Article 19Supplement v1, p. 19

COMMERCIAL LAWS SUPPLEMENT

inconsistent with the provisions of this Code are hereby

repealed, amended or modified accordingly.

ARTICLE 86. Effectivity . — This Code shall take effect

immediately upon approval.

DONE in the City of Manila, this 16th day of July, in the

year of Our Lord, Nineteen Hundred and Eighty-Seven.

Published in the Official Gazette, Vol. 83 No. 30, 3422-O-7

Supp., on July 27, 1987.

(Omnibus Investments Code of 1987, Executive Order No.

226, [July 16, 1987])

RA No 7042 | Foreign Investments Act of

1991

As amended by RA No 8179

June 13, 1991

REPUBLIC ACT NO. 7042

As amended by RA No 8179

AN

ACT

TO

PROMOTE

FOREIGN

INVESTMENTS,

PRESCRIBE

THE

PROCEDURES

FOR

REGISTERING

ENTERPRISES DOING BUSINESS IN THE PHILIPPINES,

AND FOR OTHER PURPOSES

SECTION 1. Title . — This Act shall be known as the Foreign

Investments Act of 1991.

SECTION 2. Declaration of Policy . — 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

national

industrialization

and

socioeconomic

development to the extent that foreign investment is

allowed in such 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 the welfare of

Filipino

consumers;

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.

As a general rule, there are no restrictions on extent of

foreign ownership of export enterprises. In domestic

market enterprises, foreigners can invest as 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

participation in their businesses by taking in Filipino

partners, electing Filipinos to the board of directors,

implementing

transfer

of

technology

to

Filipinos,

generating more employment for the economy and

enhancing skills of Filipino workers.

SECTION 3. Definitions . — As used in this Act:

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 organized under the laws of the Philippines

of which at least sixty percent (60%) of the capital stock

outstanding and entitled to vote is 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 other employee retirement

or separation benefits, where the trustee is a Philippine

national and at least sixty percent (60%) of the fund will

accrue to the benefit of Philippine nationals: Provided,

That

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 stock outstanding and

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 the Board of

Directors,

in

order

that

the

corporation

shall

be

considered a Philippine national. (as amended by RA No

8179)

b) The term investment shall mean equity participation in

any enterprise organized or existing under the laws of the

Philippines;

c) The term foreign investment shall mean as 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 which shall assess and appraise the

value of such assets other than foreign exchange;

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

calendar year stay in the country for a period or periods

totalling

one

hundred

eighty

(180)

days

or

more;

participating in the management, supervision or control

of any domestic business, firm, entity or corporation in

the Philippines; and 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: Provided, however , That the phrase doing

business:

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 represent its interests in

such corporation; nor appointing a representative or

distributor domiciled in the Philippines which transacts

business in its own name and for its own account;

e) The term export enterprise shall mean an enterprise

wherein a manufacture, processor or service (including

tourism) enterprise exports sixty per cent (60%) or more of

its

output,

or

wherein

a trader purchases products

domestically and exports sixty per cent (60%) or more of

such purchases;

f) The term domestic market enterprise shall mean an

enterprise which produces goods for sale, or renders

services to the domestic market entirely or if exporting a

portion of its output fails to consistently export at least

sixty percent (60%) thereof; and

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 maximum

of

forty

percent

(40%)

of the equity capital of the

enterprises engaged therein.

SECTION 4. Scope . — This Act shall not apply to banking

and other financial institutions which are governed and

regulated by the General Banking Act and other laws

under the supervision of the Central Bank.

SECTION 5. Registration of Investments of Non-Philippine

Nationals .

—

Without

need

of

prior

approval,

a

non-Philippine national, as that term is defined in 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 Industry in the case of single

proprietorships, do business as defined in Section 3 (d) of

this Act or invest in a domestic enterprise up to one

hundred percent (100%) of its capital, unless participation

of non-Philippine nationals in the enterprise is prohibited

or limited to a smaller percentage by existing law and/or

under the provisions of this Act. The SEC or BTRCP, as the

case may be, shall not impose any limitations on the

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