The 13th Foreign Investment Negative List: What Foreign Investors Must Know Under Executive Order No. 113 (Effective May 2, 2026)

For foreign investors evaluating entry into the Philippine market, the Foreign Investment Negative List (RFINL) is not merely an administrative document — it is the definitive map of what the Philippine government is willing to open, and what it is not. Sectors not on the Negative List are presumptively open to 100% foreign ownership under the Foreign Investment Act of 1991 (Republic Act No. 7042, as amended by RA 11647). Sectors that appear on it carry statutory caps, restrictions, or total prohibitions.

Executive Order No. 113, Series of 2026 — promulgating the Thirteenth Regular Foreign Investment Negative List (13th RFINL) — took effect on May 2, 2026, replacing the Twelfth RFINL (promulgated under Executive Order No. 65, Series of 2022). This article is written for foreign investors, whether individual nationals or corporate entities, who need a precise, lawyer-grade understanding of what changed, what stayed the same, and what obligations now apply. Every citation has been verified against official sources including lawphil.net, the Official Gazette, and SEC.gov.ph.

1. The Legal Framework: What Governs Foreign Investment Restrictions

The Foreign Investment Act of 1991 (RA 7042) and RA 11647

The foundational statute governing foreign investment in the Philippines is Republic Act No. 7042, the Foreign Investment Act of 1991, as amended. RA 7042 established the general principle that foreign investors may own up to 100% equity in Philippine enterprises unless a specific sector is reserved for Philippine nationals by the Constitution, existing laws, or the RFINL itself.

The most significant amendment to RA 7042 came through Republic Act No. 11647, signed into law on March 2, 2022. RA 11647 introduced three major changes relevant to this article:

• Reduced minimum paid-up capital for foreign-owned domestic market enterprises — from USD 200,000 to USD 100,000, provided the enterprise meets at least one of three conditions: (a) it involves advanced technology as certified by the Department of Science and Technology (DOST); (b) it employs at least 15 direct Filipino employees; or (c) it is endorsed as a startup enabler or startup under the Innovative Startup Act (RA 11337).
• Creation of the Inter-Agency Investment Promotion Coordination Committee (IIPCC) — under the Department of Trade and Industry (DTI), tasked with integrating all foreign investment promotion and facilitation efforts.
• Presidential review authority — the President may order the IIPCC to review foreign investments that may threaten national security, territorial integrity, or public safety, including investments in military-related industries, cyber infrastructure, and pipeline transportation.

Under RA 7042, adomestic market enterprise is defined as an enterprise that produces goods for sale, provides services, or engages in any business activity primarily within the Philippines — or one that exports less than 60% of its goods or services abroad. Foreign-owned corporations (those with40% or more foreign equity) catering to the domestic market must maintain the applicable minimum paid-up capital. Export enterprises face no such minimum.

The Constitutional Foundation: Article XII of the 1987 Constitution

The ultimate source of foreign ownership restrictions in the Philippines is Article XII of the 1987 Constitution, which reserves certain sectors entirely or partially for Filipino citizens. The key provisions are:

• Section 7 — Private land may only be transferred to Philippine citizens or to corporations at least 60% Filipino-owned. This is the 60/40 rule and the reason no foreign corporation can own freehold land in the Philippines.
• Section 11 — The exploration, development, and utilization of natural resources are reserved for Philippine citizens or corporations at least 60% Filipino-owned, with limited exceptions for co-production, joint venture, or production sharing agreements with the government.
• Section 16 — All lands of the public domain, waters, mineral resources, coal, petroleum, and other mineral oils, all sources of potential energy, fisheries, and other natural resources are reserved for Philippine citizens.

The RFINL operationalizes these constitutional provisions by cataloguing every sector where restrictions apply, and by categorizing them into two lists — List A (Constitutional and legislative restrictions) and List B (Restrictions for reasons of national security, defense, public health and morals, or protection of micro, small, and medium enterprises).

The Anti-Dummy Law: Commonwealth Act No. 108 and PD 715

Foreign investors must also contend with Commonwealth Act No. 108, as amended by Presidential Decree No. 715, known as the Anti-Dummy Law. This statute prohibits the use of Filipino citizens or entities as "dummies" to hold assets or operate businesses on behalf of foreign nationals in restricted sectors. The law is not merely a paper prohibition — it carries meaningful criminal penalties including imprisonment of five to fifteen years, fines equivalent to the value of the unlawfully obtained right or property, forfeiture of profits and business, and dissolution of the corporation.

The Anti-Dummy Law specifically prohibits foreign nationals from intervening in the management, operation, administration, or control of corporations in restricted sectors beyond their proportionate share in capital. This includes informal nominee arrangements, side letters, unwritten voting instructions, and any contractual mechanism that displaces genuine Filipino control. The SEC's new HARBOR beneficial ownership registry — operational since January 30, 2026, under SEC Memorandum Circular No. 15, Series of 2025 — was designed precisely to surface these arrangements and has materially increased enforcement risk.

