Our firm is a medium-sized law firm, wherein almost all lawyers have an experience in differing fields (not just limited specialised areas). Thus, it brings varied perspectives and approaches to the transaction.

We focus on a results-orientated and practical approach to varying legal fields, particularly regarding corporate / M&A. In our medium-sized firm, our strength lies in the diverse expertise of each of our lawyers, each bringing a wide range of experiences from separate fields. We are not limited to only a few specialised areas; hence, this allows us to offer targeted perspectives and innovative approaches to transactions, and helps us to effectively address our clients’ needs.

Drawing from our firm’s century-long practice, we apply time-tested solutions to complex legal issues, including those in corporate and M&A. Significantly for foreign companies entering the Philippines, the firm’s experience in a long, drawn-out arbitration under a Bilateral Investment Treaty adds another layer of insight in guiding foreign companies to successfully navigate and comply with unique Philippine nationality laws and regulations.

A significant aspect of the 1987 Philippine Constitution that shapes the corporate landscape in the Philippines is the “Filipino First” policy, which mandates that certain industries, such as land ownership, the utilisation of natural resources and ownership of mass media, must be at least 60% Filipino-owned. These nationality restrictions are written into corporate legislation. While ASEAN countries generally offer more relaxed foreign ownership rules, the Philippines strikes a careful balance, encouraging foreign investments while prioritising Filipino citizens.

Corporate legislation in the Philippines is comprised of several laws, including the Revised Corporation Code (RCC), the Public Service Act (PSA), the Foreign Investments Act of 1991 (FIA), the Public-Private Partnership Act (PPP Act) and the Retail Trade Liberalization Act. Together with other laws, these laws form a comprehensive framework that promotes business while safeguarding national interests as enshrined in the Philippine Constitution.

The RCC is a law designed to streamline business governance and regulations for corporations in the Philippines. It provides rules for corporate organisation, governance, powers, board roles and foreign corporations while imposing penalties for breaches of corporate law.

The PSA and FIA further underscore the balance between foreign and local investments. The PSA, especially after its 2022 amendment, allows foreign ownership in select public services – such as railways, airports, expressways and telecoms – while retaining constitutional foreign-ownership limits on public utilities like electricity distribution, water pipelines and seaports. Similarly, the FIA, which was amended in 2022, permits 100% foreign equity in domestic market enterprises under certain conditions. The business activities reserved for Filipino citizens and those allowing certain percentages of foreign ownership are summarised in the Foreign Investment Negative List, which is regularly updated by the Philippine Government.

In addition, the PPP Act provides a legal framework for partnerships between the government and private entities in infrastructure development. This law outlines the approval process for PPP projects, which is expected to attract foreign investments and promote sustainable economic growth. Meanwhile, the Retail Trade Liberalization Act further opens the economy by allowing 100% foreign-owned corporations formed and organised under the laws of the Philippines to engage in retail trade business subject to certain conditions. It also removes the obligation for retail enterprises with more than 80% foreign ownership to publically offer 30% of their shares.

One important law that foreign investors need to be apprised of is the Anti-Dummy Law (ADL). Simply, the ADL provides for the means of imposing forfeiture and penal liability for violation of the above-mentioned nationality requirements.

Overall, while other neighbouring ASEAN nations may have fewer restrictions on foreign investments, the Philippines’ approach reflects its commitment to creating a competitive, investment-friendly environment that also preserves national interests.

My current workflow largely focuses on advising clients in relation to foreign investments, establishment of corporations, structuring joint ventures and crafting or reviewing agreements with other Philippine corporations. These corporate matters are increasingly relevant as more investors seek to enter or expand within the country.

A noteworthy case we are working on involves the prospective merger of three companies with asset value of more than two billion pesos, which includes a major European food manufacturing firm.

Another legal team is working on the joint venture between a Philippine subsidiary of a Japanese real estate developer and a local construction company, with various projects with the Philippine government.

We are also assisting a foreign company to establish a subsidiary in the Philippines to engage in corporate financing.

Another complex transaction we recently handled was the multi-billion financing deal for a landmark asset acquisition by a foreign-owned tower company from a major player in the Philippine telecoms industry.

Based on recent experience, it appears that inflation has had minimal effect on planned expansions of our clients. After the economic slowdown caused by the COVID restrictions, the activities of our clients appears to be on the way back to pre-COVID conditions.

In our discussions with government officials charged with promoting investments, the feedback is that supply chain issues in the Philippines have room for improvement. This is sometimes cited as a reason, together with costs of electricity and labour, why some companies choose other Southeast Asian countries. However, the fact remains that there are many companies established in the Philippines engaged in manufacturing for export, or otherwise supporting, operations in the Asian Region. One reason is the incentives afforded to export companies.

