SIXTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
SECOND REGULAR SESSION 
) 
) 
) 
SENATE 
SENATE BILL NO. 
'11 
UEC 16 [>6:17 
2517 
INTRODUCED BY SENATOR JOSEPH VICTOR G. EJERCITO 
AN ACT 
REMOVINGI AMENDING INVESTMENT RESTRICTIONS IN SPECIFIC 
LAWS GOVERNING ADJUSTMENT COMPANIES. LENDING 
COMPANIES. AND FINANCING COMPANIES CITED IN THE FOREIGN 
INVESTMENT NEGATIVE LIST. EXCEPT THOSE IN THE 
CONSTITUTION 
EXPLANATORY NOTE 
The Foreign Investment Negative List (FINL) 
identifies the 
activities/areas where foreign investments are limited by mandate of the 
Constitution and/ or specific laws to maximum of 40% (For transparency 
purposes, activities where more than 40% foreign equity participation is 
allowed are also included in the list.) It is formulated in accordance with 
Republic Act No. 7042, otherwise known as the Foreign Investments Act 
of 1991 as amended by Republic Act No. 8179. 
Since 1991, nine (9) FINLSs (excluding the Transitory FINL) have 
been issued. From the 1st to 9th FINL, only few major changes have been 
made. Private construction contract in List A was deleted; and limitations 
on retail trade in List A and domestic market enterprises and gambling in 
List B were reduced. On the other hand, new areas I activities were added 
in List A due to new laws on the practice of profession and other 
investment activities/areas. 
With the government aiming to attract, promote and welcome more 
foreign direct investments into the country, removing or reducing the 
limitations 
on 
foreign 
investments 
or 
participation 
in 
certain 
activities/areas listed in the FINL as provided for in specific laws, 
becomes necessary. 


Therefore, this bill seeks to amend investment restrictions in 
specific laws governing adjustment companies, lending companies, 
financing companies and investment houses cited in the FINL to 
liberalize investment activities/areas which significantly contribute to 
industrialization and socioeconomic development. 
In view of the foregoing, immediate passage of this bill is earnestly 
sought. 
-
--(5,"~. 
JOSEPH VICTOR EJERCITO 


SIXTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
SECOND REGULAR SESSION 
) 
SENATE 
SENATE BILL NO. 2517 
'14 llEC16 P6:17 
INTRODUCED BY SENATOR JOSEPH VICTOR G. EJERCITO 
AN ACT 
REMOVINGI AMENDING INVESTMENT RESTRICTIONS IN 
SPECIFIC LAWS GOVERNING ADJUSTMENT COMPANIES, 
LENDING COMPANIES, AND FINANCING COMPANIES 
CITED IN THE FOREIGN INVESTMENT NEGATIVE LIST, 
EXCEPT THOSE IN THE CONSTITUTION 
Be it enacted by the Senate and the House of Representatives of 
the Philippines in Congress assembled: 
1 
SECTION 1. Title. This Ach shall be known as Foreign Investment 
2 
Liberalization Act of 2014. 
3 
4 
5 
SECTION 2. Declaration of Policy. It is the policy of the State to attract, 
6 
promote and welcome productive investments from foreign individuals, 
7 
partnerships, corporations, and governments, including their political 
8 
subdivisions, 
in 
activities 
which 
significantly 
contribute 
to 
9 
industrialization and socioeconomic development. 
10 
11 
It is also a policy of the State to improve investment liberalization and 
12 
facilitation in the country to comply with our ASEAN Economic 
13 
Community commitments. 
14 
15 
Given the country's development objectives/thrusts and the need to 
16 
increase investments to achieve these, removing or reducing the 
17 
limitations 
on 
foreign 
investments 
or 
participation 
in 
certain 
18 
activities/ areas listed in the Foreign Investment Negative List as provided 
19 
for in specific laws, becomes necessary. 
20 
21 
22 
SECTION 3. Definition of Terms. As used in this Act: 
23 
24 
a) Foreign Investment Negative List shall mean a list of areas of 
25 
economic activity whose foreign ownership is limited to a 
1 


1 
maximum of forty percent (40%) of the outstanding capital stock in 
2 
the case of a corporation or capital in the case of partnership; 
3 
4 
b) Investment shall mean equity participation in any enterprise 
5 
organized or existing under the laws of the Philippines. It includes 
6 
both original and additional investments, whether made directly as 
7 
in stock subscription, or indirectly through the transfer of equity 
8 
from one investor to another in stock purchase. Ownership of 
9 
bonds (including income bonds), debentures, notes or other 
10 
evidences of indebtedness does not qualify as investments. 
11 
12 
The purchase of stock options or stock warrants is not an 
13 
investment until the holder thereof exercises his option and 
14 
actually acquires stock from the corporation; 
15 
16 
c) Foreign Investment shall mean an equity investment made by a 
17 
non-Philippine national; Provided, however, that for purposes of 
18 
determining foreign ownership, peso investments made by a non-
19 
Philippine nationals shall be considered; Provided, further, that 
20 
only foreign investments in the form of foreign exchange and/or 
21 
other assets actually transferred to the Philippines and duly 
22 
registered with the Bangko Sentral ng Pilipinas and profits derived 
23 
therefrom can be repatriated; and Provided, finally, That" for 
24 
purposes of Section 8 of Republic Act No. 7042, as amended by 
25 
Republic Act No. 8179, and Rule VIII, Section 6 of its Implementing 
26 
Rules and Regulations, Existing Foreign Investment shall mean an 
27 
equity investment made by a 
non-Philippine national duly 
28 
registered with the Securities and Exchange Commission (SEC) or 
29 
the Bureau of Trade Regulation and Consumer Protection in the 
30 
form of foreign exchange and/ or other assets transferred to the 
31 
Philippines. 
32 
33 
d) Philippine national shall mean a citizen of the Philippines or a 
34 
domestic partnership or association wholly owned by citizens of 
35 
the Philippines; or a corporation organized under the laws of the 
36 
Philippines of which at least sixty percent (60%) of the capital 
37 
stock outstanding and entitled to vote is owned and held by 
38 
citizens of the Philippines; or a corporation organized abroad and 
39 
registered as doing business in the Philippines under the 
40 
Corporation Code of which 100% of the capital stock outstanding 
41 
and entitled to vote is wholly owned by Filipinos; or a trustee of 
42 
funds for pension or other employee retirement or separation 
43 
benefits, where the trustee is a Philippine national and at least 
44 
sixty percent (60%) of the fund will accrue to the benefits of 
45 
Philippine nationals; Provided, that where a corporation and its 
46 
non-Filipino stockholders own stocks in SEC registered enterprise, 
47 
at least sixty percent (60%) of the capital stock outstanding and 
48 
entitled to vote of each of both corporations must be owned and 
49 
held by citizens of the Philippines and at least sixty percent (60%) 
50 
of the members of the Board of Directors of each of both 
51 
corporations must be citizens of the Philippines, in order that the 
52 
corporation must be citizens of the Philippines, in order that the 
2 


