Re: Ownership of acupuncture & massage clinicscovered by Foreign Investment Negative List

May 25, 2004 SEC OPINION NO. 33-04 Re: Ownership of acupuncture & massage clinics covered by Foreign Investment Negative List Gimenez Law Offices Suite 2311 Cityland 10 Tower 2 HV De La Costa Street Makati City Attention: Atty. Arlene G. Lapuz-Ureta Gentlemen : This refers to the proposed change in the ownership structure of Fortune Pacific Medical Corporation (Corporation) from twenty percent (20%) to one-hundred percent (100%) foreign equity. The primary purpose of said corporation is "to engage in the business of developing, conducting, maintaining, arranging for and promoting holistic treatment as an alternative to western medicine by establishing aesthetic salons, acupuncture ,check-up and massage clinics and for the implementation of said objectives and/or treatments to enter into agreements with medical establishments or persons duly authorized with these specific specialties for the delivery of said services/treatments". It appears that at present eighty percent (80%) of the subscribed capital stock of the company belong to Filipinos while twenty percent (20%) are owned by Japanese. The Japanese intend to acquire all the shareholdings of the Filipinos. You believe that the nature of the business of said company is not covered by the Foreign Investment Negative List as prescribed under RA 7042 as amended. Hence, you assert that the company can be fully-owned by foreigners. We do not concur with your view. TAIDHa We call your attention to Number 2 (4),List B of the Fifth Regular Foreign Investment Negative List under Executive Order No. 139 dated 22 October 2002. The aforesaid provision provides that foreign ownership is limited up to forty percent (40%) of massage clinics and other like activities regulated by law for reason of risks posed to public health . Under RA 8423 or Traditional and Alternative Medicine Act of 1997 (TAMA), acupuncture, massage, reflexology, acupressure, chiropractics, nutritional therapy and other similar methods are considered as alternative health care modalities .Presumably, because of implications to public health of such alternative health care modalities, the operation of establishments offering such methods are regulated by the Philippine Institute of Traditional and Alternative Health Care (PITAHC),an agency attached to Department of Health. [RA 8423; IRR of RA 8423 dated 7 December 1999] Further, even the operation of spa offering reflexology, body treatment and massage services is regulated by the government. [IRR dated 4 July 2002 pursuant to Executive Order No. 120 (1987)] In sum, we opine that Fortune Pacific Medical Corporation can increase its foreign equity only up to forty percent (40%) of the equity capital as said company is engaged in activities regulated by law for reason of risks posed to public health. ICAcTa For your information and guidance. ACTISD Very truly yours, (SGD.) VERNETTE G. UMALI-PACO General Counsel