A PRIMER ON DOING BUSINESS IN THE PHILIPPINES FOR FOREIGN INVESTORS

I. Business Enterprises in the Philippines

a. Sole Proprietorship -
b. Partnership
c. Corporation

II. Foreigners doing Business in the Philippines

A. GENERAL RULE: 60% Filipino Owned-40% Foreign owned and will cater to the
domestic market - paid-in capital can be less than US$200,000.00
B. More than 40% foreign-owned and will cater to the domestic market
1. US$200,000.000 capital required
2. US$100,000.00 capital required if:
a. Activity involves advance technology
b. Company employs at least 50 direct employees
3. US$200,000.000 capital NOT required if:
a. the foreign company will export at least 60% of its output
b. a trader that purchases products domestically will export at least 60% of
its purchases

III. Foreigners and Real Estate Ownership in the Philippines

As a general rule, foreigners cannot own land in the Philippines

 Provided, however, That the phrase "doing business" shall not be deemed to include:
1. mere investment as a shareholder by a foreign entity in domestic corporations duly registered to
do business, and/or the exercise of rights as such investor;
2. nor having a nominee director or officer to represent its interests in such corporation;
3. nor appointing a representative or distributor domiciled in the Philippines which transacts
business in its own name and for its own account;

 "domestic market enterprise" shall mean an enterprise which produces goods for sale, or
renders services to the domestic market entirely

 "Foreign Investments Negative List" or "Negative List" shall mean a list of areas of economic
activity whose foreign ownership is limited to a maximum of forty percent (40%) of the equity
capital of the enterprises engaged therein.

 Up to 40% foreign equity:

1. Ownership of Private Lands (Art. XII, Sec. 7 of the Constitution; Ch. 5, Sec. 22 of
CA 141)
2. 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 (Sec. 5 pf R.A. 4726)
 Foreigner Ownership as a Philippine Corporation
1. Foreign nationals or corporations may completely own a condominium or
townhouse in the Philippines. To take ownership of a private land, residential
house and lot, and commercial building and lot, foreigners may set up a
Philippine corporation in the Philippines. This means that the corporation owning
the land has less than or up to 40% foreign equity and is formed by 5-15 natural
persons of legal age as incorporators, majority of whom are Philippine residents.