Foreign investments shall be conducted based on

the principles of transparency, reciprocity, equity

W1: INTRODUCTION and economic cooperation.

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

TOPIC OVERVIEW

A.​ Foreign Investment Act a) The term "Philippine national" shall mean a
B.​ Grandfather Rule citizen of the Philippines or a domestic partnership
C.​ Negative List or association wholly owned by citizens of the
D.​ International Agreements related to Philippines; or a corporation organized under the
the Philippines laws of the Philippines of which at least sixty
E.​ BSP FX Manual percent (60%) of the capital stock outstanding and
F.​ Anti-Money Laundering Act entitled to vote is owned and held by citizens of the
a.​ Threshold of AMLC Philippines; or a trustee of funds for pension or
G.​ Domestic v. Foreign Corporation other employee retirement or separation benefits,
H.​ Define “Doing Business” where the trustee is a Philippine national and at
I.​ Difference between Domestic least sixty (60%) of the fund will accrue to the
Subsidiary, Branches, Headquarters, benefit of the Philippine nationals: Provided, That
Representative Office, Partnership 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
A (R.A. 11647) Foreign Investment Act
outstanding and entitled to vote of both
corporations must be owned and held by citizens of
AN ACT TO PROMOTE FOREIGN INVESTMENTS, the Philippines and at least sixty percent (60%) of
PRESCRIBE THE PROCEDURES FOR REGISTERING the members of the Board of Directors of both
ENTERPRISES DOING BUSINESS IN THE corporations must be citizens of the Philippines, in
PHILIPPINES, AND FOR OTHER PURPOSES order that the corporations shall be considered a
Philippine national;
Section 1. Title. - This Act shall be known as the,
"Foreign Investments Act of 1991". b) The term “investment" shall mean equity
participation in any enterprise, organized or existing
Section 2. Declaration of Policy. - Recognizing that under the laws of the Philippines and duly recorded
increased capital and technology benefits the in the enterprise's stock and transfer book, or any
Philippines and that global and regional economies equivalent registry of ownership
affect the Philippine economy, 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 sustainable, inclusive, resilient, and
innovative economic growth, productivity, global
competitiveness, employment creation,
technological advancement, and countrywide
development to the extent that foreign investment
is allowed in such activity by the Constitution and
relevant laws, and consistent with the protection of
national security. Foreign investments shall be
encouraged in enterprises that significantly expand
livelihood and employment opportunities for
Filipinos; enhance economic value of agricultural
products; promote the welfare of Filipino consumer;
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.

The State shall promote accountability and integrity

in public office, as well as the promotion and
administration of efficient public service to entice
foreign investments.
c) The term “foreign investment" shall mean an the "IIPCC", which shall be the body that will
equity investment made by non-Philippine national integrate all promotion and facilitation efforts to
in the form of foreign exchange and/or other assets encourage foreign investments in the country. The
actually transferred to the Philippines and duly Department of Trade and Industry (DTI) shall act as
registered with the Bangko Sentral ng Pilipinas; the IIPCC's lead agency. The IIPCC shall be
composed of the:
d) The praise "doing business" shall include
soliciting orders, service contracts, opening offices, (a)​ Secretary of the DTI, to preside as
whether called "liaison" offices or branches; Chairperson;
appointing representatives or distributors domiciled (b)​ Secretary/Undersecretary of the Department
in the Philippines or who in any calendar year stay of Finance (DOF) as Vice-Chairperson;
in the country for a period or periods totalling one (c)​ One (1) representative from the DTI-Board of
hundred eighty (180) days or more; participating in Investments (BOI);
the management, supervision or control of any (d)​ One (1) representative from the
domestic business, firm, entity or corporation in the DTI-Philippine Economic Zone Authority
Philippines; and any other act or acts that imply a (PEZA);
continuity of commercial dealings or arrangements, (e)​ One (1) representative from the Department
and contemplate to that extent the performance of of Foreign Affairs (DFA), Office of the
acts or works, or the exercise of some of the Undersecretary for Multilateral Affairs and
functions normally incident to, and in progressive International Economic Relations
prosecution of, commercial gain or of the purpose (OUMAIER);
and object of the business organization: Provided, (f)​ One (1) representative from the National
however, That the phrase "doing business: shall not Economic and Development Authority
be deemed to include mere investment as a (NEDA);
shareholder by a foreign entity in domestic (g)​ One (1) representative from the Department
corporations duly registered to do business, and/or of Information and Communications
the exercise of rights as such investor; nor having a Technology (DICT);
nominee director or officer to represent its interests (h)​ One (1) representative from the Commission
in such corporation; nor appointing a representative on Higher Education (CHED);
or distributor domiciled in the Philippines which (i)​ One (1) representative from the Technical
transacts business in its own name and for its own Education and Skills Development Authority
account; (TESDA); and
(j)​ Four (4) representatives composed of one (1)
e) The term "export enterprise" shall mean an representative each from the National
enterprise that produces goods for sale, or renders Capital Region, Luzon, Visayas and
services to the domestic market entirely or if Mindanao, to be chosen from a list of
exporting a portion of its output fails to consistently nominees prepared and submitted by
export at least sixty percent (60%) thereof; and nationally recognized leading industry or
business chambers, who shall be of known
g) The term "Foreign Investments Negative List" competence, probity, integrity and expertise
or "Negative List" shall mean a list of areas of in any of the fields of investment, advertising,
economic activity whose foreign ownership is banking, finance management and law, with
limited to a maximum of forty ownership is limited at least ten (10) years of outstanding
to a maximum of forty percent (40%) of the equity management or leadership experience.
capital of the enterprise engaged therein.
The Chairperson may from time to time, as a
h) The term practice of “profession" shall mean an particular foreign investment may require, request
activity or undertaking rendered and performed by the participation of other government departments
a registered and duly licensed professional or holder and agencies or instrumentalities, local government
of a special temporary permit as defined in the units (LGUs), nongovernmental organizations
scope of practice of a professional regulatory law; (NGOs) and local business chambers and
and enterprises.

