QuestionsQuestions (Republic Act No. 8762)
The State’s policy is to promote consumer welfare by attracting productive investments that bring down prices, create jobs, promote tourism, assist small manufacturers, stimulate economic growth, and make Philippine goods and services globally competitive through liberalization of the retail trade sector.
Retail trade is habitually selling directly to the general public merchandise/commodities/goods for consumption. Exceptions include: (a) sales by a manufacturer/processor/laborer/worker of products they produced if capital does not exceed PHP 100,000; (b) sales by farmers/agriculturists of farm products; (c) incidental restaurant operations by a hotel owner/inn-keeper; and (d) sales limited to products manufactured/processed/assembled by a manufacturer through a single outlet irrespective of capitalization.
Luxury goods are goods not necessary for life maintenance with demand generated largely by higher-income groups. Examples include jewelry, branded/designer clothing and footwear, wearing apparel, leisure and sporting goods, electronics, and other personal effects.
Such person is granted the same rights as Filipino citizens for purposes of RA 8762.
Category A: paid-up capital equivalent less than US$2,500,000 reserved exclusively for Filipino citizens/wholly Filipino-owned corporations. Category B: US$2,500,000 to less than US$7,500,000 may be wholly foreign-owned except that for the first two years, foreign participation is capped at not more than 60%. Category C: US$7,500,000 or more may be wholly foreign-owned (subject to minimum investment for store establishment). Category D: enterprises specializing in high-end/luxury products with paid-up capital equivalent of US$250,000 per store may be wholly foreign-owned.
Investments for establishing a store in Categories B and C must not be less than the peso equivalent of US$830,000.
The foreign investor must maintain in the Philippines the full amount of the prescribed minimum capital unless it notifies SEC and DTI of intent to repatriate and cease operations. Actual use is monitored by SEC. Failure to maintain prior to notification subjects the investor to penalties or restrictions on future trading activities/business in the Philippines.
Foreign retail stores must secure a certification from the Bangko Sentral ng Pilipinas (BSP) and the DTI verifying/confirming inward remittance of the minimum required capital investment.
Foreign investors acquiring shares from existing retail stores with net worth exceeding the peso equivalent of US$2,500,000 may purchase up to a maximum of 60% of equity within the first two years from the effectivity of the Act; thereafter they may acquire remaining percentage consistent with allowable foreign participation under the Act.
Enterprises under Categories B and C with foreign ownership exceeding 80% must offer a minimum of 30% of their equity to the public through any stock exchange in the Philippines within eight years from their start of operations.
They must have: (1) minimum net worth in parent corporation—US$200,000,000 for Categories B and C and US$50,000,000 for Category D; (2) at least five (5) retailing branches or franchises in operation worldwide unless with at least one store capitalized at minimum US$25,000,000; and (3) a five-year track record in retailing.
Only nationals from, or juridical entities formed/incorporated in countries that allow the entry of Filipino retailers may engage in retail trade in the Philippines.
The DTI is authorized to pre-qualify foreign retailers. The DTI keeps a record of qualified foreign retailers and ensures that the parent retail trading company of the foreign investor complies with capitalization and track record qualifications.
It formulates and regularly updates a list of foreign retailers of high-end or luxury goods and renders an annual report on the same to Congress.
For ten (10) years after effectivity: at least 30% of the aggregate cost of stock inventory of foreign retailers in Categories B and C, and at least 10% for Category D.
They cannot engage in certain activities outside accredited stores such as mobile/rolling stores or carts, sales representatives, door-to-door selling, restaurants and sari-sari stores, and similar activities. The DTI will later formulate a detailed list of prohibited activities.
Imprisonment of not less than 6 years and 1 day but not more than 8 years, and a fine of not less than PHP 1,000,000 but not more than PHP 20,000,000. In associations, partners/president/directors/managers/officers responsible are liable. If offender is not a citizen, he is deported immediately after service of sentence. If Filipino offender is a public officer/employee, dismissal and permanent disqualification from public office are added.
RA 8762 repeals Republic Act No. 1180, as amended, and repeals/modifies laws, executive orders, rules, and regulations or parts inconsistent with it, including RA 3018 as amended and other inconsistent provisions. The separability clause means if any provision is held unconstitutional, the remaining unaffected provisions remain in force.