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REPUBLIC ACT NO. 7042 d) the phrase “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
(As amended by RA 8179) calendar year stay in the country for a period or periods totaling one hundred
eighty (180) days or more; participating in the management, supervision or
AN ACT TO PROMOTE FOREIGN INVESTMENTS, PRESCRIBE THE control of any domestic business, firm, entity or corporation in the Philippines;
PROCEDURES FOR REGISTERING ENTERPRISES DOING BUSINESS IN and any other act or acts that imply a continuity of commercial dealings or
THE PHILIPPINES, AND FOR OTHER PURPOSES 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
BE IT ENACTED BY THE SENATE AND HOUSE OF REPRESENTATIVES business organization: Provided, however,  That the phrase “doing business”
OF THE PHILIPPINES IN CONGRESS ASSEMBLED: 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
SECTION 1. Title. –  This Act shall be known as the “Foreign Investments Act
represent its interests in such corporation; nor appointing a representative or
of 1991”.
distributor domiciled in the Philippines which transacts business in its own
name and for its own account;
SEC. 2. Declaration of Policy. –  It is the policy of the State to attract, promote
and welcome productive investments from foreign individuals, partnerships,
e) the term “export enterprise” shall mean an enterprise wherein a
corporations, and governments, including their political subdivisions, in
manufacturer, processor or service (including tourism) enterprise exports sixty
activities which significantly contribute to national industrialization and socio-
percent (60%) or more of its output, or wherein a trader purchases products
economic development to the extent that foreign investment is allowed in such
domestically and exports sixty percent (60%) or more of such purchases;
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 f) the term “domestic market enterprise” shall mean an enterprise which
the welfare of Filipino consumers; expand the scope, quality and volume of products goods for sale, or renders services to the domestic market entirely or
exports and their access to foreign markets; and/or transfer relevant if exporting a portion of its output fails to consistency export at least sixty
technologies in agriculture, industry and support services. Foreign investments percent (60%) thereof; and
shall be welcome as a supplement to Filipino capital and technology in those
enterprises serving mainly the domestic market.
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
As a general rule, there are no restrictions on extent of foreign ownership of maximum of forty percent (40%) of the equity capital of the enterprises
export enterprises. In domestic market enterprises, foreigners can invest as engaged therein.
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 SEC. 4. Scope. –  This Act shall not apply to banking and other financial
participation in their businesses by taking in Filipino partners, electing Filipinos institutions which are governed and regulated by the General Banking Act and
to the board of directors, implementing transfer of technology to Filipinos, other laws under the supervision of the Central Bank.
generating more employment for the economy and enhancing skills of Filipino
workers. SEC. 5. Registration of Investments of Non-Philippine Nationals. –  Without
need of prior approval, a non-Philippine national, as that term is defined in
SEC. 3. Definitions. –  As used in this Act: 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
a) the term “Philippine National”  shall mean a citizen of the Philippines or a Industry in the case of single proprietorships, do business as defined in Section
domestic partnership or association wholly owned by citizens of the 3 d) of this Act or invest in a domestic enterprise up to one hundred percent
Philippines; or a corporation organized under the laws of the Philippines of (100%) of its capital, unless participation of non-Philippine nationals in the
which at least sixty percent (60%) of the capital stock outstanding and entitled enterprise is prohibited or limited to a smaller percentage by existing law and/or
to vote is owned and held by citizens of the Philippines or a corporation under the provisions of this Act. The SEC or BTRCP, as the case may be, shall
organized abroad and registered as doing business in the Philippine under the not impose any limitations on the extent of foreign ownership in an enterprise
Corporation Code of which one hundred percent (100%) of the capital stock additional to those provided in this Act: Provided, however,  That any enterprise
outstanding and entitled to vote is wholly owned by Filipinos or a trustee of seeking to avail of incentives under the Omnibus Investment Code of 1987
funds for pension or other employee retirement or separation benefits, where must apply for registration with the Board of Investments (BOI), which shall
the trustee is a Philippine national and at least sixty percent (60%) of the fund process such application for registration in accordance with the criteria for
will accrue to the benefit of Philippine nationals: Provided,  That where a evaluation prescribed in said Code: Provided, finally,  That a non-Philippine
corporation and its non-Filipino stockholders own stocks in a Securities and national intending to engage in the same line of business as an existing joint
Exchange Commission (SEC) registered enterprise, at least sixty percent venture, in which he or his majority shareholder is a substantial partner, must
(60%) of the capital stock outstanding and entitled to vote of each of both disclose the fact and the names and addresses of the partners in the existing
corporations must be owned and held by citizens of the Philippines and at least joint venture in his application for registration with SEC. During the transitory
sixty percent (60%) of the members of the Board of Directors of each of both period as provided in Section 15 hereof, SEC shall disallow registration of the
corporations must be citizens of the Philippines, in order that the corporation applying non-Philippine national if the existing joint venture
shall be considered a Philippine national; (as amended by R.A. 8179).

enterprise, particularly the Filipino partners therein, can reasonably prove they
b) the term “investment” shall mean equity participation in any enterprise are capable to make the investment needed for the domestic market activities
organized or existing under the laws of the Philippines; to be undertaken by the 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.
c) the term “foreign investment” shall mean an 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 SEC. 6. Foreign Investment in Export Enterprises. –  Foreign investment in
which shall assess and appraise the value of such assets other than foreign export enterprises whose products and services do not fall within Lists A and B
exchange;
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of the Foreign Investment Negative List provided under Section 8 hereof is “Amendments to List B after promulgation and publication of the first Regular
allowed up to one hundred percent (100%) ownership. Foreign Investment Negative List at the end of the transitory period shall not be
made more often than once every two (2) years”. (As amended by R.A. 8179)
Export enterprises which are non-Philippine nationals shall register with BOI
and submit the reports that may be required to ensure continuing compliance SEC. 9. Investment Rights of Former Natural-born Filipinos. –  For the purpose
of the export enterprise with its export requirement. BOI shall advise SEC or of this Act, former natural born citizens of the Philippines shall have the same
BTRCP, as the case may be, of any export enterprise that fails to meet the investment rights of a Philippine citizen in Cooperatives under Republic Act No.
export ratio requirement. The SEC or BTRCP shall thereupon order the non- 6938, Rural Banks under Republic Act
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 No. 7353, Thrift Banks and Private Development Banks under Republic Act No.
cancellation of SEC or BTRCP registration, and/or the penalties provided in 7906, and Financing Companies under Republic Act No. 5980. These rights
Section 14 hereof. shall not extend to activities reserved by the Constitution, including (1) the
exercise of profession; (2) in defense related activities under Section 8 (b)
hereof. Unless specifically authorized by the Secretary of National Defense;
SEC. 7. Foreign Investment in Domestic Market Enterprises.  Non-Philippine and, (3) activities covered by Republic Act No. 1180 (Retail Trade Act).
nationals may own up to one hundred percent (100%) of domestic market Republic Act No. 5187 (Security Agency Act), Republic Act No. 7076 (Small
enterprises unless foreign ownership therein is prohibited or limited by the Scale Mining Act), Republic Act No. 3018. As amended (Rice and Corn
Constitution existing law or the Foreign Investment Negative List under Section Industry Act). And P.D. 449 (Cockpits Operation and Management)”. (As
8 hereof. (As amended by R.A. 8179) amended by R.A. 8179)

