PART IV.

OMNIBUS INVESTMENTS
CODE, as amended
Executive Order No. 226
 WEEK 13
I. QUALIFIED PROPONENTS

II. INVESTMENT AREAS

III. FISCAL & NON-FISCAL INCENTIVES

 OVERVIEW
• Consolidates all laws related to domestic and foreign
investments
• Creates Board of Investments (BOI) under the Department of
Trade and Industry (DTI)
• BOI formulation of annual Investments Priority Plan (IPP)
• IPP list of preferred areas of investments
• Fiscal and non-fiscal incentives to preferred areas of
investments
 BOARD OF INVESTMENTS
(BOI)
- Attached agency of the Department of Trade and
Industry
• Mandated to promote investments into the country and
to assist local and foreign investors in their start-up and
continuing operations in the country
II. INVESTMENT PRIORITIES PLAN
(IPP)
- Annual plan of priority industries and service areas that are
encouraged through the grant of fiscal and non-fiscal incentives
Goals:
1. To uplift the material well-being of the poor and the marginalized
2. To enhance global competitiveness of Philippine industries
3. To ensure sustainable development
4. To take advantage of global and international developments
 INVESTMENT PRIORITIES PLAN
(IPP)
Contains the following:
1. Preferred Activities - covers investment areas/activities that were identified to
support the current priority programs of the government
2. Mandatory Inclusions - covers all areas/activities where the inclusion in the IPP
and/or the grant of incentives under EO 226 is mandated by law
3. Export Activities - covers investments in non-traditional export products and
services in support of exporters; and
4. ARMM List - covers priority areas that have been independently determined by the
Regional Board of Investments (RBOI) of the Autonomous Region of Muslim
Mindanao (ARMM) in accordance with E.O. 458.
 REQUIREMENTS FOR REGISTRATION
OF INVESTORS
1. CITIZENSHIP
- If a natural person, must be a Filipino citizen
- If a partnership or other association, organized under Philippine laws with
at least 60% of its capital owned and controlled by Filipino citizens
- If a corporation or cooperative, organized under Philippine laws with at
least 60% of its outstanding capital stock and entitled to vote are owned and
held by Filipino citizens, and at least 60% of the BOD are citizens of the
Philippines
 REQUIREMENTS FOR REGISTRATION
OF INVESTORS
1. CITIZENSHIP
 If it does not qualify with the required ownership by Philippine nationals, it
may still apply for registration provided that the following are met:
A. Proposes to engage in pioneer project/s that is not within the activities
reserved by the Constitution or other related laws to Filipinos
B. Proposes to export at least 70% of its total production; and
C. Attain the status of a Philippine national/ownership within 30 years from
the date of registration
 REQUIREMENTS FOR REGISTRATION
OF INVESTORS
2. PROPOSAL TO ENGAGE IN A PREFERRED PROJECT LISTED OR
AUTHORIZED UNDER THE PREVAILING IPP
 If the proposed activity is not listed in the IPP
- At least 50% of its total production is for export or it is an existing producer which
will export part of the production under the conditions to be imposed by the BOI; or
- Proposes to engage in the sale abroad of export products bought by it from one or
more export producers; or
- Proposes to engage in rendering technical, professional, or other services or in
exporting television, motion picture, and musical recordings made or produced in
the Philippines
 REQUIREMENTS FOR REGISTRATION
OF INVESTORS
3. CAPABILITY 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