i) The term “pipeline transaction" shall mean the The IIPCC shall coordinate and, when necessary,
sector which includes transport of goods or partner with and assist the Bases Conversion nd
materials through a pipeline such as crude, refined, Development Authority (BCDA), Authority of the
petroleum, natural gas, biofuels, and other Freeport Area of Bataan (AFAB), Clark Development
chemically stable substance." Corporation (CDC), Subic Bay Metropolitan Authority
(SBMA), Cagayan Economic Zone Authority (CEZA),
Section 4. Inter-Agency Investment Promotion John Hay Management Corporation (JHMC), Poro
Coordination Committee. - There is hereby created Point Management Corporation (PPMC),
the "Inter-Agency Investment Promotion Zamboanga City Special Economic Zone Authority
Coordination Committee", hereinafter referred to as (ZCSEZA), PHIVIDEC Industrial Authority (PIA),
Aurora Pacific Economic Zone and Freeport further details such as the IIPCC's procedure,
Authority (APECO), Tourism Infrastructure and contacts, schedules, among others.
Enterprise Zone Authority (TIEZA) and all other
similar existing authorities or that may be created Said database should also include a directory of
by law, in promoting foreign investments to the local enterprises capable and willing to partner with
country: Provided, That this shall not include the potential foreign investors. The IIPCC shall consult
administration, design, and grant of fiscal local chambers of commerce, sectoral, business
incentives. groups, and other individual partners whenever
foreign applicants seek partners, subcontractors,
The BOI is designated as the secretariat of the IIPCC, suppliers, and other local business counterparts.
implementing its policies and resolutions.
Similarly, Department of Education (DepEd), CHED,
SEC. 4-A. Powers and Functions of the IIPCC. - TESDA, Department of Labor and Employment
(DOLE), the Professional Regulation Commission
(a) To establish both a medium-and-long-term (PRC), and other training agencies involved in
Foreign Investment Promotion and Marketing Plan education and skills development shall likewise
(FIPMP), coordinating all xisting investment direct curriculum and training efforts toward
development plans and programs under the BOI, manpower requirements of the FIPMP.
PEZA, and various investment promotion agencies
(IPAs), LGUs, and other agencies, as delinated in The IIPCC shall coordinate with the concerned
Section 4-B of this Act; government agencies to ensure their alignment
(b) To design a comprehensive marketing strategy with the FIPMP.
and campaign, promoting the country as a
desirable investment area; DTI shall promulgate such rules and regulations
(c) To support inbound and outbound foreign direct necessary to implement this provision.
and trade missions for new international markets to
explore the country as a possible location to do Section 5. Registration of Investments of
business; Non-Philippine Nationals. - Without need of prior
(d) To encourage and support research and approval, a non-Philippine national, as that term is
development in priority areas indicated by the defined in Section 3(a), and not otherwise
FIPMP; disqualified by law may, upon registration with the
(e) To monitor actual performance against Securities and Exchange Commission (SEC), or the
measurable and timebound targets in the FIPMP, to DTI in the case of single proprietorships, do business
include job generation; as defined in Section 3(d) of this Act or invest in a
(f) To submit annual evaluation and reports to the domestic enterprise up to one hundred percent
President of the Philippines and the Congress (100%) of its capital, unless participation of
regarding the activities of the IIPCC; non-Philippine nationals in the enterprise is
(g) To establish and regularly update an online prohibited or limited to a smaller percentage by
database including a directory of ready local existing law and/or under the provisions of this Act.
partners from priority sectors under the FIPMP, as a The SEC or the DTI, as the case may be, shall not
tool for promoting investments and business impose any limitations on the extent of foreign
matching in local supply chains; and ownership in an enterprise additional to those
(h) To support local government efforts to promote provided in this Act: Provided, however, That any
foreign direct investments, expedite compliance enterprise seeking to avail of incentives under the
with national requirements and address investors in Omnibus Investment Code of 1987 must apply for
their different localities involved with said foreign registration with the BOI, which shall process such
investments. application for registration in accordance with the
criteria for evaluation prescribed in said Code:
SEC. 4-B. Development of the Foreign Investment Provided, finally, That a non-Philippine national
Promotion and Marketing Plan (FIPMP). - A intending to engage in the same line of business as
comprehensive and strategic Foreign Investment an existing joint venture, in which he or his majority
Promotion and Marketing Plan (FIPMP) shall be shareholder is a substantial partner, must disclose
developed by the IIPCC for the medium five-year the fact and the names and addresses of the
and the long-term ten-year plan Provided, That it is partners in the existing joint venture in his
based on competitive advantages, natural application for registration with SEC. During the
resources, skill and educational development, transitory period as provided in Section 15 hereof,
traditional linkages, and international market SEC shall disallow registration of the applying
potential, and it is fully consistent with the strategic non-Philippine national if the existing joint venture
investment priorities plan under Title XIII of the enterprise, particularly the Filipino partners therein,
National Internal Revenue Code, as amended: can reasonably prove the domestic market activities
Provided, further, That an online portal containing to be undertaken by SEC shall effect registration of
the FIPMP shall thereafter be uploaded, containing any enterprise applying under this Act within fifteen
(15) days upon submission of completed (2)​ which have implications on public health
requirements. and morals, such as the manufacture and
distribution of dangerous drugs; all forms of
Section 6. Foreign Investment in Export gambling; nightclubs, bars, beer houses,
Enterprises. - Foreign investment in export dance halls, sauna and steam bathhouses
