Foreigners Violating Retail Trade Law

The order states that there has been an increase in cases involving foreign nationals with permanent resident visas and temporary resident visas who engage in retail trade.
The order emphasizes that foreigners, regardless of immigration status, must not engage in retail trade in violation of Republic Act No. 8762.
The order declares BI’s commitment to strictly implement the retail trade law and to pursue violations of immigration and internal laws.
The order issues a stern warning to all alien residents engaged in retailing.

The order states that foreign nationals regardless of immigration status are prohibited to engage in retail trade as provided in Republic Act No. 8762.
The order treats engagement in retail trade by foreigners who violate the retail trade restrictions as a prosecutable and enforceable act.
The order mandates strict enforcement action against foreigners caught in the act of retailing.

The order expressly invokes Republic Act No. 8762 (Retail Trade Liberalization Act of 2000), including its provisions on foreign equity participation and qualification requirements.
Section 5 provides that foreign participation in retail trade is governed by categories A, B, C, and D, based on paid-up capital equivalents.
Section 6 provides a rule on foreign investors acquiring shares of stock of local retailers.
Sections 7 and 8 impose additional requirements on public offering for certain enterprises and on qualification of foreign retailers.

Section 5(a) reserves enterprises with paid-up capital of less than the equivalent of US$2,500,000.00 exclusively for Filipino citizens and corporations wholly-owned by Filipino citizens.
Section 5(b) allows enterprises with minimum paid-up capital of the equivalent of US$2,500,000.00 to be wholly owned by foreigners, but limits foreign participation to not more than 60% of total equity during the first two (2) years from the effectivity of the Act.
Section 5(c) allows enterprises with minimum paid-up capital of the equivalent of US$7,500,000.00 or more to be wholly owned by foreigners, but requires that investments for establishing a store in categories B and C are not less than the equivalent of US$830,000.00.
Section 5(d) allows enterprises specializing in high-end or luxury products with paid-up capital of the equivalent of US$250,000.00 per store to be wholly owned by foreigners.

Section 5 requires the foreign investor to maintain in the Philippines the full amount of the prescribed minimum capital.
Section 5 allows repatriation and cessation of operations only if the foreign investor has notified the SEC and the DTI of its intention to repatriate capital and cease operations.
Section 5 mandates that actual use in Philippine operations of the inwardly remitted minimum capital requirements is monitored by the SEC.
Section 5 requires future retail stores to secure a certification from the Bangko Sentral ng Pilipinas (BSP) and the DTI verifying or confirming inward remittance of the minimum required capital investment.

Section 6 allows foreign investors acquiring shares from existing retail stores to purchase equity only if the local retailer’s net worth is in excess of the peso equivalent to US$2,500,000.00.
During the first two (2) years from the effectivity of Republic Act No. 8762, Section 6 limits foreign investors to purchasing up to a minimum of 60% of the equity.
After the first two (2) years, Section 6 allows foreign investors to acquire the remaining percentage consistent with the allowable foreign participation provided under the Act.

Section 7 requires all retail trade enterprises in Categories B and C where foreign ownership exceeds 80% of equity to offer a minimum of 30% of equity to the public.
Section 7 requires offering through any stock exchange in the Philippines.
Section 7 imposes a timeline: the public offering must be made within eight (8) years from their start of operations.

Section 8 prohibits a foreign retailer from engaging in retail trade in the Philippines unless all stated qualifications are met.
Section 8(a) requires the foreign retailer’s parent corporation to have a minimum net worth of US$200,000,000.00 for Categories B and C, and US$50,000,000.00 for Category D.
Section 8(b) requires five (5) retailing branches or franchises in operation worldwide, unless the retailer has at least one (1) store capitalized at a minimum of US$25,000,000.00.
Section 8(c) requires a five (5) year track record in retailing.
Section 8(d) limits eligibility to nationals from, or judicial entities formed or incorporated in, countries which allow the entry of Filipino retailers.
Section 8 authorizes the DTI to pre-qualify foreign retailers before they are allowed to conduct business in the Philippines, subject to the Act.

The order states that any violation of the retail trade restrictions referenced is punished under Section 12 of Republic Act No. 8762.
Section 12 imposes imprisonment of not less than six (6) years and one (1) day, but not more than eight (8) years, for any person guilty of violation of any provision of the Act.
Section 12 imposes a fine of not less than PHP 1,000,000.00 but not more than PHP 20,000,000.00.
Section 12 provides that for associations, partnerships, or corporations, the penalty is imposed on its partners, presidents, directors, managers, and other officers responsible for the violation.
Section 12 provides that if the offender is not a citizen of the Philippines, the offender shall be deported immediately after the service of sentence.
The order further requires that any foreign national caught retailing shall be arrested, charged, and deported for violation of Republic Act No. 6785 and Section 37(a)(7) of the Philippine Immigration Act of 1940 as amended.