Foreign Investment Structuring After the PSA, FIA, and Investors' Lease Act

Executive summary

Foreign investment structuring in the Philippines has become more flexible, but it has not become simple. The amended Foreign Investments Act allows foreign ownership up to 100 percent unless a law or the current Foreign Investment Negative List imposes a restriction. The amended Public Service Act opened several public-service sectors while preserving restrictions for public utilities, critical infrastructure, and national-security-sensitive transactions. The Investors' Lease Act now permits qualified foreign investors to enter into private-land leases with an aggregate term of up to 99 years, subject to registration and investment-related conditions. In April 2026, the government also issued the 13th Regular Foreign Investment Negative List.

I suggest identifying the proposed activity, required control, property, licenses, incentive assumptions and intended exit before deciding between a corporation, branch or joint venture.

Start with the activity, not the corporate vehicle

Incorporating and signing a lease before checking nationality restrictions and sector approvals may leave the investor with commitments the proposed business cannot meet.

Assess those requirements before preparing the structure.

Under the amended Foreign Investments Act, a non-Philippine national may generally invest up to 100 percent of an enterprise unless foreign participation is prohibited or restricted by law or the applicable Foreign Investment Negative List. For certain micro and small domestic-market enterprises, however, paid-in equity below US$200,000 is reserved to Philippine nationals. The law allows a reduced US$100,000 threshold in specified circumstances, including qualifying advanced-technology businesses, startups or startup enablers, or enterprises meeting the statutory Filipino-employment condition.

Identify what the company will sell and to whom. Is it an export or domestic-market enterprise? Does another statute restrict ownership? Will it need land, a franchise, public-service authority, infrastructure approval or another license?

Use those answers when preparing the incorporation documents.

The current foreign-ownership screen is the 13th Negative List

As of 2026, practitioners and investors should be working from the 13th Regular Foreign Investment Negative List, promulgated through Executive Order No. 113 on April 13, 2026. It replaced the 12th list and reflects subsequent legislative changes. The Executive Order states that only the activities identified in the list are reserved to Philippine nationals, subject to the stated exceptions and conditions.

Check older presentations, templates and online material that may still refer to the 12th list.

The list must be read with sector laws, franchises, licenses, constitutional restrictions and approval requirements. Review each proposed activity, particularly if the Philippine group will conduct several businesses.

Subsidiary, branch, joint venture, or contract can produce very different risk

A wholly or partly foreign-owned Philippine subsidiary is a domestic corporation. Subject to the applicable nationality rules, it gives the investor a Philippine entity through which employees, contracts, permits, assets, and local operations can be housed.

A branch is different. It is the foreign corporation itself transacting business in the Philippines. A foreign corporation doing business locally must obtain the appropriate SEC license and comply with the Revised Corporation Code. Except for specified industries, a licensed foreign corporation must also maintain the statutory securities deposit, initially at least ₱500,000 under Section 143, subject to adjustments under the Code. It must designate a qualified Philippine resident agent for service of process.

Compare the structures against the intended operation. A subsidiary may accommodate several shareholders, future equity investment or a later share sale. A branch is the foreign parent’s Philippine operation without a separate local equity structure. Assess tax, treaties, regulation, finance, liability and repatriation before choosing.

For a joint venture, address board control, reserved decisions, funding, dilution, transfers, deadlock, exit and dispute resolution. The length of the shareholders’ agreement cannot cure an unworkable commercial arrangement.

The Public Service Act opened sectors, but it did not create a free-for-all

The 2022 amendments to the Public Service Act narrowed the statutory category of “public utility.” The law identifies distribution and transmission of electricity, petroleum pipeline transmission systems, water and wastewater pipeline systems, seaports, and public utility vehicles as public utilities. It also provides that nationality requirements should not be imposed by administrative agencies on public services that are not classified as public utilities.

Do not treat the reform as unrestricted foreign ownership of every public service.

The same law contains safeguards involving critical infrastructure, foreign state-owned enterprises, reciprocity, and national security. Foreign nationals generally may not own more than 50 percent of an entity operating and managing critical infrastructure unless the relevant reciprocity requirement is met. The President also has statutory authority, following the prescribed review process, to suspend or prohibit a proposed investment or M&A transaction in a public service that would effectively grant control to a foreign person or corporation where national security is implicated.

For infrastructure and technology investments, examine both the activity and the investor’s characteristics.

The 99-year lease is useful, but it is not a substitute for land due diligence

RA No. 12252 permits qualified private-land leases up to an aggregate of 99 years under its conditions. The signed implementing rules took effect in January 2026. Apply those rules to eligibility, registration and the particular lease; do not infer that every foreign lessee qualifies.

The investment must qualify under the statutory framework. The land must be used for the approved and registered investment. The lease must be registered with the Registry of Deeds and annotated on the certificate of title. The law requires, among other matters, proof of the approved investment, a definite commencement date and maximum duration, a clear technical description, preparatory acts toward the investment project, and a contractual termination mechanism if the purpose changes or the investment fails to commence. Registration is the operative act that makes the long-term lease binding against third persons.

For an industrial, tourism, logistics, energy or major commercial project, assess the lease together with the investment structure.

Before signing, review title and encumbrances, land classification and permitted use, access, utilities, zoning and environmental restrictions. Check that financing terms, lease milestones and investment registration are consistent.

Tax incentives should be modeled while the structure is still movable

If BOI, PEZA or another IPA registration is intended, review incentives before forming the company and signing the principal commitments.

CREATE MORE ties incentives to the registered project or activity, not simply to the existence of a registered company. The 2026 Strategic Investment Priority Plan now guides the government's priority investment areas, with emphasis that includes advanced manufacturing, clean energy, digital infrastructure, agribusiness, logistics, advanced technologies, cybersecurity, artificial intelligence, and data-center infrastructure.

The site, operating model, export ratio, activity description, capital plan and contracts may affect eligibility even if they appear acceptable for ordinary corporate purposes.

Bring the corporate, regulatory, tax, land and employment assumptions into the same investment assessment.

The deal file should exist before the deal becomes difficult to change

Before signing, identify the activity, foreign-equity limit, entity assuming the obligations, operating licenses, land rights and incentives used in the calculations. Also decide what happens if approval is delayed or the incentive is unavailable.

Reflect those decisions consistently in the term sheet, shareholder arrangements, lease, financing, supply and customer contracts, employment plan, conditions precedent and closing checklist.

The available structures have expanded. The appropriate choice still depends on the actual business and its requirements.

Record incentives, liability and exit separately

After the four threshold decisions, record the incentive assumptions, funding and guarantees, parent or affiliate undertakings, transfer restrictions, regulatory approvals, repatriation and tax consequences, deadlock process and termination route. A subsidiary’s separate personality is subject to guarantees, undertakings and established veil-piercing principles; the vehicle does not erase the parent’s own contractual obligations.

Keep the recorded assumptions with the term sheet and closing checklist. If a permit, ownership position, lease registration or incentive is not obtained, the transaction documents should state what happens next.