3. INSTALLATION OR UNDERTAKING TO INSTALL AN

ACCOUNTING SYSTEM ADEQUATE TO IDENTIFY INVESTMENTS,
REVENUES, COSTS, AND PROFITS AND LOSSES OF EACH
PREFERRED PROJECT UNDERTAKEN
 III. FISCAL INCENTIVES
TAX EXEMPTIONS, CREDITS AND DEDUCTIONS
A. Income tax holidays
- Six (6) years for pioneer firms
- Four (4) years for non-pioneer firms; Six (6) years, if non-pioneer firm is located in a
less developed area.
- No income tax holiday for registered firms located within Metro Manila, unless they
are: > Within a government industrial estate
> Service-type projects with no manufacturing facilities
> Power-generating plants
> Exporters with expansion projects
 FISCAL INCENTIVES
TAX EXEMPTIONS, CREDITS AND DEDUCTIONS
B. Tax credit on raw materials, supplies, and semi-manufactured products
C. Additional deduction from taxable income for labor expense
D. Additional deduction from taxable income for necessary and major infra works
E. Tax and duty exemptions on imported capital equipment
F. Tax credit on domestic capital equipment
G. Exemption from contractor’s tax
H. Tax exemption on importation of breeding stocks and genetic materials
I. Tax credit on domestic breeding stocks and genetic materials
J. Exemption from wharfage dues and any export tax, duty, impost and fee
 NON-FISCAL INCENTIVES
A. EMPLOYMENT OF FOREIGN NATIONALS
- In supervisory, technical, or advisory positions for a period not exceeding five (5)
years from its registration
- May be extended upon BOI’s discretion
- When the majority of the capital stock of a registered enterprise is owned by foreign
investors, the positions of president, treasurer, and general manager or their
equivalents may be retained by foreign nationals beyond the five-year period.
B. SIMPLIFICATION OF CUSTOMS PROCEDURE
C. UNRESTRICTED USE OF CONSIGNED EQUIPMENT
D. ACCESS TO BONDED MANUFACTURING/TRADING WAREHOUSE SYSTEM
 PART III.
LAW ON CREDIT
TRANSACTIONS
Articles 1933 to 2141 of the
Civil Code of the Philippines
 WEEK 10

V. MORTGAGE
 V. MORTGAGE
A contract whereby the debtor secures to the
creditor the fulfillment of a principal obligation,
especially subjecting to such security immovable
property or real rights over immovable property in
case the principal obligation is not complied with
at the time stipulated.
 OBJECTS OF
REAL MORTGAGE
1. Immovables
2. Alienable real rights in accordance with the
laws, imposed upon immovables
 Future property cannot be the object of
mortgage
 KINDS OF MORTGAGE
1. VOLUNTARY – agreed to between by the parties
2. LEGAL – one required by the law to be executed in
favor of certain persons.
3. EQUITABLE – One which, although lacking the
proper formalities of a mortgage, shows the
intention of the parties to make the property as a
security for a debt.
 ESSENTIAL REQUISITES
1. Constituted to secure the fulfillment of a principal
obligation
2. Mortgagor must be the absolute owner of the thing
mortgaged
3. The persons constituting the mortgage have free
disposal of the property; in the absence thereof, they
should be legally authorized for the purpose
 ESSENTIAL REQUISITES
4. Cannot exist without a valid obligation
5. When the principal obligation becomes due, the thing in
which the mortgage consists may be alienated for
payment to the creditor
6. Must appear in a public document duly recorded in the
Registry of Property, to be validly constituted. (if
unregistered, binding between parties)
EFFECT OF INVALIDITY OF MORTGAGE ON
THE PRINCIPAL OBLIGATION

1. Principal obligation remains valid

2. Mortgage deed remains evidence of a personal
obligation
 FORECLOSURE
OF MORTGAGE
Remedy available to the mortgagee by which he
subjects the mortgaged property to the satisfaction
of the obligation secured by the mortgage
 KINDS OF FORECLOSURE
1. JUDICIAL
- Bringing an action in the proper court which has jurisdiction over the area
wherein the real property involved or a portion thereof is situated
- Court shall order the mortgagor to pay the amount due with interest and
other charges within a period of not less than 90 days nor more than 120
days from the entry of judgment
- If the mortgagor fails to pay at the time directed, the court, upon motion,
shall order the property to be sold to the highest bidder at a public auction.
(Rule 68, Rules of Court)
 JUDICIAL FORECLOSURE
Before the confirmation of the sale, the court retains control of the proceedings

The proceeds of the sale shall be applied to the payment of the:

- Costs of the sale
- Amount due the mortgagee
- Claims of junior encumbrancers or persons holding subsequent mortgages
in the order of their priority; and
- Balance, if any shall be paid to the mortgagor. Sheriff’s certificate is
executed, acknowledged and recorded to complete the foreclosure
 KINDS OF FORECLOSURE
2. EXTRAJUDICIAL
Act No. 3135, as amended:
A. Express authority to sell is given to the mortgagee
B. Authority is not extinguished by death of mortgagor or
mortgagee
C. Public sale should be made after proper notice
 EXTRAJUDICIAL FORECLOSURE

D. Surplus proceeds of foreclosure sale belong to the

mortgagor
E. Debtor has the right to redeem the property sold within
1 year from and after the date of sale
F. Remedy of party aggrieved by foreclosure is a petition
to set aside sale and cancellation of writ of possession
 REDEMPTION
It is a transaction by which the mortgagor
reacquires the property which may have passed
under the mortgage or divests the property of the
lien which the mortgage may have created
 KINDS OF REDEMPTION
EQUITY OF REDEMPTION RIGHT OF REDEMPTION
Right of the mortgagor to Right of the mortgagor to
redeem the mortgaged redeem the property within a
property after his default in the certain period after it was sold for
performance of the conditions the satisfaction of the debt
of the mortgage but before the
sale of the mortgaged property
or confirmation of sale
 CHATTEL MORTGAGE
It is a transaction by which the mortgagor
reacquires the property which may have passed
under the mortgage or divests the property of the
lien which the mortgage may have created
 CHATTEL MORTGAGE:
AFFIDAVIT OF GOOD FAITH
An oath in a contract of chattel mortgage wherein the
parties "severally swear that the mortgage is made for the
purpose of securing the obligation specified in the
conditions thereof and for no other purposes and that the
same is a just and valid obligation and one not entered into
for the purpose of fraud” (Sec. 5, Act No. 1508)
 FORECLOSURE OF
CHATTEL MORTGAGE
1. PUBLIC SALE
2. PRIVATE SALE

PERIOD TO FORECLOSE:
A. After 30 days from the time of the condition is broken
B. The 30-day period is the minimum period after violation of the mortgage condition for the
creditor to cause the sale at public auction with at least 10 days notice to the mortgagor and
posting of public notice of time, place, and purpose of such sale, and is a period of grace for the
mortgagor, to discharge the obligation.
C. After the sale at public auction, the right of redemption is no longer available to the mortgagor
 FORECLOSURE OF
CHATTEL MORTGAGE
RIGHT OF MORTGAGEE TO RECOVER DEFICIENCY
1. Where mortgage foreclosed: Creditor may maintain action for deficiency
2. Where mortgage constituted as security for purchase of personal property
payable in installments: No deficiency judgment can be asked and any
contrary agreement shall be void
3. Where mortgaged property subsequently attached and sold: Mortgagee is
entitled to deficiency judgment in an action for specific performance
 FORECLOSURE OF
CHATTEL MORTGAGE
APPLICATION OF PROCEEDS OF SALE
1. Costs and expenses of keeping and sale
2. Payment of the obligation
3. Claims of persons holding subsequent mortgages in their
order
4. Balance, if any, shall be paid to the mortgagor, or person
holding rights under him
 PART V.
FOREIGN INVESTMENTS
ACT of 1991, as amended
Republic Act No. 7042
 WEEKS 14 & 15
I. LICENSE TO DO BUSINESS

II. FOREIGN INVESTMENT RESTRICTIONS

III. NEGATIVE LIST A & NEGATIVE LIST B

 OVERVIEW
• Foreign investments are encouraged to fill in capital gaps,
help provide employment, increase production, and provide a
base for the overall development of the economy
• Foreign investors are generally treated like their domestic
counterparts and must register with the Securities and
Exchange Commission or with the Department of Trade and
Industry’s Bureau of Trade Regulation and Consumer
Protection

