Republic of the Philippines

CONGRESS OF THE PHILIPPINES

Metro Manila

______________th Congress
Third Regular Session

Begun and held in Metro Manila, on ________ (day), the _____________th day of
_________ (month), _____________ (year).

REPUBLIC ACT NO. _________

AN ACT LIBERALIZING FOREIGN INVESTMENTS AND PROFESSIONAL PRACTICE,

REPEALING STATUTORY PROVISIONS THAT IMPOSE LIMITATIONS
ON FOREIGN EQUITY AND FOREIGN PROFESSIONALS,
AND ESTABLISHING A FOREIGN INVESTMENT COUNCIL

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Title.- This Act shall be known as the “Foreign Investments Liberalization Act of
__________”.

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 socio-economic development to the extent that foreign investment is allowed in
such activity by the Constitution. Foreign investments shall be encouraged to create jobs (through the
establishment of new business enterprises or expansion of existing business enterprises), reduce
consumer prices (through the increase in supply of goods and services), transfer technologies, expand
access to foreign markets, promote economic growth, strengthen free competition and enhance
efficiency. Foreign investments shall also be employed to pursue anti-corruption through systemic
change (by facilitating the entry of independent competitors vis-a-vis the existing cartels of government
suppliers).

The artificial legal barriers to foreign investments benefit only the few elite monopolists and
oligopolists, at the expense of the majority of the workers and consumers, who are unfairly deprived of
job opportunities and cheaper goods and services, as a natural consequence of the investment
limitations. Pursuant to the Constitutional principle of social justice, the matter of foreign investment
policy must hereby be resolved in favor Filipino workers and consumers and their basic needs for jobs
and cheaper consumer goods and services, as against the proprietary interests of the Filipino capitalists
who have the adequate resources to protect themselves.

Section 3. Omnibus Lifting of Nationality Requirements.- Except as otherwise provided in this Act,
and subject to the provisions of the Constitution, all local and foreign investors shall be subject to the
equal protection of the laws.

All statutory laws and implementing rules and regulations that impose nationality requirements or
foreign investment limitations on various activities and enterprises are hereby repealed, except as
otherwise provided in this Act, and subject to the provisions of the Constitution.

Section 4. Limitation of Scope.- Except as otherwise provided in this Act, the omnibus lifting of
nationality requirements or foreign investment limitations shall not apply to Micro Enterprises under

1
Republic Act No. 9501, Cooperatives under Republic Act No. 9520, Small-Scale Mining under
Republic Act No. 7076, and Public Lands under Commonwealth Act No. 141.

PROFESSIONAL PRACTICE

Section 5. Pharmacy.- Section 18 of Republic Act No. 5921 is hereby amended to read as follows:

“Section 18. Candidate for board examination.- A candidate for the board examination in
Pharmacy shall have the following qualifications:

(a) He shall be a [natural-born] citizen of the Philippines[;], OR A CITIZEN, SUBJECT

OR NATIONAL OF A FOREIGN COUNTRY THAT PERMITS FILIPINOS TO
PRACTICE PHARMACY WITHIN ITS TERRITORIES;

(b) He shall be of good moral character;

(c) He shall have completed an Internship Program which shall consist of at least nine
hundred sixty hours, one-half of which shall be spent equally distributed in a prescription
pharmacy, a pharmaceutical manufacturing laboratory and a hospital pharmacy duly
accredited by the Council of Pharmacy and the rest of the hours of internship shall be
spent in any or all of the said establishments at the choice of the candidate.

For this purpose, the above-mentioned prescription pharmacy, pharmaceutical

manufacturing laboratory and hospital pharmacy shall keep a separate record of Pharmacy
students who have undergone said internship program directly under their control and as a
result thereof shall issue the proper certificate of said hours of internship. It shall also be
the duty of said establishments to submit annually a complete report of the names of those
who have undergone training under their supervision and the corresponding number of
hours of internship credit of each of the pharmacy students to their respective colleges or
school and to the Board of Pharmacy for proper accreditation; and

(d) He shall have graduated with a degree of Bachelor of Science in Pharmacy or with an
equivalent degree from a school, college or university duly accredited by the Council of
Pharmaceutical Education after satisfactorily completing a standard pharmacy course of
not less than five academic years.”

Section 6. Pharmacy.- Section 39 of Republic Act No. 5921 is hereby amended to read as follows:

“Section 39. Requirements for the opening and operation of drugstores and pharmacies.- The
minimum requirements necessary for the opening and operation of drugstores and pharmacies
shall be in accordance with the rules and regulations to be prescribed by the Food and Drug
Administration in accordance with the provisions of this Act. Only [natural-born] Filipino
citizens, OR CITIZENS, SUBJECTS OR NATIONALS OF A FOREIGN COUNTRY THAT
PERMITS FILIPINOS TO OPEN AND OPERATE DRUGSTORES AND PHARMACIES
WITHIN ITS TERRITORIES, AND who are registered pharmacists, can apply for the opening
of a retail drugstore.”

Section 7. Radiologic and X-Ray Technology.- Section 19 of Republic Act No. 7431 is hereby amended
to read as follows:

“Sec. 19. Qualifications for Examination. — Every applicant for examination under this Act
shall, prior to admission for examination establish to the satisfaction of the Board that he:
(a) Is a Filipino citizen[;],OR A CITIZEN, SUBJECT OR NATIONAL OF A FOREIGN
COUNTRY THAT PERMITS FILIPINOS TO PRACTICE RADIOLOGIC
TECHNOLOGY WITHIN ITS TERRITORIES;

2
 (b) Is of good moral character and has not been convicted of a crime involving moral
turpitude; and

(c) Is a holder of a baccalaureate degree in radiologic technology from a school, college

or university recognized by the Government if he applies for the radiologic technology
examination or is a holder of an associate in radiologic technology diploma from a
school, college or university recognized by the Government if he applies for the x-ray
technology examination.”

Section 8. Criminology.- Section 12 of Republic Act No. 6506 is hereby amended to read as follows:

“SECTION 12. Qualifications for Examination. — Any person applying for examination and
for a certificate, shall, prior to admission to examination, establish to the satisfaction of the
Board that:

(a) He is at least eighteen years of age and a citizen of the Philippines[;], OR A CITIZEN,
SUBJECT OR NATIONAL OF A FOREIGN COUNTRY THAT PERMITS FILIPINOS TO
PRACTICE CRIMINOLOGY WITHIN ITS TERRITORIES;

(b) He must be a person of good moral character, as certified to by at least three persons of
good standing in the community wherein he resides;

(c) He must not have been convicted of a crime involving moral turpitude; and

(d) He has graduated in Criminology from a school, college or institute recognized by the
Government after completing a four-year resident collegiate course leading to the degree of
Bachelor of Science in Criminology (B.S. Crim.): provided, that holders of Bachelor of Laws
degree may, within five years after the approval of this Act, take this examination after
completing at least ninety-four (94) units Criminology, Law Enforcement, Police Science and
Penology subjects.”

Section 9. Forestry.- Section 14 of Republic Act No. 6239 is hereby amended to read as follows:

“SECTION 14. Qualifications for Examination. — Any person applying for admission to the
forester examination shall, prior to the date of the examination, establish to the satisfaction of
the Board that he has the following qualifications:

(a) At least twenty-one years of age;

(b) A citizen of the Philippines[;],OR A CITIZEN, SUBJECT OR NATIONAL OF A

FOREIGN COUNTRY THAT PERMITS FILIPINOS TO PRACTICE FORESTRY WITHIN
ITS TERRITORIES;

(c) Of good reputation and good moral character; and

(d) A graduate of a four-year course in forestry or its equivalent from an educational institution
in the Philippines or abroad.”

Section 10. Law.- Section 2 of Rule 138 the Rules of Court is hereby amended to read as follows:

“Section 2. Requirements for all applicants for admission to the bar. — Every applicant for
admission as a member of the bar must be a citizen of the Philippines, OR A CITIZEN OR
SUBJECT OF A FOREIGN COUNTRY THAT PERMITS FILIPINOS TO PRACTICE LAW
WITHIN TERRITORIES, at least twenty-one years of age, and of good moral character; and
must produce before the Supreme Court satisfactory evidence of good moral character, and that
no charges against him, involving moral turpitude, have been filed or are pending in any court
in the Philippines, AND IF HE IS AN ALIEN, NO SUCH CHARGES HAVE BEEN FILED OR

3
 ARE PENDING IN ANY COURT IN THE COUNTRY OF WHICH HE IS A CITIZEN OR
SUBJECT.”

BUSINESS ENTERPRISES

Section 11. Fisheries.- Section 5 of Republic Act No. 8550 is hereby amended to read as follows:

“Sec. 5. Use of Philippine Waters. - The use and exploitation of the fishery and aquatic
resources in Philippine waters shall be IN ACCORDANCE WITH THE CONSTITUTION.
[reserved exclusively to Filipinos: Provided, however, That] Research and survey activities may
be allowed [under strict regulations,] for [purely] research, scientific, technological and
educational purposes [that would also benefit Filipino citizens].”