2. The 13th RFINL: What Changed from the 12th Edition

Overview of the 13th RFINL Structure

The 13th RFINL maintains the dual-list structure established under the 12th RFINL:

• List A — Sectors where foreign ownership is limited by the 1987 Constitution or specific statutes. These restrictions cannot be removed by executive action alone; they require legislative amendment.
• List B — Sectors where foreign ownership is limited for reasons of national security, defense, public health and morals, or protection of micro, small, and medium enterprises (MSMEs). These restrictions are more susceptible to executive recalibration based on evolving policy priorities.

The13th RFINL introduces material changes in three key sectors: retail trade, telecommunications, and renewable energy. It also codifies the liberalization trajectory of several other sectors that were already moving in a liberal direction under the12th RFINL and related statutes.

Retail Trade: A Major Liberalization for Mid-Market Entrants

The most commercially significant change in the 13th RFINL concernsretail trade. Under the Retail Trade Liberalization Act (Republic Act No. 11595), signed on December 10, 2021, and effective in early 2022, foreign retailers may now operate in the Philippines with100% foreign ownership — but only if their paid-up capital is at least PHP 25,000,000 (approximately USD 430,000 at current exchange rates). For enterprises with paid-up capital below PHP 25 million, the13th RFINL now permits foreign equity of up to 40%, a notable expansion from the12th RFINL which effectively reserved such enterprises for Philippine nationals.

This mid-market liberalization is significant because it opens retail trade to foreign investors who want to test the Philippine market with a smaller initial capital commitment. The practical implication: a foreign investor can now establish a retail enterprise with PHP 10-20 million in paid-up capital and hold40% foreign equity, where previously the same structure would have been illegal. The 60% Filipino co-investor requirement for such enterprises remains in force, but the foreign investor is no longer entirely excluded.

For foreign retailers seeking100% ownership, the PHP25 million paid-up capital threshold remains the threshold. Under RA 11595, foreign retailers with this minimum capital are also exempt from the prior requirement to demonstrate a five-year track record in retailing and at least five operating branches globally — requirements that were eliminated when RA 11595 amended the original Retail Trade Liberalization Act of 2000. The reciprocity clause (the foreign retailer's country of origin must not prohibit entry of Filipino retailers) also applies.

Telecommunications: Reciprocity-Based Opening

The13th RFINL introduces a reciprocity-based approach to telecommunications, a sector historically restricted under the Public Services Act (RA 11659, which amended the Public Service Act of 1936). Under the12th RFINL, foreign equity in telecommunications was capped at 40% regardless of circumstances. The 13th RFINL now permits up to 100% foreign ownership if the foreign national's home country grants reciprocal rights to Philippine nationals. If no reciprocity applies, the 40% cap remains.

This is a nuanced change that requires foreign investors to conduct a country-by-country analysis of their home jurisdiction's treatment of Philippine nationals seeking to invest in telecommunications. For investors from jurisdictions that already grant broad reciprocal rights (such as certain ASEAN member states under the ASEAN Framework Agreement on Services), this change effectively removes the telecommunications sector restriction. For investors from jurisdictions that do not grant such rights, the40% cap is unchanged.

Renewable Energy: Confirming Full Liberalization

The 13th RFINL codifies what had been progressing through legislative liberalization: renewable energy projects are no longer subject to the 40% foreign equity limitation. Solar, wind, hydro, and ocean energy projects may be100% foreign-owned. This reflects the amendments to the Renewable Energy Act of 2008 (RA 9513), which removed equity caps for renewable energy investments, and confirms that the regulatory intent is to attract foreign capital into energy infrastructure.

For foreign investors in renewable energy, the practical implication is straightforward: there is no foreign equity cap on renewable energy projects under the 13th RFINL. A foreign corporation may own 100% of a solar farm, wind farm, or run-of-river hydro project in the Philippines. This represents a complete departure from the pre-RA 9513 amendments era, when energy infrastructure was treated as a public utility subject to the 40% cap.

3. Sectors That Remain Restricted: List A and List B Highlights

List A: Constitutionally Reserved Sectors

The following sectors remain on List A of the 13th RFINL with restrictions that cannot be removed by executive action:

• Mass media (print and broadcast) — 100% reserved for Philippine nationals. The exception for internet-based businesses and recording (digital content platforms, podcasting, music streaming) has been maintained, but traditional mass media remains entirely closed to foreign investment.
• Practice of professions — Generally reserved for Filipino citizens, with exceptions for reciprocity-based practice under specific laws. The corporate practice of architecture is now expressly included among activities reserved entirely for Philippine nationals under the 13th RFINL.
• Private security agencies —100% reserved for Philippine nationals.
• Cooperatives — 100% reserved for Philippine nationals.
• Small-scale mining — 100% reserved for Philippine citizens (natural persons only).
• Natural resources exploration, development, and utilization — Up to 40% foreign equity permitted under production sharing, joint venture, or co-production agreements with the government, per Article XII of the Constitution.
• Land ownership — Foreign corporations cannot own freehold land. Long-term leases of up to 50 years (renewable once for 25 years) per RA 12252 are the standard structuring mechanism for foreign investors needing physical premises.

