EO 113 & the 13th Foreign Investment Negative List (FINL‑13): Ownership Limits, Sector Rules and Compliance for Inbound Investors (philippines, 2026)

The foreign investment negative list Philippines regime underwent its most consequential update in years when Executive Order No. 113 (EO 113) promulgated the 13th Regular Foreign Investment Negative List (FINL‑13) in April 2026. Arriving on the heels of Republic Act No. 12252, the landmark law extending foreign lease rights on private land to 99 years, the twin reforms materially reshape how inbound investors, private‑equity sponsors and project companies structure deals, secure land tenure and navigate licensing across regulated sectors.

This article provides a practitioner‑level compliance and transaction playbook: precise ownership caps by sector, structuring alternatives where 100 % foreign ownership is not permitted, the practical implications of the RA 12252 lease regime for project finance, and a step‑by‑step licensing and filings checklist to satisfy Philippines market entry compliance requirements.

Executive Summary, Key Takeaways for Deal Teams

Before committing capital, every deal team entering the Philippines should internalise the following headline points from FINL‑13 and RA 12252:

• 100 % foreign ownership is allowed, but only in sectors not restricted by the Constitution or specific statutes. Activities outside the foreign investment negative list Philippines are fully open. Sectors on List A (constitutional and statutory caps) and List B (security, defence, health, morals and SME protection) carry binding equity ceilings ranging from zero to 40 %.
• FINL‑13 (EO 113) confirms and in some cases relaxes sectoral foreign investment limits. Investors should cross‑reference the updated list against prior FINL‑12 entries, as certain activities, particularly those reclassified under the amended Public Service Act (RA 11659), now permit higher foreign participation.
• Constitutional hard stops remain non‑negotiable. Mass media (0 % foreign equity), land ownership (reserved to Filipino citizens and qualifying corporations with at least 60 % Filipino equity) and natural resource exploitation (40 % foreign cap) are embedded in the 1987 Constitution and cannot be altered by executive order.
• RA 12252 extends the maximum lease of private land to 99 years, replacing the old 50‑year initial term plus 25‑year renewal under RA 7652. This significantly improves bankability for project‑finance transactions, but the Implementing Rules and Regulations (IRR) impose registration, qualification and public‑notice requirements that must be tracked.
• Anti‑dummy risk is the single largest enforcement exposure. The Anti‑Dummy Law (CA No. 108, as amended) criminalises arrangements where a Filipino nominee holds shares or exercises rights on behalf of a disqualified foreign party. Structuring must be legally defensible from day one.
• Sector licences, not just equity structure, gate market entry. Even where FINL‑13 permits foreign participation, regulators such as the Department of Energy (DOE), Energy Regulatory Commission (ERC), National Telecommunications Commission (NTC) and Civil Aviation Authority of the Philippines (CAAP) impose separate licensing, capitalisation and technical requirements.
• Immediate next step: engage Philippine counsel to run a FINL mapping exercise against the target activity, confirm permissible foreign equity, and design a compliant holding structure before executing term sheets.

What Is FINL‑13 (EO No. 113) and Why It Matters for Investors

The Philippines has maintained a Foreign Investment Negative List since the passage of the Foreign Investments Act of 1991 (RA 7042, as amended by RA 8179). Updated by executive order every two years, the FINL catalogues every economic activity in which foreign ownership is limited or prohibited. Activities not appearing on the list are open to 100 % foreign equity, a point often misunderstood by first‑time investors who assume a blanket restriction applies.

The list is divided into two schedules. List A captures restrictions mandated by the Constitution or specific statutes, these cannot be relaxed by executive action alone. List B covers activities restricted for reasons of security, defence, public health, morals, or protection of local small and medium enterprises (SMEs), with the foreign equity cap typically set at 40 %. For a deeper policy analysis, see our detailed overview of EO 113 and what foreign investors need to know in 2026.

What Changed in FINL‑13 vs FINL‑12

EO 113 (April 2026) carries forward the liberalisation trajectory set in motion by the amendments to the Public Service Act (RA 11659), the Retail Trade Liberalization Act (RA 11595) and the amended Foreign Investments Act. Key shifts include the reclassification of certain “public utilities” into “public services”, a distinction that, where applicable, removes the 40 % foreign equity cap and opens qualified activities to full foreign ownership subject to reciprocity and National Economic and Development Authority (NEDA) clearance. The list also refines capitalisation thresholds for retail trade and adjusts the SME‑reservation cutoffs under List B.