Section 12. Retail Trade.- Section 5 of Republic Act No. 8762 is hereby amended to read as follows:

“Sec. 5. Foreign Equity Participation. - Foreign-owned partnerships, associations and

corporation formed and organized under the laws of the Philippines may, upon registration with
the Securities and Exchange Commission (SEC) and the Department of Trade and Industry
(DTI), or in case of foreign owned single proprietorships, with the DTI, engage or invest in the
retail trade business, [subject to the following categories.]

[Category A – Enterprises with paid-up capital of the equivalent in Philippine

Pesos of less than Two million five hundred thousand US dollars
(US$2,500,000.00) [shall be reserved exclusively for Filipino citizens and
corporations wholly owned by Filipino citizens].

[Category B – Enterprises with a minimum paid-up capital of the equivalent in

Philippine Pesos of two million five hundred thousand US dollar
(US$2,500,000.00) but less than Seven million five hundred thousand US dollars
(US$7,500,000.00) [may be wholly owned by foreigners except for the first two
(2) years after the effectivity of this Act wherein foreign participation shall be
limited to not more than sixty percent (60%) of total equity].

[Category C – Enterprises with a paid-up capital of the equivalent in Philippine

Pesos of Seven million five hundred thousand US dollars (US$7,500,000.00), or
more [may be wholly owned by foreigners: Provided, however, That in no case
shall the investments for establishing a store in vestments for establishing a store
in Categories B and C be less than the equivalent in Philippine pesos of Eight
hundred thirty thousand US dollars (US$830,000.00)].

[Category D – Enterprises specializing in high-end or luxury products [with a

paid-up capital of the equivalent in Philippine Pesos of Two hundred fifty
thousand US dollars (US$250,000.00) per store may be wholly owned by
foreigners].

“EXCEPT IN MICRO-SIZED DOMESTIC MARKET ENTERPRISES, AS DEFINED UNDER

REPUBLIC ACT NO. 9178 AND OTHER LAWS, WHICH SHALL BE RESERVED TO
FILIPINO CITIZENS, OR TO CORPORATIONS, PARTNERSHIPS, ASSOCIATIONS OR
COOPERATIVES WHOLLY OWNED BY THEM, UNLESS OTHERWISE PROVIDED IN
SECTION 9 OF REPUBLIC ACT NO. 7042, AS AMENDED BY REPUBLIC ACT NO. 8179
AND BY THIS REPUBLIC ACT, KNOWN AS THE FOREIGN INVESTMENTS ACT
GRANTING INVESTMENT RIGHTS TO FORMER NATURAL-BORN FILIPINOS.

“The foreign investor shall [be required to] maintain in the Philippines the full amount of the

4
 prescribed minimum capital unless the foreign investor has notified the SEC and the DTI of its
intention to repatriate its capital and cease operations in the Philippines. [The actual use in
Philippine operations of the inwardly remitted minimum capital requirement shall be monitored
by the SEC.]

“Failure to maintain the full amount of the prescribed minimum capital prior to notification of
the SEC and the DTI, shall subject the foreign investor to penalties or restrictions on any future
trading activities/business in the Philippines.”

[“Foreign retail stores shall secure a certification from the Bangko Sentral ng Pilipinas (BSP) and
the DTI, which will verify or confirm inward remittance of the minimum required capital
investments.”]

Section 13. Retail Trade.- Section 8 of Republic Act No. 8762 is hereby amended to read as follows:

“Sec. 8. Qualification of Foreign Retailers. - No ALIEN OR FOREIGN ENTITY [foreign

retailer] shall be allowed to engage OR INVEST in retail trade in the Philippines unless [all the
following qualifications are met:]

[(a) A minimum of Two hundred million US dollar (US$200,000,000.00) net worth in its
parent corporation for Categories B and C, and Fifty million US dollar
(US$50,000,000.00) net worth in its parent corporation for category D;]

[(b) (5) retailing branches or franchises in operation anywhere around the word unless
such retailer has at least one (1) store capitalized at a minimum of Twenty-five million US
dollars (US$25,000,000.00);]

[(c) Five (5)-year track record in retailing; and]

[d] HE OR SHE IS A [Only] national[s] from, or A juridical ENTITY [entities] formed or

incorporated in Countries which allow the entry of Filipino retailers [shall be allowed to
engage in retail trade in the Philippines].

“The DTI is hereby authorized to pre-qualify all foreign retailers WHO ARE NATIONALS
FROM, OR A JURIDICAL ENTITY FORMED OR INCORPORATED IN COUNTRIES
WHICH ALLOW THE ENTRY OF FILIPINO RETAILERS, subject to the provisions of this
Act, before they are allowed to conduct business in the Philippine.

[“The DTI shall keep a record of Qualified foreign retailers who may, upon compliance with law,
establish retail stores in the Philippines. It shall ensure that parent retail trading company of the
foreign investor complies with the qualifications on capitalization and track record prescribed in
this section.]

[“The Inter- Agency Committee on Tariff and Related Matters Authority (NEDA) Board shall
formulate and regularly update a list of foreign retailers of high-end or luxury goods and render
an annual report on the same to Congress.”]

Section 14. Private Securities Agencies.- Section 4 of Republic Act No. 5487 is hereby amended to
read as follows:

“Sec. 4. Who May Organize a Security or Watchman Agency. Any Filipino citizen, OR A
CITIZEN OR SUBJECT OF A FOREIGN COUNTRY THAT PERMITS FILIPINOS TO
ORGANIZE A SECURITY OR WATCHMAN AGENCY WITHIN ITS TERRITORIES, or a
corporation, partnership, or association, with a minimum capital of five thousand pesos, one
hundred per cent of which is owned and controlled by THE FOREGOING [Filipino citizens],
may organize a security or watchman agency: Provided, That no person shall organize or have an
interest in, more than one such agency except those which are already existing at the

5
 promulgation of this Decree: Provided, further, That the operator or manager of said agency must
be at least 25 years of age, a college graduate and/or a commissioned officer in the inactive
service of the Armed Forces of the Philippines; of good moral character; having no previous
record of any conviction of any crime or offense involving moral turpitude and not suffering
from any of the following disqualifications:

(1) Having been dishonorably discharged or separated from the Armed Forces of the
Philippines;

(2) Being a mental incompetent;

(3) Being addicted to the use of narcotic drug or drugs; and

(4) Being a habitual drunkard.

For purposes of this Act, elective or appointive government employees who may be called upon
on account of the functions of their respective offices in the implementation and enforcement of
the provisions of this Act and any person related to such government employees by affinity or
consanguinity in the third civil degree shall not hold any interest, directly or indirectly in any
security guard or watchman agency. (As amended by Pres. Decree No. 11.)”

Section 15. Cockpits.- Section 5(a) of Presidential Decree No. 449 is hereby amended to read as
follows:

Section 5. Cockpits and Cockfighting: In General:

“(a) Ownership, Operation and Management of Cockpits. Only Filipino citizens, OR CITIZENS
OR SUBJECTS OF A FOREIGN COUNTRY THAT PERMITS FILIPINOS TO OWN,
MANAGE AND OPERATE COCKPITS WITHIN ITS TERRITORIES, AND not otherwise
inhibited by existing laws, shall be allowed to own, manage and operate cockpits. [Cooperative
capitalization is encouraged.]”

Section 16. Firecrackers and other Pyrotechnic Devices.- Section 5 of Republic Act No. 7183 is
hereby amended to read as follows:

“Sec. 5. Qualifications of Manufacturers or Dealers. — A license or permit to manufacture or to

deal in wholesale or retail of firecrackers and pyrotechnic devices shall be issued only to: (a)
Filipino citizens, OR CITIZENS OR SUBJECTS OF A FOREIGN COUNTRY THAT
PERMITS FILIPINOS TO MANUFACTURE OR DEAL IN FIRECRACKERS AND
PYROTECHNIC DEVICES WITHIN ITS TERRITORY, WHO ARE of good moral character;
or (b) entities duly registered with the Bureau of Commerce of the Department of Trade and
Industry (DTI) or the Securities and Exchange Commission (SEC), one hundred per centum
(100%) of the capitalization of which is owned by [Filipino citizens] THE FOREGOING.”

Section 17. Private Radio Communications Network.- Section 4 of Republic Act No. 3846 is hereby
amended to read as follows:

“Section 4. No radio station license shall be GRANTED OR transferred to any person, firm,
company, association or corporation without express authority of the NATIONAL
TELECOMMUNICATIONS COMMISSION. [Secretary of Commerce and Communications,
and no license shall be granted or transferred to any person who is not a citizen of the United
States of America or of the Philippine Islands; or to any firm or company which is not
incorporated under the laws of the Philippine Islands or any state or territory of the United
States of America; or to any company or corporation twenty percent (20%) of whose capital
stock may be voted by aliens or their representatives, or by a foreign government or its
representatives, or by any company, corporation, or association organized under the laws of a
foreign country.]”