enterprise whose products and services do not fall and massage clinics.
within Lists A and B of the Foreign Investment Excerpts as otherwise provided under Republic Act
Negative List provided under Section 8 hereof is No. 8762, otherwise known as the Retail Trade
allowed up to one hundred percent (100%) Liberalization Act of 2000 and other relevant laws,
ownership. micro and small domestic market enterprise with
paid-in equity capital less than the equivalent of
Export enterprise which a re non-Philippine Two hundred thousand US dollar (US$200,000.00).
nationals shall register with BOI and submit the are reserved to Philippine nationals: Provided, That
reports that may be required to ensure continuing if: (1) they involve advanced technology as
compliance of the export enterprise with its export determined by the Department of Science and
requirement. BOI shall advise SEC or STI, as the case Technology, or (2) they are endorsed as startup or
may be, of any export enterprise that fails to meet startup enablers by the lead host agencies pursuant
the export ration requirement.ᇈWᑭHIL The SEC or to Republic Act No. 11337, otherwise known as the
DTI shall thereupon order the non-complying Innovative Startup Act; or (3) a majority of their
export enterprise to reduce its sales to the domestic direct employees are Filipinos, but in no case shall
market to not more than forty percent (40%) of its the number of Filipino employees be less than
total production; failure to comply with such SEC or fifteen (15), than a minimum paid-in capital of One
DTI order, without justifiable reason, shall subject hundred thousand US dollars (US$100,000.00) shall
the enterprise to cancellation of SEC or DTI be allowed to non-Philippine nationals: Provided,
registration, and/or the penalties provided in further, That registered foreign enterprises
Section 14 hereof. employing foreign nationals and enjoying fiscal
incentive shall implement an understudy or skills
Export enterprise shall register and comply with the development program to ensure the transfer of
export requirements in accordance with Title XIII of technology or skills to Filipinos. Compliance with
the National Internal Revenue Code (NIRC), as this requirement shall be regularly monitored by
amended, for purpose of availing any tax incentive the DOLE.
or benefit.
Nothing in this Act shall operate as a cause for
Section 7. Foreign Investments in Domestic termination of employees hired prior to the
Market Enterprises. - Non-Philippine nationals may effectivity of this Act. In all cases, the provisions of
own up to one hundred percent (100%) of domestic Presidential Decree No. 442, otherwise known as
market enterprises unless foreign ownership the Labor Code of the Philippines" and other
therein is prohibited or limited by existing law or the applicable laws, rules and regulations issued by
Foreign Investment Negative List under Section 8 DOLE shall prevail.
hereof.
Amendments to List B may be made upon
SEC. 8. List of Investment Areas Reserved to recommendation of the Secretary of National
Philippine Nationals (Foreign Investment Defense, or the Secretary of Health, endorses by the
Negative List). – The Foreign Investment Negative NEDA, or upon recommendation motu propio, of
List shall have two (2) component lists: A and B: NEDA, approved by the President, and promulgated
through the issuance of the Foreign Investment
a) List A shall enumerate the areas of activities Negative List by Executive Order.
reserved to Philippine nationals by mandate of the xxx
Constitution and specific laws.
b) List B shall contain the areas of activities and Amendments to the Foreign Investment Negative
enterprises regulated pursuant to law: List shall not be made more often than once every
(1)​ which are defense-related activities, two (2) years: Provided, That the NEDA, in
requiring prior clearance and authorization consultation and cooperation with the BOI, DTI, SEC,
from Department of National Defense (DND) DICT, IPAs and other pertinent government
to engage in such activity, such as the agencies, shall, every two (2) years, (i) review the
manufacture, repair, storage and/or Foreign Investment Negative List, and (ii) submit to
distribution of firearms, ammunition, lethal Congress an analysis of foreign investment
weapons, military ordinance, explosives, performance economic activities of the industries
pyrotechnics and similar materials, unless under the Foreign Investment Negative List and the
such manufacturing or repair activity is reasons for the recommended amendments, if any:
specifically authorized by the Secretary of Provided, further, That NEDA shall recommend to
National Defense; or Congress investment-related matters requiring
necessary legislation."
 the Government shall take any action on conflict
SEC. 9. Investment Rights of Former Natural-born with or which will nullify the provisions of this Act, or
Filipinos. – For purposes of this Act, former natural any certificate or authority granted hereunder.
born citizens of the Philippines shall have the same
investment rights of a Philippine citizen in Section 13. Implementing Rules and Regulations.
Cooperatives under Republic Act No. 6938, Rural - NEDA, in consultation with BOI, SEC and other
Banks under Republic Act No. 7353, Thrift Banks and government agencies concerned, shall issue the
Private Development Banks under Republic Act No. rules and regulations to implement this Act within
7906, and Financing Companies under Republic Act one hundred and twenty (120) days after its
No. 5980. These rights shall not extend to activities effectivity. A copy of such rules and regulations shall
reserved by the Constitution, including (1) the be furnished the Congress of the Republic of the
exercise of profession; (2) in defense related Philippines.
activities under Section 8 (b) hereof, unless
specifically authorized by the Secretary of National Section 14. Administrative Sanctions. - A person
Defense; and (3) activities covered by Republic Act who violates any provision of this Act or of the terms
No. 1180 (Retail Trade Act), Republic Act No. 5487 and conditions of registration or of the rules and
(Security Agency Act), Republic Act No. 7076 (Small regulations issued pursuant thereto, or aids or abets
Scale Mining Act), Republic Act No. 3018, as in any manner any violation shall be subject to a fine
amended (Rice and Corn Industry Act), and P.D. 449 not exceeding One hundred thousand pesos
(Cockpits Operation and Management). (P100,000).

