Foreign Ownership Limits in the Philippines Under the 13th Negative List

By Jot Jacosalem · Roll No. PENDING · IBP PENDING
Last updated September 8, 2026

Executive Order No. 113 took effect in early May 2026, replacing a negative list issued in 2022. For most activities the percentage in the list is the whole answer. For several of the most commercially significant ones it is not, and the conditions sitting behind the number are where structures fail.

The rule that comes before the list

The Philippines regulates foreign equity through a negative list. Activities appearing on List A or List B carry ownership limits. Anything not on either list is open to 100% foreign equity, subject to licensing, regulatory and capitalisation requirements that apply regardless of nationality.

That ordering matters more than any individual percentage. A foreign investor’s first question is not what their cap is. It is whether their activity appears on the list at all.

A small difference in how a business is described can move it from an unrestricted activity to a restricted one, or the reverse. The description registered with the SEC is not a formality.

What Executive Order No. 113 is

The effectivity date is reported two ways because the Order counts fifteen days from publication in the Official Gazette or in any newspaper of general circulation, and the two dates differ by one day. The point only matters for a transaction that closed inside that window.

The list has two parts. List A covers activities where foreign ownership is limited by the Constitution or by specific laws. List B covers activities restricted for reasons of security, defence, risk to health and morals, and the protection of small and medium scale enterprises.

The distinction has a practical consequence that is rarely explained. List A tracks whatever the underlying statutes say and may be amended at any time to reflect them. List B may not be amended more often than once every two years. So when Congress amends a statute behind a List A entry, the legal position changes on the statute’s own terms, and the list catches up afterwards.

Why the 2026 list mostly consolidates rather than liberalises

Four years passed between the 12th list and the 13th. Several statutes moved the underlying position in that gap:

• The Retail Trade Liberalization Act amendments, RA 11595, signed December 2021
• The Foreign Investments Act amendments, RA 11647, 2022
• The Public Service Act amendments, RA 11659, 2022
• The Self-Reliant Defense Posture Revitalization Act, RA 12024, 2024
• The New Government Procurement Act, RA 12009, and the Tatak Pinoy Act, RA 11981, 2024

Those took legal effect when they were enacted. The negative list caught up in 2026. An investor who structured a company in 2023 or 2024 may already have been entitled to something the list in force at the time did not show.

Limits by sector

Executive Order No. 113 itself contains no sector limits. Its operative section provides only that the activities in the attached 13th Regular Foreign Investment Negative List are reserved to Philippine nationals. The limits sit in that annex, reproduced below in summary. Entries marked new or modified changed in this edition.

List A: limited by the Constitution and specific laws

No foreign equity

• Mass media, except recording and internet business
• Practice of professions, except where specifically allowed by law, per the Annex on Professions
• Corporate practice of the profession of architecture (modified: the 12th list dealt with professions generally, the 13th names architecture)
• Cooperatives, except investments of former natural-born Filipino citizens
• Private security agency (modified)
• Small-scale mining
• Utilisation of marine resources in archipelagic waters, the territorial sea and the exclusive economic zone, and small-scale utilisation of natural resources in rivers, lakes, bays and lagoons (modified)
• Ownership, operation and management of cockpits
• Manufacture, repair, stockpiling and distribution of nuclear weapons
• Manufacture, repair, stockpiling and distribution of biological, chemical and radiological weapons and anti-personnel mines
• Manufacture and retail of firecrackers and other pyrotechnic devices (modified: retail added)

Up to 25% foreign equity

• Private recruitment, local or overseas
• Contracts for the construction of defence-related structures

