What EO No. 113 (the 13th Foreign Investment Negative List) Means for Foreign Investors in the Philippines, 2026 Market‑entry & Compliance Guide

Last updated: May 2, 2026

The 13th Foreign Investment Negative List Philippines, promulgated through Executive Order No. 113, series of 2026, took effect on 2 May 2026, fifteen days after its publication on 17 April 2026. The order recalibrates foreign ownership limits 2026 across sectors ranging from retail trade and aviation to renewable energy and telecommunications, creating immediate structuring, licensing and compliance questions for every inbound investor. This practitioner guide explains what changed, maps the new sectoral ceilings, and provides a step‑by‑step compliance playbook for general counsel, CFOs and foreign sponsors evaluating foreign investment in the Philippines this year.

Executive Summary, Key Takeaways for Investors

Before diving into sector‑by‑sector analysis, here are the headline points that every foreign investor or adviser should note about EO No. 113:

• Effective date. EO No. 113 was published on 17 April 2026 and became effective on 2 May 2026.
• List A / List B structure retained. The FINL continues to divide restricted activities into List A (foreign ownership limited by the Constitution or specific laws) and List B (foreign ownership limited for reasons of national security, defence, public health and morals).
• Retail trade liberalisation. Foreign investors may now own up to 40 % of retail enterprises with paid‑up capital below the previous full‑ownership threshold, a notable expansion for mid‑market entrants.
• Constitutional ceilings unchanged. Mass media, certain natural‑resource activities and private land ownership remain closed or capped at 40 % foreign equity under constitutional mandate.
• Aviation and utilities. Sector‑specific caps (40 % for airlines, 40 % for public utilities unless amended by sector statute) continue to apply; investors must check both the FINL and the governing sectoral law.
• Anti‑dummy risk elevated. With liberalisation comes heightened scrutiny. Regulators and enforcement agencies are expected to intensify anti‑dummy compliance reviews on deal structures designed to exceed statutory ceilings.
• Immediate action required. Existing and prospective investors should re‑map their sector classification, recompute shareholding structures, refresh board and governance controls, and engage local counsel to confirm compliance under the new list.

The sections below unpack each of these points in operational detail.

What Is EO No. 113 (the 13th FINL)?, Legal Basis & Effective Date

Executive Order No. 113, signed by President Ferdinand Marcos Jr., promulgates the Thirteenth Regular Foreign Investment Negative List (RFINL). The RFINL is a regulatory instrument mandated by the Foreign Investments Act of 1991 (Republic Act No. 7042, as amended by RA 11647) requiring the President to issue an updated negative list every two years. The list identifies the economic activities where foreign participation is either prohibited outright or limited to a specified percentage of equity.

Legal basis and interaction with the Constitution and sector statutes

The 1987 Philippine Constitution imposes hard caps on foreign ownership in specific sectors, mass media (0 %), land ownership (0 %), public utilities (40 %), and exploration of natural resources (40 %), among others. No executive order can override these constitutional limits. EO No. 113 operates within these boundaries while also incorporating restrictions prescribed by special laws such as the Retail Trade Liberalization Act (RA 11595), the Public Service Act as amended (RA 11659), the Renewable Energy Act (RA 9513) and the Civil Aviation Authority Act.

The FINL is divided into two lists. List A covers activities reserved to Philippine nationals by mandate of the Constitution or specific legislation. List B covers activities where foreign ownership is limited for security, defence, risk‑to‑health‑and‑morals, or small‑and‑medium enterprise protection reasons. Together, these lists function as the definitive reference for permissible foreign equity in the Philippines.

Sectoral Headline Changes Under the 13th Foreign Investment Negative List, Foreign Ownership Limits 2026

The following table summarises the key sectoral ownership ceilings under EO No. 113. Investors should cross‑reference each entry with the applicable constitutional provision or special law, as the FINL itself notes that these caps derive from higher legal authority.

Aviation foreign ownership Philippines, what investors need to know

Domestic air transport remains capped at 40 % foreign equity under the Civil Aviation Authority Act and the Constitution. EO No. 113 does not alter this ceiling. Foreign investors seeking exposure to Philippine aviation typically structure their participation through minority equity stakes combined with management or technical‑assistance contracts, an approach that must be carefully designed to avoid anti‑dummy exposure.

Renewable energy foreign ownership

Under the Renewable Energy Act (RA 9513), foreign participation in the exploration, development and utilisation of renewable energy resources is generally limited to 40 %. However, the law permits foreign companies to enter into service contracts and financial or technical assistance agreements (FTAAs) with the government. EO No. 113 preserves this framework. Industry observers expect forthcoming Department of Energy (DOE) guidelines to clarify how RE service contracts interact with the updated FINL.