SEC. 10. Other Rights of Natural Born Citizen If the offense is committed by a juridical entity, it
Pursuant to the Provisions of Article XII, Section 8 shall be subject to a fine in an amount not
of the Constitution. – Any natural born citizen who exceeding ½ of 1% of total paid-in capital but not
has lost his Philippine citizenship and who has the more than Five million pesos (P5,000,000). The
legal capacity to enter into a contract under president and/or officials responsible therefor shall
Philippine laws may be a transferee of a private land also be subject to a fine not exceeding Two hundred
up to a maximum area of five thousand (5,000) thousand pesos (P200,000).
square meters in the case of urban land or three (3)
hectares in the case of rural land to be used by him In addition to the foregoing, any person, firm or
for business or other purposes. In the case of juridical entity involved shall be subject to forfeiture
married couples, one of them may avail of the of all benefits granted under this Act.
privilege herein granted: Provided, That if both shall
avail of the same, the total area acquired shall not SEC shall have the power to impose administrative
exceed the maximum herein fixed. sanctions as provided herein for any violation of this
Act or its implementing rules and regulations.
In case the transferee already owns urban or rural
land for business or other purposes, he shall still be Section 15. Transitory Provision. - xxx
entitled to be a transferee of additional urban or
rural land for business or other purposes which Section 16. Review of Strategic Industries. - Upon
when added to those already owned by him shall the order of the President, the IIPCC, in coordination
not exceed the maximum areas herein authorized. with the National Security Council (NSC), and the
NEDA, shall review foreign investments involving
A transferee under this Act may acquire not more military-related industries, cyber infrastructure,
than two (2) lots which should be situated in pipeline transportation, or such other activities
different municipalities or cities anywhere in the which may threaten territorial integrity and the
Philippines: Provided, That the total land area safety, security and well-being of Filipino citizens,
thereof shall not exceed five thousand (5,000) when:
square meters in the case of urban land or three (3)
hectares in the case of rural land for use by him for (a) Made by a foreign government-controlled entity
business or other purposes. A transferee who has or state-owned enterprises except independent
already acquired urban land shall be disqualified pension funds, sovereign wealth funds and
from acquiring rural land and vice versa. multi-national banks; or