Industry observers expect these changes to stimulate additional inbound deal flow, particularly in digital infrastructure, logistics and renewable energy, sectors where the Philippines competes directly with Vietnam, Indonesia and Thailand for project capital.

Quick Reference: Foreign Investment Negative List Philippines, List A & List B Sectors

The table below summarises the principal foreign ownership limits Philippines investors encounter under FINL‑13. It is not exhaustive; always cross‑check the full EO 113 text and the underlying enabling statute. For a concise summary of each sector, refer to our 13th Foreign Investment Negative List practitioner summary.

How to Read the FINL: Statutory vs Regulatory Limits

Not every cap on the list carries the same legal weight. Constitutional caps (land, mass media, natural resources) require charter change to modify. Statutory caps (advertising at 30 %, education at 40 %) demand legislative amendment. Regulatory caps set by EO under delegated authority (List B) can, in principle, be adjusted every FINL cycle. Deal teams should always trace a restriction back to its source to assess the realistic likelihood of future liberalisation, a factor that affects exit multiples and long‑horizon project finance models.

Sector Deep Dives and Structuring Options Under the Foreign Investment Negative List Philippines

Public Utilities, Electricity, Water and Transport

The amended Public Service Act (RA 11659) fundamentally redrew the boundary between “public utilities” and “public services. ” Activities retained as public utilities, such as electricity distribution and water distribution, remain subject to the constitutional 40 % foreign equity cap. Activities reclassified as public services, such as telecommunications, domestic shipping and airlines, subject to conditions, may now permit up to 100 % foreign equity if reciprocity exists between the Philippines and the investor’s home jurisdiction. Structuring in this space typically involves a joint venture (JV) where the foreign investor takes a 40 % equity stake but negotiates board‑level governance rights, veto powers and management‑services agreements that deliver operational control without breaching the sectoral foreign investment limits.

Anti‑dummy scrutiny is intense: side agreements that transfer substantive control or economic benefit beyond the foreign equity share are at risk of invalidation.

Natural Resources and Mining

The 1987 Constitution caps foreign equity in the exploration, development and utilisation of natural resources at 40 %. Financial or Technical Assistance Agreements (FTAAs), authorised by the Mining Act (RA 7942), allow a foreign contractor to undertake large‑scale exploration and development under a service‑contract model, technically sidestepping the equity cap. Deal documents typically include a government royalty, community development fund and environmental compliance certificate from the Department of Environment and Natural Resources (DENR). Industry observers expect continued reliance on the FTAA model for large mining and upstream oil‑and‑gas projects, especially as FINL‑13 leaves the constitutional cap unchanged.

Telecommunications and Mass Media

Mass media ownership remains at 0 % foreign equity, no structure can lawfully circumvent this. Telecommunications, by contrast, sits at a pivotal juncture: where reclassified as a public service under RA 11659, it may accommodate 100 % foreign ownership subject to reciprocity. Tower companies, data‑centre operators and satellite ground‑station developers should verify their precise classification before structuring. NTC licensing requirements and spectrum allocation processes add months to project timelines.

Renewable Energy

The Renewable Energy Act (RA 9513), as amended, allows up to 100 % foreign ownership of solar, wind, ocean‑energy and hydropower projects. Geothermal, however, is classified as a natural resource and capped at 40 %. DOE service contracts, ERC certificates of compliance and grid‑connection permits from the National Grid Corporation of the Philippines (NGCP) are prerequisite to operation. PE sponsors commonly invest via a Philippine project company paired with an offshore holding entity to manage cash repatriation and withholding‑tax efficiency.

Aviation and Airports

Domestic airlines face a 40 % foreign equity cap. Airport infrastructure, depending on structure (BOT, JV, concession), may attract different limits. CAAP licensing, air‑operator certificates and NEDA approval for major infrastructure projects overlay the FINL equity analysis. Structuring typically mirrors the public‑utility JV model, with separate management and technical‑services agreements supporting operational efficiency.

