- Conventus Law: What impact have recent amendments to the Foreign Investment Act and Public Service Act had on foreign ownership and control of key Philippine industries?
SyCipLaw: Recent amendments to the Foreign Investments Act (FIA) and Public Service Act (PSA) have liberalized foreign ownership restrictions previously imposed on certain Philippine industries.
Republic Act No. 11647, amending the FIA in 2022, provided additional exceptions to the general rule that a domestic market enterprise must have a paid-up capital of at least the Philippine Peso equivalent of US$200,000 so as to allow foreign equity participation in excess of 40% of the outstanding capital stock. Under the FIA as amended, subject to other applicable nationality restrictions, in order that a domestic market enterprise can have foreign equity in excess of the 40% threshold, it should still generally have a minimum paid-up capital of the Philippine Peso equivalent of US$200,000. However, by way of exception, the minimum paid-up capital requirement for foreign-owned domestic market enterprises is reduced to US$100,000 if (1) the domestic market enterprise involves advanced technology as determined by the Department of Science and Technology, or (2) it is endorsed as a startup or startup enabler by the lead host agencies pursuant to Republic Act No. 11337, otherwise known as the Innovative Startup Act; or (3) a majority of its direct employees are Filipinos, but in no case shall the number of Filipino employees be less than fifteen (15). (The previous requirement was at least fifty (50) direct employees).
On the other hand, Republic Act No. 11659, which amended the PSA in 2022, narrowed down the definition of “public utility” to cover only certain key sectors, which means that the 40% foreign ownership restriction on industries previously classified as public utilities has fallen away. Under the PSA as amended, only the following are considered public utilities: (i) distribution of electricity; (ii) transmission of electricity; (iii) petroleum and petroleum products and pipeline transmission systems; and (iv) water pipeline distribution systems and wastewater pipeline systems, including sewerage pipeline systems.
“In 2025, the SEC further launched the SEC Zuper Easy Registration Online (ZERO) system, a fully paperless platform that eliminates the need for notarization, wet signatures, and hard-copy document submissions. These digital initiatives have reduced incorporation timelines and improved predictability for investors.”
- CL: Does the government’s “Ease of Doing Business” initiative result in measurable improvements for investors setting up operations in the Philippines?
SyCipLaw: We believe that the Philippine government’s “Ease of Doing Business” (EODB) initiative has resulted in measurable improvements, particularly in reducing processing times, expanding end-to-end online systems, and institutionalizing stricter timelines geared towards expediting government action.
Republic Act No. 11032, or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 (which amended the Anti-Red Tape Act of 2007), mandates all government agencies to comply with prescribed processing periods. Accordingly, several government agencies have published standard processing times and checklists, thereby reducing uncertainty and transaction costs.
Republic Act No. 11032 likewise requires the establishment of a Business One-Stop Shop (BOSS) in local government units (LGUS) to centralize the processing of business permits and licenses. It encourages the use of digital and online platforms to prevent repetitive submission of information to multiple government offices. On the ground, many LGUs have operationalized an electronic BOSS (eBOSS), enabling online submission of applications, digital payment of fees, and electronic issuance of permits.
The Securities and Exchange Commission (SEC) has also implemented substantial digital reforms aligned with EODB principles. It introduced the Electronic Simplified Processing of Application for Registration of Company (eSPARC), allowing domestic stock and non-stock corporations to complete incorporation online.
In 2025, the SEC further launched the SEC Zuper Easy Registration Online (ZERO) system, a fully paperless platform that eliminates the need for notarization, wet signatures, and hard-copy document submissions. These digital initiatives have reduced incorporation timelines and improved predictability for investors.
However, the implementation of EODB initiatives continue to vary significantly across local government units and sector-specific regulators. Certain processes, such as land registration, environmental permitting, and the issuance of complex tax rulings, still experience delays due to legacy systems, fragmented procedures, and the exercise of agency discretion.