Section 11. Compliance with Environmental (b) Located in geographical areas critical to national
Standards. - All industrial enterprises regardless of security.
nationality of ownership shall comply with existing
rules and regulations to protect and conserve the Any recommendation to suspend, prohibit, or
environment and meet applicable environmental otherwise limit a reviewed foreign investment
standards. under this section shall be transmitted to the Office
of the President for appropriate action.
Section 12. Consistent Government Action. - No
agency, instrumentality or political subdivision of
Section 17. Anti-Graft Practices in Foreign ●​ “Grandfather Rule Proper,” which states that if
Investment Promotions. - Public officials and the percentage of Filipino ownership in the
employees involved in foreign investment corporation or partnership is less than 60%, only
promotions shall uphold the highest standards of the number of shares corresponding to such
public service, accountability, and integrity. percentage shall be counted as of Philippine
Accordingly, any public official or employee involved nationality. The combined totals in the Investing
in foreign investment promotions who sahll commit Corporation and the Investee Corporation must
any of the acts under Section 3 of Republic Act No. be traced (or “grandfathered”) to determine the
3019, as amended, otherwise known as the total percentage of Filipino ownership. (id.)
Anti-Graft and Corrupt Practices Act, shall, in
additional to the penalties provided under Section OTHER TEST TO DETERMINE NATIONALITY OF A
9(a) of the said Act, be punished by a fine of not less CORPORATION:
than Two million pesos (P2,000,000.00) but not
more than Five million pesos (P5,000,000.00). ●​ Control Test – “Control Test” wherein shares
belonging to corporations or partnerships at
Section 18. Non-Applicability. - This Act shall not least 60% of the capital of which is owned by
apply to banking and other financial institutions Filipino citizens shall be considered as a
which are governed and regulated by Republic Act Philippine national. Under the liberal Control
No. 8791, otherwise known as The General Banking Test, there is no need to further trace the
Law of 2000" and other laws under the supervision ownership of the 60% Filipino stockholdings of
of the Bangko Sentral ng Pilipinas. Moreover, this the Investing Corporation since a corporation
Act shall not apply to the practice of professions which is at least 60% Filipino-owned is
that are covered by specific laws and fall under the considered as Filipino. (id.)
jurisdiction of various Professional Regulatory
Boards (PRBs) or any other equivalent regulating Note: The Narra Nickel case explains that the
body, or those subject to reciprocity agreements Grandfather Rule applies only when the 60-40
with other countries. Filipino-foreign equity ownership is in doubt;
otherwise, it is the Control Test that should be used.
To the extent applicable, and provided that the
necessary licenses, work permits and visas are
C NEGATIVE LIST
properly secured from the relevant government
agencies, any occupation, employment or practice
of profession not covered by any special law or ●​ Nationalized and Partially Nationalized
reciprocity agreement as provided in the previous Industries are listed on the Negative List. The
paragraph shall be subject to the provisions of this Negative List is divided into two lists: List A lists
Act. industries where foreign ownership is limited by
the Constitution and specific law, and List B lists
industries where foreign ownership is limited for
B GRANDFATHER RULE
reasons of security, defense, risk to health and
morals and protection of small- and
●​ Grandfather Rule is “the method by which the medium-scale enterprises.
percentage of Filipino equity in a corporation
engaged in nationalized and/or partly
C1 List A: Foreign Ownership is Limited
nationalized areas of activities, provided for
by Mandate of the Constitution and
under the Constitution and other nationalization
Specific Laws
laws, is computed, in cases where corporate
shareholders are present, by attributing the
nationality of the second or even subsequent No Foreign Equity
tier of ownership to determine the nationality of
the corporate shareholder.” Thus, to arrive at the 1. Mass media, except recording (Section 11, Article