SEC. 8. List of Investment Areas Reserved to Philippine Nationals (Foreign SEC. 10. Other Rights of Natural Born Citizen Pursuant to the Provisions of
Investment Negative List). –  The Foreign Investment Negative List shall have Article XII, Section 8 of the Constitution. –  Any natural born citizen who has
two (2) components lists; A, and B. lost his Philippine citizenship and who has the legal capacity to enter into a
contract under Philippine laws may be a transferee of a private land up to a
maximum area of five thousand (5,000) square meters in the case of urban
a) List A shall enumerate the areas of activities reserved to Philippine nationals land or three (3) hectares in the case of rural land to be used by him for
by mandate of the Constitution and specific laws. business or other purposes. In the case of married couples, one of them may
avail of the privilege herein granted: Provided, That if both shall avail of the
b) List B shall contain the areas of activities and enterprises regulated pursuant same, the total area acquired shall not exceed the maximum herein fixed.
to law:
In the case the transferee already owns urban or rural land for business or
1) which are defense-related activities, requiring prior clearance and other purposes, he shall still be entitled to be a transferee of additional urban or
authorization from Department of National Defense (DND) to engage in such rural land for business or other purposes which when added to those already
activity, such as the manufacture, repair, storage and/or distribution of firearms, owned by him shall not exceed the maximum areas herein authorized.
ammunition, lethal weapons, military ordinance, explosives, pyrotechnics and
similar materials; unless such manufacturing or repair activity is specifically A transferee under this Act may acquire not more than two (2) lots which
authorized, with a substantial export component, to a non-Philippine national should be situated in different municipalities or cities anywhere in the
by the Secretary of National Defense; or Philippines: Provided, That the total land area thereof shall not exceed five
thousand (5,000) square meters in the case of urban land or three (3) hectares
2) which have implications on public health and morals, such as the in the case of rural land for use by him for business or other purposes. A
manufacture and distribution of dangerous drugs; all forms of gambling; transferee who has already acquired urban land shall be disqualified from
nightclubs, bars, beerhouses, dance halls; sauna and steam bathhouses and acquiring rural land and vice versa”. (As amended by R.A. 8179)
massage clinics.
SEC. 11. Compliance with Environmental Standards. –  All industrial
“Small and medium-sized domestic market enterprises, with paid-in equity enterprises regardless of nationality of ownership shall comply with existing
capital less than the equivalent two hundred thousand US dollars rules and regulations to protect and conserve the environment and meet
(US$200,000) are reserved to Philippine nationals, Provided that if: (1) they applicable environmental standards.
involve advanced technology as determined by the Department of Science and
Technology or (2) they employ at least fifty (50) direct employees, then a SEC. 12. Consistent Government Action. –  No agency, instrumentality or
minimum paid-in capital of one hundred thousand US dollars (US$100,000.00) political subdivision of the Government
shall be allowed to non-Philippine nationals.

shall take any action in conflict with or which will nullify the provisions of this
Amendments to List B may be made upon recommendation of the Secretary of Act, or any certificate or authority granted hereunder.
National Defense, or the Secretary of Health, or the Secretary of Education,
Culture and Sports, endorsed by the NEDA, approved by the President, and
promulgated by a Presidential Proclamation. SEC. 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
“Transitory Foreign Investment Negative List” established in Sec. 15 hereof after its effectivity. A copy of such rules and regulations shall be furnished the
shall be replaced at the end of the transitory period by the first Regular Congress of the Republic of the Philippines.
Negative List to be formulated and recommended by NEDA, following the
process and criteria provided in Sections 8 of this Act. The first Regular
Negative List shall be published not later than sixty (60) days before the end of SEC. 14. Administrative Sanctions. –  A person who violates any provision of
the transitory period provided in said section, and shall become immediately this Act or of the terms and conditions of registration or of the rules and
effective at the end of the transitory period. Subsequent Foreign Investment regulations issued pursuant thereto, or aids or abets in any manner any
Negative Lists shall become effective fifteen (15) days after publication in a violation shall be subject to a fine not exceeding one hundred thousand pesos
newspaper of general circulation in the Philippines: Provided, however, That (P100,000).
each Foreign Investment Negative List shall be prospective in operation and
shall in no way affect foreign investment existing on the date of its publication.
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If the offense is committed by a juridical entity, it shall be subject to a fine in an Foreign investments provide an economic boon, but investing in the Philippines
amount not exceeding ½ of 1% of total paid-in capital but not more than five proved to be a challenge because of the laws and processes involved. In 2015
million pesos (P5,000,000). The president and/or officials responsible therefor alone, the country's economy has increased by 6.5%, and most of which are
shall also be subject to a fine not exceeding two hundred thousand pesos due to foreign investments. However, if you are a foreigner venturing into
(P200,000.00) setting up a business in the Philippines, the process is not going to be easy.
From endless paperwork to accomplishing BIR registration, the corporate law
is, without a doubt, complicated.
In addition to the foregoing, any person, firm or juridical entity involved shall be
subject to forfeiture of all benefits granted under this Act.
Foreign investors and entrepreneurs have to be aware that there are
government restrictions involved in foreign equity. This has been specified
SEC shall have the power to impose administrative sanctions as provided under Republic Act No. 7042 otherwise known as the Foreign Investments Act
herein for any violation of this Act or its implementing rules and regulations. of 1991 (FIA). The act has been amended by Republic Act No. 8179. The Act
provides a detailed explanation of the limitations on foreign equity.
SEC. 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. REPUBLIC ACT NO. 8179 - AN ACT TO FURTHER LIBERALIZE FOREIGN
INVESTMENTS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO.
During the initial transitory period of thirty-six (36) months after issuance of the 7042, AND FOR OTHER PURPOSES
Rules and Regulations to implement this Act, the Transitory Foreign
Investment Negative List shall consist of the following: Sec. 2. Sec. 7 of Republic Act No. 7042 is hereby amended to read as follows:

A. List A: Sec. 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 the
1. All areas of investment in which foreign ownership is limited by mandate of Constitution and existing law or the Foreign Investment Negative List under
Constitution and specific laws. Sec. 8 hereof.

B. List B:

1. Manufacture, repair, storage and/or distribution of firearms, ammunition, Sec. 3. Sec. 8 of the Foreign Investments Act of 1991 is hereby amended to
lethal weapons, military read as follows:

ordnance, explosives, pyrotechnics and similar materials required by law to be Sec. 8. List of Investment Areas Reserved to Philippine Nationals (Foreign
licensed by and under the continuing regulation of the Department of National Investment Negative List). – The Foreign Investment Negative List shall have
Defense; unless such manufacturing or repair activity is specifically authorized, two (2) component lists: A and B:
with substantial export component, to a non-Philippine national by the
Secretary of National Defense;
a) List A shall enumerate the areas of activities reserved to Philippine nationals
by mandate of the Constitution and specific laws.
2. Manufacture and distribution of dangerous drugs; all forms of gambling;
nightclubs, bars, beerhouses, dance halls; sauna and steam bathhouses,
massage clinics and other like activities regulated by law because of risks they b) List B shall contain the areas of activities and enterprises regulated pursuant
may pose to public health and morals; to law:

3. “Small and medium-sized domestic market enterprises with paid-in equity 1) which are defense-related activities, requiring prior clearance and
capital less than the equivalent of Two-hundred thousand US dollars authorization from Department of National Defense (DND) to engage in such
(US$200,000.00), reserved to Philippine nationals: Provided, That if: (1) they activity, such as the manufacture, repair, storage and/or distribution of firearms,
involve advanced technology as determined by the Department of Science and ammunition, lethal weapons, military ordinances, explosives, pyrotechnics and
Technology or (2) they employ at least fifty (50) direct employee, then a similar materials, unless such manufacturing on repair activity is specifically
minimum paid-in capital of One hundred thousand US dollars (US$100,000.00) authorized, with a substantial export component, to a non-Philippine national
shall be allowed to non-Philippine nationals. by the Secretary of National Defense; or

SEC. 16. Repealing Clause. –  Articles forty-four (44) to fifty-six (56) of Book II 2) which have implications on public health and morals, such as the
of Executive Order No. 226 are hereby repealed. manufacture and distribution of dangerous drugs, all forms of gambling,
nightclubs, bars, beer houses, dance halls, sauna and steam bathhouses and
massage clinics.
All other laws or parts of laws inconsistent with the provisions of this Act are
hereby repealed or modified accordingly.
Small and medium-sized domestic market enterprises with paid-in equity
capital less than the equivalent of Two hundred thousand US dollars
SEC. 17. Separability Clause. –  If any part or section of this Act is declared (US$200,000.00), are reserved to Philippine nationals: provided, that if (1) they
unconstitutional for any reason whatsoever, such declaration shall not in any involve advanced technology, or (2) they employ at least fifty (50) direct
way affect the other parts or sections of this Act. employees, then a minimum paid-in capital of One hundred thousand US
dollars (US$100,000.00) shall be allowed to non-Philippine nationals.
SEC. 18. Effectivitiy. –  This Act take effect from fifteen (15) days after approval
and publication in two (2) newspapers of general circulation in the Philippines.

