Re: Application of the Control Test to Retail Companies Pursuant to the Retail Trade Liberalization Act

November 21, 2018SEC-OGC OPINION NO. 20-18RE: APPLICATION OF THE CONTROL TEST TO RETAIL COMPANIES PURSUANT TO THE RETAIL TRADE LIBERALIZATION ACTAtty. Jofred Paul P. JandayanNo. 7 The Coating Industries CompoundSheridan St., Shaw BoulevardMandaluyong CityDear Atty. Jandayan :This refers to your letter dated 25 October 2016 requesting for an opinion on whether your client (Company A), which is a 60% Filipino and 40% foreign-owned corporation, can invest in a domestic corporation (Company B) which will be incorporated together with other Filipino individuals to engage in the restaurant business, an activity considered as retail and therefore subject to 100% Filipino ownership. You mentioned that Company B is required by law to be 100% Filipino-owned. You also posited that by applying the Control Test, as long as Company A is 60% owned by Filipinos, its existing and would-be shareholdings in Company B shall be considered owned by Filipinos for purposes of computing the required Filipino equity for Company B. You quoted the decision of the Supreme Court in Narra Nickel Mining and Development Corporation, et al. v. Redmont...