actual Filipino ownership and control in a XVI of the 1987 Constitution; Presidential
corporation, both the direct and indirect Memorandum dated 05 May 1994) and internet
shareholdings in the corporation are business (Department of Justice [DOJ] Opinion No.
determined. (Narra Nickel Mining and 40, s. 1998)
Development Corp. vs. Redmont Consolidated
Mines Corp.) 2. Practice of professions (Section 14, Article XII of
●​ “the Grandfather Rule was originally conceived the Constitution), except in cases specifically
to look into the citizenship of the individuals allowed by law following the prescribed conditions
who ultimately own and control the shares of stated therein (Section 1 of Republic Act [RA] 5181,
stock of a corporation for purposes of Section 7 [j] of RA No. 8981, Title II of Presidential
determining compliance with the constitutional Decree [PD] No. 442.) The Annex on Professions
requirement of Filipino ownership.” (id.) attached herewith and forming an integral part of
this document, indicated:
 a.​ professions where foreigners are not allowed 15. Procurement of infrastructure projects
to practice in the Philippines, except if pursuant to Section 23.4.2.1(b), (c) and (e) of the
subject to reciprocity as provided in Implementing Rules and Regulations (IRR) of RA
pertinent laws; No. 9184
b.​ corporate practice of professions with
foreign equity restrictions under pertinent 16. Exploration, development and utilization of
laws. natural resources (Section 2, Article XII of the
Constitution)
3. Retail trade enterprises with paid-up capital of
less than PhP25,000,000.00 (Section 2 of RA No. 17. Ownership of private lands (Section 7, Article II
11595, amending RA No. 8762) of the Constitution; Section 22 of CA No. 141; Section
4 of RA No. 9182), except a natural born citizen who
4. Cooperatives (Chapter III, Article 26 of RA No. has lost his Philippine citizenship and who has the
6938, as amended by Chapter II, Article 10 of RA No. legal capacity to enter into a contract under
9520), except investments of former natural born Philippine laws (Section 10 of RA No. 7042, as
citizens of the Philippines (Section 4 of RA No. 8179, amended by Section 5 of RA No. 8179)
amending RA No. 7042)
18. Operation of public utilities (Section 11, Article
5. Organization and operation of private XII of the Constitution; Section 13 of CA No. 146, as
detective, watchmen or security guards agencies amended by Section 4 of RA No. 116959; Section
(Section 4 of RA No. 5487, as amended by Section 4 2[a], 2[b] and 2[m] of RA No. 7718)
of PD No. 11 and PD No. 100, s. 1973)
19. Educational institutions other than those
6. Small-scale mining (Section 3 of RA No. 7076) established by religious groups and mission
boards, for foreign diplomatic personnel and
7. Utilization of marine resources in archipelagic their dependents, and other foreign temporary
waters, territorial sea and exclusive lakes, bays residents (Section 4, Article XIV of the Constitution)
and lagoons (Section 2, Article XII of the or for short-term high-level skills development that
Constitution) do not form part of the formal education system as
defined in Section 20 of Batas Pambansa No. 232
8. Ownership, operation and management of
cockpits (Section 5 of PD No. 449) 20. Culture, production, milling, processing,
trading except retailing, of rice and corn and
9. Manufacturable, repair, stockpiling and/or acquiring, by barter, purchase or otherwise, rice
distribution of nuclear weapons (Section 8, Article and corn and the by-products thereof (Section 5 of
II of the Constitution) PD No. 1994), subject to period of divestment
(National Food Authority [NFA] Council Resolution
10. Manufacture, repair, stockpiling and/or No. 193, s. 1998)
distribution of biological, chemical and
radiological weapons and anti-personnel mines 21. Contracts for the supply of materials, goods
(various treaties to which the Philippines is a and commodities to government-owned or
signatory and conventions supported by the -controlled corporations (GOCC), company,
Philippines) agency or municipal corporation (Section 1 of RA
No. 5183, and Section 4 of RA No. 9184)
11. Manufacture of firecrackers and other
pyrotechnic devices (Section 5 of RA No. 7183) 22. Operation of deep sea commercial fishing
vessels (Section 27 of RA No. 8550, as amended by
Up to twenty-five percent (25%) foreign equity RA No. 10654)