- CL: How are companies optimizing their tax incentives under the new regime? What is the latest development in the implementation of the CREATE Law?
SyCipLaw: Under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, registered business enterprises (RBEs) engaged in activities identified under the Strategic Investment Priorities Plan (SIPP) are entitled to fiscal incentives corresponding to their approved registered project or activity. Companies are optimizing tax incentives under the CREATE Act by registering as RBE for qualified projects or activities under the SIPP.
RBEs select the most commercially advantageous incentive package based on their business profile and cost structure. These incentives generally include an income tax holiday (ITH), the special corporate income tax (SCIT) regime, enhanced deductions, exemption from customs duties on the importation of capital equipment, raw materials, spare parts, or accessories, as well as value-added tax (VAT) exemption on importations and VAT zero-rating on qualified local purchases.
On November 11, 2024, Republic Act No. 12066 or the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE), was enacted into law. CREATE MORE expanded and refined the fiscal incentive framework under the CREATE Act by enhancing the scope and duration of incentives, reducing the corporate income tax rate for registered domestic market enterprises (DMEs) that elect the Enhanced Deductions Regime (EDR), broadening the range of allowable deductions under the EDR, and introducing reforms on the imposition and administration of local taxes on RBEs.
CREATE MORE also addressed interpretative gaps under the CREATE Act. In particular, it clarified that SCIT is in lieu not only of national and local government taxes, but also of local government fees and charges. It further statutorily defined the scope of tax and duty incentives by providing that VAT and duty exemption on importation, as well as VAT zero-rating on qualified local purchases, apply to goods and services that are “directly attributable” to the registered project or activity. The law now expressly provides that this refers to goods and services that are incidental to and reasonably necessary for the registered project or activity, including janitorial, security, financial, consultancy, marketing and promotion services, and administrative support services such as those relating to human resources, legal, and accounting functions.
- CL: In light of the increased enforcement by the National Privacy Commission, what compliance trends or enforcement actions should GCs be aware of?
SyCipLaw: The National Privacy Commission (NPC) routinely conducts compliance checks on personal information controllers (PICs) consistent with its mandate under the Data Privacy Act (DPA). In our experience, the NPC has initiated enforcement actions on PICs for: (i) failure to comply with the mandatory registration requirement (of their data processing systems); and (ii) deficiencies in privacy notices and privacy policies. The NPC of course also investigates alleged data breaches, which it may be pursue when it receives a data breach notification, or on its own initiative.
- CL: What should GCs prioritize when aligning local operations with global data governance standards (e.g., GDPR, APPI)?
SyCipLaw: In one of its advisory opinions, the NPC clarified that the Philippines is not bound by the General Data Protection Regulation (GDPR) because it is not a member of the European Union (EU). Thus, although the NPC examines EU opinions, laws, and jurisprudence for analogous cases for guidance in interpreting the provisions of the Data Privacy Act (which was influenced by the 1995 EU Data Protection Directive, the predecessor of the GDPR), Philippine data privacy laws should still prevail. Compliance with basic requirements under the DPA, such as the processing of personal data based on a lawful criterion (generally, consent of the data subject), registration of data processing systems and appointment of data protection officers, and upholding the rights of data subjects, should therefore be prioritized.
Having said that, the NPC has referred to global best practices from the EU and the Association of Southeast Asian Nations (ASEAN) and advised that, although non-binding, these may aid in complying with local privacy law requirements. For example, the NPC issued an advisory referring to these standards on Model Contractual Clauses (MCCs) for cross-border transfers of personal data. However, this advisory “is intended for voluntary adoption.” Under this advisory, the “NPC does not require contractual parties to adopt the use of MCCs. It remains the PIC[‘s]… obligation to refer to the MCCs and determine for themselves whether applicable laws may impose additional obligations on the parties. Nevertheless, the use of MCCs may aid PICs in upholding the accountability principle in cross-border transfers of personal data.”