Approved,
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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 a Sec. 6. The National Economic and Development Authority, in consultation with
Presidential Proclamation. the Board of Investments, the Department of Trade and Industry and Securities
and Exchange Commission, shall prepare and issue the necessary primer and
other information campaign materials regarding the Foreign Investments Act
The Transitory Foreign Investment Negative List established in Section 15 and the amendments introduced thereto, with copies of said materials
hereof shall be replaced at the end of the transitory period by the first Regular furnished all the Philippine embassies, consulates and other diplomatic offices
Negative List to be formulated and recommended by NEDA, following the abroad and disseminated to Filipino nationals, former natural-born Filipino
process and criteria, provided in Sections 8 and 9 of this Act. The first Regular citizens, and foreign investors, within sixty days after the effectivity hereof. 
Negative Lists 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 Sec. 7. The NEDA is hereby directed to make the necessary amendments to
Negative Lists shall become effective fifteen (15) days after publication in a the implementing rules and regulations of Republic Act No. 7042 in order to
newspaper of general circulation in the Philippines: provided, however, that reflect the changes embodied in this Act.
each Foreign Investment Negative List shall be prospective in operation and
shall in no way affect foreign investment existing on the date of its publication. Sec. 8. Sections 9 and 10 of Republic Act No. 7042 and all references thereto
in said law are hereby repealed or modified accordingly. All other laws, rules
Amendments to List B after promulgation and publication of the first Regular and regulations and/or parts thereof inconsistent with the provisions of this Act
Foreign Investment Negative List at the end of the transitory period shall not be are hereby repealed or modified accordingly.
made more often than once every two (2) years.
Sec. 9. If any part or section of this Act is declared unconstitutional for any
reason whatsoever, such declarant shall not in any way affect the other parts
or sections of this Act.

Sec. 4. The Foreign Investments Act is further amended by inserting a new

section designated as Sec. 9 to read as follows: Sec. 10. This Act shall take effect fifteen (15) days after publication in two (2)
newspapers of general circulation in the Philippines.

Sec. 9. Investment Rights of Former Natural-born Filipinos. – For purposes of

this Act, former natural born citizens of the Philippines shall have the same
investment rights of a Philippine citizen in Cooperatives under Republic Act No.
6938. Rural Banks under Republic Act No. 7353, Thrift Banks and Private
Development Banks under Republic Act No. 7906, and Financing Companies
under Republic Act No. 5980. These rights shall not extend to activities
reserved by the Constitution, including (1) the exercise of profession, (2) in
defense related activities under Sec. 8 (b) hereof, unless specifically authorized
by the Secretary of National Defense, and (3) activities covered by Republic
Act No. 1180 (Retail Trade Act), Republic Act No. 5487 (Security Agency Act).
Republic Act No. 7076 (Small Scale Mining Act). Republic Act No. 3018, as
amended (Rice and Corn Industry Act), and P.D. 449 (Cockpits Operation and
Management).

Sec. 5. The Foreign Investments Act is further amended by inserting a new

section designated as Section 10 to read as follows:

Sec. 10. Other Rights of Natural Born Citizen Pursuant to the Provisions of
Article XII, Sec. 8 of the Constitution. – Any natural born citizen who has the
legal capacity to enter into a contract under Philippine laws may be a
transferee of a private land up to a maximum area of five thousand (5,000)
square meters in the case of urban land or three (3) hectares in the case of
rural land to be used by him for business or other purposes. In the case of
married couples, one of them may avail of the privilege herein granted:
provided, that if both shall avail of the same, the total area acquired shall not
exceed the maximum herein fixed.

In case the transferee already owns urban or rural land for business or other
purposes, he shall still be entitled to be a transferee of additional urban or rural
land for business or other purposes which when added to those already owned
by him shall not exceed the maximum areas herein authorized.

A transferee under this Act may acquire not more than two (2) lots which
should be situated in different municipalities or cities anywhere in the
Philippines: provided, that the total land area thereof shall not exceed five
thousand (5,000) hectares in the case of rural land for use by him for business
or other purposes. A transferee who has already acquired urban land shall be
disqualified from acquiring rural land area and vice versa.
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indirectly through the transfer of equity from one investor to another as in stock
purchase. Ownership of bonds (including income bonds), debentures, notes or
other evidences of indebtedness does not qualify as investment.

IMPLEMENTING RULES AND REGULATIONS The purchase of stock options or stock warrants is not an investment until the
OF REPUBLIC ACT NO. 7042 holder thereof exercises his option and actually acquires stock from the
(FOREIGN INVESTMENT ACT OF 1991) corporation.
AS AMENDED BY REPUBLIC ACT NO. 81791
e. Foreign investment shall mean an equity investment made by a non-
RULE I. DEFINITIONS Philippine national; Provided,  however, that for purposes of determining foreign
ownership, peso investments made by non-Philippine nationals shall be
considered; Provided, further,  that only foreign investments in the form of
SECTION 1. DEFINITION OF TERMS. – For purposes of these Rules and
foreign exchange and/or other assets actually transferred to the Philippines
Regulations:
and duly registered with the Central Bank (CB) and profits derived therefrom
can be repatriated; and Provided, finally,  That, for purposes of Section 8 of the
a. Act shall refer to Republic Act No. 7042 entitled “An Act to Promote Foreign Act, and Rule VIII, Section 6 of these Rules and Regulations, Existing Foreign
Investments, Prescribe the Procedures for Registering Enterprises Doing Investment shall mean an equity investment made by a non-Philippine national
Business in the Philippines, and for Other Purposes”, also known as the duly registered with the SEC or the Bureau of Trade Regulation and Consumer
Foreign Investments Act of 1991, as amended by Republic Act No. 8179. Protection (BTRCP) in the form of foreign exchange and/or other assets
transferred to the Philippines.
b. Philippine national shall mean a citizen of the Philippines or a domestic
partnership or association wholly owned by citizens of the Philippines; or a f. Doing business shall include soliciting orders, service contracts, opening
corporation organized under the laws of the Philippines of which at least sixty offices, whether liaison offices or branches; appointing representatives or
percent (60%) of the capital stock outstanding and entitled to vote is owned distributors, operating under full control of the foreign corporation, domiciled in
and held by citizens of the Philippines; or a corporation organized abroad and the Philippines or who in any calendar year stay in the country for a period or
registered as doing business in the Philippines under the Corporation Code of periods totaling one hundred eighty (180) days or more; participating in the
which 100% of the capital stock outstanding and entitled to vote is wholly management, supervision or control of any domestic business, firm, entity or
owned by Filipinos;  or a trustee of funds for pension or other employee corporation in the Philippines; and any other act or acts that imply a continuity
retirement or separation benefits, where the trustee is a Philippine national and of commercial dealings or arrangements, and contemplate to that extent the
at least sixty percent (60%) of the fund will accrue to the benefits of Philippine performance of acts or works, or the exercise of some of the functions normally
nationals; Provided,  That where a corporation and its non-Filipino stockholders incident to and in progressive prosecution of commercial gain or of the purpose
own stocks in a Securities and Exchange Commission (SEC) registered and object of the business organization. The following acts shall not be
enterprise, at least sixty percent (60%) of the capital stock outstanding and deemed “doing business” in the Philippines:
entitled to vote of each of both corporations must be owned and held by
citizens of the Philippines and at least sixty percent (60%) of the members of
(1) Mere investment as a shareholder by a foreign entity in domestic
the Board of Directors of each of both corporations must be citizens of the
corporations duly registered to do business, and/or the exercise of rights as
Philippines, in order that the corporation shall be considered a Philippine
such investor;
national. The control test shall be applied for this purpose.