6
Section 18. Recruitment and Placement.- Article 27 of Presidential Decree No. 442, as amended,
known as the “Labor Code of the Philippines”, is hereby repealed.

[Article 27. Citizenship requirement. Only Filipino citizens or corporations, partnerships or

entities at least 75 percent of the authorized and voting capital stock of which is owned and
controlled by Filipino citizens shall be permitted to participate in the recruitment and placement
of workers, locally or overseas.]

Section 19. Government Contracts for Public Works.- Commonwealth Act No. 541 is hereby repealed.

[COMMONHEALTH ACT NO. 541, AN ACT TO REGULATE THE AWARDING OF

CONTRACTS FOR THE CONSTRUCTION OR REPAIR OF PUBLIC WORKS

[SECTION 1. All branches, offices, and subdivisions of the Government and all government-
owned or controlled companies, authorized to contract and make disbursements for the
construction or repair of public works, shall give preference in awarding contracts for such
works to Filipino or American contractors and domestic entities when the lowest bid of a
domestic bidder is not more than fifteen per centum in excess of the lowest foreign bid:
Provided, however, That for the construction of land, air, and seacoast defenses, arsenals,
barracks, depots, hangars, landing fields, quarters, hospitals, and all other buildings and
structures required for the national defense of the Philippines, no foreign bids shall be allowed.

[SECTION 2. For the purposes of this Act, the following terms shall be taken in the sense
herein-below indicated:
(a) The term "Filipino or American contractor" means any citizen of the Philippines or of
the United States habitually established in business and engaged in general construction work.
(b) The term "domestic entity" means any corporate body or commercial company duly
organized and registered under the laws of the Philippines seventy-five per centum of the capital
of which is owned by citizens of the Philippines or of the United States, or by citizens of both
countries.
(c) The term "domestic bidder" means any Filipino or American contractor or domestic
entity which bids for any public work or work of construction or repair for the Government of
the Philippines and/or any of its instrumentalities as enumerated in section one of this Act.
(d) The term "foreign bid" means the bid of any other contractor or entity, not included in
subsection (a) of this section.

[SECTION 3. This Act shall take effect upon its approval.

Approved: May 26, 1940]

Section 20. Government Infrastructure Contracts.- Section 3(d) of Presidential Decree No. 1594 is
hereby repealed.

“Section 3. Prequalification of Prospective Contractors. A prospective contractor may

prequalified to offer his bid or tender for a construction project only if he meets the following
requirements.

“(a) Legal Requirements. The prospective contractor must have been licensed as a contractor for
the current year pursuant to Republic Act No. 4566, must have paid his privilege tax to practice
or engage in the contracting business for the current year, must comply with the Administrative
Order No. 66 of the Office of the President of the Philippines, and must comply with other
existing pertinent laws, rules and regulations.

“(b) Technical Requirements. The prospective contractor must meet the following technical
requirements to be established in accordance with the rules and regulations to be promulgated
pursuant to Section 12 of this Decree, to enable him to satisfactorily prosecute the subject
project:

7
 1) Competence and experience of the contractor in managing projects similar to the
subject project.

2) Competence and experience of the contractor's key personnel to be assigned to the

subject project.

3) Availability and commitment of the contractor's equipment to be used for the subject
project.

“(c) Financial Requirements. The net worth and liquid assets of the prospective contractor must
meet the requirements, to be established in accordance with the rules and regulations to be
promulgated pursuant to Section 12 of this Decree, to enable him to satisfactorily execute the
subject project. The prospective contractor may be allowed to cover the deficiency in the
required net worth through a line of credit fully committed to the subject project by a bank or
financial institution acceptable to the Ministry concerned.

[(d) Filipino participation. The Government shall promote maximum participation of eligible
Filipino contractors in all construction projects.]”

Section 21. Government Contracts for Civil Works.- Letter of Instructions No. 630 is hereby amended
to read as follows:

“[In order to encourage and promote the development of the domestic construction industry,
the] THE following instructions shall be [strictly] observed:

“1. [Unless specifically authorized by the President of the Philippines in exceptional cases,]
Bidding award or negotiations of primarily civil works contracts shall be limited to Filipino
individuals, OR TO CITIZENS OR SUBJECTS OF A FOREIGN COUNTRY THAT PERMITS
FILIPINOS TO ENTER INTO GOVERNMENT CIVIL WORKS CONTRACTS WITHIN ITS
TERRITORIES, and to corporations, partnership, or associations ONE HUNDRED PERCENT
(100%) [seventy-five per sent (75%)] of the capital of which is owned by THE FOREGOING.
[citizens of the Philippines; and]
[2. The contracting government entity shall at all times ensure that no individual, corporation,
partnership or association shall enter into any contract, agreement, tie-up, or joint venture
arrangement with any non-Filipino entity that would circumvent the provisions of the Anti-
Dummy laws.]”

Section 22. Special Purpose Vehicle.- Section 4 of Republic Act No. 9182 is hereby amended to read as
follows:

“Sec. 4. Special Purpose Vehicle. An SPV shall be organized as stock corporation in accordance
with Batas Pambansa Blg. 68, otherwise known as "The Corporation Code of the Philippines"
and the rules promulgated by the Commission for purposes of registering the SPV
[: Provided, That if the SPV will acquire land, at least sixty percent (60%) of its outstanding
capital stock shall be owned by Philippines nationals pursuant to Republic Act No7042, as
amended, otherwise known as "The Foreign Investment Act"].”

Section 23. Public Utilities.- Section 16(a) of Commonwealth Act No. 146 is hereby amended to read
as follows:

“Section 16. Proceedings of the Commission, upon notice and hearing.- The Commission shall
have power, upon proper notice and hearing in accordance with the rules and provisions of this
Act, subject to the limitations and exceptions mentioned and saving provisions to the contrary:

“(a) To issue certificates which shall be known as certificates of public convenience, authorizing
the operation of public service within the Philippines whenever the Commission finds that the
operation of the public service proposed and the authorization to do business will promote the

8
 public interest in a proper and suitable manner. [Provided, That thereafter, certificates of public
convenience and certificates of public convenience and necessity will be granted only to citizens
of the Philippines or of the United States or to corporations, co-partnerships, associations or
joint-stock companies constituted and organized under the laws of the Philippines; Provided,
That sixty per centum of the stock or paid-up capital of any such corporations, co-partnership,
association or joint-stock company must belong entirely to citizens of the Philippines or of the
United States: Provided, further, That no such certificates shall be issued for a period of more
than fifty years.]”

Section 24. Rice and Corn.- Section 3 of Presidential Decree No. 194 is hereby amended to read as
follows:

“Section 3. The National Grains Authority may authorize the alien or business organization
mentioned in Section 1 hereof to engage in the rice and/or corn industry, subject to the
following conditions:

[a. The National Grains Authority shall certify that there is an urgent need for foreign
investment in the undertaking and that the same will not pose a clear and present danger
of promoting monopolies or combination in restraint of trade.]

A[b]. The alien, association, corporation or partnership shall have the necessary
financial capability and technical competence.

B[c]. The alien, association, corporation or partnership shall submit a development plan
acceptable to the National Grains Authority.”

Section 25. Rice and Corn.- Section 5 of Presidential Decree No. 194 is hereby repealed.

[Section 5. In connection with the foreign equity participation, at least 60% thereof shall be
transferred to Filipino citizens over a period to be established by the National Grains Authority
at the time of approval of its authority to engage in the industry, or phase out its operation
within the same period.]

Section 26. Government Contracts for the Supply of Goods.- Section 1 of Republic Act No. 5183 is
hereby amended to read as follows:

“Section 1. No contract either through a public bidding or negotiated contract for the supply to,
or procurement by, any government-owned or controlled corporation, company, agency or
municipal corporation of materials, equipment, goods and commodities shall be awarded to any
contractor or bidder who is not a citizen of the Philippines, OR IS NOT A CITIZEN OR
SUBJECT OF A FOREIGN COUNTRY THAT PERMITS FILIPINOS TO SUPPLY GOODS
TO ITS GOVERNMENT, or which is not a corporation or association [at least sixty percent]
ONE HUNDRED PERCENT (100%) of the capital of which is owned by THE FOREGOING
[Filipino citizens, except, as to a citizen, corporation or association of a country the laws or
regulations of which grant similar rights or privileges to citizens of the Philippines. In the latter
case the Flag Law shall continue to be applicable].”