12. Private recruitment, whether for local or 23. Ownership of condominium units (Section 5 of
overseas employment (Article 27 of PD No. 442) RA No. 4726)

13. Contracts for the construction of 24. Private radio communications network
defense-related structures (Section 1 of (Section 11, Article XII of the Constitution, National
Commonwealth Act [CA] No. 541) Telecommunications Commission Memorandum
Circular No. 10-8-91)
Up to thirty percent (30%) foreign equity

14. Advertising (Section 11, Article XVI of the

Constitution)
C2 List B: Foreign Ownership is Limited
for Reasons of Security, Defense, Risk
Up to forty percent (40%) foreign equity
to Health and Morals and Protection
 (i) that involve advance technology as determined
of Small and Medium Scale
by the Department of Science and Technology
Enterprises
(DOST);
(ii) are endorsed as startup or startup enablers by
Up to forty percent (40%) foreign equity the lead host agencies, namely the Department of
Trade and Industry, Department of Information and
1. Manufacture, repair, storage, and/or distribution Communications Technology or DOST, pursuant to
of products and/or ingredients requiring RA No. 11337, otherwise known as the "Innovative
Philippine National Police (PNP) clearance: Startup Act;" or
a.​ Firearms (handguns to shotguns), parts of (iii) with a majority of their direct employees as
firearms and ammunition therefore, Filipinos, but in no case shall be the number of
instruments or implements used or intended to Filipino employees be less than fifteen (15), with
be used in the manufacture of firearms; paid-in equity capital of less than the equivalent of
b.​ Gunpowder; US$100,000 (RA No. 7042, as amended by RA No.
c.​ Dynamite; 11647)
d.​ Blasting supplies;
e.​ Ingredients used in making explosives; ANNEX ON PROFESSIONS
i.​ Chlorates of potassium and sodium;
ii.​ Nitrates of ammonium, potassium, sodium A. Professions where foreigners are not allowed
barium, copper (11), lead (11), calcium and to practice in the Philippines except if subject to
cuprite; reciprocity as provided in the pertinent laws:
iii.​ Nitric acid;
iv.​ Nitrocellulose; 1.​ Accountancy (Section 34 of RA No. 9298)
v.​ Perchchlorates of ammonium, potassium 2.​ Aeronautical engineering (Section 14 of PD No.
and sodium; 1570)
vi.​ Dinitrocellulose; 3.​ Agricultural and biosystems engineering
vii.​ Glycerol; (Sections 15 and 31 of RA No. 10915, repealing RA
viii.​ Amorphousphorus; No. 8559)
ix.​ Hydrogen peroxide; 4.​ Agriculture (Section 27 of Professional
x.​ Strontium nitrate powder; Regulation Commission (PRC) Resolution No.
xi.​ Toluene; and 2000-63)
xii.​ Telescopic sights, sniper and other similar 5.​ Architecture (Sections 13 and 27 of RA No. 9266)
devices. 6.​ Chemical engineering (Section 30 of RA No.
9297)
However, the manufacture or repair of these 7.​ Chemistry (Section 16, 18 and 34 of RA No.
items may be authorized by the Chief of the PNP to 10657)
non-Philippine nationals; Provided that a 8.​ Civil engineering (Section 25 of RA No. 544, as
substantial percentage of output, as determined by amended by RA No. 1582)
the said agency, is exported. Provided further that 9.​ Criminology (Section 14(a) and 27(b) of RA No.
the extent of foreign equity ownership allowed shall 11131)
be specified in the said authority/clearance (IRR of 10.​ Customs brokers (Section 25 of RA No. 9280)
RA No. 7042, as amended by IRR of RA No. 8179). 11.​ Dentistry (Section 14 and 31 of RA No. 9484)
12.​ Electrical engineering (Section 38 of RA No.
2. Manufacture and distribution of dangerous 7920)
drugs (RA No. 7042, as amended by RA No. 8179) 13.​ Electronics engineering (Section 13 and 33 of
RA No. 9292)
3. Sauna and steam bathhouses, massage clinics 14.​ Electronics technician (Sections 13 and 33 of RA
and other like activities regulated by law because No. 9292)
of risks posed to public health and morals, except 15.​ Environmental planning (Sections 8 and 28 of
wellness centers (RA No. 7042, as amended by RA RA No. 10587)
No. 8179) 16.​ Fisheries profession (Section 28 of RA No. 11398)
17.​ Food technology (Section 14(a) of RA No. 11052)
4. All forms of gambling (RA No. 7042, as amended 18.​ Dorestry (Section 14 and 27 of RA No. 10690)
by RA No. 8179) except those covered by investment 19.​ Geodetic engineering (Section 26 of RA No.
agreements with PAGCOR (PD No. 1869, as 8560)
amended by RA No. 9487) 20.​ Geology (Sections 17 and 33 of RA No. 10166)
5. Micro and small domestic market enterprises 21.​ Guidance and counseling (Sections 13 and 29 of
with paid in equity capital of less than the RA No. 9258)
equivalent of US$200,000 (RA No. 7042, as 22.​ Interior design (Sections 15 and 29 of RA No.
amended by RA No. 11647) 10350)
23.​ Landscape architecture (Sections 13 and 29 of
6. Micro and small domestic marker enterprises: RA No. 9053)
24.​ Librarianship (Sections 15 and 28 of RA No.
E BSP FOREX MANUAL
9246)
25.​ Marine deck and engineering (Section 28 of RA
No. 8544, as amended by RA No. 10635)
26.​ Master plumbing (Section 21 of RA No. 1378) F ANTI-MONEY LAUNDERING ACT
27.​ Mechanical engineering (Section 39 of RA No.
8495)
28.​ Medical technology (Section 27 of RA No. 5527, G DOMESTIC V. FOREIGN
as amended by RA No. 6138, PD No. 498 and CORPORATION
PD No. 1534)
29.​ Medicine (Section 27 of RA No. 5527, as Corporation - A corporation is an artificial being
amended by RA No. 6138, PD No. 498 and PD created by operation of law, having the right of
No. 1534) succession and the powers, attributes, and
30.​ Metallurgical engineering (Sections 17 and 34 properties expressly authorized by law or incidental
of RA No. 10688) to its existence. (Sec. 2, R.A. 11232)
31.​ Midwifery (Section 22 of RA No. 7392)
32.​ Mining engineering (Sections 15, 16 and 28 of Domestic Corporation – a corporation organized
RA No. 4274) under the laws of the Philippines of which at least
33.​ naval architecture (Sections 13 and 31 of RA No. sixty percent (60%) of the capital stock outstanding
10698) and entitled to vote is owned and held by citizens of
34.​Nursing (Sections 13 and 20 of RA No. 9173) the Philippines; or a corporation organized abroad
35.​ Nutrition nd dietetics (Sections 15 and 31 of RA and registered as doing business in the Philippines
No. 10862) under the Corporation Code of which one hundred
36.​ Optometry (Section 34 of RA No. 8050) percent (100%) of the capital stock outstanding and
37.​ Pharmacy (Sections 14 and 21 of RA No. 10918) entitled to vote is wholly owned by Filipinos or a
38.​ Physical therapy (Sections 15 and 21 of RA No. trustee of funds for pension or other employee
5680) and occupational therapy (Sections 13(a) retirement or separation benefits, where the trustee
and 25 of RA No. 11241) is a Philippine national and at least sixty percent
39.​ Professional teaching (Sections 15(a) and 24 of (60%) of the fund will accrue to the benefit of
RA NO. 7836, as amended by RA No. 9293; Philippine nationals (Sec. 3, R.A. 7042, as amended)
Section 7(j) of RA No. 8981, PRC Resolution No. – a corporation that is organized,
2012-668 and RA No. 11448) registered, and existing under Philippine laws.