(2) Having a nominee director or officer to represent its interests in such

Compliance with the required Filipino ownership of a corporation shall be
corporation;
determined on the basis of outstanding capital stock whether fully paid or not,
but only such stocks which are generally entitled to vote are considered.
(3) Appointing a representative or distributor domiciled in the Philippines which
transacts business in the representative’s or distributor’s own name and
For stocks to be deemed owned and held by Philippine citizens or Philippine
account;
nationals, mere legal title is not enough to meet the required Filipino equity.
Full beneficial ownership of the stocks, coupled with appropriate voting rights is
essential. Thus, stocks, the voting rights of which have been assigned or (4) The publication of a general advertisement through any print or broadcast
transferred to aliens cannot be considered held by Philippine citizens or media;
Philippine nationals.
(5) Maintaining a stock of goods in the Philippines solely for the purpose of
Individuals or juridical entities not meeting the aforementioned qualifications having the same processed by another entity in the Philippines;
are considered as non-Philippine nationals.
(6) Consignment by a foreign entity of equipment with a local company to be
c. Foreign corporation shall mean one which is formed, organized or existing used in the processing of products for export;
under laws other than those of the Philippines.
(7) Collecting information in the Philippines; and
Branch office  of a foreign company carries out the business activities of the
head office and derives income from the host country.
(8) Performing services auxiliary to an existing isolated contract of sale which
are not on a continuing basis, such as installing in the Philippines machinery it
Representative or liaison office  deals directly with the clients of the parent has manufactured or exported to the Philippines, servicing the same, training
company but does not derive income from the host country and is fully domestic workers to operate it, and similar incidental services.
subsidized by its head office. It undertakes activities such as but not limited to
information dissemination and promotion of the company’s products as well as
g. Export enterprise shall mean an enterprise wherein a manufacturer,
quality control of products.
processor or service (including tourism) enterprise exports sixty percent (60%)
or more of its output, or wherein a trader purchases products domestically and
d. Investment shall mean equity participation in any enterprise organized or exports sixty percent (60%) or more of such purchases.
existing under the laws of the Philippines. It includes both original and
additional investments, whether made directly as in stock subscription, or
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h. Exports shall mean the volume or the Philippine port F.O.B. peso value, n. Dangerous drug as defined under Republic Act 6425 or the Dangerous
determined from invoices, bills of lading, inward letters of credit, loading Drugs Act, as amended, refers to either:
certificates, and other commercial documents, of products exported directly by
an export enterprise or the value of services including tourism sold by service-
(1) “Prohibited drug”  which includes opium and its active components and
oriented enterprises to non-resident foreigners or the net selling price of export
derivatives, such as heroin and morphine; coca leaf and its derivatives,
products sold by an export enterprise to another export enterprise that
principally cocaine; alpha and beta eucaine; hallucinogen drugs, such as
subsequently exports the same; Provided,  That sales of export products to
mescaline, lysergic and diethylamide (LSD) and other substances producing
another export enterprise shall only be deemed exports when actually exported
similar effects; Indian hemp and its derivatives; all preparations made from any
by the latter, as evidenced by loading certificates or similar commercial
of the foregoing; and other drugs and chemical preparations whether natural or
documents; and Provided, finally,  that without actual exportation, the following
synthetic, with the physiological effects of a narcotic or hallucinogenic drug; or
shall be considered constructively exported for purposes of the Act: (1) sales of
products to bonded manufacturing warehouses of export enterprises; (2) sales
of products to export processing zone enterprises; (3) sales of products to (2) “Regulated drug”  which includes, unless authorized by the Department of
export enterprises operating bonded trading warehouses supplying raw Health (DOH) and in accordance with the Dangerous Drugs Board, self-
materials used in the manufacture of export products; and (4) sales of products inducing sedatives, such as secobarbital, phenobarbital, pentobarbital, barbital,
to foreign military bases, diplomatic missions and other agencies and/or amobarbital or any other drug which contains a salt or a derivative of salt of
instrumentalities granted tax immunities of locally manufactured, assembled or barbituric acid; any salt, isomer, or salt of an isomer, of amphetamine such as
repacked products whether paid for in foreign currency or pesos funded from benzedrine or dexedrine, or any drug which produces a physiological action
inwardly remitted foreign currency. similar to amphetamine; and hypnotic drugs, such as methaqualone,
nitrazepam or any other compound producing similar physiological effects.
Sales of locally manufactured or assembled goods for household and personal
use to Filipinos abroad and other non-residents of the Philippines as well as o. Advanced technology refers to a higher degree or form of technology than
returning overseas Filipinos under the Internal Export Program of the what is domestically available and needed for the development of certain
Government and paid for in convertible foreign currency inwardly remitted industries as subject to guidelines of the Department of Science and
through the Philippine banking system shall also be considered exports. Technology (DOST). Its introduction into the country through foreign
investments under the terms and conditions of the Act must be linked to its
appropriateness and adaptability to local conditions with a view towards
i. Output shall refer to the export enterprise’s total sales in a taxable year, The
eventual transfer and applicability including the upgrading of the indigenous
term sales shall refer to value in case of heterogeneous products and volume
technology available.
in case of homogeneous products.

p. Paid-in equity capital shall mean the total investment in a business that has
Heterogeneous products  shall refer to products of different kinds and
been paid-in in a corporation or partnership or invested in a single
characteristics as well as to those of the same kind but with various categories
proprietorship, which may be in cash or in property. It shall also refer to inward
using different units of measurement.
remittance or assigned capital in the case of foreign corporations.

Homogeneous products  shall refer to products of the same kind or category

q. Foreign Investment Negative List (FINL) or Negative List shall mean a list of
using a common unit of measurement.
areas of economic activity whose foreign ownership is limited to a maximum of
forty percent (40%) of the outstanding capital stock in the case of a corporation
j. Export ratio shall refer to: or capital in the case of partnership.

(1) the percentage share of the volume or peso value of goods exported to the r. NEDA Board shall refer to the body constituted as such under Executive
total volume or value of goods sold in any taxable year if the export enterprise Order No. 230 entitled “Reorganizing the National Economic and Development
is engaged in manufacturing or processing; Authority” and in which reside the powers and functions of the Authority.

(2) the percentage share of the peso value of services sold to foreigners to s. NEDA shall refer to the NEDA Secretariat, which is the body constituted as
total earnings or receipts from the sale of its services from all sources in any such under Executive Order No. 230 and which serves as the research and
taxable year if the export enterprise is service-oriented; Value of services technical support arm and the Secretariat of the NEDA Board.
sold  shall refer to the peso value of all services rendered by an export
enterprise to foreigners that are paid for in foreign currency and/or pesos
t. SEC shall refer to the Securities and Exchange Commission.
funded from inwardly remitted foreign currency as properly documented by the
export enterprise; or
u. BTRCP shall refer to the Bureau of Trade Regulation and Consumer
Protection as represented by the provincial offices of the Department of Trade
(3) the percentage share of the volume or peso value of goods exported to the
and Industry (DTI).
total volume or value of goods purchased domestically in any taxable year if
the export enterprise is engaged in merchandise trading.
v. BOI shall refer to the Board of Investments.
k. Domestic market enterprise shall mean an enterprise which produces goods
for sale, renders service, or otherwise engages in any business in the w. Technology Transfer Board shall refer to the Bureau of Patents. Trademarks
Philippines. and Technology Transfer (BPTTT).