1 
corporation shall be considered Philippine national. The control 
2 
test shall be applied for this purpose. 
3 
4 
Compliance with the required Filipino ownership of a corporation 
5 
shall be determined on the basis of outstanding capital stock 
6 
whether fully paid or not, but only such stocks which are generally 
7 
entitled to vote are considered. 
8 
9 
For stocks to be deemed owned and held by Philippine citizens or 
10 
Philippine nationals, mere legal title is not enough to meet the 
11 
required Filipino equity. Full beneficial ownership of the stocks, 
12 
coupled with appropriate voting rights is essential. Thus, stocks, 
13 
the voting rights of which have been assigned or transferred to 
14 
aliens cannot be considered held by Philippine citizens or 
15 
Philippine nationals. 
16 
17 
Individual or juridical entities not meeting the aforementioned 
18 
qualifications are considered as non-Philippine nationals. 
19 
20 
SECTION 4. Lifting of Nationality Requirements. All statutory laws 
21 
and implementing rules and regulations that impose nationality 
22 
requirements 
or 
foreign 
investment 
limitations 
on 
adjustment 
23 
companies, lending companies and financing companies are hereby 
24 
repealed, except as otherwise provided in this Act, and subject to the 
25 
provisions of the Constitution. 
26 
27 
SECTION 5. Adjustment companies. Section 332 of Presidential Decree 
28 
612, otherwise known as "The Insurance Code"' as amended by Republic 
29 
Act No. 10607 is hereby amended to read as follows: 
30 
"Section 332. No person, partnership, association, or corporation 
31 
shall act as an adjuster, as hereinafter defined, unless authorized 
32 
so to act by virtue of a license issued or renewed by the 
33 
Commissioner pursuant to the provisions of this Code." 
34 
35 
SECTION 6. Lending companies. Section 6 of Republic Act No. 9474, 
36 
otherwise known as the "Lending Company Regulation Act of 2007", is 
37 
hereby amended to read as follows: 
38 
39 
40 
"Section 6. Citizenship Requirements. 
41 
A lending company may be owned up to 100% by foreign nationals; 
42 
Provided, however, that where the loan is secured by land, a 
43 
lending company, more than 40% of whose capital is owned by 
44 
foreign nationals, shall not bid or take part in any sale of such 
45 
land as a consequence of such mortgage. 
46 
47 
No foreign national may be allowed to own stocks unless the 
48 
country of which he is a national accords reciprocal rights to 
49 
Filipinos." 
3 


1 
2 
3 
SECTION 7. Financing companies. Section 6 of Republic Act No. 8556, 
4 
otherwise known as the "Financing Company Act of 1998" is hereby 
5 
amended to read as follows: 
6 
7 
"Section 6. Form of organization and capital requirements. 
8 
Financing companies shall be organized in the form of stock 
9 
corporations, may be owned up to 100% by foreign nationals, and 
10 
shall have a paid-up capital of not less than Ten million pesos 
11 
(Phpl0,000,OOO.OO) in case the financing company is located in 
12 
Metro Manila and other first class cities, Five Million Pesos 
13 
(Php5,000,000.OO) in other classes of cities and Two Million Five 
14 
Hundred Thousand Pesos (Php2,500,OOO.OO) in municipalities: 
15 
Provided, however, that no foreign national may be allowed to own 
16 
stock in any financing company unless the country of which he is 
17 
a national accords the same reciprocal rights to Filipinos in the 
18 
ownership of financing companies or their counterpart entities in 
19 
such country: and Provided, further, that financing companies 
20 
duly existing and in operation before the effectivity of this Act 
21 
shall comply with the minimum capital requirement within one (1) 
22 
year from the date of the said effectivity; and Provided finally, that 
23 
where land is concerned, the financing company with the 
24 
Constitutional provision on foreign ownership ofland." 
25 
26 
27 
SECTION 8. Repealing Clause. All statutory laws, orders, issuances, 
28 
rules and regulations and/or parts thereof which are inconsistent with 
29 
the provisions of this Act are hereby repealed or modified accordingly. 
30 
31 
32 
SECTION 9. Effectivity. This Act shall take effect fifteen (15) days after 
33 
publication in the Official Gazette or in a newspaper of general 
34 
circulation. 
35 
36 
37 
Approved, 
4