Telecommunications and public services

The amended Public Service Act (RA 11659) reclassified telecommunications and transport services as “public services” rather than “public utilities,” potentially allowing up to 100 % foreign ownership in those reclassified sub‑sectors. EO No. 113 reflects this reclassification. However, activities that remain classified as public utilities, such as electricity distribution and water supply, are still capped at 40 %.

Retail trade liberalisation

One of the most commercially significant changes under EO No. 113 relates to retail trade. The 13th FINL permits foreign investors to hold up to 40 % equity in retail enterprises whose paid‑up capital falls below the threshold that previously required 100 % Filipino ownership. This is expected to open the Philippine retail market to a broader range of mid‑market foreign brands and franchise operators.

Practical Deal Structures & Ownership Models After EO No. 113

Foreign investors entering sectors with capped equity must choose structuring options that maximise commercial participation while remaining within statutory limits and avoiding anti‑dummy exposure. Below are the most common models under the 13th Foreign Investment Negative List Philippines framework.

Sample ownership structures

A typical compliant structure in a 40 %‑capped sector involves a Philippine corporation where the foreign sponsor holds 40 % of both voting and economic shares, the Filipino partner holds 60 %, and management authority is allocated proportionally through the articles of incorporation and by‑laws. The board composition should reflect the 60/40 split. Where the foreign partner provides technology or operational expertise, a separate arm’s‑length management contract can formalise that contribution without transferring control beyond the permitted threshold.

For reclassified sectors (e.g., telecommunications under RA 11659), a 100 %‑owned foreign subsidiary registered with the Securities and Exchange Commission (SEC) is the cleanest structure, provided the investor confirms that the specific activity falls within the reclassified category rather than the residual “public utility” classification.

Anti‑Dummy Law Philippines & Enforcement Risk, Red Flags and Mitigation

The Anti‑Dummy Law (Commonwealth Act No. 108, as amended) criminalises arrangements where a Filipino citizen or entity acts as a front to enable a foreign national to exercise rights, privileges or engage in activities reserved for Filipinos. Penalties include imprisonment and fines, and the arrangement itself is void.

With EO No. 113 expanding certain thresholds and attracting new foreign capital, early indications suggest that regulators, including the SEC, DTI and sector agencies, will intensify scrutiny of ownership and control arrangements. Red flags that commonly trigger enforcement action include:

• Nominee shareholders. Filipino individuals holding shares on behalf of a foreign principal, often evidenced by side agreements, trust deeds or powers of attorney granting the foreigner effective control.
• Disproportionate board control. A foreign partner holding 40 % equity but appointing a majority of directors or holding veto rights over all material decisions.
• Simulated capital contributions. The Filipino partner’s equity funded entirely by the foreign investor through undisclosed loans or guarantees.
• Operational control beyond equity. Management contracts that grant day‑to‑day operational authority exceeding the foreign partner’s proportional interest.

Governance controls to reduce anti‑dummy risk

Practical mitigations for foreign investors structuring deals under the 13th FINL include:

• Board composition clause. Draft articles of incorporation specifying that the ratio of foreign to Filipino directors mirrors the equity split (e.g., two out of five directors for a 40 % foreign holder).
• Nominee warranty. Require all Filipino shareholders to execute a sworn declaration that they are the beneficial owners of their shares and are not acting on behalf of any foreign person.
• Independent legal opinion. Obtain a Philippine‑qualified legal opinion confirming that the corporate structure, shareholder arrangements and management contracts comply with the FINL and Anti‑Dummy Law.
• Transparent funding trail. Maintain documented evidence that the Filipino partner’s capital contribution was sourced from their own funds or arm’s‑length financing.
• Periodic compliance review. Conduct annual governance audits to confirm that board resolutions, management authority and financial flows remain consistent with the disclosed ownership structure.

Licensing, Approvals & Regulator Roadmap for Market Entry Philippines

Compliance with EO No. 113 is only the starting point. Foreign investors must also secure sector‑specific registrations, licences and permits. The table below maps the primary regulators, key filings and indicative timelines for the most common investment sectors.