- CL: Considering recent regulatory updates, what is the most effective way to structure cross-border M&A deals in the Philippines?
SyCipLaw: Despite the amendments to the FIA and PSA, a number of industries remain subject to nationality restrictions under the Philippine Constitution and various other laws or statutes. These are set out under the Foreign Investments Negative List which, pursuant to the FIA, is issued by the President of the Philippines in the form of an executive order and amended not more than once every two years. The most recent is the 12th Regular Foreign Investments Negative List (Executive Order No. 175, Series of 2022) issued on June 27, 2022. These existing foreign ownership restrictions should still therefore be taken into account when structuring cross-border M&A deals.
Both buyers and sellers should also note that certain government agencies require that they be notified, or that their prior approval be obtained, if there is a change in control in Philippine corporations. This is true if such corporations are registered with certain investment promotion agencies, such as the Philippine Economic Zone Authority (PEZA) and the Board of Investments (BOI).
Buyers and sellers should also continue to monitor developments in antitrust regulations when structuring M&A deals. Note that the Philippine Competition Act provides for a compulsory notification regime in respect of transactions that breach certain thresholds. As of 1 March 2025, these thresholds, as promulgated by the Philippine Competition Commission (PCC), are PhP8.5 billion (approx. USD145 million) for the Size of Party Test and PhP3.5 billion (approx. USD59.5 million) for the Size of Transaction Test. The PCC adjusts these thresholds from time to time.
- CL: What impact do changing labor laws and post-pandemic work models have on HR compliance and foreign employers in the Philippines?
SyCipLaw: The pandemic forced employers in the private sector to adapt and implement work models in line with the government’s restrictions and limitations. Since then, some employers have implemented and maintained flexible work arrangements and allowed their employees to work from home or from an alternative workplace. These arrangements require compliance with Republic Act No. 11165, or the Telecommuting Act, and the Department of Labor and Employment’s regulations on flexible work arrangements and alternative work schemes.
There has also been a rapid shift in the use of online platforms in providing services to local and foreign employers. This has allowed foreign entities to engage Filipino workers to provide cross-border services either through a freelancer model or through third-party organizations. Foreign entities who engage Filipino workers through a freelancer model must ensure compliance with laws and jurisprudence on individual independent contractor arrangements to avoid misclassification. Those who engage Filipino workers through third-party entities, such as employers of record or professional employer organizations or PEOs, must ensure that these arrangements are valid from a job contracting and employment law perspective, particularly in line with the requirements under Department Order No. 174 issued by the Department of Labor and Employment.
- CL: Is arbitration becoming more popular for resolving commercial disputes, and how is the Philippine Dispute Resolution Center evolving?
SyCipLaw: Yes, arbitration is becoming more recognized not just as a viable, but even as a preferred alternative dispute resolution mechanism when compared to regular court litigation. This is appears to be due to the relatively faster speed in which the proceedings are completed, party autonomy in the proceedings, and the very limited grounds upon which an arbitral award can be vacated or set-aside. All of these redound to a dispute resolution mechanism that is perceived to be more efficient and predictable.
Having said that, arbitration remains to be just a small fraction of the litigation practice in the Philippines. For instance, the Philippine Dispute Resolution Center, over the past five years has only handled around 52 domestic arbitrations and 11 international arbitrations. These are very small numbers when compared to the hundreds of cases that regular courts throughout the country hear everyday. In addition, it is also not uncommon for Philippine-based parties to designate in their dispute resolution clauses, a seat of arbitration in a country with a more developed arbitration practice like Singapore before the SIAC or the ICC.
The Philippine Dispute Resolution Center remains the most prominent institutional arbitration center in the Philippines. It administers arbitration and mediation proceedings in specialized fields such as maritime, banking, finance, insurance, securities and intellectual property. The proceedings before the Philippine Dispute Resolution Center are governed by its 2021 Arbitration Rules, 2017 Mediation Rules, 2021 Sports Arbitration Rules or 2021 Sports Mediation Rules.
