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Dayao points out that despite this recognition of a need for foreign investments, the
Philippines was still not the priority of foreign investors during the years immediately preceding
the early 90s. For instance, out of the $44 Billion invested in the ASEAN region during the
period of 1986-1990, only 6% was pumped into the countrya vast difference as compared to
approximately 30% invested in Malaysia and 46% invested in Indonesia.3 As such, Dayao
asserts that with the realization that the policy as contained in previous laws such as the Omnibus
Investments Code of 1987 was not enough to attract foreign investment to the country, the
Philippine Congress enacted the Foreign Investments Act on June 30, 1991.4
As the FIA expressly states, its passage subsequently declared it the States policy to attract
foreign investments in activities which are of significant contribution to economic development
and industrialization.5 It is worth noting, however, that the FIAs declaration of the same comes
with the sole condition that the foregoing investments comply with the Constitution and other
relevant laws.6
Junita N. Dayao, Foreign Investments Act: A Deregulation of Investments? (1991) (J.D. Thesis, Ateneo de Manila
University) (on file with the Ateneo Professional Schools Library)
2
Id., citing Senate Hearings on Senate Bill 1678, (opening speech of Sen. Vicente Paterno), (November 27, 1990)
3
Id.
4
Id.
5
Foreign Investments Act of 1991, Section 2.
6
Id.
DELIMITATION
No Foreign Equity is Allowed
No Foreign Equity is Allowed
No Foreign Equity is Allowed
No Foreign Equity is Allowed
Id.
DAYAO, supra note xxx at 24.
9
FERNANDEZ, supra note xxx at xxx.
10
PHILIPPINE NEWS AGENCY, Aquino Expands List of Foreign Investment Limitations, available at
http://www.interaksyon.com/article/47090/aquino-expands-list-of-foreign-investment-limitations (last accessed
June 6, 2014).
11
Office of the President, Promulgating the Ninth Annual Foreign Investments Negative List, Executive Order 98
(October 29, 2012)
8
List A may be edited and amended at any time in order to make it conform to current laws
and become in-line with government direction.12
On the other hand, List B, which may only be amended every after 2 years and upon
recommendation by the National Economic Development Authority, provides limitations for
investments involving small or medium scale domestic enterprises, industries involving public
health and morals, as well as investments which are defence-related.13 The revised list retains
that of the former List B, to wit:14
FIELD
PNP-related products
DND-related products
12
DELIMITATION
40% Foreign Equity is Allowed
40% Foreign Equity is Allowed
Gambling houses, bath houses, saunas and the 40% Foreign Equity is Allowed
like
Manufacture/ distribution of dangerous drugs
40% Foreign Equity is Allowed
Small and medium scale enterprises
40% Foreign Equity is Allowed
Under the Foreign Investments Act, those which are not included in the foregoing Foreign
Investments Negative List may therefore invest freely and completely in a Philippine
enterprise.15
D. The FIA Provision Relating to Employee and Benefit Trust Funds
While the use of mass media can be found in List A of the Foreign Investments Negative
List, which means that zero foreign equity is allowed, the use of the PLDT Beneficial Trust Fund
by the foreign group of Salim seemingly found a loophole in the following provision of the
Foreign Investments Act:
"Section 3. Definitions. By "Philippine national" is meant a Filipino citizen or an association or
domestic partnership which is wholly owned by Filipino citizens; or a corporation duly organized
under Philippine laws, of which at least 60% of the outstanding capital stock and entitled to vote is
held and owned by Filipino citizens; or a trustee of funds for pension or other employee retirement
or separation benefits, where the trustee is a Philippine national and at least sixty (60%) of the fund
will accrue to the benefit of the Philippine nationals: Provided, That where a corporation and its
non-Filipino stockholders own stocks in a Securities and Exchange Commission (SEC) registered
enterprise, at least sixty percent (60%) of the capital stocks outstanding and entitled to vote of both
corporations must be owned and held by citizens of the Philippines and at least sixty percent (60%) of
the members of the Board of Directors of both corporations must be citizens of the Philippines, in
order that the corporations shall be considered a Philippine national. " 16(emphasis supplied).
Given the foregoing provision, it can be gleaned that while the Constitution and the Foreign
Investments Act itself provided for safeguards regarding foreigners owning shares in the mass
media industry, there is still an effective way by which these provisions might be skirted.
Specifically, if a corporation has a trust fund for its employees, or if there is a trust fund
established as a separate juridical entity, and this particular trust fund allots 60% of its funding to
Filipinos, that particular entity as a whole becomes, in the eyes of the law, a 100% Filipino
national. As such, this provision, when read with the foregoing chapter regarding the intent of
the framers of the 1987 Constitution becomes a problematic or contentious provision of law.
When applied to the field of mass media, it is potentially anathema to the goal of the 1987
Constitution, if not contradictory to the Foreign Investments Negative List itself.
E. Issues of Constitutionality Involving the FIA
15
16
Dayao, in here thesis was quick to point a caveat with regard to the enactment of the Foreign
Investments Act:
The Legislative and Executive Department are one in saying that the Foreign Investments Act is consistent with
the 1987 Constitution. However, other people would adopt an entirely different view of the Act. The Act is said to be
unconstitutional for it completely deregulates foreign investments in the Philippines. Barely a month after the Acts
effectivity, a petition was filed in the Supreme Court primarily questioning the constitutionality of the Act.