Outsourcing and BPO

Information technology–business process outsourcing (IT‑BPO) is not on the foreign investment negative list Philippines and is therefore open to 100 % foreign ownership. This has made the Philippines one of the world’s top destinations for shared‑services and outsourcing investment. Philippine Economic Zone Authority (PEZA) or Board of Investments (BOI) registration unlocks fiscal incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

Land, Leases and RA No. 12252: Implications for Project Finance and Tenure Security

Republic Act No. 12252, signed into law on 3 September 2025, represents the most significant liberalisation of foreign land‑lease rights in the Philippines in decades. Amending the original Investors’ Lease Act (RA 7652), it allows qualified foreign investors to lease private land for a total period of up to 99 years, a dramatic extension from the previous 50‑year initial term plus a 25‑year renewal. The IRR, finalised in early 2026, clarifies registration, qualification and compliance requirements.

Who Qualifies and What the 99‑Year Lease Allows

Under the law, “qualified foreign investors” include foreign nationals, foreign‑owned corporations and entities investing in the Philippines for purposes recognised under the law. The leased land must be privately owned, the RA 12252 regime does not override public‑land restrictions. The President retains discretion to impose shorter lease periods for investors in vital services or industries deemed sensitive to national interest. Lenders evaluating project‑finance transactions secured by leasehold rights should confirm that the lease is properly registered with the relevant Registry of Deeds and that the lease term aligns with the debt‑repayment profile. Key contract clauses to negotiate include step‑in rights for lenders, assignment and sublease provisions, and compensation mechanisms upon lease expiry.

Registration and Public‑Notice Requirements

The IRR mandates formal registration of qualifying leases. Investors should budget for notarisation, documentary‑stamp tax and registration fees. Practitioners advise building in a timeline buffer of 30–60 days for Registry of Deeds processing. For an introduction to the local banking and financing ecosystem, see our guide on opening a bank account in the Philippines.

Philippines Market Entry Compliance Checklist: Licences, Filings, Capitalisation, Anti‑Dummy and Enforcement Risk

Meeting Philippines foreign investor requirements involves sequencing corporate formation, regulatory licensing and tax registration correctly. The checklist below maps the critical path:

• Entity choice. Most foreign investors incorporate a domestic stock corporation with the Securities and Exchange Commission (SEC). Branch offices or representative offices are alternatives where full operations are not intended.
• SEC registration and capitalisation. File articles of incorporation and treasurer’s affidavit. Where foreign equity exceeds 40 %, the paid‑up capital must meet the minimums prescribed by the Foreign Investments Act (currently at least USD 200,000, or USD 100,000 if the enterprise involves advanced technology or employs at least 50 direct employees). For sector‑specific thresholds (e.g., retail trade under RA 11595), verify the updated FINL‑13 figure.
• Beneficial‑ownership and GIS filings. The SEC requires annual General Information Sheet (GIS) filings disclosing share ownership, board composition and beneficial owners. Ensure that the reported structure matches the actual economic arrangement, discrepancies trigger investigation. See our SEC GIS form guide for practical steps.
• BIR tax registration. Register the entity with the Bureau of Internal Revenue within 30 days of incorporation. Obtain the Tax Identification Number (TIN) and register books of account.
• Sector‑specific licences. Apply for the relevant regulatory clearances, DOE/ERC for energy, NTC for telecommunications, CAAP for aviation, DENR for natural resources. Lead times range from two to six months depending on technical approvals and environmental clearances.
• BOI or PEZA registration (optional but advantageous). Enterprises on the Investment Priorities Plan may qualify for income‑tax holidays, duty‑free importation and other incentives under the CREATE Act.
• Foreign‑investment registration with the Bangko Sentral ng Pilipinas (BSP). Register inward capital remittances with the BSP to ensure unimpeded repatriation of profits and capital.