- CL: What are the ways in which ESG principles are being incorporated into corporate governance and compliance expectations in the Philippines?
SyCipLaw: There has been a continuing shift toward the adoption of internationally recognized ESG reporting standards as part of corporate governance and compliance expectations in the Philippines. Philippine regulators have issued various frameworks, circulars, and guidelines that encourage, and in certain sectors require, corporations to integrate ESG principles into governance structures, standardized disclosures, and credit and operational risk management systems.
“The SEC’s reporting template requires disclosures on, among others, “Direct (Scope 1) GHG emissions,” “Energy indirect (Scope 2) GHG emissions,” and “Emissions of ozone-depleting substances.” It also sets out guiding principles that require disclosures to be consistent over time, comparable among companies within a sector or industry, and reliable, verifiable, and objective.”
The Securities and Exchange Commission (SEC) issued SEC Memorandum Circular No. 4, Series of 2019 (Sustainability Reporting Guidelines for Publicly-Listed Companies), which applies to publicly listed companies. The SEC’s reporting template requires disclosures on, among others, “Direct (Scope 1) GHG emissions,” “Energy indirect (Scope 2) GHG emissions,” and “Emissions of ozone-depleting substances.” It also sets out guiding principles that require disclosures to be consistent over time, comparable among companies within a sector or industry, and reliable, verifiable, and objective. The Sustainability Reporting Guidelines are aligned with internationally recognized frameworks, including the Global Reporting Initiative (GRI) Sustainability Reporting Standards, the Sustainability Accounting Standards Board (SASB) Standards, the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), and the United Nations Sustainable Development Goals (UN SDGs).
The SEC also issued SEC Memorandum Circular No. 24, Series of 2019 (Code of Corporate Governance for Public Companies and Registered Issuers), which applies to public companies and registered issuers. While it does not mandate the use of a particular ESG framework, it recommends that companies adopt a globally recognized standard in reporting sustainability and non-financial matters.
In addition, the SEC issued regulations governing the issuance of green, social, sustainability, sustainability-linked, and blue bonds, as well as rules on the establishment of Sustainable and Responsible Investment (SRI) funds. These regulations identify categories of projects eligible for financing through such instruments and align Philippine capital markets with international sustainable finance standards.
For the insurance sector, the Insurance Commission issued Circular Letter No. 2020-71 (Revised Code of Corporate Governance for Insurance Commission Regulated Companies). The sustainability reporting obligations under this Circular Letter apply on a “comply or explain” basis and require regulated entities to adopt a globally recognized standard or framework for sustainability and non-financial reporting.
“In particular, banks are required to integrate environmental and social risk management into their operations, strategy-setting, and governance processes, with explicit accountability placed on the board of directors and senior management.”
The Bangko Sentral ng Pilipinas (BSP), the Philippine Central Bank, likewise issued BSP Circular No. 1085 (Sustainable Finance Framework), which has been incorporated as Section 153 of the Manual of Regulations for Banks. The BSP framework imposes mandatory obligations on banks to institutionalize sustainability principles within their corporate governance and risk management systems. In particular, banks are required to integrate environmental and social risk management into their operations, strategy-setting, and governance processes, with explicit accountability placed on the board of directors and senior management.
- CL: Which sectors, such as renewable energy, fintech, or infrastructure, are most attractive to foreign investors under the latest policy direction?
SyCipLaw: The CREATE Act mandates the Board of Investments (BOI), in coordination with the Fiscal Incentives Review Board (FIRB), Investment Promotion Agencies (IPA), other government agencies administering tax incentives, and the private sector, to formulate the Strategic Investment Priority Plan (SIPP) which will set out priority projects or activities in the Philippine Development Plan and contain recommendations to attract foreign capital or investment.