Step‑by‑step for priority sectors

For aviation, energy and telecoms investments, the licensing roadmap typically follows this sequence: (1) confirm FINL classification and permissible equity ceiling; (2) incorporate the Philippine entity with the SEC, attaching all required share‑class and governance documents; (3) apply for sector‑specific licences with the relevant regulator (CAAP, DOE/ERC or NTC); (4) secure LGU permits at the municipal level; and (5) register with tax and social insurance agencies. Engaging local counsel at step one, rather than after incorporation, significantly reduces the risk of structural errors that require costly unwinding later.

Land & 99‑Year Leases, Practical Interplay With EO No. 113 and RA 12252

The Philippine Constitution prohibits foreign nationals from owning private land. EO No. 113 does not modify this prohibition. However, Republic Act 12252, signed into law under the Marcos administration, now allows foreign investors to lease land for up to 99 years, a major departure from the previous 50‑year cap (with a single 25‑year renewal).

For foreign investors, the practical interplay is significant. While the FINL classifies land ownership as a 0 %‑foreign‑equity activity, a long‑term lease under RA 12252 provides a viable alternative for establishing manufacturing facilities, logistics hubs, commercial developments or renewable energy project sites. Key due diligence steps include:

• Confirming that the land title is clean and registered with the Register of Deeds.
• Verifying that the lease terms comply with the implementing rules of RA 12252.
• Obtaining LGU consent where required by local ordinance.
• Structuring the lease so that it does not confer rights equivalent to ownership, which would trigger FINL or Anti‑Dummy Law concerns.

Compliance Checklist & Immediate Next Steps for Inbound Investors Under the 13th Foreign Investment Negative List

The following checklist provides a practical roadmap for counsel, sponsors and C‑suite decision‑makers acting on EO No. 113:

1. Map your sector classification. Identify whether your target business activity falls under List A, List B, or is unrestricted. Cross‑reference the EO No. 113 text with the governing constitutional provision or special law.
2. Run an ownership computation. Calculate the precise percentage of foreign equity in your proposed structure. Use the SEC’s “grandfather rule” or “control test” methodology, whichever is required by the applicable regulation.
3. Conduct an anti‑dummy risk review. Evaluate all shareholder agreements, management contracts, side letters and governance arrangements for indicators that could be construed as dummy or nominee arrangements.
4. Prepare a regulatory filing plan. Identify every regulator, SEC, DTI, DOE, CAAP, NTC, ERC, LGU, that must approve or be notified of the investment, and map filing sequences and lead times.
5. Implement corporate governance controls. Align board composition, officer appointment rights, approval thresholds and management authority with the equity split to demonstrate genuine local participation.
6. Engage Philippine‑qualified local counsel. Obtain a formal legal opinion confirming FINL compliance and Anti‑Dummy Law clearance before executing transaction documents.
7. Update the investment memorandum. Reflect the new FINL ceilings, regulatory approvals timeline and risk disclosures in all investor‑facing materials and board papers.

For a consultative review of your specific transaction structure, connect with a qualified Philippines foreign investment lawyer through our directory.

Appendix, References and Sample Clause Bank

The following sample clauses may be adapted for use in shareholder agreements and articles of incorporation for foreign‑invested Philippine companies. These are illustrative only and must be reviewed by qualified Philippine counsel before inclusion in any transaction document.

• Nominee warranty clause. “Each Filipino shareholder hereby represents and warrants that he/she is the true and beneficial owner of the shares registered in his/her name and is not holding such shares, directly or indirectly, on behalf of, or for the benefit of, any foreign national or entity.”
• Board composition covenant. “The number of directors who are foreign nationals shall at no time exceed [X] out of [Y] total directors, and the proportion of foreign directors shall not exceed the proportion of foreign equity to total subscribed capital stock.”
• Management control limitation. “The Management Agreement shall not confer upon the Foreign Partner any authority, right or power that would enable it to exercise management or operational control over the Corporation beyond what is commensurate with its proportional equity interest, as determined under the Foreign Investment Negative List then in effect.”

Sources

1. Cruz Marcelo, Philippines Issues 13th Foreign Investment Negative List
2. InCorp Philippines, 13th Regular Foreign Investment Negative List Advisory
3. Rappler, Malacañang Releases Updated List of Foreign Ownership Limits 2026
4. Philippine News Agency, Gov’t Outlines Foreign Ownership Limits
5. BusinessWorld, Marcos Allows Up to 40% Foreign Ownership in Small Retailers
6. Department of Trade and Industry (DTI)
7. Securities and Exchange Commission Philippines (SEC)
8. Department of Energy (DOE)
9. Energy Regulatory Commission (ERC)
10. Civil Aviation Authority of the Philippines (CAAP)