Reviewer other employee retirement or separation benefits, where the trustee is a

sixty percent (60%) of the fund will accrue to the benefit of Philippine na
FOREIGN INVESTMENTS ACT corporation and its non-Filipino stockholders own stocks in a Securities an
registered enterprise, at least sixty percent (60%) of the capital stock outs
(R.A. 7042)
each of both corporations must be owned and held by citizens of the Philip
(60%) of the members of the Board of Directors of each of both corpor
POLICY OF THE LAW
Philippines, in order that the corporation shall be considered a Philippine
8179).
SEC. 2. Declaration of Policy. - It is the policy of the State to attract, promote and welcome productive
investments from foreign individuals, partnerships, corporations, andb)governments, including their
the term investment political
shall mean equity participation in any enterpr
subdivisions, in activities which significantly contribute to nationalthe
industrialization and socio-economic
laws of the Philippines;
development to the extent that foreign investment is allowed in such activity by the Constitution and
relevant laws. Foreign investments shall be encouraged in enterprisesc) thethat significantly
term foreign expand livelihood
investment shall mean an equity investment made
and employment opportunities for Filipinos; enhance economic value the form of foreign exchange and/orthe
of farm products; promote other assets actually transferred to the
welfare of Filipino consumers; expand the scope, quality and volumewith of exports and their
the Central Bankaccess
whichto shall
foreign
assess and appraise the value of s
markets; and/or transfer relevant technologies in agriculture, industry
exchange; and support services. Foreign
investments shall be welcome as a supplement to Filipino capital and technology in those enterprises
serving mainly the domestic market. xxxxxxx
As a general rule, there are no restrictions on extent of foreign e) ownership of export
the term export enterprises.shall
enterprise In mean an enterprise wherein a man
domestic market enterprises, foreigners can invest as much as one (including
hundred percent
tourism) (100%) equityexports
enterprise except sixty percent (60%) or more of it
in areas included in the negative list. Foreign owned firms catering mainly
purchasesto the domestic
products market shall
domestically andbe exports sixty percent (60%) or more o
encouraged to undertake measures that will gradually increase Filipino participation in their businesses by
taking in Filipino partners, electing Filipinos to the board of directors, implementing
f) the transfermarket
term domestic of technology
enterprise shall mean an enterprise wh
to Filipinos, generating more employment for the economy and enhancing skills of Filipino workers.
renders services to the domestic market entirely or if exporting a portion o
export at least sixty percent (60%) thereof; and
Basically the purpose is to encourage FOREIGN
INVESTMENTS because that would translate to the creation g) the term Foreign Investments Negative List or Negative List
of jobs, etc. In other words, it has a multiplier effect. economic activity whose foreign ownership is limited to a maximum of for
capital of the enterprises engaged therein.
DEFINITION OF TERMS

SEC. 3. Definitions. As used in this Act: I.