I. LICENSE TO DO BUSINESS
- Secure the necessary licenses or registrations from the SEC or
from the Bureau of Trade Regulation & Consumer Protection
of the DTI
- Filing of a verified application with the SEC setting forth
specifically required data, including certified copies of its
articles of incorporation and by-laws (for corporations)
- Upon issuance, foreign corporation may commence to
transact its business
I. LICENSE TO DO BUSINESS
EFFECTS OF NOT OBTAINING A LICENSE TO DO
BUSINESS:
A. Shall not be permitted to maintain or intervene in any action,
suit or proceeding in any court or administrative agency of
the Philippines
B. May be sued or proceeded against before Philippine courts
or administrative tribunals on any valid cause of action
recognized under Philippine laws
 RESIDENT AGENT
- State in the verified application the name and address of the foreign
corporation’s resident agent authorized to accept summons and process in
all legal proceedings and, pending the establishment of a local office, all
notices affecting the corporation
- A written power of attorney must be filed with the SEC designating some
person who must be a resident of the Philippines, and consenting that
service upon such resident agent shall be admitted and held as valid as if
served upon the duly authorized officers of the foreign corporation at its
home office
 Failure to appoint or maintain resident agent shall be a ground to revoke
license to do business
 PERCENTAGE OF
FOREIGN EQUITY
GENERAL RULE: 100% foreign equity may be
allowed in all areas of investment
EXCEPTION: Investment areas reserved for
Filipinos under the Philippine Constitution and
existing laws
 II. FOREIGN INVESTMENT
RESTRICTIONS
• Foreign Investment Negative List which defines
the foreign investments, which are limited or
restricted by the Constitution and specific laws
• Negative List A & Negative List B
 III. NEGATIVE LIST A
NO FOREIGN EQUITY
1. Mass Media except recording
2. Practice of professions
3. Retail trade enterprises with paid-up capital of not less than US$ 2,500,000.00
4. Cooperatives
5. Private Security Agencies
6. Small-scale Mining
7. Utilization of Marine Resources in archipelagic waters, territorial sea, and EEZ
8. Ownership, operation and management of cockpits
9. Manufacture, repair, stockpiling and/or distribution of nuclear weapons
10. Manufacture, repair, stockpiling and/or distribution of biological, chemical and radiological weapons
and anti-personal mines
11. Manufacture of firecrackers and other pyrotechnic devices
 III. NEGATIVE LIST A
UP TO 20% FOREIGN EQUITY
12. Private radio communication network
UP TO 25% FOREIGN EQUITY
13. Private recruitment, whether for local or overseas employment
14. Contracts for the construction and repair of locally-funded public works, except: a.
infrastructure/development projects covered in RA 7718; and
b. projects which are
foreign funded or assisted and required to undergo international competitive bidding
(Sec. 2(a) of RA 7718)
15. Contracts for construction of defense-related structure
UP TO 30% FOREIGN EQUITY
16. Advertising
 III. NEGATIVE LIST A
UP TO 40% FOREIGN EQUITY
17. Exploration, development and utilization of natural resources
18. Ownership of Private Lands
19. Operation and management of public utilities
20. Ownership/establishment and administration of educational institutions
21. Culture, production, milling, processing, trading excepting retailing, of rice and corn and acquiring, by barter, purchase or otherwise,
rice and corn and the by-products thereof
22. Contracts for the supply of materials, goods and commodities to government-owned or controlled corporation, company, agency or
Municipal Corporation
23. Project Proponent and facility Operator of a BOT project requiring a public utilities franchise
24. Operation of deep-sea commercial fishing vessels
25. Adjustment Companies
26. Ownership of condominium units where the common areas in the condominium projects are co-owned by the owners of the separate
units or owned by a corporation
UP TO 60% FOREIGN EQUITY
27. Financing companies regulated by the SEC
28. Investment housed regulated by the SEC
 NEGATIVE LIST B
Foreign ownership is limited for reason of security, defense, risk to health and morals and protection of small-and-
medium-scale enterprises
UP TO 40% FOREIGN EQUITY
1. Manufacture, repair, storage and/or distribution of products and/or ingredients requiring Philippine National
Police (PNP) clearance
2. Manufacture, repair, storage and/or distribution of products requiring Department of National Defense (DND)
clearance
3. Manufacture and distribution of dangerous drugs
4. Sauna and steam bathhouses, massage clinics and other like activities regulated by law because of risks posed to
public health and morals
5. All forms of gambling, e.g. race track operation 

6. Domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000
7. Domestic market enterprises, which involve advanced technology or employ at least fifty (50) direct employees
with paid-in-equity capital of less than the equivalent of US$100,000
 PART III.
LAW ON CREDIT
TRANSACTIONS
Articles 1933 to 2141 of the
Civil Code of the Philippines
 WEEKS 8 & 9
II. DEPOSIT

III. GUARANTY

IV. PLEDGE
 II. DEPOSIT
Art. 1962. A deposit is constituted from the
moment a person receives a thing belonging to
another, with the obligation of safely keeping it
and of returning the same. If the safekeeping of the
thing delivered is not the principal purpose of the
contract, there is no deposit but some other
contract.
 DEPOSIT
- Real contract thus perfected by delivery (Art. 1963)
- Purpose is safekeeping of the thing
- Essentially gratuitous except where there is a contrary
stipulation or if the depositary is engaged in the business of
storing goods (Art. 1965)
- Only movable things may be the object of deposit (Art. 1966)
- Two kinds of Extrajudicial Deposit; Voluntary and Necessary
(Art. 1967)
 EXTRAJUDICIAL DEPOSIT:
VOLUNTARY DEPOSIT
- Where delivery is made by the will of the
depositor
- The depositor need not be the owner of the thing
deposited
- Entered into verbally or in writing
 VOLUNTARY DEPOSIT:
OBLIGATIONS OF DEPOSITARY
OBLIGATIONS
1. To keep the thing deposited and return it (Art. 1972)
2. Not to transfer deposit to a third person (Art. 1973)
3. Not to change way of deposit except if delay would entail danger (Art. 1974)
4. Not to use thing deposited except if with consent or if preservation of thing
deposited requires its use (Art. 1977)
4. To be liable for loss of the thing through a fortuitous event if so stipulated, if he uses
the thing without permission, if he delays its return or if he allows others to use it
(Art. 1979)
 VOLUNTARY DEPOSIT:
OBLIGATIONS OF DEPOSITARY
OBLIGATIONS
1. When thing deposited is delivered closed and sealed, to return it in
same condition (Art. 1981)
2. When the seal or lock is broken, with or without the depositary’s
fault, to keep the secret of the deposit (Par. 4, Art. 1981)
3. To return thing deposited with all its products, accessories and
accessions (Art. 1983)
 VOLUNTARY DEPOSIT:
OBLIGATIONS OF DEPOSITOR
OBLIGATIONS
1. To reimburse the depositary for expenses for
preservation (Art. 1992)
2. To reimburse the depositary for any loss arising from the
character of the thing deposited (Art. 1993)
3. To pay the depositary in case of retention of thing (Art.
1994)
 EXTRAJUDICIAL DEPOSIT:
NECESSARY DEPOSIT
INSTANCES:
1. In compliance with a legal obligation (Art. 1996)
2. On the occasion of any calamity, such as fire, storm, flood, pillage,
shipwreck (Art. 1996)
3. Hotels and inns –
A. Deposit of effects: Prior information to the keepers or their
employees about effects brought and guest/s take precautions
prescribed by hotel-keepers relative to the care and vigilance of
their effects (Art. 1998)
 EXTRAJUDICIAL DEPOSIT:
NECESSARY DEPOSIT
INSTANCES:
3. Hotels and inns -
B. Liable for vehicles, animals and articles which have been introduced or placed in the
annexes of hotel (Art. 1999)
C. Loss of or injury to the personal property of guests caused by servants or employees as
well as strangers (Art. 2000)
D. Loss is caused by act of thief or robber, unless done with the use of arms or through
irresistible force (Art. 2001)
 Cannot free himself from responsibility by posting notices to the effect that he is not
liable for articles brought by the guest. Contrary stipulation is void (Art. 2003)
 Hotel-keeper has right to retain things brought as security for credit on account of
lodging, and supplies usually furnished to guests (Art. 2004)
 JUDICIAL DEPOSIT
- Seizure of property in litigation is ordered
- Auxiliary to a case pending in court
- Purpose is to maintain the status quo during
pendency of case
 III. GUARANTY
Art. 2047. By guaranty a person, called the guarantor,
binds himself to the creditor to fulfill the obligation of
the principal debtor in case the latter should fail to do
so.