Section 27. Deep Sea Commercial Fishing.- Section 27 of Republic Act No. 8550 is hereby amended
to read as follows:

“Section 27. Persons Eligible for Commercial Fishing Vessel License. - No commercial fishing
vessel license shall be issued UNLESS THE APPLICANT COMPLIES WITH THE
PROVISIONS OF THIS ACT [except to citizens of the Philippines, partnerships or to
associations, cooperatives or corporations duly registered in the Philippines at least sixty percent
(60%) of the capital stock of which is owned by Filipino citizens]. No person to whom a license
has been issued shall sell, transfer or assign, directly or indirectly, his stock or interest therein to
any person not qualified to hold a license. Any such transfer, sale or assignment shall be null and

9
 void and shall not be registered in the books of the association, cooperative or corporation.

“For purposes of commercial fishing, fishing vessels owned by [citizens of the Philippines]
INDIVIDUALS, partnerships, corporations, cooperatives or associations qualified under this
section shall secure Certificates of Philippine Registry and such other documents as are necessary
for fishing operations from the concerned agencies: Provided, That the commercial fishing vessel
license shall be valid for a period to be determined by the Department.”

Section 28. Condominium Units.- Section 5 of Republic Act No. 4726 is hereby amended to read as
follows:

“Sec. 5. Any transfer or conveyance of a unit or an apartment, office or store or other space
therein, shall include the transfer or conveyance of the undivided interests in the common areas
or, in a proper case, the membership or shareholdings in the condominium
corporation: Provided, however, That where the common areas in the condominium project are
owned by the owners of separate units as co-owners thereof, no condominium unit therein shall
be conveyed or transferred to persons other than INDIVIDUALS OR JURIDICAL ENTITIES
THAT MAY BE QUALIFIED UNDER THE APPLICABLE PROVISIONS OF THE
CONSTITUTION [Filipino citizens, or corporations at least sixty percent of the capital stock of
which belong to Filipino citizens, except in cases of hereditary succession]. Where the common
areas in a condominium project are held by a corporation, no transfer or conveyance of a unit
shall be valid if the concomitant transfer of the appurtenant membership or stockholding in the
corporation will cause the alien interest in such corporation to exceed [the limits imposed by
existing laws] ANY LIMITATION THAT MAY BE IMPOSED BY THE CONSTITUTION.”

OMNIBUS INVESTMENTS CODE

Section 29. Omnibus Investments Code.- Article 11 of Executive Order No. 226 is hereby amended to
read as follows:

“ARTICLE 11. "Registered Enterprise" shall mean any individual, partnership, cooperative,
corporation or other entity incorporated and/or organized and existing under Philippine laws;
OR ANY CITIZEN OR SUBJECT OF A FOREIGN COUNTRY, OR ANY CORPORATION
OR OTHER ENTITY FORMED, ORGANIZED AND EXISTING UNDER ANY LAWS
OTHER THAN THOSE OF THE PHILIPPINES, WHOSE LAWS ALLOW FILIPINO
CITIZENS AND CORPORATIONS TO DO BUSINESS IN ITS OWN COUNTRY OR STATE,
AND LICENSED TO TRANSACT BUSINESS IN THE PHILIPPINES UNDER PHILIPPINE
LAWS; and registered with the Board in accordance with this Book: Provided, however, That
the term "registered enterprise" shall not include commercial banks, savings and mortgage
banks, rural banks, savings and loan associations, building and loan associations, developmental
banks, trust companies, investment banks, finance companies, brokers and dealers in securities,
consumers cooperatives and credit unions, and other business organizations whose principal
purpose or principal source of income is to receive deposits, lend or borrow money, buy and sell
or otherwise deal, trade or invest in common or preferred stocks, debentures, bonds or other
marketable instruments generally recognized as securities, or discharge other similar
intermediary, trust of fiduciary functions.”

Section 30. Omnibus Investments Code.- Article 32 of Executive Order No. 226 is hereby amended to
read as follows:

“ARTICLE 32. Qualifications of a Registered Enterprises. — To be entitled to registration

under the Investment Priorities Plan, an applicant must satisfy the Board that:
(1) He is a citizen of the Philippines, OR A CITIZEN OR SUBJECT OF A FOREIGN
COUNTRY THAT PERMITS FILIPINOS TO OWN, MANAGE AND OPERATE

10
ENTERPRISES WITH INCENTIVES WITHIN ITS TERRITORIES, in case the applicant is a
natural person[,]; or in case of a partnership or any other association, it is organized under
Philippine laws, OR UNDER THE LAWS OF A COUNTRY THAT PERMITS SIMILAR
PHILIPPINE ENTITIES TO OWN, MANAGE AND OPERATE ENTERPRISES WITH
INCENTIVES WITHIN ITS TERRITORIES, [and that] at least sixty percent (60%) of its
capital is owned and controlled by [citizens of the Philippines] THE FOREGOING, AND AT
LEAST SIXTY PER CENT (60%) OF THE MEMBERS OF ITS GOVERNING BODY ARE
CITIZENS OF THE PHILIPPINES, OR CITIZENS OR SUBJECTS OF A FOREIGN
COUNTRY AS AFORESAID; or in case of a corporation or a cooperative, it is organized under
Philippine laws, OR UNDER THE LAWS OF A COUNTRY THAT PERMITS SIMILAR
PHILIPPINE ENTITIES TO OWN, MANAGE AND OPERATE ENTERPRISES WITH
INCENTIVES WITHIN ITS TERRITORIES, [and that] at least sixty per cent (60%) of the
capital stock outstanding and entitled to vote is owned and held by [Philippine nationals as
defined under Article 15 of this Code] THE FOREGOING, and at least sixty per cent (60%) of
the members of the Board of Directors are citizens of the Philippines, OR CITIZENS OR
SUBJECTS OF A FOREIGN COUNTRY AS AFORESAID. [If it does not possess the required
degree of ownership as mentioned above by Philippine nationals, the following circumstances
must be satisfactorily established:]
[(a) That it proposes to engage in a pioneer projects as defined in Article 17 of this Code, which,
considering the nature and extent of capital requirements, processes, technical skills and relative
business risks involved, is in the opinion of the Board of such a nature that the available
measured capacity thereof cannot be readily and adequately filled by Philippine nationals; or, if
the applicant is exporting at least seventy per cent (70%) of is total production, the export
requirement herein provided may be reduced in meritorious cases under such conditions and/or
limited incentives as the Board may determine;]
[(b) That it obligates itself to attain the status of a Philippine national, as defined in Article 15,
within thirty (30) years from the date of registration or with such longer period as the Board
may require taking into account the export potential of the project: Provided, That a registered
enterprise which exports one hundred percent (100%) of its total production need not comply
with this requirement;]
[(c) That the pioneer area it will engage in is one that is not within the activities reserved by the
Constitution or other laws of the Philippines to the Philippine citizens or corporations owned
and controlled by Philippine citizens;]

THE BOARD MAY IN THE NATIONAL INTEREST RESERVE TO PHILIPPINE CITIZENS

OR TO CORPORATIONS OWNED AND CONTROLLED BY PHILIPPINE CITIZENS, THE
GRANT OF INCENTIVES UNDER THIS BOOK, WITH RESPECT TO CERTAIN
PREFERRED AREAS OF INVESTMENT, AT THE REASONABLE DISCRETION OF THE
BOARD.

NOTWITHSTANDING THE FOREGOING, THE BOARD MAY IN THE REASONABLE

EXERCISE OF ITS DISCRETION, PROVIDE EXCEPTIONS TO THE GENERAL
RESERVATION, AND GRANT INCENTIVES TO APPLICANTS WHO ARE CITIZENS,
SUBJECTS OR CORPORATIONS OF A FOREIGN COUNTRY, IF THE ACTIVITY IS A
PIONEER ACTIVITY AS DEFINED IN ARTICLE 17, OR THE ACTIVITY INVOLVES THE
EXPORT AS DEFINED IN ARTICLE 23 OF AT LEAST SIXTY PERCENT (60%) OF THE
TOTAL PRODUCTION OR SUCH OTHER PERCENTAGE DETERMINED BY THE
BOARD, OR THE ACTIVITY IS LOCATED IN A LESS-DEVELOPED-AREA AS DEFINED
IN ARTICLE 40.

THE BOARD MAY AT ITS REASONABLE DISCRETION REQUIRE APPLICANT WHO IS

A CITIZEN, SUBJECT OR CORPORATION OF A FOREIGN COUNTRY, TO ATTAIN THE
STATUS OF A PHILIPPINE NATIONAL AS DEFINED IN ARTICLE 15, WITHIN THIRTY
(30) YEARS OR SUCH OTHER PERIOD DETERMINED BY THE BOARD.