EXPORT ENTERPRISE: at least 60% of its production or
output is exported
a) the term Philippine National shall mean a citizen of the Philippines or a domestic partnership or
association wholly owned by citizens of the Philippines; or a corporation
GENERALorganized
RULE: under theare
There lawsnoofrestrictions
the on extent of
Philippines of which at least sixty percent (60%) of the capital stock outstanding and entitled to vote
foreign ownership (can be 100% owned is by foreigners)
owned and held by citizens of the Philippines or a corporation organized abroad and registered as doing
business in the Philippines under the Corporation Code of which one hundred percent (100%) of the capital
stock outstanding and entitled to vote is wholly owned by Filipinos or a trustee of funds for pension or
 - Regardless of the capitalization, for as long as you
are into export, you can be 100% owned by
foreigners.
EXCEPTION: If they are engaged in activities wherein
ownership is limited or restricted in the negative list
II. DOMESTIC ENTERPRISE: less than 60% of its production
or output is exported
GENERAL RULE: At least 60% Filipinos; at most 40%
Foreigners. Cannot be 100% foreign owned.
EXCEPTIONS: 100% foreign ownership if:
1. Paid-up capital of at least $200,000; or
2. Involved in advanced technology as certified by the
DOST (capital must be at least $100,000); or
3. Minimum of 50 employees (capital must be at least
$100,000).
Examples:
1. 55% export. Paid-up capital is only $150k. 50
employees. Can I be 100% foreign-owned?
- YES. Although you are a domestic enterprise, but
you employ 50 people (and the capital is more
than $100k). Exception #3.
2. 75% export. Paid-up capital of $50k. 30 employees.
Can I be 100% foreign-owned?
- YES. Because you are an export enterprise.
Regardless of the capitalization, an export
enterprise can be 100% foreign owned for as long
as it is not engaged in activities where ownership
limited in the negative list.
TAKE NOTE of the items in the 8TH FOREIGN INVESTMENT
NEGATIVE LIST
So:
1. See if it is in the negative list.
2. If not, follow the rules on foreign ownership above
When is a corporation considered as a Philippine
national?
- When at least 60% of the outstanding capital stock is
owned by Filipinos.
- If the percentage of Filipino ownership in the
corporation is less than 60%, only the number of
shares corresponding to such percentage shall be
considered as of Philippine nationality and the other
shares shall be recorded as belonging to aliens.
SEC. 3. Definitions. As used in this Act:
xxxxxxx
d) the phrase doing business shall include soliciting orders, service con
called liaison offices or branches; appointing representatives or distribut
or who in any calendar year stay in the country for a period or periods tot
days or more; participating in the management, supervision or control o
entity or corporation in the Philippines; and any other act or acts that im
dealings or arrangements, and contemplate to that extent the perform
exercise of some of the functions normally incident to, and in progressive p
or of the purpose and object of the business organization: Provided, how
business shall not be deemed to include mere investment as a shareholder
corporations duly registered to do business, and/or the exercise of rights
nominee director or officer to represent its interests in such corporation; no
distributor domiciled in the Philippines which transacts business in its own n
What are the requirements if already doing business in
the Philippines?
- You have to get a license from the SEC, appoint a
resident agent etc.
What are the consequences if youre doing business
without the necessary permit?
- GENERAL RULE: Cannot sue but can be sued.
- EXCEPTION: ESTOPPEL.
o Merryl Lynche case: FC tried to sue DC. DC raised
the defense that it cannot be sued because FC is
doing business without license.
 o SC: DC already estopped from questioning the
personality of FC. Estoppel also applies to
domestic corporations dealing with foreign
corporations without license.
Can a former natural born Filipino now a naturalized US
citizen acquire land in the Philippines?
- YES Under the FIA but limited only to a certain
number of hectares (5,000 sqm for urban and 3,000
sqm for rural)
DOING BUSINESS:
1. soliciting orders, service contracts, opening offices,
whether called liaison offices or branches;
2. appointing representatives or distributors
domiciled in the Philippines or who in any calendar
year stay in the country for a period or periods
totaling one hundred eighty (180) days or
more;
3. participating in the management, supervision or
control of any domestic business, firm, entity or
corporation in the Philippines; and
4. any other act or acts that imply a continuity of
commercial dealings or arrangements, and
contemplate to that extent the performance of acts
or works, or the exercise of some of the functions
normally incident to, and in progressive prosecution
of, commercial gain or of the purpose and object of
the business organization
- so, not isolated
NOT DOING BUSINESS:
1. 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
2. having a nominee director or officer to represent
its interests in such corporation; nor
3. appointing a representative or distributor
domiciled in the Philippines which transacts business
in its own name and for its own account;
REGISTRATION OF INVESTMENTS OF NON-PHILIPPIN
SEC. 5. Registration of Investments of Non-Philippine Nationals.
a non-Philippine national, as that term is defined in Section 3 a), and no
may, upon registration with the Securities and Exchange Commission (SE
Regulation and Consumer Protection (BTRCP) of the Department of Trade an
proprietorships, do business as defined in Section 3 d) of this Act or invest
one hundred percent (100%) of its capital, unless participation of non-Philip
is prohibited or limited to a smaller percentage by existing law and/or unde
SEC or BTRCP, as the case may be, shall not impose any limitations on the
an enterprise additional to those provided in this Act: Provided, however,
avail of incentives under the Omnibus Investment Code of 1987 must apply
of Investments (BOI), which shall process such application for registration
for evaluation prescribed in said Code: Provided, finally, That a non-Philippin
in the same line of business as an existing joint venture, in which he o
substantial partner, must disclose the fact and the names and addresses
joint venture in his application for registration with SEC. During the transito
15 hereof, SEC shall disallow registration of the applying non-Philippine
venture
FOREIGN INVESTMENTS IN EXPORT ENTERPR
SEC. 6. Foreign Investment in Export Enterprises. Foreign investme
products and services do not fall within Lists A and B of the Foreign Inve
under Section 8 hereof is allowed up to one hundred percent (100%) owners
Export enterprises which are non-Philippine nationals shall register with B
may be required to ensure continuing compliance of the export enterprise w
shall advise SEC or BTRCP, as the case may be, of any export enterprise th
requirement. The SEC or BTRCP shall thereupon order the non-complying
sales to the domestic market to not more than forty percent (40%) of its tot
with such SEC or BTRCP order, without justifiable reason, shall subject the e
or BTRCP registration, and/or the penalties provided in Section 14 hereof.
 FOREIGN INVESTMENT IN DOMESTIC MARKET ENTERPRISES

SEC. 7. Foreign Investment 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 Constitution existing law or the Foreign Investment Negative List under Section 8 hereof. (As
amended by R.A. 8179)