Foreign Corporations

Question 1

What is the definition of a foreign corporation? What are its rights?

Answer 1

Sec. 123. Definition and rights of foreign corporations. - For the purposes of this Code, a foreign corporation is one formed, organized or existing under any laws other than those of the Philippines and whose laws allow Filipino citizens and corporations to do business in its own country or state. It shall have the right to transact business in the Philippines after it shall have obtained a license to transact business in this country in accordance with this Code and a certificate of authority from the appropriate government agency.

Question 2

What are the requisites for the issuance of a licese?

Answer 2

1) A copy of its AIO and by-laws certified in accordance with law and their translation to an official language of the Philippine, if necessary;
2) An application for license under oath;
3) Attached to the application for license shall be a duly executed certificate under oath by the authorized official, attesting to the fact that the laws of the country allow Filipino citizens and corporations to do business therein;
4) The application shall be accompanied by a statement under oath of the president of the corporation, showing that the applicant is solvent and in sound financial condition, and stating its assets and liabilities as of the date not exceeding one year immediately prior to the filing of the application;
5) Foreign banking, financial and insurance corporations shall also comply with the provisions of existing laws applicable to them. In the case of all other foreign corporations, no application for license to transact business in the Philippines shall be accepted by the SEC without previous authority from the appropriate government agency, whenever required by law.
5)

Question 3

What is a resident agent?

Answer 3

1) An individual, who must be of good moral character and of sound financial standing, residing in the Philippines; or
2) A domestic corporation lawfully transacting business in the Philippines designated in a written power of attorney by a foreign corporation authorized to do business in the Philippines.

Question 4

What are the grounds for revocation of a foreign corporation’s license?

Answer 4

Sec. 134. Revocation of license. - Without prejudice to other grounds provided by special laws, the license of a foreign corporation to transact business in the Philippines may be revoked or suspended by the Securities and Exchange Commission upon any of the following grounds:

1. Failure to file its annual report or pay any fees as required by this Code;
2. Failure to appoint and maintain a resident agent in the Philippines as required by this Title;
3. Failure, after change of its resident agent or of his address, to submit to the Securities and Exchange Commission a statement of such change as required by this Title;
4. Failure to submit to the Securities and Exchange Commission an authenticated copy of any amendment to its articles of incorporation or by-laws or of any articles of merger or consolidation within the time prescribed by this Title;
5. A misrepresentation of any material matter in any application, report, affidavit or other document submitted by such corporation pursuant to this Title;
6. Failure to pay any and all taxes, imposts, assessments or penalties, if any, lawfully due to the Philippine Government or any of its agencies or political subdivisions;
7. Transacting business in the Philippines outside of the purpose or purposes for which such corporation is authorized under its license;
8. Transacting business in the Philippines as agent of or acting for and in behalf of any foreign corporation or entity not duly licensed to do business in the Philippines; or
9. Any other ground as would render it unfit to transact business in the Philippines.

Question 5

What is the consent doctrine?

Answer 5

As a rule, a foreign corporation can have no legal existence
or status beyond the bounds of the State or sovereignty by
which it is created or incorporated and organized. It exists
only in contemplation of law and by force of the law and
where that law ceases to operate, the corporation can have
no existence. This principle, however, does not prevent a
corporation from acting in another State or country with the
latter’s express or implied consent. This is the “consent
doctrine” which is provided in Sections 125 and 126. But
every power which a corporation exercises as such in
another State depends for its validity upon the laws of the
sovereignty in which it is exercised. A corporation can
exercise none of the functions and privileges conferred by its
charter in another State or country except by the comity and
consent of such State or country.