l. Joint venture shall mean two or more entities, whether natural or juridical, x. Former natural─born Filipinos shall mean those who have lost Philippine
one of which must be a Philippine national, combining their property, money, citizenship but were previously citizens of the Philippines falling in either of the
efforts, skills or knowledge to carry out a single business enterprise for profit, following categories: (a) from birth without having to perform any act to acquire
which is duly registered with the SEC as a corporation or partnership. or perfect their Philippine citizenship; or (b) by having elected Philippine
citizenship upon reaching the age of majority, if born before January 17, 1973,
of Filipino mothers.
m. Substantial partner shall mean an individual or a firm who owns enough
shares to be entitled to at least one (1) seat on the Board of Directors of a
corporation, or in the case of a partnership, any partner.
 JDINVEST | FIA 91 + IRR | 7

y. Transferee of private land shall mean a person to whom the ownership enterprises shall be allowed to increase the percentage share of foreign equity
rights of private land is transferred through either voluntary or involuntary sale, participation beyond current equity holdings only if their existing investment
devise or donation. Involuntary sales shall include sales on tax delinquency, area is not in the FINL. Similarly, existing enterprises engaged in more than
foreclosures and executions of judgment. one (1) investment area shall be allowed to increase percentage of foreign
equity participation if none of the investment areas they are engaged in is in
the FINL.
z. Direct employees shall mean Filipino personnel hired and engaged under
the control and supervision of the applicant investor/employer in the production
of goods or performance of services. Excluded from this definition are Existing foreign corporations shall be allowed to increase capital even if their
personnel hired as casual, seasonal, learner, apprentice or any employee of existing investment area is in the FINL.
subcontractor or those under fixed term employment.
Transfer of ownership from one foreign company to another shall be allowed
aa. Start of commercial operations shall mean the date when a particular even if the enterprise is engaged in an area in the FINL as long as there is no
enterprise actually begins production of the product for commercial purposes increase in the percentage share of foreign equity.
or commercial harvest in the case of agricultural activities. In the case of
service oriented activities, the date when the enterprise begins catering or
SECTION 2. APPLICATION FOR REGISTRATION.
servicing its clients on a commercial basis. In the case of export traders and
service exporters, the date when the initial export shipment in commercial
quantity has been made or initial performance of service as borne out by the a. Filing of Application.  Applications for registration shall be filed with the SEC
appropriate supporting documents. in the case of foreign corporations and domestic corporations or partnerships
which are non-Philippine nationals. In the case of single proprietorships,
applications for Metro Manila shall be filed with the BTRCP or the DTI-National
RULE II. SCOPE
Capital Region. In the provinces, applications may be filed with the extension
offices of the SEC for corporations/partnerships and the provincial offices of the
SECTION 1. COVERAGE. The Act covers all investment areas or areas of DTI for sole proprietorships.
economic activity except banking and other financial institutions which are
governed and regulated by the General Banking Act and other laws under the
b. Pre-Processing of Documents.  Pre-processing of documents shall be under
supervision of the CB.
taken to assist the investor in determining the completeness of his documents.
All applications are considered officially accepted only upon submission of
RULE III. BASIC GUIDELINES complete documents to either the SEC or BTRCP. Applications for clearances
from the Department of National Defense (DND) or Philippine National Police
(PNP) for defense-related activities, or the DOST for investments involving
SECTION 1. The Act covers restrictions pertaining to foreign equity
advanced technology shall be decided upon by said agencies within fifteen (15)
participation only. All other regulations governing foreign investments remain in
working days.
force.

c. Approval. Within fifteen (15) working days from official acceptance of an

SECTION 2. MONITORING OF COMPLIANCE WITH EQUITY
application, the SEC or BTRCP shall act on the same. Otherwise, the
PARTICIPATION REQUIREMENTS. The SEC or BTRCP, as applicable, shall
application shall be considered as automatically approved if it is not acted upon
monitor the compliance with the equity requirements of the Act.
within said period for a cause not attributable to the applicant.

RULE IV. REGISTRATION OF INVESTMENTS

SECTION 3. REGISTRATION WITH THE SEC.
OF NON-PHILIPPINE NATIONALS

a. Existing Requirements.  As required by laws and regulations, an application

SECTION 1. QUALIFICATIONS.
form together with the following documents shall be submitted to the SEC:

a. Any non-Philippine national may do business or invest in a domestic

(1) In the case of a new domestic corporation or a partnership:
enterprise up to one hundred percent (100%) of its capital provided:

(i) Articles of Incorporation/Partnership

(1) it is investing in a domestic market enterprise in areas outside the FINL; or

(ii) Name Verification Slip

(2) it is investing in an export enterprise whose products and services do not
fall within Lists A and B (except for defense-related activities, which may be
approved pursuant to Section 8(b)(1) of the Act) of the FINL. (iii) Bank Certificate of Deposit

Provided further that, as required by existing laws, the country or state of the (iv) ACR/ICR, SIRV (Special Investors Resident Visa), Visa #13 of the alien
applicant must also allow Filipino citizens and corporations to do business subscribers
therein.
(v) Proof of Inward Remittance (for non-resident aliens)
b. Non-Philippine national qualified to do business per paragraph (a) above,
but who will engage in more than one investment area, one or more of which is
(2) In the case of a foreign corporation:
in the FINL, may be registered under the Act. However, said non-Philippine
national will not be allowed to engage in the investment areas which are in the
FINL. (i) Name verification slip

c. Existing enterprises, which are non-Philippine nationals at the time of (ii) Certified Copy of Board Resolution authorizing the establishment of an
effectivity of the Act and which intend to increase the percentage of foreign office in the Philippines; designating the resident agent to whom summons and
equity participation under the Act, beyond that previously authorized by SEC, other legal processes may be served in behalf of the foreign corporation; and
shall be governed by the qualifications in item (a) above. Thus, existing stipulating that in the absence of such agent or upon cessation of its business
 JDINVEST | FIA 91 + IRR | 8

in the Philippines, the SEC shall receive any summons or legal processes as if the documents were filed and/or forwarded, and identification certificate issued
the same is made upon the corporation at its home office. by the Bureau of Immigration;

(iii) Financial statements for the immediately preceding year at the time of filing (iii) In case of loss and/or destruction of the record of birth or non-registration
of the application, certified by an independent Certified Public Accountant of of birth
the home country.
(iii.1) Certificate of non-availability of birth certificate on account of loss and/or
(iv) Certified copies of the Articles of Incorporation/Partnership with an English destruction of birth record from the local civil registrar and/or appropriate
translation thereof if in a foreign language. government agency if birth was registered abroad;

(v) Proof of inward remittance such as bank certificate of inward remittance or (iii.2) Copy of birth certificate of mother or father certified by the local civil
credit advices. registrar or the NSO; and

For representative offices, the amount remitted initially should be at least (iii.3) Affidavit of two (2) disinterested persons attesting to their personal
US$30,000. knowledge that at the time of the applicant’s birth, the child was born of a
Filipino mother or father.
If the paid-in equity/capital is in kind, additional requirements shall be submitted
to the SEC pursuant to its existing rules and regulations. Any document executed or issued abroad must be authenticated by the
Philippine Embassy or consulate having jurisdiction over the place of execution
or issuance of the document.
All documents executed abroad should be authenticated by the Philippine
Embassy or Consular Office.
c. Application Fee.  A reasonable application fee to be determined by the SEC
shall be collected from each applicant.
(3) In the case of an existing corporation intending to increase foreign equity
participation, all documents required of the proposed transaction under
applicable laws, rules and regulations shall be submitted. d. SEC Action.  Upon fulfillment of all SEC requirements and favorable
evaluation by the SEC, the Certificate of Registration under the Act for
domestic corporations and partnerships, or license to do business in the case
b. Additional Requirements.  As required by the Act, the following shall also be
of a foreign corporation, shall be issued by the SEC. In case of disapproval, the
submitted to SEC:
SEC shall also inform the applicant in writing of the reasons for the disapproval
of the registration.
(1) For enterprises wishing to engage in defense-related activities, clearance
from the DND or PNP.
SECTION 4. REGISTRATION WITH THE BTRCP ─ DEPARTMENT OF
TRADE AND INDUSTRY.
(2) For small and medium-sized domestic market enterprises with paid-in
equity capital less than the equivalent of US$200,000 but not less than the
a. Existing Requirements.  As required by existing laws and regulations,
equivalent of US$100,000,  a certificate from the DOST that the investment
BTRCP Form No. 17 and accompanying documents shall be submitted to
involves advanced technology, or a certificate from the appropriate Department
BTRCP.
of Labor and Employment (DOLE) Regional Office that the enterprise has
issued an undertaking to employ at least 50 direct employees  shall be
submitted. All documents executed abroad should be authenticated by the Philippine
Embassy or Consular Office.
The DOLE, through its Regional Offices, shall validate and monitor compliance
by the investor to the undertaking that it will hire at least 50 direct employees b. Additional Requirements.  The additional requirements for corporations and
within six (6) months from the start of commercial operations. Non-satisfaction partnerships provided under Sec. 3 (b) hereof shall be complied with.
of the undertaking shall be reported by the DOLE Regional Office to the SEC,
which shall cause the investor to satisfy the appropriate higher investment
c. Application Fee.  A reasonable application fee to be determined by BTRCP
requirement, with penalty for failure to satisfy the undertaking.
shall be collected from each applicant.