11
 IF THE APPLICANT IS NOT A CITIZEN OF THE PHILIPPINES, NOR A CORPORATION
OR OTHER ENTITY FORMED, ORGANIZED AND EXISTING UNDER PHILIPPINE
LAWS WITH AT LEAST SIXTY PERCENT (60%) OF ITS CAPITAL OWNED AND
CONTROLLED BY CITIZENS OF THE PHILIPPINES, THE ACTIVITY OR ACTIVITIES
IT WILL ENGAGE IN MUST NOT BE WITHIN THE ACTIVITIES RESERVED TO
PHILIPPINE CITIZENS OR TO CORPORATIONS OWNED AND CONTROLLED BY
PHILIPPINE CITIZENS.
(2) The applicant is proposing to engage in a preferred project listed or authorized in the current
Investment Priorities Plan within a reasonable time to be fixed by the Board [or, if not so listed,
at least fifty percent (50%) of its total production is for export or it is an existing producer
which will export part of production under such conditions and/or limited incentives as the
Board may determine; or that the enterprise is engaged or proposing to engage in the sale
abroad of export products bought by it from one or more export producers; or the enterprise is
engaged or proposing to engage in rendering technical, professional or other services or in
exporting television and motion pictures and musical recordings made or produced in the
Philippines, either directly or through a registered trader].
(3) The applicant is capable of operating on a sound and efficient basis of contributing to the
national development of the preferred area in particular and of the national economy in general;
and
(4) If the applicant is engaged or proposes to engage in undertakings or activities other than
preferred projects, it has installed or undertakes to install an accounting system adequate to
identify the investments, revenues, costs, and profits or losses of each preferred project
undertaken by the enterprise separately from the aggregate investment, revenues, costs and
profits or losses of the whole enterprise or to establish a separate corporation for each preferred
project if the Board should so require to facilitate proper implementation of this Code.”

Section 31. Omnibus Investments Code.- Article 35 of Executive Order No. 226 is hereby amended to
read as follows:

“ARTICLE 35. Criteria for Evaluation of Applications. — The following criteria will be
considered in the evaluation of applications for registration under a preferred area:
[(a) The extent of ownership and control by Philippine citizens of the enterprises;]
[(b)] (A) The economic rates of return;
[(c)] (B) The measured capacity Provided, That estimates of measured capacities shall be
regularly reviewed and updated to reflect changes in market supply and demand conditions;
Provided, Further, That measured capacity shall not result in a monopoly in any preferred area
of investment which would unduly restrict trade and fair competition nor shall it be used to
deny the entry of any enterprise in any field of endeavor or activity;
[(d)] (C) The amount of foreign exchange earned, used or saved in their operations;
[(e)] (D) The extent to which labor, materials and other resources obtained from indigenous
sources are utilized;
[(f)] (E) The extent to which technological advances are applied and adopted to local condition;
[(g)] (F) The amount of equity and degree to which the ownership of such equity is spread out
and diversified; and
[(h)] (G) Such other criteria as the Board may determine.”

FOREIGN INVESTMENTS ACT

Section 32. Foreign Investments Act.- Section 6 of Republic Act No. 7042, as amended by Republic

12
Act No. 8179, is hereby amended to read as follows:

“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 33. Foreign Investments Act.- Section 8 of Republic Act No. 7042, as amended by Republic
Act No. 8179, is hereby amended to read as follows:

“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 the
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 or 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.]

“SECURITY-RELATED ACTIVITIES, REQUIRING PRIOR CLEARANCE AND

AUTHORIZATION FROM THE PHILIPPINE NATIONAL POLICE TO ENGAGE IN SUCH
ACTIVITY, SHALL BE RESERVED TO PHILIPPINE NATIONALS, AND TO CITIZENS,
SUBJECTS OR NATIONALS OF FOREIGN COUNTRIES THAT PERMIT FILIPINOS TO
ENGAGE IN SECURITY RELATED ACTIVITIES WITHIN ITS TERRITORIES. SECURITY
-RELATED ACTIVITIES INCLUDE BUT ARE NOT LIMITED TO THE MANUFACTURE,
REPAIR, STORAGE AND/OR DISTRIBUTION OF FIREARMS, GUNPOWDER,
DYNAMITE, BLASTING SUPPLIES, INGREDIENTS USED IN MAKING EXPLOSIVES,
TELESCOPIC SITES, AND SIMILAR MATERIALS.

“DEFENSE-RELATED ACTIVITIES, REQUIRING PRIOR CLEARANCE AND

AUTHORIZATION FROM THE DEPARTMENT OF NATIONAL DEFENSE TO ENGAGE
IN SUCH ACTIVITY, SHALL BE RESERVED TO PHILIPPINE NATIONALS, AND TO

13
 CITIZENS, SUBJECTS OR NATIONALS OF FOREIGN COUNTRIES THAT PERMIT
FILIPINOS TO ENGAGE IN DEFENSE RELATED ACTIVITIES WITHIN ITS
TERRITORIES. DEFENSE-RELATED ACTIVITIES INCLUDE BUT ARE NOT LIMITED
TO THE MANUFACTURE, REPAIR, STORAGE AND/OR DISTRIBUTION OF GUNS AND
AMMUNICATION, MILITARY ORDNANCE, GUNNERY, GUIDED MISSILES,
TACTICAL AIRCRAFT, SPACE VEHICLES, COMBAT VESSELS, WEAPONS
EQUIPMENT, MILITARY COMMUNICATIONS EQUIPMENT, NIGHT VISION
EQUIPMENT, RADIATION DEVICES, ARMAMENT TRAINING DEVICES, AND
SIMILAR MATERIALS.

“ACTIVITIES WITH IMPLICATIONS ON PUBLIC HEALTH AND MORALS, SHALL BE

RESERVED TO PHILIPPINE NATIONALS, AND TO CITIZENS, SUBJECTS OR
NATIONALS OF FOREIGN COUNTRIES THAT PERMIT FILIPINOS TO ENGAGE IN
SUCH ACTIVITIES WITHIN ITS TERRITORIES. ACTIVITIES WITH IMPLICATIONS ON
PUBLIC HEALTH AND MORALS INCLUDE BUT ARE NOT LIMITED TO THE
MANUFACTURE AND DISTRIBUTION OF DANGEROUS DRUGS; ALL FORMS OF
GAMBLING, NIGHTCLUBS, BARS, BEER HOUSES, DANCE HALLS, SAUNA AND
STEAM BATHHOUSES AND MASSAGE CLINICS.

“MICRO-SIZED DOMESTIC MARKET ENTERPRISES, AS DEFINED UNDER REPUBLIC

ACT NO. 9178 AND OTHER LAWS, SHALL BE RESERVED TO FILIPINO CITIZENS, OR
TO CORPORATIONS, PARTNERSHIPS, ASSOCIATIONS OR COOPERATIVES WHOLLY
OWNED BY THEM, EXCEPT AS OTHERWISE PROVIDED IN SECTION 9 OF THIS ACT.

[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, endorsed
by 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 Republic Act No. 8179)]

Section 34. Foreign Investments Act.- Section 9 of Republic Act No. 7042, as amended by Republic
Act No. 8179, is hereby amended to read as follows:

“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 MICRO ENTERPRISES UNDER REPUBLIC ACT NO. 9178 AND
OTHER LAWS, Cooperatives under Republic Act No. 9520 [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 as amended,
AND INVESTMENT HOUSES UNDER PRESIDENTIAL DECREE NO. 129 AS
AMENDED. [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) [superseded by Republic Act No. 8762 (Retail Trade

14
 Liberalization Act of 2000)]. 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. No. 449 (Cockpits Operation and Management). (as amended by Republic Act
No. 8179)]”

BANKS AND OTHER FINANCIAL INSTITUTIONS

Section 35. Foreign Banks.- Section 3 of Republic Act No. 7721, as amended by Republic Act No.
10641, is hereby further amended to read as follows:

“SEC. 3. Guidelines for Approval. – In approving entry applications of foreign banks, the
Monetary Board shall: (i) ensure geographic representation and complementation; (ii) consider
strategic trade and investment relationships between the Philippines and the country of
incorporation of the foreign bank; (iii) study the demonstrated capacity, global reputation for
financial innovations and stability in a competitive environment of the applicant; (iv) see to it
that reciprocity rights are enjoyed by Philippine banks in the applicant’s country; and (v)
consider willingness to fully share their technology.

“Only established, reputable and financially sound foreign banks shall be allowed entry in
accordance with Section 2 of this Act. The foreign bank applicant must be widely-owned and
publicly-listed in its country of origin, unless the foreign bank applicant is owned and controlled
by the government of its country of origin.

“In the REASONABLE exercise of this authority, the Monetary Board MAY [shall] IN THE
NATIONAL INTEREST adopt such measures as may be necessary to ensure that the control of
at least [sixty percent (60%)] A MAJORITY of the resources or assets of the entire banking
system is held by domestic banks which are majority-owned AND CONTROLLED by
Filipinos.”

Section 36. Domestic Banks.- Section 73 of Republic Act No. 8791, is hereby amended to read as
follows:

“SECTION 73. Acquisition of Voting Stock in a Domestic Bank. — [Within seven (7) years
from the effectivity of this Act and] Subject to guidelines issued pursuant to the Foreign Banks
Liberalization Act, the Monetary Board may authorize a foreign bank to acquire up to one
hundred percent (100%) of the voting stock of only one (1) bank organized under the laws of
the Republic of the Philippines.

