Laws & Policies
EO 156 Restructuring Of The Motor Vehicle Development
EO 226 Omnibus Investment Code
EO 226 Omnibus Investment Code Guidelines
EO 286 Foreign Investment List
EO 1016 IRR
Primer On Investment Policies
RA 7394 Consumer Act
RA 7581 Price Act
RA 7844 Export Development Act
RA 8179 Foreign Investment Act
RA 8181 Transaction Value Act
RA 8502 Jewelry Development Act
RA 8751 Counterveiling Act Of 1999
RA 8752 Anti-Dumping Act Of 1999
RA 8762 Retail Trade Liberalization Act
RA 8792 Electronic Commerce Act
RA 8800 Safeguards Measures Act
RA 9178 BMBE Law
RA 9211 Tobacco Regulation Act
SME Development Plan
EO 156 Restructuring Of The Motor Vehicle Development Program
PROVIDING FOR A COMPREHENSIVE INDUSTRIAL POLICY AND
DIRECTIONS FOR THE MOTOR VEHICLE DEVELOPMENT PROGRAM AND
ITS IMPLEMENTING GUIDELINES
Omnibus Investment Code (Executive Order No. 226)
Executive Order 226, otherwise known as the Omnibus Investments Code,
was enacted in 1987 to develop the country's industries, establish a competitive
investment environment and discourage monopolies. The law provides a host of
incentives to registered investments and sets into place systematic procedures
by which local or foreign companies or business projects can easily register.
An important aspect of the law is the provision of incentives, fiscal and non-fiscal,
to preferred areas of investments, pioneer or non-pioneer, export production as
well as rehabilitation or expansion of existing operations. Pioneer enterprises are
registered enterprises engaged in the manufacture and processing of products or
raw materials that are not yet produced in the Philippines in large volume. It also
involves the design, formula or system applied as well as agricultural, forestry
and mining activities, the services and energy sectors. Non-pioneer enterprises
refer to all registered producer enterprises not included in the pioneer enterprise
Qualified projects, depending on their category, are granted a host of incentives,
including income tax holidays, tax credits, tax and duty exemption for imported
raw materials and equipment, hiring of foreign labor, exemption from contractors
tax, simplified customs procedure, and other tax incentives. Investors are
assured the right to repatriate of profits and earnings, payment of foreign loans
and interests, and freedom from expropriation.
EO 226 also requires the Board of Investments (BOI) to draw up an Investment
Priorities Plan (IPP), review and update it on an annual basis and submit it to the
President for approval. The IPP lists economic activities and industries which are
encouraged and considered desirable for the overall economic development of
the country and thus entitled to incentives. Equity limits for foreign and local
investors in an enterprise availing of incentives are specified.
An attached agency of the Department of Trade and Industry (DTI), the BOI is
the implementing agency authorized to grant incentives, set investment priorities
programs and promote the country as an investment site.
Omnibus Investment Code Guidelines
EO 1016 IRR
Foreign Investment List (Executive Order No. 286)
On August 11, 1998, the Foreign Investment List was released. The list defines
the areas where restrictions on foreign ownership as specified by the Constitution
and certain laws exist. The list also identifies the areas or industries which are
closed to foreigners.
Under the 1998 Foreign Investment List, no foreign equity is allowed in mass
media; services involving the practice of professions such as engineering,
medical and allied profession, accountancy, criminology, architecture, law, etc.;
retail trade; cooperatives; small-scale mining, utilization of marine resources;
ownership and operation of cockpits; manufacture, repair of nuclear weapons
and other biological, chemical weapons, etc; and other areas.
Up to 25% foreign ownership is allowed for private recruitment, whether for local
or overseas employment; locally-funded public works, except for
infrastructure/development projects and foreign-funded or assisted projects. Up
to 30% foreign equity is allowed in advertising while a maximum of 40% is
granted for exploration, development and utilization of natural resources;
ownership of private lands; operation and management of public utilities,
educational institutions; rice and corn administration; contracts to supply
materials, good and commodities to government-owned or controlled
corporations, and government agencies; project proponent of a BOT project in
public utilities; deep-sea commercial fishing vessels operation and
The law also allows 60% ownership in financing companies regulated by the
Securities and Exchange Commission (SEC) and investment houses.
Consumer Act of the Philippines (Republic Act No. 7394)
Republic Act No. 7394, or the Consumer Act of the Philippines, was enacted
to protect the interests of the consumer from trade malpractices and from
substandard or hazardous practices, promote his general welfare and to
establish standards of conduct for business and industry.
The Act mandates the Government to:
a. Develop and provide safety and quality standard for consumer products,
including performance or use-oriented standards codes of practice and
b. Assist the consumer in evaluating the quality of consumer products,
including safety, performance and comparative utility
c. Protect the public against unreasonable risks to injury associated with
d. Undertake research on quality improvement of products and investigation
into causes and prevention of product related deaths, illness and injuries
Implementing agencies are the Department of Health (for food, drugs, cosmetics,
devices and substances), the Department of Agriculture (for products related to
agriculture) and the Department of Trade and Industry (for other consumer
products not specified above). The concerned department shall then establish or
adopt existing government consumer product quality and safety standards.