(3) For former natural born Filipinos wishing to engage in investment areas
d. BTRCP-DTI Action.  Upon fulfillment of all BTRCP-DTI requirements and
allowed to them under this Act, the following documents are required:
favorable evaluation by DTI, the Certificate of Registration for Sole
Proprietorship shall be issued by DTI. In case of disapproval, DTI shall also
(i) Copy of birth certificate inform the applicant in writing of the reasons for the disapproval of the
registration
(i.1) Certified by the local civil registrar or the National Statistics Office (NSO);
or SECTION 5. REGISTRATION OF NON-PHILIPPINE NATIONALS INTENDING
TO ENGAGE IN THE SAME LINE OF BUSINESS AS THEIR EXISTING
JOINT VENTURE.
(i.2) For those born abroad, certificate of birth from the appropriate government
agency of the country where the birth is recorded showing the father or mother
to be a Filipino at the time of birth or if the citizenship of the parents is not a. During the transitory period, any applicant who has an investment in an
indicated, additional proof that the parent/s is a Filipino citizen or has not lost existing joint venture, in which he or his majority shareholder in the existing
his/her Filipino citizenship at the time of the applicant investor’s birth; joint venture is a substantial partner, shall be registered with the SEC or
BTRCP in the same line of business if the Filipino partners representing the
majority of the Filipino equity in the existing joint venture certify under oath that
(ii) Those born before 17 January 1973 of Filipino mothers must additionally
they are not capable and willing to make the investment needed for the
submit all of the following: certified true copies of his/her sworn statement of
domestic market activities, which is being proposed to be undertaken by the
election of Filipino citizenship, oath of allegiance from the civil registrar where
applicant.
 JDINVEST | FIA 91 + IRR | 9

b. If the Filipino partners are willing and able to make the needed investment, hundred percent (100%) unless such participation is prohibited or limited by
the SEC shall not register the applicant, in which case, both joint venture existing laws or the FINL.
partners may agree to undertake the expansion. Both partners are then
required to place the balance of their agreed upon investment shares within six
SECTION 2. CHANGE OF STATUS FROM DOMESTIC MARKET
(6) months from the date of the agreement. The Filipino partner(s) shall not be
ENTERPRISE TO EXPORT ENTERPRISE. A domestic market enterprise may
compelled to make additional investment for the proposed expansion of
change its status to an export enterprise any time by notifying the SEC or
domestic market activities if such will result in a higher Filipino equity share. If
BTRCP.
the Filipino partner(s) fails(fail) to infuse said capital within said period, per the
report of the non-Philippine national applicant to the SEC, the SEC or BTRCP
shall then allow the registration of said non-Philippine national applicant as a Section 2 of Rule VI shall apply for any change of status from domestic to
separate enterprise under the Act. export enterprise. Such application shall be supported by relevant reports as
evidence that the applicant enterprise has exported sixty percent (60%) or
more of its output.
RULE V. REGISTRATION WITH THE CENTRAL BANK

The new export enterprise shall be subject to the reportorial requirements and

SECTION 1. CB REQUIREMENTS. Enterprises seeking to remit foreign
shall be monitored for its compliance with the export requirement under
exchange abroad for purposes of remittance of profits and dividends and
Sections 3 and 4, respectively, of Rule VI of these Rules and Regulations.
capital repatriation in connection with the foreign investment made pursuant to
the Act shall be deemed registered with the CB after SEC or BTRCP
registration. For this purpose, CB rules and regulations covering procedures for RULE VIII. THE REGULAR FOREIGN INVESTMENT NEGATIVE
registration of foreign investments shall be observed. LIST

RULE VI. FOREIGN INVESTMENTS IN EXPORT ENTERPRISES SECTION 1. DESCRIPTION. The Regular FINL shall have two (2) component
lists: A and B which shall contain areas of economic activities reserved to
Philippine nationals. The description and guidelines governing Lists A and
SECTION 1. ALLOWABLE FOREIGN EQUITY PARTICIPATION. Foreign
B are provided for in Rules IX and X hereof, respectively.
equity participation in export enterprises shall be allowed up to one hundred
percent (100%) provided that the products and services of such enterprises do
not fall within Lists A and B of the FINL. SECTION 2. FORMULATION. The NEDA shall be responsible for the
formulation of the Regular FINL, following the process and criteria provided in
Section 8 of the Act and in Rules IX and X hereof.
SECTION 2. REGISTRATION OF EXPORT ENTERPRISES. Export
enterprises shall be deemed registered with the BOI pursuant to Section 6 of
the Act upon registration with the SEC or BTRCP. SECTION 3. APPROVAL. The NEDA shall submit the proposed Regular FINL
to the President for approval and promulgation. The NEDA shall submit the first
Regular FINL and subsequent proposed Regular FINLs to the President at
Enterprises registered under the Act seeking to avail of incentives under EO
least forty five (45) days before the scheduled date of publication.
226 must apply for registration with the BOI. Rules and regulations on EO 226
shall be observed for this purpose.
SECTION 4. PUBLICATION. The NEDA shall publish the first Regular
Negative List not later than sixty (60) days before the end of the transitory
Within ten (10) working days from the issuance of the certificate of registration,
period. Subsequent Negative Lists shall be published not later than fifteen (15)
the SEC or BTRCP shall transmit to BOI copies of the Certificate of
days before the end of the effectivity of the current Negative List.
Registration together with the application from duly accomplished by the export
enterprises.
SECTION 5. EFFECTIVITY. The first Regular Negative List shall become
immediately effective at the end of the transitory period. Subsequent Regular
SECTION 3. SUBMISSION OF REPORTS. All duly-registered export
FINLs shall become effective fifteen (15) days after publication in a
enterprises under this Rule shall submit to the BOI a duly accomplished form
newspaper of general circulation in the Philippines. Except for List A, each
within six (6) months after the end of each taxable year.
Regular FINL shall remain in force for two (2) years from the date of its
effectivity.
Failure of export enterprises to submit the required reports within the
prescribed period of time or the submission of fraudulent reports shall be a
SECTION 6. COVERAGE OF OPERATION. Each Regular FINL shall apply
ground for the SEC or BTRCP to impose appropriate sanctions as provided for
only to new foreign investments and shall not affect existing foreign
under Rule XVIII, Section 1, of these Rules and Regulations.
investments at the time of its publication.

