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National Food Authority

LEGAL AFFAIRS DEPARMENT


Quezon City

MEMORANDUM 2015
LAD-B-H- _______________
17 August 2015
FOR

ATTY. PATRICIA A. GALANG-DE JESUS


Special Assistant to the Administrator

SUBJECT

LETTER FROM PHILIP G. SOLIVEN OF CARGILL PHILS.,


INC. DATED MAY 24, 2015 RE PROPOSED AMENDMENTS
TO THE RICE AND CORN LAW.

This refers to your instruction dated 26 May 2015 with reference code
AO-PR-2015-05-036 regarding the above subject for appropriate action.
Based on the letter, Cargill Philippines, Incorporated (Cargill) requests
the National Food Authority (NFA) and NFA council to consider the following:
1. Propose legislative changes to PD No. 194 to allow foreign
companies to engage in rice and corn business in the
Philippines; and
2. Extend the 30-year period under NFA Council Resolution
No. 193-98 to 50 years to provide foreign investors a more
reasonable and sufficient period to address and resolve their
concerns on the said divestment period.
After careful review, this Office respectfully submits that a legislative
amendment as to PD No. 194 in order to extend the period upon which Foreign
Investor is required to divest at least 60 percent of foreign equity participation
to Filipino Citizens will not violate the Constitution and existing laws.
Under the Constitution, only the following areas provide limitations as to
foreign investments, to wit:
1. Owning and operating of public utilities which requires
60 percent Filipino ownership (Section 11, Article XII);
2. Mass Media which requires 100 percent wholly owned and
managed by Filipino citizens (Section 11, Article XVI); and

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3. Advertising Industry (Section 11, Article XVI) which


requires 70% ownership by Filipino citizens or
corporations.
Thus, as a general rule, corporations regardless whether it is wholly or
partially owned by foreigners are allowed to engage in business in the
Philippines but subject only to capital requirements when it comes to certain
industries as regulated by the Constitution and other laws.
Section 1 of PD 194 allow corporations whether wholly or partially owned
by foreigners to engage in the business of rice and corn subject only to the
conditions set forth under Section 3.
Having no controversy as to the capital structure required to engage in
the business of rice and corn, this Office submits that NFA may extend the
period from 30 to 50 years upon which foreign equity participation shall be
divested or transferred to Filipino Citizens. Section 5, PD 194 provides:
Section 5. In connection with the foreign equity
participation, at least 60% thereof shall be transferred to
Filipino citizens over a period to be established by the
National Grains Authority at the time of approval of its
authority to engage in the industry, or phase out its
operation within the same period. (Emphasis supplied).
Therefore, under the said provision, NFA may amend the period under
NFA Council Resolution No. 193-98 from 30 to 50 years upon which at least
60% foreign equity participation shall be transferred to Filipino Citizens.
For information and guidance

EDNA T. LOVERIA
Officer-in-charge

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