Under the 2022 SIPP, preferred investment activities include qualified manufacturing activities, agriculture, strategic services (e.g. knowledge-based industries, maintenance, repair, and overhaul of aircraft, telecommunications), healthcare and disaster risk reduction management services, mass housing, infrastructure and logistics, environment or climate change-related projects, and energy (including renewable energy).
The SIPP is subject to review and amendment every three years. Based on news reports, the BOI is preparing the 2025 SIPP. However, to date the 2025 SIPP has not been released.
- CL: What are the top three “watchlist” issues for maintaining compliance and mitigating risk in Philippine operations for 2025 and beyond?
SyCipLaw: As the digital economy in the Philippines further grows and develops, online businesses and technology-enabled enterprises should note the following regulatory developments and compliance issues in this space:
Internet Transactions Act – The provision of services through an online platform, even on an offshore basis, is subject to the Internet Transactions Act of 2023 (ITA), which has extraterritorial application. The ITA regulates digital platforms, e-marketplaces, e-retailers, and online merchants, and sets out consumer protection requirements for e-commerce.
VAT on Digital Services – In 2024, the National Internal Revenue Code was amended by Republic No. 12023 which imposed VAT on digital services. Under this new law, digital services “refer to any service that is supplied over the internet or other electronic network with the use of information technology and where the supply of the service is essentially automated.” Moreover, the law provides that “digital services delivered by nonresident digital service providers shall be considered performed or rendered in the Philippines if the digital services are consumed in the Philippines.”
Financial Technology (Fintech) and Telecommunications – The Fintech industry in the Philippines is rapidly growing and the SEC and BSP continue to issue regulations covering payment system participants (such as operators of payment systems, including merchant acquirers), electronic money issuers, virtual asset service providers, and crypto-asset service providers. In the telecommunications sector, Republic Act No. 12234 or the Konektadong Pinoy Act (KPA) lapsed into law without the signature of the President of the Philippines in 2025. The KPA regulates Data Transmission Industry Participants (DTIPs), and a key change was the removal of the requirement for public telecommunications entities to obtain a legislative franchise (except for basic telephone services).
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WRITTEN BY
Benedicto P. Panigbatan is a Partner and a member of the SyCipLaw’s Corporate Services, Tax, Special Projects, and Banking, Finance & Securities groups. His practice areas cover mergers and acquisitions, foreign investments, corporate structuring and reorganization, sale and purchase of non-performing/distressed assets of banks and financial institutions, securities regulation, documentation of loans and security arrangements, taxation (including estate planning, availment of reliefs and exemptions under various tax treaties), joint ventures and financing for real estate projects, mining and construction projects, general corporate services, legal due diligence exercises, and general contract drafting, review and negotiations.
Leo Francis F. Abot is a Senior Associate and a member of the Firm’s Special Projects, Banking, Finance & Securities, Corporate Services, and Intellectual Property departments, as well as the Firm’s Technology, Media, and Telecommunications (TMT) practice group. He is a corporate lawyer with a focus on technology and intellectual property (IP) law. His practice areas include mergers and acquisitions (M&A), technology, media, and telecommunications (TMT), data privacy and cybersecurity, financial technology (FinTech), investments and joint ventures, corporate governance, technology transfers, trademarks, and consumer protection and e-commerce.
Raymond Joseph S. Garcia is a Senior Associate and a member of the Firm’s Litigation and Employment and Immigration departments. He is a litigation lawyer who has represented clients in civil and criminal cases before local courts, and in commercial disputes before local and international arbitral tribunals.
Kevin Joseph C. Berbaño is Senior Associate Kevin Joseph C. Berbaño is a member of the Firm’s Employment and Immigration, Tax, and Corporate Services Department. He is also a Certified Public Accountant, having passed the CPA Board Examinations in August 2014.
Lourd Marc Andrew D. Parong is an Associate and is also a licensed Certified Public Accountant in the State of California. Before joining the SyCipLaw, he practiced in an international public accounting firm, specializing in US corporate and partnership taxation.