SECTION 4. MONITORING OF COMPLIANCE WITH THE EXPORT

RULE IX. GUIDELINES FOR LIST A OF THE REGULAR FOREIGN
REQUIREMENT. Upon receipt of the reports submitted by the export
INVESTMENT NEGATIVE LIST
enterprise, the BOI shall determine compliance of the enterprise with the export
requirement. If the enterprise fails to comply with the export requirement, the
BOI shall advise the SEC or BTRCP of said failure. The SEC or BTRCP shall SECTION 1. COVERAGE. List A of the FINL shall consist of the areas of
require the firm to immediately increase its export to at least sixty percent activities reserved to Philippine nationals were foreign equity participation in
(60%) of total sales. If the firm fails to comply with the order of the SEC or any domestic or export enterprise engaged in any activity listed therein shall be
BTRCP without any justifiable reason, it shall be penalized in accordance with limited to a maximum of forty percent (40%) as prescribed by the Constitution
the provisions of Rule XVIII, Section 1, of these Implementing Rules and and other specific laws.
Regulations. The BOI, in consultation with the SEC or BTRCP shall issue
guidelines for this purpose.
The NEDA shall make an enumeration of said activities reserved to Philippine
nationals by the Constitution and other specific laws.
RULE VII. FOREIGN INVESTMENTS IN DOMESTIC MARKET
ENTERPRISES
SECTION 2. AMENDMENTS. Amendments to List A may be made by the
NEDA any time to reflect changes made by law regarding the extent of foreign
SECTION 1. ALLOWABLE FOREIGN EQUITY PARTICIPATION. Foreign equity participation in any specific area of economic activity.
equity participation in domestic market enterprises shall be allowed up to one
 JDINVEST | FIA 91 + IRR | 10

RULE X. GUIDELINES FOR LIST B OF THE REGULAR FOREIGN may be a transferee of a private land up to a maximum area of 5,000 square
INVESTMENT NEGATIVE LIST meters in the case of urban land or three (3) hectares in the case of rural land
to be used by him for business or other purposes.
SECTION 1. COVERAGE. List B shall consist of the following:
SECTION 2. In case where both spouses are qualified under the law, one of
them may avail of the said privilege. However, if both shall avail of the
a. Activities where foreign ownership is limited  pursuant to law such
privilege, the total area acquired shall not exceed the maximum allowed.
as  defense or law enforcement-related, requiring prior clearance and
authorization from the DND or PNP, to engage in such activity as the
manufacture, repair, storage and/or distribution of firearms, ammunition, SECTION 3. In case the transferee already owns urban or rural land for
armored vests and other bullet proof attires, lethal weapons, military ordnance, business or other purposes, he shall still be entitled to be a transferee of
explosives, pyrotechnics and similar materials. additional urban or rural land for business or other purposes which when
added to those already owned by him shall not exceed the maximum areas
allowed.
However, the manufacture and repair of said items may be specifically
authorized by the Secretary of National Defense or Chief of the PNP, to non-
Philippine nationals, provided a substantial percentage of output as determined SECTION 4. A transferee may acquire not more than two (2) lots which should
by said agencies is exported. be situated in different municipalities or cities anywhere in the Philippines. The
total land area acquired shall not exceed 5,000 square meters in the case of
urban land or three (3) hectares in the case of rural land for use by him for
Compliance with the export requirement shall be monitored by the DND or
business or other purposes. A transferee who has already acquired urban land
PNP, as the case may be.
shall be disqualified from acquiring rural land and vice versa. However, if the
transferee has disposed of his urban land, he may still acquire rural land and
b. Activities which have negative implications on public health and morals, such vice versa, provided that the same shall be used for business or other
as the manufacture and distribution of dangerous drugs; all forms of gambling; purposes.
sauna and steam bathhouses and massage clinics.
SECTION 5. Land acquired under this Act shall be primarily, directly and
c. Small and medium-sized domestic market enterprises with paid-in equity actually used by the transferee in the performance or conduct of his business
capital of less than US$200,000, or its equivalent; However, small and or commercial activities in the broad areas of agriculture, industry and
medium-sized domestic market enterprises which involve advanced services, including the lease of land, but excluding the buying and selling
technology or which issue an undertaking to employ at least fifty (50) direct thereof. A transferee shall use his land to engage in activities that are not
employees are allowed a minimum paid-in capital of US$100,000, or its included in the Negative List or in those areas wherein investment rights have
equivalent. been granted to him under this Act.

SECTION 2. PROCESS FOR DETERMINATION OF LIST B. SECTION 6. REGISTRATION OF LAND. The Register of Deeds in the
province or city where the land is located shall register the land in the name of
the transferee only upon presentation of proof by the transferee that it will be
a. Activities (a) and (b) above shall be determined upon recommendation of the used for any of the purposes mentioned in Section  5 above, i.e., certification of
Secretary of National Defense, Chief of the PNP, Secretaries of Health or business registration issued by the DTI and affidavit that the land shall be used
Education, Culture and Sports and endorsed by the NEDA or upon for business purposes.
recommendation motu propio of NEDA, approved and promulgated by the
President. List B shall be submitted for Presidential action together with List A.
The NEDA shall inform said agencies of the deadline for the submission of The provisions of BP 185 (An Act to Implement Section 15 of Article XIV of the
their recommendations. Constitution and for Other Purposes Pertaining to the Ownership of Private
Lands for Residential Purposes by Former Natural Born Filipinos) and its
implementing rules and regulations shall be adopted, where applicable, in the
b. Enterprises which are covered by Section 1 (c) above are automatically implementation of this Act through a circular to be issued by the Laud
reserved to Philippine nationals. Registration Authority.

SECTION 3. AMENDMENTS. Amendments to List B shall be made only after The Register of Deeds shall also ensure that the limits prescribed by law are
two years, upon the recommendation of the Secretary of National Defense, observed.
Chief of the PNP, Secretaries of Health and Education, Culture and Sports,
endorsed by the NEDA, or upon recommendation motu propio of NEDA,
approved and promulgated by the President. List B shall be submitted for RULE XIII. TRANSITORY PROVISIONS
Presidential action together with List A.
SECTION 1. Prior to the effectivity of these Implementing Rules and
RULE XI. INVESTMENT RIGHTS OF FORMER NATURAL BORN Regulations, the provisions of Book II of EO 226 and its implementing rules
FILIPINOS and regulations shall govern the registration of foreign investments without
incentives.
SECTION 1. Former natural born citizens of the Philippines shall have the
same investment rights of a Philippine citizen in Cooperatives under RA 6938, SECTION 2. There shall be a transitory period of thirty-six (36) months after
Rural Banks under RA 7353, Thrift Banks and Private Development Banks issuance of these Implementing Rules and Regulations to implement this Act.
under RA 7906, Financing Companies under RA 5980, and activities listed
under List B including defense─related activities, if specifically authorized by
SECTION 3. During the transitory period, the Transitory FINL described in Rule
the Secretary of National Defense.
XIV, Section 1 hereof shall take effect.

RULE XII. RIGHTS OF FORMER NATURAL BORN FILIPINOS TO

RULE XIV. TRANSITORY FOREIGN INVESTMENT NEGATIVE LIST
OWN PRIVATE LAND

SECTION 1. DESCRIPTION. The Transitory FINL shall consist of the following:

SECTION 1. Any natural born citizen who has lost his Philippine citizenship
and who has the legal capacity to enter into a contract under Philippine laws
 JDINVEST | FIA 91 + IRR | 11

a. List A (i) Licensing agreements involving the right to use industrial property rights,
such as patents or trademarks/ service marks;
All investment areas in which foreign ownership is limited by mandate of the
Constitution and specific laws. (ii) Know-how agreements for the grant of a license to use know-how; and

b. List B (iii) Franchise agreements involving the use of the franchisor’s system.

(1) Manufacture, repair, storage and/or distribution of firearms, ammunition, Expired license agreements with notification or application for renewal with
armored vests and other bullet proof attires, lethal weapons, military ordnance, BPTTT as of the date of effectivity of the Act are deemed operatively in force.
explosives, pyrotechnics and similar materials required by law to be licensed
by and under the continuing regulation of the DND or the PNP, as the case
If the licensing agreement expires and/or is rendered inoperative during the
may be.
transitory period, the foreign licensor and/or its affiliates may invest in the same
line of business covered by the agreement.
However, the manufacture or repair of these items may be specifically
authorized by the Secretary of National Defense or the Chief of the PNP to
SECTION 2. FORMULATION OF THE TRANSITORY FOREIGN
non-Philippine nationals, provided a substantial percentage of output, as
INVESTMENT NEGATIVE LIST.
determined by the said agencies, is exported.

a. NEDA, in consultation with relevant agencies, shall enumerate, as

The extent of foreign equity ownership allowed shall be specified in the said
appropriate, the areas of investment covered in this Transitory FINL.
authority/clearance.

b. The Transitory FINL shall be published in full at the same time as, or prior to,
Compliance with the export requirement shall be monitored by the DND or
the publication of these Implementing Rules and Regulations to implement the
PNP, as the case may be.
Act.