“[Within the same period,] The Monetary Board may authorize any foreign bank, which prior to
the effectivity of this Act availed itself of the privilege to acquire up to sixty percent (60%) of
the voting stock of a bank under the Foreign Banks Liberalization Act and the Thrift Banks Act,
to further acquire voting shares of such bank to the extent necessary for it to own one hundred
percent (100%) of the voting stock thereof.

“In the REASONABLE exercise of this authority, the Monetary Board MAY [shall] IN THE
NATIONAL INTEREST adopt measures as may be necessary to ensure that [at all times the]
ADEQUATE MAJORITY control of [seventy percent (70%) of] the resources or assets of the
entire banking system is held by banks which are at least majority-owned AND
CONTROLLED by Filipinos.

“Any right, privilege or incentive granted to a foreign bank under this Section shall be equally
enjoyed by and extended under the same conditions to banks organized under the laws of the
Republic of the Philippines.[(Secs. 2 and 3, RA 7721)]”

15
Section 37. Thrift Banks.- Section 7 of Republic Act No. 7906, is hereby amended to read as follows:

“SECTION 7. Directors and Officers. — NON-FILIPINO CITIZENS MAY BECOME

MEMBERS OF THE BOARD OF DIRECTORS OF A THRIFT BANK TO THE EXTENT OF
THE FOREIGN PARTICIPATION IN THE EQUITY OF SAID BANK [At least a majority of
the members of the board of directors of any thrift bank which may be established after the
effectivity of this Act shall be citizens of the Philippines]: provided, however, that no appointive
or elective official, whether full-time or part-time, shall at the same time serve as officer of any
thrift bank, except in cases where such service is incident to financial assistance provided by the
government or a government-owned or -controlled corporation to the bank: provided, further,
that in the case of merger or consolidation duly approved by the Monetary Board, the limitation
on the number of directors in a corporation, as provided in Section 14 of the Corporation Code
of the Philippines, shall not be applied so that membership in the new board may include up to
the total number of directors provided for in the respective articles of incorporation of the
merging or consolidating banks.”

Section 38. Thrift Banks.- Section 8 of Republic Act No. 7906, is hereby amended to read as follows:

“SECTION 8. Ownership. — UNLESS OTHERWISE PROVIDED BY THE MONETARY

BOARD, AT least forty percent (40%) of the voting stock of a thrift bank [which may be
established after the approval of this Act] shall be owned by citizens OR NATIONALS of the
Philippines, except where a new bank may be established as a result of a merger or
consolidation of existing thrift banks with foreign holdings in which case, the resulting foreign
holdings shall not be increased but may be reduced and, once reduced, shall not be increased
thereafter beyond sixty percent (60%) of the voting stock of thrift banks. The percentage of the
foreign-owned voting stocks shall be determined by the citizenship of individual stockholders
and in case of corporations owning shares, by the citizenship of each stockholder in the said
corporations.”[Any provision of existing laws to the contrary notwithstanding, stockholders in a
thrift bank shall be exempt from any ownership ceiling for a period of ten (10) years from the
effectivity of this Act.]

“EXCEPT AS OTHERWISE PROVIDED BY REPUBLIC ACT NO. 8791, REPUBLIC ACT

NO. 7721 AND OTHER LAWS, THE MONETARY BOARD MAY IN THE NATIONAL
INTEREST, AND UPON THE REASONABLE EXERCISE OF ITS DISCRETION,
RESTRICT, REGULATE OR LIBERALIZE FOREIGN INVESTMENTS IN THE VOTING
STOCK OF A THRIFT BANK.”

Section 39. Private Development Banks.- Section 4 of Republic Act No. 4093, as amended, is hereby
further amended to read as follows:

“Sec. 4. A private development bank shall be organized in the form of a stock corporation and
its paid-up capital shall not be less than four million pesos for Class A, two million pesos for
Class B, and one million pesos for Class C: Provided, That UNLESS OTHERWISE
PROVIDED BY THE MONETARY BOARD, at least FORTY [seventy] percent (40%) of the
voting stock OF A PRIVATE DEVELOPMENT BANK [subscribed by the private sector] shall
be owned [and held] by [the] citizens OR NATIONALS of the Philippines, except where a new
bank is established as a result of the consolidation of existing private development banks in any
of which there are foreign-owned voting stocks at the time of consolidation: [Provided,
however, That the Monetary Board may, with the approval of the President of the Philippines,
reduce the required minimum percentage of Philippine ownership prescribed herein from
seventy percent (70%) to sixty percent (60%)]: Provided, further, That if said subscription of
private shareholders to the initial capitalization of a private development bank cannot be
secured or is not available, the Development Bank of the Philippines on representation of the
said private shareholders and with the approval of its Board of Governors shall, within thirty
days from date of approval by the Board of Governors, and after compliance by the private
stockholders with the conditions of said approval, subscribe to the capital stock of such
development bank, which shall be paid in full at the time of subscription out of the trust fund

16
 provided in Section three, paragraph three, of Republic Act Numbered Twenty hundred and
eighty-one, in an amount equal to the difference between the required paid-up capital and the
fully paid subscribed capital of the private stockholders but not exceeding the latter: Provided,
furthermore, That the Board of Governors shall act on the representation made by the private
shareholders within thirty days from the date it is filed: Provided, still further, That such shares
of stock subscribed by the bank shall be preferred shares entitled to cumulative dividends at the
yearly rate of one percent during the first five years, two percent during the following five
years, and three percent thereafter shall be preferred as against common and other preferred
stockholders in the distribution of assets in the event of liquidation, and shall be entitled to
voting privileges: Provided, still further, That such preferred shares of the bank may at any time
he paid off at not less than par and retired in whole or in part if, in the opinion of the Monetary
Board, the bank has accumulated enough capital strength to permit retirement of such shares, or
sold at not less than par [to private individuals who are citizens of the Philippines], and in the
sale thereof, the qualified registered stockholders shall have the right of pre-emption within one
year from the date of offer in proportion to their respective holdings, but in the absence of such
buyers, preference shall be given to residents of the province or city where the development
bank is located: Provided, finally, That such preferred shares may be converted to common
shares when sold [to private individuals]. NON-FILIPINO CITIZENS MAY BECOME
MEMBERS OF THE BOARD OF DIRECTORS OF A THRIFT BANK TO THE EXTENT OF
THE FOREIGN PARTICIPATION IN THE EQUITY OF SAID BANK [All members of the
board of directors of the private development bank shall be citizens of the Philippines]:
Provided, however, That no appointive or elective public official, whether full-time or part-time,
shall at the same time serve as officer of any private development bank, except in cases where
such service is incident to financial assistance provided by the government or a government-
owned or controlled corporation to the bank: Provided, further, That in the case of merger or
consolidation of private development banks duly approved by the Monetary Board, the
limitation on the maximum number of corporate directors in a corporation, as provided for in
Section 12 of the Corporation Code of the Philippines, shall not be applied so that membership
in the new board may include up to the total number of directors provided for in the respective
articles of incorporation of the merging or consolidating private development banks.

“EXCEPT AS OTHERWISE PROVIDED BY REPUBLIC ACT NO. 8791, REPUBLIC ACT

NO. 7721 AND OTHER LAWS, THE MONETARY BOARD MAY IN THE NATIONAL
INTEREST, AND UPON THE REASONABLE EXERCISE OF ITS DISCRETION,
RESTRICT, REGULATE OR LIBERALIZE FOREIGN INVESTMENTS IN THE VOTING
STOCK OF A PRIVATE DEVELOPMENT BANK.”

Section 40. Rural Banks.- Section 4 of Republic Act No. 7353, is hereby further amended to read as
follows:

“SECTION 4. No rural bank shall be operated without a Certificate of Authority from the
Monetary Board of the Central Bank. Rural banks shall be organized in the form of stock
corporations. Upon consultation with the rural banks in the area, duly established cooperatives
and corporations primarily organized to hold equities in rural banks may organize a rural bank
and/or subscribe to the shares of stock of any rural bank: provided, that a cooperative or
corporation owning or controlling the whole or majority of the voting stock of the rural bank
shall be subject to special examination and to such rules and regulations as the Monetary Board
may prescribe. UNLESS OTHERWISE PROVIDED BY THE MONETARY BOARD [With the
exception of shareholdings of corporations organized primarily to hold equities in rural banks as
provided for under Section 12-C of Republic Act No. 337, as amended, and of Filipino-
controlled domestic banks], AT LEAST SIXTY PERCENT (60%) OF the VOTING [capital]
stock of any rural bank shall be [fully] owned [and held directly or indirectly] by citizens OR
NATIONALS of the Philippines [or corporations, associations or cooperatives qualified under
Philippine laws to own and hold such capital stock: provided, that any provisions of existing
laws to the contrary notwithstanding, stockholdings in a rural bank shall be exempt from any
ownership ceiling for a period of ten (10) years from the approval of this Act: provided, further,
that any such exemption shall required the approval of the Monetary Board]. If subscription of

17
 private shareholders to the capital stock of a rural bank cannot be secured or is not available, or
insufficient to meet the normal credit needs of the locality, the Land Bank of the Philippines, the
Development Bank of the Philippines, or any government-owned or controlled bank or financial
institution, on representation of the said private shareholders but subject to the investment
guidelines, policies and procedures of the bank of financial institution and upon approval of the
Monetary Board of the Central Bank, shall subscribe to the capital stock of such rural bank,
which shall be paid in full at the time of subscription, in an amount equal to the fully paid
subscribed and unimpaired, capital of the private stockholders or such amount as the Monetary
Board may prescribe as may be necessary to promote and expand rural economic development:
provided, however, that such shares of stock subscribed by the Land Bank of the Philippines,
the Development Bank of the Philippines or any government-owned or controlled bank or
financial institution may be sold at any time at market value [to private individuals who are
citizens of the Philippines]: provided, finally, that in the sale of shares of stock subscribed by
the Land Bank of the Philippines, the Development Bank of the Philippines or any government-
owned or controlled bank or financial institution, the registered stockholders shall have the right
of preemption within one (1) year from the date of offer in proportion to their respective
holdings, but in the absence of such buyer, preference, however, shall be given to residents of
the locality or province where the rural bank is located.