Up to 30% foreign equity

• Advertising

Up to 40% foreign equity

• Retail trade enterprises with paid-up capital of less than ₱25,000,000 (new to this band; the 12th list closed these to foreign equity entirely)
• Exploration, development and utilisation of natural resources, including the appropriation of water direct from a natural source, except (a) agreements with the President involving technical or financial assistance for large-scale exploration, development and utilisation of minerals, petroleum and other mineral oils, and (b) renewable energy such as solar, wind, hydro and ocean or tidal energy, where full foreign participation is allowed (modified; see the hydropower section below)
• Ownership of private lands, except a natural-born citizen who has lost Philippine citizenship and has legal capacity to contract
• Operation of public utilities
• Educational institutions, subject to the stated exceptions
• Culture, production, milling, processing and trading, except retailing, of rice and corn, subject to divestment
• Government procurement of goods (new)
• Government procurement of infrastructure projects, with foreign ownership allowed up to 75% where the structures require techniques or technologies not adequately possessed by Filipino entities (new)
• Government procurement of consulting services (new)
• Operation of commercial fishing vessels (modified from deep sea commercial fishing vessels)
• Ownership of condominium units

Up to 100% foreign equity

• Operation and management of telecommunications where the country of the foreign national accords reciprocity to Philippine nationals, and up to 50% in the absence of reciprocity (new)

Dropped from the 12th list

• Procurement of infrastructure projects, replaced by the three government procurement entries above
• Contracts for the supply of materials, goods and commodities to government-owned or controlled corporations
• Private radio communications network, previously capped at 40%

List B: limited for security, defence, health, morals and the protection of small and medium enterprises

Up to 40% foreign equity

• Manufacture, repair, storage and distribution of products and ingredients requiring Philippine National Police clearance, which the Chief of the PNP may authorise to non-Philippine nationals (modified)
• Development, production, manufacturing, assembly, servicing or operation of materiel by an in-country enterprise (new)
• Manufacture and distribution of dangerous drugs
• Sauna and steam bathhouses, massage clinics and other like activities regulated by law because of risks to public health and morals (modified)
• All forms of gambling, except those covered by investment agreements with PAGCOR
• Micro and small domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000
• Micro and small domestic market enterprises with paid-in equity capital of less than the equivalent of US$100,000, where they involve advanced technology as determined by the DOST, are endorsed as startups or startup enablers by the DTI, DICT or DOST, or employ a majority of Filipinos and in no case fewer than fifteen

Where the percentage is not the answer

For most entries the cap is the whole rule. For four of the most commercially significant, a separate requirement sits behind it, and a structure built on the percentage alone will fail.

Hydropower: the water right is a separate gate

Renewable energy has been treated as outside the 40% constitutional limit since 2022. The Department of Justice took that position in Opinion No. 21, series of 2022, dated 29 September 2022, reasoning that solar, wind, hydro and ocean or tidal energy sit outside the constitutional term “natural resources” because they are not capable of appropriation and are inexhaustible. The Department of Energy then amended Section 19 of the Renewable Energy Act implementing rules through Department Circular DC2022-11-0034, issued 15 November 2022 and effective 8 December 2022, removing the Filipino ownership requirement for those resources.

Hydropower carries a qualification the others do not. The same DOJ opinion expressly preserved the Water Code and the jurisprudence limiting the appropriation of water direct from its natural source, so a water permit for power generation may be held only by a Filipino citizen or an entity at least 60% Filipino-owned. That position rests on IDEALS Inc. v. PSALM. A second opinion, DOJ Opinion No. 23, series of 2022, explained the reasoning: rivers, lakes, streams and other inland bodies of water are exhaustible and can dry up, unlike the sea and the ocean.

Two features of the 13th list sharpen the question rather than settling it. The natural resources entry now names the appropriation of water direct from a natural source inside the 40% band, and then carves out renewable energy including hydro for full foreign participation. Separately, small-scale utilisation of natural resources in rivers, lakes, bays and lagoons appears under no foreign equity.

A negative list issued by executive order does not amend the Water Code or reverse a Supreme Court decision. Until the water permitting position is changed by legislation or by the courts, the safe planning assumption is that the permit and the project company can require different ownership structures.

One further caution. The renewable energy position is an executive interpretation, built from a DOJ opinion and a DOE circular. It has not been tested in the Supreme Court, and the constitutional argument against it has been made in the academic literature.

Telecommunications: the cap depends on the investor’s own country

The operation and management of telecommunications may allow up to 100% foreign equity where the country of the foreign national accords reciprocity to Philippine nationals, and up to 50% in the absence of reciprocity.

The cap is therefore a property of the investor rather than of the sector. Two investors in the same activity can face different limits, and an investor’s own jurisdiction has to be assessed before the Philippine position can be stated.