(2) Manufacture and distribution of dangerous drugs; all forms of gambling;

c. The areas of investment contained in List C above shall be reserved to
sauna and steam bath houses, massage clinics and other like activities
Philippine nationals only during the transitory period. Their inclusion in the
regulated by law because of risks they may pose to public health and morals.
regular Negative List will require determination by the NEDA following the
procedures and criteria for formulating List C.
(3) Small and medium-sized domestic market enterprises with paid-in equity
capital of less than the equivalent of US$500,000, unless they involve
RULE XV. OPTIONS FOR EXISTING
advanced technology as determined by the DOST; and
BOI-REGISTERED ENTERPRISES

(4) Export enterprises which utilize raw materials from depleting natural
SECTION 1. Existing enterprise which have been issued Certificates of
resources, and with paid-in equity capital of less than the equivalent of
Authority to do Business or to Accept Permissible Investments under Book II of
US$500,000.
EO 226, Book II of PD 1789 and RA 5455, whose activities are included in the
Transitory FINL or in subsequent Negative Lists, are allowed to continue to
c. List C undertake the same activities which they have been authorized to do subject to
the same terms and conditions stipulated in their certificates of registration.
(1) Import and wholesale activities not integrated with the production or
manufacture of goods. Those whose activities have been previously authorized under Book II of EO
226, Book II of PD 1789 and RA 5455, and whose activities are not in the
Transitory FINL or in subsequent Negative Lists may opt to be governed by the
Import and wholesale activities which are considered to be not integrated with
provisions of the Act. Said enterprises shall be considered automatically
production or manufacture of goods are those carried out separately from or
registered with the SEC upon surrender of their certificates of authority to the
independently of any production activity.
BOI. The SEC shall issue a new certificate of authority upon advise of the BOI.

(2) Services requiring a license or specific authorization, and subject to

SECTION 2. Existing enterprises with more than forty percent (40%) foreign
continuing regulation by national government agencies other than the BOI and
equity which have availed of incentives under any of the investment incentives
SEC which at the time of effectivity of the Act are restricted to Philippine
laws implemented by the BOI may opt to be governed by the Act. In such
nationals by existing administrative regulations and practice of the regulatory
cases, said enterprises shall be required to surrender their certificates of
agencies concerned: Provided,  That after effectivity of the Act, no other
registration, which shall be deemed as an express waiver of their privilege to
services  shall be additionally subjected to such restrictions on nationality of
apply for and avail of incentives under the incentives law under which they
ownership by the corresponding regulatory agencies through administrative
were previously registered. Subject to BOI rules and regulations, said
regulations, and such restrictions once removed shall not be reimposed except
enterprises may be required to refund all capital equipment incentives availed
through legislation or inclusion in the regular Negative List.
of.

(3) Enterprises owned in the majority by non-Philippine nations which, as of the

RULE XVI. CONSISTENT GOVERNMENT ACTION
date of effectivity of the Act, have subsisting and operatively in force
technology transfer and/or brand name licensing agreements with Philippine
nationals for the assembly, processing or manufacture of goods for the SECTION 1. No agency, instrumentality or political subdivision of the
domestic market: Provided,  That, the said licensing agreements are duly Government shall take any action in conflict with or which will nullify the
registered with the BPTTT and/or the CB as of the date of effectivity of the Act. provisions of the Act, or any certificate or authority granted hereunder.

The types of agreements covered by the Act are the following: RULE XVII. COMPLIANCE WITH ENVIRONMENTAL
STANDARDS
 JDINVEST | FIA 91 + IRR | 12

SECTION 1. All industrial enterprises, regardless of nationality or ownership, Sole

shall comply with existing rules and regulations, and applicable environmental Partnership/Corporation
Proprietorship
standards set by the Department of Environment and Natural Resources
(DENR) to protect and conserve the environment. 1st violation P100,000.00 P50,000.00
2nd violation P150,000.00 P70,000.00
The DENR shall provide the SEC with a list of environmentally critical fine in an amount not
activities/projects and areas. Necessary clearances may be secured after exceeding ½ of 1% of
registration with the SEC. 3rd violation P100,000.00
total paid-in capital but not
more than P5 million

Subsequent violations: Cancellation of registration granted under the Act

RULE XVIII. ADMINISTRATIVE SANCTIONS
The President and/or official/personnel of the partnership/ corporation
SECTION 1. FOREIGN INVESTMENTS IN EXPORT ENTERPRISES. Non- responsible in the failure to comply with the said SEC or BTRCP order shall be
compliance by any duly-registered export enterprise with Rule VI, Sections 3 subject to the following sanctions:
and 4 above shall be subject to the following sanctions:

1st violation ─ a fine of P50,000.00

a. For late submission of the required annual report ─
2nd violation ─ a fine of P100,000.00
1st violation ─ written warning 3rd violation ─ a fine of P200,000.00
2nd violation ─ basic fine of P1,000.00 and a daily fine of P50.00
3rd violation ─ basic fine of P2,000.00 and a daily fine of P100.00 SECTION 2. COMPLIANCE WITH ENVIRONMENTAL STANDARDS. Any
industrial enterprise, regardless of nationality of ownership which fails to
Subsequent violations ─ basic fine of P5,000.00
comply with existing rules and regulations to protect and conserve the
environment and meet applicable environmental standards shall be subject to
the sanctions as may be provided for in the rules and regulations of the DENR.
b. For the submission of fraudulent reports ─

SECTION 3. HEARING OF VIOLATIONS OF THE ACT. The SEC or BTRCP

FINE shall adopt their respective rules and regulations for the purpose of conducting
hearings and investigations involving violations of the provisions of the Act and
Sole these Implementing Rules and Regulations.
Partnership/Corporation
Proprietorship
SECTION 4. OTHER GROUNDS FOR CANCELLATION. The following are
1st violation P100,000.00 P50,000.00
other grounds for the cancellation of the certificate of registration granted under
2nd violation P150,000.00 P70,000.00 the Act:
fine in an amount not
exceeding ½ of 1% of total a. Failure of a non-Philippine national intending to engage in the same line of
3rd violation P100,000.00 business as an existing joint venture, in which he or his majority shareholder is
paid-in capital but not more
than P5 million a substantial partner, to disclose such fact and the names and addresses of
the partners in the existing joint venture in his application for registration with
the SEC; or
Subsequent violations: Cancellation of registration granted under the Act

b. Commission of any other fraudulent act.

The President and/or official/personnel of the partnership/corporation
responsible for the submission of fraudulent reports shall be subject to the
following sanctions: SECTION 5. OTHER VIOLATIONS. Any other violations of the Act and these
Implementing Rules and Regulations shall be penalized in accordance with
Section 14 of the Act.
1st violation ─ a fine of P50,000.00
RULE XIX. EFFECTIVITY
2nd violation ─ a fine of P100,000.00

3rd violation ─ a fine of P200,000.00 SECTION 1. These amended Implementing Rules and Regulations shall take
effect fifteen (15) days after publication in a newspaper of general circulation in
the Philippines.
c. For non-submission of the required reports within twelve (12) months after
the taxable year, cancellation of the certificate of registration granted under the
Act. Notes:

d. For failure of any duly-registered export enterprise to comply, without 1. R. A. 7042 was assigned into law 13 June 1991 and became effective on 30
justifiable reason, with the SEC or BTRCP order to increase its export to at June 1991. Its IRR took effect on November 1991.
least sixty percent (60%) of total sales ─
2. R. A. 8179 was signed into law on 28 March 1996 and became effective on
15 April 1996. Its IRR took effect on 30 July 1996.
FINE
 JDINVEST | FIA 91 + IRR | 13

Footnote: 1Text in bold and Italic reflect change under R.A. 8179.

References:  ANNEXES I, A, and II