“EXCEPT AS OTHERWISE PROVIDED BY REPUBLIC ACT NO. 8791, REPUBLIC ACT

NO. 7721 AND OTHER LAWS, THE MONETARY BOARD MAY IN THE NATIONAL
INTEREST, AND UPON THE REASONABLE EXERCISE OF ITS DISCRETION,
RESTRICT, REGULATE OR LIBERALIZE FOREIGN INVESTMENTS IN THE VOTING
STOCK OF A RURAL BANK.”

Section 41. Rural Banks.- Section 5 of Republic Act No. 7353, is hereby further amended to read as
follows:

“SECTION 5. NON-FILIPINO CITIZENS MAY BECOME MEMBERS OF THE BOARD

OF DIRECTORS OF A RURAL BANK TO THE EXTENT OF THE FOREIGN
PARTICIPATION IN THE EQUITY OF SAID BANK [All members of the Board of Directors
of the rural bank shall be citizens of the Philippines at the time of their assumption to office]:
provided, however, that nothing in this Act shall be construed as prohibiting any appointive or
in any capacity in the bank.

“No director or officer of any rural bank shall, either directly or indirectly, for himself or as the
representative or agent of another, borrow any of the deposits or funds of such banks, nor shall
he become a guarantor, indorser, or surety for loans from such bank to others, or in any manner
be an obligor for money borrowed from the bank or loaned by it except with the written
approval of the majority of the directors of the bank, excluding the director concerned. Any
such approval shall be entered upon the records of the corporation and a copy of such entry
shall be transmitted forthwith to the appropriate supervising department. The director/officer of
the bank who violates the provisions of this section shall be immediately dismissed from his
office and shall be penalized in accordance with Section 26 of this Act.

“The Monetary Board may regulate the amount of credit accommodations that may be extended
directly to the directors, officers or stockholders of rural banks of banking institutions.
However, the outstanding credit accommodations which a rural bank may extend to each of its
stockholders owning two percent (2%) or more of the subscribed capital stock, its directors, or
officers shall be limited to an amount equivalent to the respective outstanding deposits and book
value of the paid-in capital contributions in the bank.”

FOREIGN INVESTMENT COUNCILi

Section 42. Policy.- Foreign investment in the Philippines promotes job creation, productivity,

18
competitiveness and economic growth. It shall be the policy of the Philippines to support unequivocally
such investment, consistent with the protection of the basic securities of the country, being defense or
external security, internal security, food security, water security, energy security, environment security
and resource security (human, natural, industrial).ii

Section 43. Definitions.-

(a) “Control” means the ability to exercise certain powers over important matters affecting an entity;
the power, direct or indirect, whether or not exercised, through the ownership of a majority or a
dominant minority of the total outstanding voting interest in an entity, board representation, proxy
voting, a special share, contractual arrangements, formal or informal arrangements to act in concert, or
other means, to determine, direct, or decide important matters affecting an entity; the power to
determine, direct, take, reach, or cause decisions regarding important matters affecting an entity,
including but not limited to the following:
(1) The sale, lease, mortgage, pledge, or other transfer of any of the tangible or intangible principal
assets of the entity, whether or not in the ordinary course of business;
(2) The reorganization, merger, or dissolution of the entity;
(3) The closing, relocation, or substantial alteration of the production, operational, or research and
development facilities of the entity;
(4) Major expenditures or investments, issues of equity or debt securities, or dividend payments by the
entity, or approval of the operating budget of the entity;
(5) The selection of new business lines or ventures that the entity will pursue;
(6) The entry into, termination, or non-fulfillment by the entity of significant contracts;
(7) The policies or procedures of the entity governing the treatment of non- public technical, financial,
or other proprietary information of the entity;
(8) The appointment or dismissal of officers or senior managers;
(9) The appointment or dismissal of employees with access to sensitive technology or classified
government information; or
(10) The amendment of the Articles of Incorporation, constituent agreement, or other organizational
documents of the entity with respect to the matters described in paragraphs (a)(1) through (9) of this
subsection.iii

(b) “Covered transaction” means any merger, acquisition, or takeover that is proposed or pending as of
the date this Act takes effect, by or with any foreign person which could result in foreign control of any
person engaged in commerce in the Philippines.iv

(c) “Critical Infrastructure” means systems and assets, whether physical or virtual, so vital to the
Philippines that the incapacity or destruction of such systems or assets would have a debilitating impact
on any of the basic securities.v

(d) “Critical technologies” mean critical technology, critical components, or critical technology items
essential to any of the basic securities.vi

(e) “Foreign government-controlled transaction” means any covered transaction that could result in the
control of any person engaged in commerce in the Philippines by a foreign government or an entity
controlled by or acting on behalf of a foreign government.vii

Section 44. Council.- There is hereby established the Foreign Investment Council (Council) which
shall be composed of the following members or the designee of any such member:
(a) The Secretary of the Department of Justice;
(b) The Secretary of the Department of National Defense;
(c) The Secretary of the Department of Interior and Local Government;
(d) The Secretary of the Department of Agriculture;
(e) The Secretary of the Department of Environment and Natural Resources;
(f) The Secretary of the Department of Energy;
(g) The Secretary of the Department of Labor and Employment;
(h) The Secretary of the Department of Trade and Industry;

19
(i) The Director-General of the National Economic Development Authority;
(j) The Governor of the Bangko Sentral ng Pilipinas;
(k) The Chairman of the Securities and Exchange Commission;
(l) The Solicitor-General;
(m) The heads of any other executive department, agency, or office, as the President determines
appropriate, generally or on a case-by-case basis.

The Secretary of the Department of Justice shall be the Chairman of the Council. The Chairman of the
Council shall have the authority, exclusive of the heads of departments or agencies, to act, or authorize
others to act, on behalf of the Council, and to communicate on behalf of the Council with the legislative
branch of government and the public.viii

The resolutions of the Council shall be approved by a majority vote of all its members.

Section 45. Secretariat.- The Council is hereby authorized to establish a secretariat. The Council shall
determine the composition, prescribe the qualifications and fix the compensation of the members of the
secretariat.

Section 46. Lead Agency.- The lead agency or agencies (lead agency) shall have primary responsibility,
on behalf of the Council, for the review and investigation of a specific covered transaction.

The following shall be the lead agency for the review and investigation of the particular transaction
indicated:

(a) The Department of National Defense for any covered transaction that poses a risk to defense or
external security;

(b) The Department of National Defense for any covered transaction that poses a risk to internal
security; the Department of Interior and Local Government as co-lead agency for any covered
transaction that poses a risk to internal security;

(c) The Department of Agriculture for any covered transaction that poses a risk to food security;

(d) The Department of Environment and Natural Resources for any covered transaction that poses a
risk to water security;

(e) The Department of Energy for any covered transaction that poses a risk to energy security;

(f) The Department of Environment and Natural Resources for any covered transaction that poses a risk
to environment security;

(g) The Department of Labor and Employment for any covered transaction that poses a risk to human
resource security;

(h) The Department of Environment and Natural Resources for any covered transaction that poses a
risk to natural resource security;

(i) The Department of Trade and Industry for any covered transaction that poses a risk to industrial
resource security.

The Chairman of the Council shall designate the lead agency or agencies whenever a covered
transaction poses a risk to two or more basic securities.