The Act also mandated the creation of a National Consumer Affairs Council,
referred to as the "Council", to improve the management, coordination and
effectiveness of consumer programs. The Council is composed of specific
government and non-government agencies and representatives from consumer
organizations and the business/industry sector.
Price Act (Republic Act No. 7581)
Republic Act No. 7581, or the Price Act, aims to ensure the availability of prime
commodities at reasonable prices at all times. It also aims to provide effective
and sufficient protection to consumers against hoarding, profiteering and cartels
with respect to the supply, distribution, marketing and pricing of said goods,
especially during periods of calamity, emergency, widespread illegal price
manipulation and other similar situations.
Under the Act, there will be two types of price control that can be imposed by the
a. Automatic price control when prices of basic necessities are automatically
placed under price control whenever the President declares an area under
a state of calamity, disaster, emergency, rebellion, war, martial law, or
when the privilege of the writ of habeas corpus has been suspended. This
shall remain effective for the duration of the condition that brought it about,
but not more than 60 days.
b. Mandated price control (MPC) where the Price Coordinating Council
(PPC) or the implementing agency may recommend the imposition of
mandated price ceilings on any or all of the products that fall under the list
of basic necessities and prime commodities when there is
impendency/threat, existence or effects of a calamity or emergency or any
event that causes artificial or unreasonable increase in prices; or
whenever the prevailing prices have risen to unreasonable levels. This
shall require the approval of the President.
Implementing agencies include the Departments of Agriculture, Health,
Environment and Natural Resources, and Trade and Industry.
The Act also mandated the creation of the PPC composed of Department
Secretaries of or representatives from specific government agencies and
representatives from selected sectors. Its major functions is to coordinate
productivity, distribution and price stabilization programs, projects and measures
as well as comprehensive strategies to effect a general stability in the prices of
basic necessities and prime commodities.
The Price Act was signed into law by President Corazon C. Aquino on May 27,
1992 and took effect on June 7, 1992.
Export Development Act (Republic Act No. 7844)
Republic Act No. 7844, or the Export Development Act, aims to develop the
country's export sector and meet the country's export goals. The law puts into
focus a national strategy for a sustainable agri-industrial development to push the
Philippines' image as a newly-industrialized country.
The law enjoins the government and the private sector to consolidate efforts to
promote exports and expand the country's share in the international markets by
promoting industries that are considered export winners. Under an integrated
strategy, a conducive environment where monetary and foreign exchange
policies, fiscal and credit policies, agricultural policies, and trade, tariff and
customs policies is to be established. Technical support policies are also
provided to encourage technology transfer, R&D, technical training and related
The law develops and promotes a Philippine Export Development Plan, a three-
year rolling plan prepared by the Department of Trade and Industry (DTI) which
forms part of the medium-term Philippine Development Plan (MTPDP). The
Export Development Council is created to oversee the implementation of the
export plan and come up with measures to support the export sector.
The law emphasizes the other incentives granted to exporters: exemption from
import duties, tax credit for imported inputs and raw materials used in production
and other incentives as provided by the Omnibus Investment Code and
The Department of Trade and Industry (DTI) and Department of Finance (DOF),
in consultation with the Export Development Council, are tasked to formulate the
rules and regulations.
Foreign Investment Act (Republic Act No. 8179)
Republic Act No. 7042, more popularly known as the Foreign Investment Act,
was signed into law in 1991 under the term of former President Corazon Aquino.
The law recognizes the role played by foreign investments in the economy, and
sets into place the procedures for the registration and grant of incentives to
The law specifies the limits on the extent of allowable foreign ownership. There
are no restrictions on foreign ownership in export and domestic market
enterprises, but a Foreign Investment Negative List or Negative List defines the
areas of economic activities where foreign ownership is limited (see the Foreign
Investment List). The Transitory Foreign Investment negative list will be replaced
at the end of the transitory period when adjustments in the equity limits will be
Former natural-born Filipinos are granted the same investment rights of a
Philippine citizen based on existing investment and related laws. However,
former natural-born Filipinos are restricted in some areas such as defense-
related activities, exercise of profession, activities covered by the Retail Trade
Act, Small Scale Mining Act, Rice and Corn Industry Act and other laws. Also, all
industrial enterprises, regardless of the citizenship of owners, are required to
comply with existing environmental standards.
The acts implementing rules and regulations was prepared by the National
Economic Development Authority (NEDA), in consultation with the Board of
Investments (BOI), Securities and Exchange Commission (SEC) and other
government agencies. Procedures for the registration of foreign investments with
various government agencies such as the Securities and Exchange Commission
(SEC), the Bureau of Trade Regulation and Consumer Protection (BTRCP) of the
Department of Trade and Industry (DTI) are included in the law.
