PHILIPPINES Law and Practice Contributed by: Francis L. Fragante and Jennifer Marie G. Castro, Cruz Marcelo & Tenefrancia
The most recent Twelfth Negative List was issued on 27 June 2022. It contains two lists: • list A, which enumerates areas of investment where foreign ownership is limited pursuant to the Consti - tution and/or by specific laws; and • list B, which lists areas of investment where for - eign ownership is limited for reasons of security, defence, risk to health and morals and protection of local small and medium scale enterprises. Some activities included in List A of the Twelfth Nega - tive List are as follows. • No foreign equity: (a) mass media, except recording and internet business; (b) practice of professions, except in cases spe - cifically allowed by law following the prescribed conditions stated therein; (c) retail trade enterprises with paid-up capital of less than PHP25 million; (d) co-operatives, except investments of former natural born citizens of the Philippines; (e) organisation and operation of private detective, watchmen or security guards agencies; (f) small-scale mining; (g) utilisation of marine resources in archipelagic waters, territorial sea and exclusive lakes, bays and lagoons; (h) ownership, operation and management of cockpits; (i) manufacture, repair, stockpiling and/or distribu - tion of nuclear weapons; (j) manufacture, repair, stockpiling and/or distribu - tion of biological, chemical and radiological weapons and anti-personnel mines; and (k) manufacture of firecrackers and other pyro - technic devices • Up to 25% foreign equity: (a) private recruitment, whether for local or over - seas employment; and (b) contracts for the construction of defence-relat - ed structures. • Up to 30% foreign equity: (a) advertising. • Up to 40% foreign equity: (a) procurement of infrastructure projects;
(b) exploration, development and utilisation of natural resources; (c) ownership of private lands, except by a natural born citizen who has lost his Philippine citizen - ship and who has the legal capacity to enter into a contract under Philippine laws; (d) operation of public utilities; (e) educational institutions other than those established by religious groups and mission boards, for foreign diplomatic personnel and their dependents, and other foreign temporary residents or for short-term high-level skills de - velopment that does not form part of the formal education system; (f) culture, production, milling, processing, trading except retailing, of rice and corn, and acquir - ing, by barter, purchase or otherwise, rice and corn and the by-products thereof, subject to a period of divestment; (g) contracts for the supply of materials, goods and commodities to government-owned or -controlled corporations (GOCC), companies, agencies or municipal corporations; (h) operation of deep sea commercial fishing ves - sels; (i) ownership of condominium units; and (j) private radio communications network. The maximum amount of equity held by a foreigner in a corporation will, therefore, depend on the type of activity that the entity will engage in. If the corporation is engaged in a partially national - ised business activity, foreigners may become mem - bers of the board of directors only in proportion to their allowable participation or share in the capital of such entities. Further, foreigners cannot intervene in the management, operation, administration or control of corporations that are engaged in nationalised or partially nationalised business activities, whether as officers, employees or labourers thereof. However, the Secretary of Justice may authorise their employment as foreign technical personnel. Domestic market enterprises produce goods or pro - vide services exclusively for the domestic market. If they export a portion of their products, they do not consistently export at least 60% of their output.
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