 Takes effect only when debtor fails in his obligation

 GUARANTY
- Guaranty is not presumed
- Must be express and cannot extend to more than what is
stipulated
- Must be reduced in writing (Statute of Frauds)
- Guarantor cannot be compelled to pay unless creditor
has exhausted all properties of the debtor and has
resorted to all legal remedies (Art. 2058)
 QUALIFICATIONS OF
GUARANTOR
1. Integrity
2. Capacity to bind himself
3. Sufficient property (Arts. 2056 and 2057)

 Qualifications of the guarantor may be waived by the

creditor
 PROVISIONS COMMON TO
PLEDGE & MORTGAGE
A. Constituted to secure fulfillment of a principal obligation
B. Pledgor or mortgagor be the absolute owner of the thing pledged
or mortgaged
C. Persons constituting have free disposal of their property, and in the
absence thereof, that they be legally authorized for the purpose
(Art. 2085)
 Third persons not parties to principal obligation may secure the
latter by pledging or mortgaging their own property
 PROVISIONS COMMON TO
PLEDGE & MORTGAGE
D. Cannot exist without a valid obligation
E. Debtor retains the ownership of the thing given as
security
F. When the principal obligation becomes due, the thing
pledged or mortgaged may be alienated for the
payment to the creditor (Art. 2085)
 PACTUM COMMISSORIUM
Stipulation where thing pledged or mortgaged shall
automatically become the property of the creditor in the event of
nonpayment of the debt within the term fixed (Art. 2088). This
stipulation is void.
REQUISITES:
a) Pledge or mortgage
b) A stipulation for an automatic appropriation by the creditor
of the property in the event of nonpayment
 III. PLEDGE
Art. 2085
- Debtor delivers to the creditor or to a third person a movable
or document evidencing incorporeal rights
- Purpose is to secure the fulfillment of a principal obligation
- When obligation is fulfilled, the thing delivered shall be
returned with all its fruits and accessions
- The thing pledged shall be placed in the possession of the
creditor (actual possession) (Art. 2093)
 CHARACTERISTICS
OF PLEDGE
1. REAL – Perfected by delivery
2. ACCESSORY – Has no independent existence of its own
3. UNILATERAL – Creates obligation solely on the part of the
creditor to return the thing subject upon the fulfillment of the
principal obligation
4. SUBSIDIARY – Obligation incurred does not arise until the
fulfillment of the principal obligation
 PLEDGE & MORTGAGE
PLEDGE
1. Constituted on movables
2. Actual delivery
3. Must appear in public instrument with
description of thing pledged and date
of pledge (Art. 2096)
4. May sell the thing pledged with the
consent of the pledgee (Art. 2097)
MORTGAGE
1. Constituted on immovables
2. Delivery is not necessary
3. Registration of mortgage is necessary to
bind third persons
4. Debtor may sell the property
mortgaged even without the consent of
the creditor
 RIGHTS AND DUTIES
OF PLEDGEE / CREDITOR
RIGHTS & DUTIES
1. Take care of the thing pledged with the diligence of a good father of
a family (Art. 2099)
2. Right to reimbursement of the expenses made for preserving the
thing (Art. 2099)
3. Cannot use the thing without the authority of the owner (Art. 2104)
3. May use the thing if necessary for its preservation
 RIGHTS AND DUTIES
OF PLEDGOR / DEBTOR
RIGHTS & DUTIES
1. Take responsibility for the flaws of the thing pledged
2. Cannot ask for the return of the thing against will of the creditor unless and until he
has paid (Art. 2105)
3. Allowed to substitute the thing which is in danger of destruction or impairment
without fault on pledgee, with same kind
3. May require that the thing be deposited with a 3rd person, if through the negligence
or willful act of pledgee the thing is in danger of being lost or impaired (Art. 2106)
 EXTINGUISHMENT
OF PLEDGE
1. Payment of the debt
2. Sale of the thing pledged at public auction (Art. 2112)
3. Thing pledged is returned by the pledgee to the pledgor or owner
(Art. 2110)
4. Written statement by the pledgee that he renounces or abandons
the pledge. For this purpose, neither the acceptance by the pledgor
or owner nor the return of the thing pledged is necessary, and the
pledgee becomes a depositary (Art. 2111)
 PART VI.
RETAIL TRADE
LIBERALIZATION ACT
Republic Act No. 8762
 WEEK 16
I. RETAIL TRADE

