 100% 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.
 May foreigners engage in retail trading in the country?
Yes, 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: (Sec. 5, RA 8762 & Sec. 1 of Rule III, Capitalization and Equity of
IRR )

CATEGORY C CATEGORY D

$7.5 Million $250, 000

Enterprises with a paid-up capital of the Enterprises specializing in high-end or luxury
equivalent in Philippine Pesos of Seven products
million five hundred thousand US dollars a paid-up capital of the equivalent I Philippine
(US$7,500,000.00) or more may be wholly Pesos of Two hundred fifty thousand US dollars
owned by foreigners. (US$250,000.00) per store may be wholly
Click icon to add picture
owned by foreigners.
 Provided, further…
$830,000.00
But the investment, categories B and
C, for putting up a store should not be
less than US$830,000.00 each store.
Click icon to add picture
80%
If foreign ownership exceeds 80% of
equity, the corporation must offer a
minimum of 30% of their equity to the
public through any stock exchange in the
Philippines within 8 years from their
start of operations. (Sec. 7, RA 8762)
SEC,
BSP,
DTI
The foreign investor shall be required to
maintain in the Philippines the full amount
of the prescribed minimum capital
Foreign retail shall secure a certification from
the Bangko Sentral ng Pilipinas (BSP) and
the DTI, which will verify or confirm inward 15
remittance of the minimum required capital
investments.
RA 8762, Section 8. Qualification of Foreign Retailers

(a) A minimum of Two hundred million US dollar (c) Five (5)-year track record in retailing; and
(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)
(d) Only nationals from, or juridical entities
net worth in its parent corporation for category D; formed or incorporated in Countries which allow
the entry of Filipino retailers shall be allowed to
engage in retail trade in the Philippines.
(b) (5) retailing branches or franchises in operation
anywhere around the world unless such retailer has
at least one (1) store capitalized at a minimum of
Twenty-five million US dollars (US$25,000,000.00);

Click icon to add picture

16
 RULE IV
PREQUALIFICATION OF FOREIGN RETAILERS
it must possess all of the following qualifications:
Prequalification Application for Pre-
Requirements (Sec. 1, Qualification (Sec. 2,
IRR) IRR)

Issuance of Certificate of
Compliance with List of Qualified Foreign
Prequalification (Sec. 4, IRR) Retailers (Sec. 5, IRR)

Less Convenient
17
Sec. 3. Enterprises composed
of Two (2) or More
Stockholders/Partners.
If a single retailing
corporation/partnership to be formed and
organized under Philippine laws will be
owned by several foreign retailers and
foreign investors, an application for all of
the stockholders/partners for pre-
qualification must be filed with the BOI.

The foreign retailer-stockholder/

partner with the highest equity in said
company should satisfy the conditions
mentioned under Rule IV, Sections 1 and
18
2.
May foreigner invest in
existing retail stores?
Yes, Any foreign investor, whether or not
it is presently engaged in retail trade,
may be allowed to invest in existing retail
stores, publicly listed or not, subject to
the paid up capitalization  amounts
expressed in net worth, investment per
store and equity requirements under
Rule III hereof. (Sec. 1, Rule V, IRR)
An additional pre-qualification
requirement they may actually buy
shares from existing retail store. (Sec. 2,
Rule V, IRR)

19
 What is Reciprocity Rights?

Click icon to add picture

20
 APPLICATION

RULE VII
Rule IV RULE IX
APPLICATION FOR COMPLIANCE REQUIREMENTS
Pre-qualification REGISTRATION

• Section 1. Prequalification • Section 1. Filing of Application. Section 1. Maintenance of Prescribed

Requirements • Sec. 2. Certificate of Compliance Minimum Capital
• Sec. 2. Application for Pre- with Pre-qualification Failure to do so will subject the foreign
Qualification Requirements investor/s to penalties or restrictions on
• Sec. 3. Issuance of Certificate of future business/trading in the Ph
• Sec. 3. Enterprises composed of Two
(2) or More Stockholders/Partners Incorporation/Business Name Sec. 2. Public Offering of Shares of
• Sec. 4. BSP Registration of Stock.
• Sec. 4. Issuance of Certificate of Inward Remittance
Compliance with Prequalification. • Sec. Sec. 3. - Promotion of Locally
5. Establishment of
Manufactured Products
• Sec. 5. List of Qualified Foreign Branches
Retailers • Sec. 6. Reporting Requirements Sec. 4. Visitorial Powers.

21
 RULE VIII
PROHIBITED ACTIVITIES OF QUALIFIED FOREIGN RETAILERS

Section 1. Accredited Stores. Sec. 2. List of Prohibited Activities.

Qualified foreign retailers shall not be A detailed list of these prohibited
allowed to engage in certain retailing activities shall be formulated by the
activities outside their accredited DTI.
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

Click icon to add picture

22
 Penalties (Sec. 7, IRR)
Any person who shall be found guilty of
violation of any provision of this Act, or its
implementing rules and regulations, or other
terms and conditions of its registration, shall be
punished by imprisonment of not less than
six (6) years and one (1) day but not more
that eight (8) years, and a fine of not less
than One million pesos (P1,000,000.00) but
not more than 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 offender is a public officer of
employee, he shall, in addition to the penalty
prescribed herein, suffer dismissal and
permanent disqualification from public office.
23
Click icon to add picture