Transaction Value Act
Republic Act No. 8181, or the Transaction Value Act, changes the basis of
dutiable value of imported articles subject to an ad valorem rate of duty from
home consumption value (HCV) to transaction value (TV).
Transaction value is the price actually paid or payable for goods that are
exported to the Philippines. It is the price that appears on the accompanying
commercial or sales invoice issued in the country of origin or exporting country. It
is neutral because there is no distinction between the sources of supply.
The TV system enables local manufacturers or producers to price their export
products more competitively and allows the Philippines to align its valuation
system not only with its ASEAN neighbors but with the rest of the world.
The Filipino manufacturer or producer will benefit from the TV system in terms of
reduced raw material costs. This in turn translates to lower production costs, thus
enabling him to price his products more competitively for the domestic and
foreign markets, if he is an exporter.
Under the Act, the Commissioner of Customs may delegate his power to
determine dutiable values and to release imported goods under cash bond as
provided in this law in cases where there are no established and published
values covering the importation. He has also been mandated to create such body
or bodies to receive and hear protest regarding published values.
Retail Trade Liberalization Act
Retail Trade Liberalization Act or the (Republic Act No. 8762), provides four
major qualifications for a foreign retailer before being allowed to do business in
the country. These include:
a. A minimum of US$200 million net worth in its parent corporation for
Categories B and C, and $50 million net worth in its parent corporation for
b. Five retailing branches or franchises in operation anywhere around the
world unless such retailer has at least one (1) store capitalized at a
minimum of $25 million;
c. Five (5) year track record in retailing; and
d. Only nationals from, or juridical entities formed or incorporated in countries
which allow the entry of Filipino retailers, shall be allowed to engage in
retail trade in the Philippines.
RA 8762 set the following categories:
a. Category A, or enterprises with a paid-up capital of equivalent in Philippine
pesos of less than $2.5 million shall be reserved exclusively for Filipinos;
b. Category B, or enterprises with a minimum paid-up capital of the
equivalent in Philippine pesos of $2.5 million but less than $7.5 million, in
which case foreign equity will be allowed in the first two years up to a
maximum of 60%. On the third year, 100% ownership will be allowed;
c. Category C allows 100% foreign ownership of retailers whose paid-up
capital of the equivalent in Philippine pesos will be at least $7.5 million;
d. Category D allows 100% foreign ownership of stores selling high-end or
luxury products if the minimum capital is at least $250,000 per store.
Foreign retailers under categories B and C whose ownership exceeds 80% of
equity will be required to offer their shares to the public (minimum of 30% of
equity) within 8 years from start of commercial operation.
Qualified foreign retailers will also be barred from engaging in activities outside
their stores through mobile or rolling stores or carts, and the use of sales
representatives, door-to-door selling, restaurants and sari-sari (variety) stores.
RA 8762 was signed into law on March 7, 2000
Electronic Commerce Act of 2000 (Republic Act No. 8792)
Republic Act 8792, otherwise known as the Electronic Commerce Act of
2000 provides for the legal recognition and admissibility of electronic data
messages, documents and signatures. This was signed into law on June 14,
a. Mandates all government departments and offices to accept electronic
data messages and documents in their transactions within two years from
b. Provides for penaltieson computer hacking, introduction of viruses and
piracy of copyrighted works of at least P100,000 and maximum
commensurate to the damage incurred, and imprisonment of six months to
three years among others
c. Promotes e-commerce in the country, particularly in business-to-business
and business-to-consumer transactions whereby business relations are
enhanced and facilitated and consumers are able to find and purchase
d. Aims to reduce graft and corruption in government as it lessens personal
interaction between government agents and private individuals
The Department of Trade and Industry (DTI) is tasked to direct and supervise the
promotion and development of electronic commerce in the country in
coordination with relevant government agencies. It is empowered to promulgate
rules and regulations, provide quality standards or issue certifications, and
perform such other functions as may be necessary for the implementation of this
Act in the area of electronic commerce. These may include, but shall not be
limited to, the installation of an online public information and quality and price
monitoring system for goods and services aimed at protecting the interests of the
consuming public availing of the advantages of this Act.
Safeguards Measures Act
Republic Act No. 8800, or the Safeguards Measures Act, contains measures
to protect local manufacturers from trade practices that are seen as unfair. It
provides relief to domestic industries when sudden increase in imports adversely
affect local industries.
Under the law, the government can levy a higher tariff on imports of agricultural
products once they breach a certain volume or price, protecting local farmers
growing the same products.
The law also provides an adjustment period for the agricultural sector to become
competitive, as well as adjustment plans for other affected sectors to help
RA 8800 was signed into law last July 19, 2000