Section 47. Review.- Upon notice by any party to any covered transaction, or upon its unilateral
initiative without such notice, the Council shall review the covered transaction to determine the effects
of the transaction on any basic security of the Philippines, and shall consider the relevant factors for
such purpose as appropriate.ix

20
If the Council determines that the covered transaction is a foreign government-controlled transaction,
the Council shall conduct an investigation of the transaction.x

Any review under this section shall be completed within thirty (30) calendar days beginning on the date
of notice or initiation of review.xi

Section 48. Investigation.- The Council shall immediately conduct an investigation of the effects of a
covered transaction on any basic security of the Philippines, and take any necessary action in
connection with the transaction to protect the affected basic security of the Philippines, in each case in
which a review of the covered transaction results in a determination that:
(a) the transaction threatens to impair any basic security of the Philippines and that threat has not been
mitigated during or prior to the review of a covered transaction;
(b) the transaction is a foreign government-controlled transaction;
(c) the transaction would result in control of any critical infrastructure of or within the Philippines by or
on behalf of any foreign person, if the Council determines that the transaction could impair any basic
security, and that such impairment to a basic security has not been mitigated by assurances provided or
renewed with the approval of the Council during the review period; or
(d) the lead agency recommends that an investigation be undertaken.xii

Any investigation under this section shall be completed within forty-five (45) calendar days beginning
on the date on which the investigation commenced.xiii

Section 49. Factors to be considered.- The Council, or any lead agency acting on behalf of the Council,
taking into account the requirements of the basic securities, shall consider:
(a) domestic production needed for the projected requirements of the basic securities,
(b) the capability and capacity of domestic industries to meet the requirements of the basic securities,
including the availability of human resources, products, technology, materials, and other supplies and
services,
(c) the control of domestic industries and commercial activity by foreign citizens as it affects the
capability and capacity of the Philippines to meet the requirements of the basic securities,
(d) the potential effects of the proposed or pending transaction on sales of military goods, equipment,
or technology to any country identified by the Secretary of National Defense as a country that supports
terrorism, or to any country identified by the Secretary of Defense as posing a potential military threat
to the interests of the Philippines;
(5) the potential effects of the proposed or pending transaction on Philippine international technological
leadership in areas affecting the basic securities of the Philippines;
(6) the potential basic security-related effects on Philippine critical infrastructure, including major
energy assets;
(7) the potential basic security-related effects on Philippine critical technologies;
(8) whether the covered transaction is a foreign government-controlled transaction;
(9) as appropriate, and particularly with respect to a foreign government-controlled transaction, a
review of the current assessment of the relationship of such country with the Philippines, specifically
on its record on cooperating in counter-terrorism efforts, and the potential for transshipment or
diversion of technologies with military applications;
(10) the long-term projection of Philippine requirements for sources of energy and other critical
resources and material; and
(11) such other factors as the Council, or any lead agency acting on behalf of the Council, may
determine to be appropriate, generally or in connection with a specific review or investigation. xiv

Section 50. Risk Mitigation.- The Council, or any lead agency acting on behalf of the Council, may
seek to mitigate any basic security risk posed by a transaction that is not adequately addressed by other
provisions of laws, by entering into a mitigation agreement with the parties to a transaction or by
imposing conditions on such parties.xv

The Council, or any lead agency acting on behalf of the Council, may negotiate, enter into or impose,
and enforce any agreement or condition with any party to the covered transaction in order to mitigate

21
any threat to any basic security of the Philippines that arises as a result of the covered transaction. xvi

Prior to taking risk mitigation measures, the Council shall identify the basic security risk posed by the
transaction based on factors including the threat, vulnerabilities, and potential consequences. The
Council shall also set forth the risk mitigation measures that it believes are reasonably necessary to
address the risk.xvii

Any agreement entered into or condition imposed under this section shall be based on a risk-based
analysis, conducted by the Council, or any lead agency acting on behalf of the Council, of the threat to
a basic security of the Philippines of the covered transaction.xviii

The Council shall ensure that adequate resources are available for the purpose of monitoring a risk
mitigation measure.xix

Section 51. Suspension or Prohibition.- The Council, by a majority vote of all its members, may
suspend or prohibit a covered transaction if in the reasonable exercise of its discretion it determines that
such action is necessary to address risk.xx

Section 52. Confidentiality of Information.- Any covered transaction report, relevant documentary
material or information, shall be confidential and exempt from disclosure. No such report, material or
information may be made public, except as may be relevant to any administrative or judicial action or
proceeding. Nothing in this section shall be construed to prevent disclosure to the legislative branch of
government.xxi

Section 53. Control and Supervision.- The Council shall be under the control and supervision of the
President.

Section 54. Implementing Rules and Regulations.- The Council, by a majority vote of all its members,
shall promulgate rules and regulations to implement the provisions of this Act relevant to its mandate.

Section 55. Appropriation.- The Council shall be provided with an initial appropriation of
______________ Philippine Currency (Php__________) drawn from the national government.
Appropriations for the succeeding years shall be included in the General Appropriations Act.

MISCELLANEOUS PROVISIONS

Section 56. Interpretation.- Nothing herein shall be construed to modify the requirements or otherwise
liberalize the issuance of working visas or investor's visas under the immigration and investment laws,
or of alien employment permits under the labor laws.

Section 57. Implementing Rules and Regulations.- The National Economic Development Authority
(NEDA), in consultation with the Securities and Exchange Commission (SEC), the Board of
Investments (BOI), the Philippine Economic Zone Authority (PEZA) and other government agencies
concerned, shall issue the rules and regulations to implement this Act within one hundred and twenty
(120) days after its effectivity.

The respective government agencies vested with authority to issue the implementing rules and
regulations of the various statutory laws cited in this Act, shall also promulgate amendatory rules and
regulations to carry out the provisions of this Act in pursuit of their mandate.

Section 58. Repealing Clause.- All laws, decrees, executive order, executive issuance's or letters of
instruction, rules and regulations or any part thereof inconsistent with or contrary to the provisions of
this Act are hereby deemed repealed, amended or modified accordingly.

Section 59. Separability Clause.- If, for any reason or reasons, any part or parts of this Act shall be

22
declared unconstitutional or invalid by any competent court, other parts of this Act shall be thereby
shall continue to be in full force and effect.

Section 60. Effectivity Clause.- This Act shall take effect fifteen days (15) after its publication in two
(2) national newspapers of general education.

Approved

(Sgd.) ___________________ (Sgd.) ___________________________

President of the Senate Speaker of the House of Representatives

This Act which is a consolidation of House Bill No. ____ and Senate Bill No. ____ was finally
passed by the House of Representatives and Senate on _______________.

(Sgd.) __________________ (Sgd.) ____________________

Secretary of Senate Secretary General
House of Representatives

Approved: _____________ (date)

(Sgd.) _______________________
President of the Philippines

This material was written ex-gratia by Demosthenes B. Donato

for Tanggulang Demokrasya (Tan Dem), Inc.
All intellectual property rights are granted to the public domain.

6 28 August 2016. Makati City, Philippines.

Disclaimer: The views and opinions expressed in this material are those of the author
and do not necessarily reflect the official policy or position of TanDem.
i
See US Defense Production Act of 1950, as amended by FINSA, Section 721 (50 U.S.C. App.
2170). Executive Order No. 11858 (as amended by Executive Order No. 13456), re Foreign Investment
in the United States.
ii
See US Executive Order No. 11858 (as amended by Executive Order No. 13456), Section 1.
iii
See US Regulations, 31 CFR Part 800, Section 800.204 (2008).
iv
See US Defense Production Act of 1950, as amended by FINSA, Section 721(a)(3).
v
See US Defense Production Act of 1950, as amended by FINSA, Section 721(a)(6).
vi
See US Defense Production Act of 1950, as amended by FINSA, Section 721(a)(7).
vii
See US Defense Production Act of 1950, as amended by FINSA, Section 721(a)(4).
viii
See US Executive Order No. 11858 (as amended by Executive Order No. 13456), Section 4(c).
ix
See US Defense Production Act of 1950, as amended by FINSA, Section 721(b)(1)(A).
x
See US Defense Production Act of 1950, as amended by FINSA, Section 721(b)(1)(B).
xi
See US Defense Production Act of 1950, as amended by FINSA, Section 721(b)(1)(E).
xii
See US Defense Production Act of 1950, as amended by FINSA, Section 721(b)(2)(A)&(B).
xiii
See US Defense Production Act of 1950, as amended by FINSA, Section 721(b)(2)(C).
xiv
See US Defense Production Act of 1950, as amended by FINSA, Section 721(f).
xv
See US Executive Order No. 11858 (as amended by Executive Order No. 13456), Section 7(a).

23
xvi
See US Defense Production Act of 1950, as amended by FINSA, Section 721(l)(1)(A).
xvii
See US Executive Order No. 11858 (as amended by Executive Order No. 13456), Section 7(b).
xviii
See US Defense Production Act of 1950, as amended by FINSA, Section 721(l)(1)(B).
xix
See US Executive Order No. 11858 (as amended by Executive Order No. 13456), Section 7(d).
xx
See US Executive Order No. 11858 (as amended by Executive Order No. 13456), Section
6(c)(i).
xxi
See US Defense Production Act of 1950, as amended by FINSA, Section 721(c).

24