II. FOREIGN RETAIL

III. FOREIGN EQUITY REQUIREMENT

 OVERVIEW
• Law that intends to promote both Filipino and foreign
investors to forge efficient and competitive retail trade
• Empowering the Filipino consumer through lower prices,
higher quality goods, better services and wider choices
• SEC. 4 – A natural-born Filipino who has lost Philippine
citizenship but who resides in the Philippines shall be granted
the same rights as Filipino citizens
 I. RETAIL TRADE
• The act, occupation or calling of habitually
selling direct to the general public merchandise,
commodities or goods for consumption
 SALES THAT ARE
NOT CONSIDERED AS RETAIL
1. Sales by a manufacturer, processor, laborer or worker, to the general public of products
manufactured, processed or produced by him if his capital does not exceed P100,000;
2. Sales by a farmer or agriculturist selling the products of his farm, regardless of capital;
3. Sales arising from restaurant operations by a hotel owner or inn-keeper irrespective of the
amount of capital, provided, that the restaurant is incidental to the hotel business;
4. Sales through a single outlet owned by a manufacturer of products manufactured, processed or
assembled in the Philippines, irrespective of capitalization;
5. Sales to industrial and commercial users or consumers who use the products bought by them to
render service to the general public and/or produce or manufacture of goods which are in turn
sold by them; or
6. Sales to the government and/or its agencies and government-owned and controlled corporations
 QUALIFICATIONS FOR
FOREIGN RETAILERS
- Request for pre-qualification duly signed and acknowledged under oath by an authorized officer of the foreign retailer
- Submitted to the Board of Investments accompanied by the following documents:
1. Latest audited annual financial statements incorporating an income statement and a balance sheet or their equivalents
a. For Category B – minimum of US$200M net worth
b. For Category D – minimum of US$50M net worth
2. Certification by a responsible officer of the applicant-foreign retailer duly authenticated by the Philippine
Embassy/Consulate stating that:
i. it has been engaged in retailing for the past five years;
ii. has at least five (5) retailing branches anywhere in the world, or at least one branch is capitalized at a minimum
of US$25,000,000.00;
iii. copies of franchise or licensing agreements between the applicant and its franchisee/licensee if the applicant
fails to meet the preceding requirement of at least five (5) retailing branches; and
3. Certification by the proper official of the home state of the applicant-foreign retailer to the effect that the laws of such state
allows or permits reciprocal rights to the Philippine citizens and enterprises together with the extent of participation allowed
 III. FOREIGN EQUITY
REQUIREMENT
CATEGORY B – Enterprises with a minimum paid-up capital of
US$2,500,000.00
 The opening of branches by a foreign retailer is allowed, provided that the
investments of each store/branch established under Category B must be no
less that the peso equivalent of $830,000.00
CATEGORY D – Enterprises specializing in high-end or luxury products with
a paid-up capital of US$250,000.00 per store may be wholly owned by
foreigners