40.​Psychology (Sections 12, 13 and 24 of RA No. Foreign Corporation – a foreign corporation is one
10029) formed, organized or existing under laws other than
41.​ Radiologic and x-ray technology (Section 17 (b) those of the Philippines' and whose laws allow
of RA No. 7431) Filipino citizens and corporations to do business in
42.​Real estate service (real estate consultant, real its own country or State. It shall have the right to
estate appraiser, real estate assessor, real estate transact business in the Philippines after obtaining
broker and real estate salesperson) (Section 24 a license for that purpose in accordance with this
of RA No. 9646) Code and certificate of authority from the
43.​ Respiratory therapy (Sections 13 and 34 of RA appropriate government agency. (Sec. 140, R.A.
No. 10024) 11232)
44.​Sanitary engineering (Section 32 of RA No. 1364)
45.​ Social work (Section 18 of RA No. 4373, as
amended) H DOING BUSINESS DEFINED
46.​Speech Language Pathology (Sections 13(a)
and 25 of RA No. 11249)
"Doing Business" shall include:
47.​ Veterinary medicine (Sections 15 and 31 of RA
●​ soliciting orders, service contracts, opening
No. 9268)
offices, whether called "liaison" offices or
48.​Other professions as may be provided by law or
branches;
by treaty where the Philippines is a party
●​ appointing representatives or distributors
domiciled in the Philippines or who in any
B. Corporate practice of professions with foreign
calendar year stay in the country for a period or
equity restrictions under pertinent laws:
periods totalling one hundred eighty (180) days
or more;
1.​ Architecture (Section 37 of RA No. 9266)
●​ participating in the management, supervision
or control of any domestic business, firm, entity
D INTERNATIONAL AGREEMENTS or corporation in the Philippines; and
RELATED TO THE PHILIPPINES ●​ 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 APAC subsidiaries, branches, and affiliates. It
progressive prosecution of, commercial gain or also serves as its general administration,
of the purpose and object of the business business planning, and communication
organization: centre.
Provided, however, That the phrase "doing ●​ Regional operating headquarters (ROHQ)
business”: shall not be deemed to include mere ○​ Regional operating headquarters is a branch
investment as a shareholder by a foreign entity in of a foreign corporation that is permitted to
domestic corporations duly registered to do generate income in the Philippines by
business, and/or the exercise of rights as such providing qualifying services to its
investor; nor having a nominee director or officer to headquarters, subsidiaries, affiliates, or
represent its interests in such corporation; nor branches in the Asia-Pacific (APAC) region
appointing a representative or distributor domiciled and other international markets.
in the Philippines which transacts business in its ○​ It can only be established and run by a
own name and for its own account. [Sec. 3(d), R.A. foreign corporation with subsidiaries,
7042, as amended] branches, affiliates, or clients in the
Asia-Pacific (APAC) and other international
markets.
I DOMESTIC SUBSIDIARY, BRANCHES,
HEADQUARTERS, REPRESENTATIVE
Representative Office
OFFICE, PARTNERSHIP
●​ A representative office is a business structure
that serves as a local liaison office for a
Domestic Subsidiary foreign corporation seeking to establish a
●​ a domestic subsidiary involves incorporation presence in the country without engaging in
under Philippine laws. By incorporation, the revenue-generating activities. It receives no
domestic subsidiary acquires a juridical funding from the host country and is entirely
personality that is separate and distinct from subsidized by its headquarters.
that of its parent company. (Sec. 2, ●​ A representative office’s activities are limited,
Corporation Code) and it is forbidden for the representative
●​ From the viewpoint of taxation, the office to provide its services to third parties.
subsidiary becomes a domestic corporation *note: most definitions are from Acclime
while the parent company remains a Philippines, hence, no legal basis, and are based
non-resident foreign corporation. (Sec. 22 (C) only on business jargon*
and (I), Tax Code)
Partnership
●​ Two or more persons bind themselves to
Branch Office contribute money, property, or industry to a
●​ a branch office does not acquire a separate common fund, with the intention of dividing
juridical personality but becomes merely an the profits among themselves. (Art. 1767,
extension of its parent company. (Sec. 123, NCC)
Corporation Code) ●​ Two or more persons may also form a
●​ From the point of view of taxation, the partnership for the exercise of a profession.
foreign company upon obtaining a license to (id.)
do business through a branch office ●​ The partnership has a juridical personality
becomes a resident foreign corporation (Sec. separate and distinct from that of each of
22, (H), Tax Code) with respect to the the partners, even in case of failure to
transactions that are effectively connected comply with the requirements of article 1772,
with its business in the Philippines. first paragraph. (Art. 1768, NCC)

Headquarters
●​ Regional area headquarters (RHQ)
○​ an administrative branch of a foreign
corporation conducting business in the
Asia-Pacific (APAC) and other international
markets.
○​ It can only be established and run by a
foreign corporation with subsidiaries,
branches, affiliates, or clients in the APAC
region and other international markets. It is
not permitted to manage their activities or
to generate income in the Philippines from
any source.
○​ The primary function of a Philippine RHQ is
to oversee, manage, inspect, or coordinate its