Anti‑Dummy Doctrine: Criminal and Administrative Penalties

The Anti‑Dummy Law (Commonwealth Act No. 108, as amended by PD 715) imposes criminal penalties, including imprisonment, on any person who permits a disqualified foreign party to exercise rights reserved to Filipino citizens or to Filipino‑controlled entities. Enforcement has intensified: the SEC and the Department of Justice actively investigate nominee shareholding arrangements, undisclosed side agreements and voting‑trust schemes that effectively transfer control beyond the permissible foreign equity cap. Deal teams should ensure that shareholder agreements, management contracts and governance structures are reviewed by Philippine counsel for anti‑dummy compliance at the earliest stages of transaction planning.

Typical Timelines for Approvals

Transaction Playbook: Structuring Majority Control Without Breaching FINL‑13

Where the foreign investment negative list Philippines imposes a cap below 100 %, investors have several models to achieve practical, though not absolute, control:

• Joint venture with a Filipino strategic partner. The most common structure. The foreign investor takes the maximum permissible equity (e.g., 40 %) and negotiates board seats, veto rights over material decisions, management‑services agreements and brand‑licensing arrangements that deliver operational influence. The Filipino partner contributes local knowledge, relationships and regulatory standing.
• Preferred shares with economic rights. Philippine corporate law permits classes of shares with differential dividend, liquidation and redemption rights. A foreign investor may hold preferred shares carrying priority economic returns while the Filipino partner holds common shares carrying the majority vote. Care is required: if the economic allocation effectively transfers the entire benefit to the foreign party, anti‑dummy exposure rises.
• Project‑company structure with offshore holding. For infrastructure or energy projects, the foreign sponsor incorporates a Philippine project company (at the FINL‑permissible cap) and a parallel offshore entity that provides technical services, equipment leasing or financing. Revenue flows to the offshore entity through commercially justifiable service fees, subject to transfer‑pricing rules and BIR scrutiny.
• Convertible instruments and exit planning. In anticipation of further liberalisation, investors sometimes structure convertible notes or warrants that convert into additional equity if and when the FINL cap is relaxed. Exit mechanisms, put/call options, tag‑along and drag‑along rights, should be embedded in the shareholders’ agreement from inception.
• Nominee and trust arrangements, high risk. Placing shares in the name of a Filipino nominee who acts at the direction of a foreign principal is a textbook anti‑dummy violation. This route is strongly discouraged. Enforcement penalties include criminal prosecution, forfeiture of the investment and dissolution of the entity.

Worked example, renewable‑energy project: A Southeast Asian PE fund seeks to develop a 200 MW solar facility. Under the amended RE Act, 100 % foreign equity is permissible for solar. The fund incorporates a wholly owned Philippine project company, secures a DOE service contract, obtains an ERC certificate of compliance, and leases the project site under RA 12252 for 75 years (matching the debt tenor plus a buffer). No JV partner is required. Had the project been geothermal, the 40 % natural‑resource cap would apply, necessitating a JV with at least 60 % Filipino ownership.

Conclusion and Recommended Next Steps

The 2026 regulatory landscape, anchored by EO 113 (FINL‑13) and RA 12252, offers the most investor‑friendly framework the Philippines has produced in a generation, yet it remains layered with constitutional hard stops, sector‑specific licensing requirements and significant anti‑dummy enforcement risk. Any entity evaluating how to invest in the Philippines should treat the foreign investment negative list Philippines as the starting point, not the finish line, of its market entry analysis. Mapping the target activity against FINL‑13, validating the permissible structure with Philippine counsel, and building a compliant licensing and registration timeline are non‑negotiable prerequisites before executing binding commitments.

Global Law Experts can connect investors with specialist practitioners who advise on every stage of the inbound investment cycle, from FINL compliance and entity formation through to sector licensing, lease structuring and exit planning.

Sources

1. Lawphil, Republic Act No. 12252
2. Presidential Communications Office (PCO), RA 12252 Signing Release
3. Law.asia, Philippines’ 99‑Year Lease Reform (RA 12252)
4. Lexology, Philippines Issues 13th Foreign Investment Negative List
5. UNCTAD Investment Policy Hub, Philippines FINL Updates
6. Global Law Experts, 13th Foreign Investment Negative List (Practitioner Summary)
7. Global Law Experts, The 13th FINL (EO 113): What Foreign Investors Need to Know in 2026
8. InCorp Philippines, 13th Regular Foreign Investment Negative List Advisory