Article 20Supplement v1, p. 20

COMMERCIAL LAWS SUPPLEMENT

extent of foreign ownership in an enterprise additional to

those provided in this Act: Provided, however , That any

enterprise

seeking

to

avail

of

incentives

under

the

Omnibus

Investment

Code

of

1987

must

apply

for

registration with the Board of Investments (BOI), which

shall

process

such

application

for

registration

in

accordance with the criteria for evaluation prescribed in

said

Code:

Provided,

finally ,

That

a

non-Philippine

national intending to engage in the same line of business

as an existing joint venture, in which he or his majority

shareholder is a substantial partner, must disclose the

fact and the names and addresses of the partners in the

existing joint venture in his application for registration

with SEC. During the transitory period as provided in

Section 15 hereof, the SEC shall disallow registration of the

applying non-Philippine national if the existing joint

venture

enterprise,

particularly

the

Filipino

partners

therein, can reasonably prove they are capable to make

the investment needed for the domestic market activities

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.

SECTION 6. Foreign Investments in Export Enterprises . —

Foreign investment in export enterprises whose products

and services do not fall within Lists A and B of the Foreign

Investment Negative List provided under Section 8 hereof

is allowed up to one hundred percent (100%) ownership.

Export enterprises which are non-Philippine nationals

shall register with BOI and submit the reports that may

be required to ensure continuing compliance of the

export enterprise with its export requirement. BOI shall

advise SEC or BTRCP, as the case may be, of any export

enterprise that fails to meet the export ratio requirement.

The

SEC

or

BTRCP

shall

thereupon

order

the

non-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 cancellation of SEC or BTRCP registration,

and/or the penalties provided in Section 14 hereof.

SECTION 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 Constitution and existing law or the

Foreign Investment Negative List under Section 8 hereof.

(as amended by RA No 8179)

SECTION

8.

List

of

Investment

Areas

Reserved

to

Philippine Nationals (Foreign Investment Negative List) .

— The Foreign Investment Negative List shall have two (2)

component lists: A and B:

a) List A shall enumerate the areas of activities reserved to

Philippine nationals by mandate of the Constitution and

specific laws.

b)

List

B

shall

contain

the

areas

of

activities

and

enterprises regulated pursuant to law:

1) which are defense-related activities, requiring prior

clearance

and

authorization

from

Department

of

National Defense (DND) to engage in such activity, such

as the manufacture, repair, storage and/or distribution of

firearms, ammunition, lethal weapons, military ordnance,

explosives,

pyrotechnics and similar materials, unless

such

manufacturing

on

repair

activity is specifically

authorized, with a substantial export component, to a

non-Philippine national by the Secretary of National

Defense; or

2) which have implications on public health and morals,

such as the manufacture and distribution of dangerous

drugs,

all

forms of gambling, nightclubs, bars, beer

houses, dance halls, sauna and steam bathhouses and

massage clinics.

Small and medium-sized domestic market enterprises

with paid-in equity capital less than the equivalent of Two

hundred

thousand

US

dollars

(US$200,000.00),

are

reserved to Philippine nationals: Provided, That if (1) they

involve

advanced

technology

as

determined

by the

Department

of

Science and Technology, or (2) they

employ

at

least

fifty

(50)

direct employees, then a

minimum paid-in capital of One hundred thousand US

dollars (US$100,000.00) shall be allowed to non-Philippine

nationals.

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

Presidential

Proclamation.

The

Transitory

Foreign

Investment

Negative

List

established in Section 15 hereof shall be replaced at the

end of the transitory period by the first Regular Negative

List to be formulated and recommended by NEDA,

following the process and criteria, provided in Sections 8

and 9 of this Act. The first Regular 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 Negative Lists

shall become effective fifteen (15) days after publication in

a newspaper of general circulation in the Philippines:

Provided,

however,

That

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.

Amendments

to

List

B

after

promulgation

and

publication

of

the

first

Regular

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 RA No 8179)

SECTION 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 Section 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). (as amended by RA No 8179)

SECTION.

10.

Other

Rights

of

Natural

Born

Citizen

Pursuant to the Provisions of Article XII, Section 8 of the

Constitution . — Any natural born citizen who has 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 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) square meters in the case of urban

land or three (3) hectares in the case of rural land for use

© Compiled by RGL

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