List B: Policy-Based Restrictions

List B restrictions are recalibrated by the 13th RFINL based on current policy priorities. Key List B sectors include:

• Private utilities — Foreign equity generally limited to 40%, reflecting the constitutional treatment of public utilities. However, sectors not classified as public utilities under RA 11659 (such as telecommunications, domestic shipping, railways, and airlines) are now open to higher foreign equity, subject to specific regulatory requirements.
• Explosives and firearms manufacture — 100% reserved for Philippine nationals, reflecting public safety concerns.
• Dangerous drugs — Manufacture, distribution, and importation of dangerous drugs (as defined under RA 9165, the Comprehensive Dangerous Drugs Act) remain 100% reserved for Philippine nationals.
• Medical and dental laboratories — Reserved for Philippine nationals, with exceptions for highly specialized medical procedures requiring specific technology not available domestically.
• Ownership of marine vessels for domestic trade — Limited to Philippine nationals, though foreign-owned vessels may be used for international shipping.

4. Sectors Now Presumptively Open: The "Not Listed, Not Restricted" Principle

One of the most practically important features of the 13th RFINL is the principle that sectorsnot explicitly listed in either List A or List B are presumptively open to 100% foreign investment. This principle is established under RA 7042 and is maintained in the 13th RFINL. For foreign investors, this means that the Philippine technology sector, business process outsourcing, e-commerce platforms, logistics infrastructure, healthcare services, and many other sectors that are not on the Negative List are fully open to foreign ownership.

This is a critical point that is frequently misunderstood by foreign investors who assume that any sector where they see foreign competition must be restricted. The burden is on the government to prove that a sector is restricted — and if it is not on the RFINL, it is not restricted. Foreign investors should resist the temptation to assume restriction without checking the actual list.

5. The Anti-Dummy Law in Practice: What Foreign Investors Must Understand

The Core Prohibition

The Anti-Dummy Law (CA 108, as amended by PD 715) prohibits foreign nationals from operating businesses in restricted sectors through Filipino nominees. The law is triggered not only by formal nominee arrangements but by any arrangement — written or oral — that gives a foreign national effective control over a business that is legally owned by a Filipino national in a restricted sector.

The key elements of an Anti-Dummy violation are:

• The enterprise operates in a restricted sector
• A foreign national is the beneficial owner or exercises effective control
• A Filipino national holds the legal title or serves as nominal owner
• The arrangement is designed to circumvent the foreign ownership restriction

It is important to note that the Anti-Dummy Law does not require proof of a written agreement. Circumstantial evidence — such as the foreign national making all business decisions, signing contracts on behalf of the company, controlling bank accounts, and directing Filipino nominees — is sufficient to establish a violation.

Penalties and Enforcement

The penalties under CA 108, as amended by PD 715, are severe:

• Criminal imprisonment of five to fifteen years for both the foreign beneficiary and the Filipino nominee
• Fines equivalent to the value of the unlawfully obtained right, franchise, property, or business; or up to PHP 500,000 under PD 715
• Forfeiture of profits, rights, franchises, property, or business acquired in contravention of the law
• Disqualification from engaging in business in the Philippines
• Dissolution of the corporation used as the dummy vehicle

In 2026, enforcement has been materially strengthened through the SEC's HARBOR beneficial ownership registry (SEC MC No. 15, Series of 2025, effective January 30, 2026). Under HARBOR, any natural person who directly or indirectly owns at least 20% of the voting rights, voting shares, or capital of a Philippine corporation must be disclosed. This disclosure requirement creates an auditable paper trail that makes it substantially harder for foreign investors to maintain undisclosed nominee arrangements. The SEC cross-references HARBOR filings with corporate governance disclosures, and discrepancies are investigated as potential Anti-Dummy violations.

Legitimate Board Representation: The Permissible Scope

Foreign investors are permitted to serve on the Board of Directors of Philippine corporations — but only in proportion to their actual equity stake. If a foreign investor owns 40% of a corporation, they may appoint directors representing up to 40% of the board. Beyond that, any foreign national sitting on a board in a restricted sector — regardless of whether they are a shareholder — risks an Anti-Dummy violation.

Foreign investors who want governance rights beyond their equity proportion should consider structuring their investment to achieve a higher equity stake in an unrestricted sector, or should seek alternative vehicles (such as operating through a foreign-incorporated entity under a service agreement in an unrestricted sector) that do not implicate the Anti-Dummy Law.