For example, the Philippine Economic Zone Authority (PEZA) and the Board of Investments (BOI) offer a range of fiscal and non-fiscal incentives. For PEZA-registered businesses, these incentives include income tax holidays, preferential tax rates and exemptions from import duties, as well as taxes. Similarly, businesses registered under the BOI enjoy income tax holidays, exemptions from various import duties, tax credits and other benefits that encourage capital investment and expansion. These incentives promote industrial growth and encourage manufacturing companies to operate in the Philippines.

For the past 32 years, the transition of power in the Philippines has been peaceful. The laws enacted have been transparent and driven by feedback from the business community, as well as fiscal needs of the country. In our recent experience, companies are not so affected by political uncertainties in their decisions.

At present, we do not see any security threat affecting the businesses of our client. In the same vein, there appears to be no overriding security threat discouraging foreign investors who we interact with.

The Philippines has one of the highest energy costs in Southeast Asia. Subsequently, this has caused an increase in the prices of products and services – while continuously lowering the buying power of the consumers. This remains a factor directly affecting commercial decisions, primarily for corporations engaged in manufacturing.

Currently, the sectors experiencing the most deal activity are renewable energy, manufacturing and real estate. This is primarily driven by increased investments in sustainable technologies, rising demand for industrial and infrastructure development, combined with supportive government policies.

In the renewable energy sector, the Philippines’ investor-friendly policies are fostering foreign investment. For instance, the Board of Investments Memorandum Circular 2023-006, signed in October 2023, provides such incentives as income tax holidays and exemptions on duties for the importation of capital equipment, raw materials and spare parts or accessories for companies engaged in self-financed energy efficiency projects. Such laws incentivise businesses engaged in renewable energy, and consequently foster more deal activities.

The manufacturing sector is, likewise, seeing significant advancements due to the implementation of new technologies and techniques, supported by recent policy changes.

In the real estate sector, increased government spending and initiatives focused on infrastructure development and urban renewal are improving connectivity between provinces and cities across the Philippine archipelago. This enhanced connectivity is facilitating greater mobility and access, which in turn is driving growth and leading to increased deal activity in the real estate market.

Some foreign companies see the Philippine market as still in its initial development when it comes to – for example – renewable energy use by consumers, thereby looking at the possibility that there is still enormous room for growth. Consumer and other forms of financing also appears to be a promising growth area that has attracted many companies.

We work with both large firms and SMEs. Our law office has several large firms as clients that have been with us for decades, and we continue to meet their evolving legal needs. Large firms typically require assistance with regulatory compliance, M&A, due diligence and cross-border transactions, while SMEs seek guidance on navigating local business regulations, contract drafting and review, as well as negotiations. Our excellent reputation for meeting their diverse needs has allowed us to attract clients across all levels.

In addition to compliance with general corporate laws and regulations, we counsel foreign clients on navigating nationality restrictions to ensure compliance with applicable laws to secure their business operations. Moreover, we provide guidance on transactions and agreements, keeping in mind investment treaties with other countries for the protection of investments. We were part of a team in an investment treaty arbitration involving a large European company, wherein we had the occasion to view agreements or arrangements that were questioned later on, although it seemed common or acceptable when it was entered into.

We participate in network events and conferences. I also work closely with our firm’s foreign consultant. Meanwhile, our law office, Siguion Reyna Montecillo & Ongsiako, is a member of the TAGLaw international alliance of law firms, granting us access to a global network of legal expertise. We also maintain regular correspondence with several international law firms we have previously worked with, and have acted as Philippine counsel in numerous international transactions.

Below are a couple of pending legislations to take note of:

a. VAT on Digital Services (House Bill No. 4122 and Senate Bill No. 2528): This bill, once signed, will impose Value-Added Tax (VAT) on digital transactions conducted by non-resident digital service providers (NDSPs). An NDSP is defined as a digital merchant who does not have a physical store in the Philippines, but transacts, whether selling a product or a service, to Filipino citizens.

b. CREATE MORE Act: This proposed legislation aims to set income tax rates at 20% for domestic and resident foreign corporations that opt for the enhanced deductions regime. The proposed Act is designed to ensure that the tax regime aligns with global minimum tax standards while remaining competitive.

While the Philippines has had protective measures that limit foreign investments in many areas, the trend recently is in liberalising these restrictions, to the extent allowed by statutes, with the objective of making the country more investor-friendly. There are also legacy laws and programmes that have been revisited and revised, with the above purpose in mind. There also remain certain factors that have influenced decisions to set up business in the Philippines (such as: English being widely spoken as a second language, as well as strategic location of the country – straddling the sea lanes between Southeast Asia & North Asia).

We provide results-orientated legal advice and support for our clients in navigating the myriad rules and regulations necessary to establish their presence – and do business – in the Philippines. Our team of lawyers is well-rounded, with each lawyer possessing unique experience across varying fields of legal practice. Consequently, this provides a multi-discipline perspective to the legal matters referred to us by our clients.