The condition traces to Section 25 of the amended Public Service Act, which bars foreign nationals from owning more than 50% of the capital of entities operating critical infrastructure absent reciprocity, and allows reciprocity to be satisfied by rights of similar value in other economic sectors. Under the Public Service Act implementing rules, telecommunications is currently the only public service treated as critical infrastructure, and others may be added by presidential declaration.

Two further conditions sit alongside the reciprocity rule and are easy to miss:

• Foreign governments, foreign state-owned enterprises and entities they control cannot own capital in a public service classified as a public utility or as critical infrastructure. Sovereign wealth funds and independent state pension funds may collectively hold up to 30%.
• Telecommunications entities carry standing certification obligations on information security under the amended Public Service Act.

Retail trade: the percentage and the capital rule interact

Retail enterprises with paid-up capital below ₱25 million now permit up to 40% foreign equity, where the previous list permitted none.

Crossing 40% changes the governing statute rather than merely the percentage. Above that line the enterprise is a foreign retailer under the Retail Trade Liberalization Act, and the Act’s capital, per-store and reciprocity conditions apply in full. Below it, they do not apply at all. That is set out in our guide to minimum capital for a foreign-owned company.

Public utilities: what counts as one has narrowed

The 40% constitutional limit on public utilities is unchanged. The definition changed. The 2022 amendments to the Public Service Act confined “public utility” to the distribution of electricity, the transmission of electricity, petroleum and petroleum products pipeline transmission systems, water pipeline distribution and wastewater and sewerage pipeline systems, seaports, and public utility vehicles. Anything outside that list is a public service, and the 40% cap does not follow it there.

An investor in transport, logistics or a related sector should establish which side of that line their activity now falls on before assuming the 40% applies.

What tightened

The 13th list is generally described as a liberalisation. In two respects it moves the other way.

Defence materiel. The 11th list capped foreign equity at 40% for the manufacture, repair, storage and distribution of products requiring Department of National Defense clearance, covering guns and ammunition for warfare, military ordnance, guided missiles, tactical aircraft, space vehicles and military communications equipment. The 12th list deleted that entry, leaving those activities open to full foreign participation. The 13th list introduces a new List B entry capping foreign equity at 40% in the development, production, manufacturing, assembly, servicing or operation of materiel by an in-country enterprise, using the definition of materiel in the Self-Reliant Defense Posture Revitalization Act, RA 12024. That covers military technology, weapons systems, arms, ammunition, combat clothing, armour, vehicles and similar military equipment and materials.

Two points of precision are worth holding onto. Defence was never fully deregulated: products requiring PNP clearance stayed at 40% throughout, and contracts for the construction of defence-related structures stayed at 25%. And the new entry attaches to an in-country enterprise, a term drawn from RA 12024, so the scope of the cap depends on that definition rather than on a general notion of defence work.

Corporate practice of architecture. The 12th list referred to the practice of professions generally and left the detail to the Annex on Professions. The 13th list names the corporate practice of architecture as an activity with no foreign equity, which is a firmer position than the reciprocity mechanisms available to some other regulated professions.

If you structured before the 13th list took effect

Two questions are worth asking, and they point in opposite directions.

Are you carrying a restriction you no longer need? Telecommunications, retail and renewable energy all moved. A structure built around a Filipino partner or a capped shareholding may be able to simplify. Where the activity was never on the list at all, the partner may never have been required.

Are you inside something that tightened? The materiel entry is the clear case. The structure may have been compliant when formed while the position going forward has changed.

Where a structure was built to satisfy a cap that no longer applies, unwinding it is a legal question rather than an administrative one. Arrangements that place shares in another person’s name to secure beneficial ownership for a foreign national carry criminal exposure regardless of whether the underlying restriction still exists. That is covered in our guide to the Anti-Dummy Law and nominee shareholders.

This guide is one of the foreign investment guides, which are read in order there and dated against the instruments they rest on.

This guide sits under the firm's foreign investment and market entry practice.

This guide states the law as at the date above. It is general information about Philippine law and not legal advice, and reading it does not create a lawyer-client relationship.