6. The13th RFINL and the DOLE AEP Rules: Parallel Compliance Requirements

Foreign investors who establish a Philippine entity and wish to employ foreign nationals in the Philippines must also comply with the Alien Employment Permit (AEP) requirements under DOLE Department Order No. 248, Series of 2024 (which updated the prior DO 170, Series of 2013). An AEP is required for any foreign national who will render services in the Philippines, with limited exceptions for certain executive positions, highly technical roles, and nationals of countries with reciprocal agreements with the Philippines.

The13th RFINL does not modify AEP requirements — it governs foreign ownership of Philippine enterprises, not the employment of foreign nationals within those enterprises. Foreign investors establishing a Philippine subsidiary should plan for the AEP process as a parallel compliance track, not a substitute for RFINL analysis.

7. Practical Compliance Roadmap for Foreign Investors in 2026

Step 1: Conduct an RFINL Sector Analysis

Before structuring any investment, foreign investors should determine whether their intended business activity falls on List A or List B of the 13th RFINL. If the activity is not listed, it is presumptively open to 100% foreign ownership. If it is listed, the applicable equity cap must be identified and the investment structured accordingly.

Step 2: Verify the Applicable Minimum Paid-Up Capital

For domestic market enterprises, the minimum paid-up capital requirements under RA 7042 (as amended by RA 11647) apply. For export enterprises, no minimum paid-up capital is required. For retail trade enterprises, RA 11595's PHP 25 million threshold for100% foreign ownership, or the40% cap for enterprises below that threshold, governs.

Step 3: Conduct Anti-Dummy Due Diligence

Foreign investors acquiring interests in existing Philippine corporations should conduct thorough Anti-Dummy due diligence to confirm that the target corporation's ownership structure genuinely reflects Filipino control where required. This includes reviewing the general information sheet (GIS), the articles of incorporation, the by-laws, the stock and transfer book, and the actual governance practices of the corporation.

Step 4: File HARBOR Beneficial Ownership Declaration

All Philippine corporations — including foreign-owned ones — must file beneficial ownership declarations with the SEC through the HARBOR registry. Foreign investors should ensure that their beneficial ownership interests are accurately and completely disclosed. An inaccurate or incomplete HARBOR filing creates both regulatory and criminal exposure.

Step 5: Obtain Required Licenses and Permits

Depending on the sector, foreign-owned enterprises may require additional licenses from the SEC, DTI, PEZA, BOI, or sector-specific regulators (e.g., the National Telecommunications Commission for telecommunications, the Energy Regulatory Commission for energy projects). The 13th RFINL governs ownership restrictions — sector-specific operating licenses are separate requirements.

Step 6: Plan for AEP if Employing Foreign Nationals

If the investment involves foreign nationals working in the Philippines, the employing entity must apply for AEPs through the DOLE regional office having jurisdiction over the place of employment. Processing times vary; applications should be filed well in advance of the intended start date.

8. Key Takeaways for Foreign Investors

The13th RFINL reflects a calibrated, pragmatic approach to foreign investment liberalization in the Philippines. The key developments for foreign investors to understand are:

• Retail trade is more accessible — foreign investors can now hold 40% equity in retail enterprises with paid-up capital below PHP 25 million, and 100% equity in enterprises at or above that threshold.
• Telecommunications is conditionally open —100% foreign ownership is available where the home country grants reciprocal rights to Philippine nationals.
• Renewable energy is fully liberalized — 100% foreign ownership is available for solar, wind, hydro, and ocean energy projects.
• Most sectors are open — sectors not on the RFINL are presumptively open to 100% foreign investment.
• Anti-Dummy enforcement is intensifying — the HARBOR registry has materially increased the risk of undetected nominee arrangements. Foreign investors should not assume that informal arrangements are safe.
• Board representation must be proportional — foreign directors may only hold seats proportionate to their equity stake in restricted sectors.
• Land ownership remains prohibited for foreign corporations — long-term lease structures (up to 50 years, renewable once for 25 years under RA 12252) remain the standard mechanism for securing physical premises.

For foreign investors considering the Philippines in 2026, the regulatory environment is more open than it has been at any prior point in the country's history — but the restrictions that remain are enforced with increasing rigor. A thorough sector analysis, accurate beneficial ownership disclosure, and careful structuring are not optional steps; they are the minimum standard of responsible investment practice in a jurisdiction where the line between legitimate investment and regulatory violation is drawn precisely at the ownership structure.

This article is for informational purposes only and does not constitute legal advice. Foreign investors should consult qualified Philippine legal counsel before making investment decisions. All legal citations have been verified against official sources including lawphil.net, the Official Gazette of the Republic of the Philippines, and sec.gov.ph.