XVIII.

FOREIGN CORPORATIONS
Foreign Corporations
is generally defined as one formed and organized under
laws other than those of the Philippines, regardless of the
citizenship of the incorporators and stockholders.
For licensing purposes, however, the Corporation Code adds
one essential element: the laws of the country where the
corporation was organized and operates allow Filipino
citizens and corporations to do business in that country.
Theory of Separate Corporate Entity
Under this theory, although the citizenship of the
incorporators and stockholders is immaterial in establishing
whether or not a corporation is foreign, it has been held that
in time of war, for purposes of security of the state, the
citizenship of the controlling stockholders determines the
corporations nationality.
Juridical Existence of a Corporation
Is confined within the territory of the state under whose laws
it was incorporated and organized, and it has no legal status
beyond such territory.
It may therefore be excluded by any other state from doing
business within its limits, or conditions may be imposed on
the exercise of such privileges.
PHILIPPINE SETTING: the condition is that it must obtain a
LICENSE to do business in the Philippines.
Methods of Entry of Investment
A foreign corporation wishing to invest in the
Philippines has various alternatives.
1. It may incorporate and organize a subsidiary as a
domestic corporation, either wholly owned by it or under
its effective control.
In such a case, the subsidiary would be a legally
independent unit and will be governed exclusively
by Philippine laws. The parent foreign company
may need a license to do business in the
Philippines if it participates in the management or
control of the subsidiary.
2. It may decide instead to open a branch or agency in the
Philippines, bringing in capital and technical know-how,
without organizing a legally independent unit.
In this case a license to do business in the
Philippines will be indispensable.

3. Joint venture where the foreign corporation may merely

invest in either a new or an existing domestic concern,
purchasing part of the latters stock and/or lending it
money and technical know how.
This method is often resorted to where the
business concerned is partially nationalized in
that a definite percentage of the capital must be
owned by Filipino citizens.
It would be the most convenient set-up where the
foreign corporation has not had any previous
experience in the Philippines.
In this case, the foreign corporation would need
authority from the Board of Investment (BOI) if its
investment exceeds 40% of the capital of the
business enterprises it invests in, unless the
latter is already registered with said Board. But it
will not require a SEC license to do business in
the Philippines, unless it participates in the
management, supervision, or control of the
domestic corporation.
Mere investment in a business enterprise does
not constitute doing business in the Philippines.
4. It may seek entry into Philippine territory by virtue of
service contracts with domestic corporation.
This is an alternative to the joint venture where
the area of business is partially nationalized. It
will always require a license to do business in the
Philippines.
Permitted Areas of Investment
1. Partially Nationalized Areas
The Philippine Constitution and various statutes have
reserved certain business activities to citizens or to
corporations or associations a definite percentage of
the capital stock of which is owned by Filipino
citizens.
The percentage ranges anywhere from a bare
majority to 100% of either the entire subscribed
capital stock or of the voting stocks of the
corporation concerned. In these areas, except where
100%
Filipino
ownership
required,
foreign
corporations can at most be only joint venturers with
Filipino capital and only from a minority position.
In the retail trade, and the operation of rural banks
and of mass media . E.g. foreign corporations are

completely out because the law governing these

require 100% Filipino ownership.
In the interisland shipping industry, the requirement
of Filipino ownership is 75%.
In banks except rural banks, the requirement is 70%
of the votings stocks thereof, although this may be
reduced to 60%.
In public utilities, corporations engaged in the
exploration, exploitation and utilization of natural
resources and educational institutions at least 60% of
their capital stock must be owned by Filipinos.
Except in educational institutions, in all these cases
of partial nationalization, aliens may sit in the board
of directors in proportion to their allowable
participation or share in the capital of the entities
concerned.
2. Preferred Areas; Incentives for Investment therein.
The Omnibus Investments Code of 1987 defines
the investment policies of the government, all of
which are aimed at the acceleration of the sound
development of the national economy.
Mainly, the State encourages private Filipino and
foreign investments in industry, agriculture, forestry,
mining, tourism and other sectors of the economy,
which would provide significant employment
opportunities, increase productivity of the countrys
resources, improve technical skills, and provide a
foundation for the future development of the
economy.
Under said Code, the BOI is mandated to determine
what areas of investment should be given
preference, taking into consideration certain
specified criteria and to prepare annually an
Investment Priorities Plan which must be submitted
to the President for approval.
The preferred areas of investment are classified into
pioneer and non-pioneer.
All investors in these preferred areas and all BOI
registered enterprises are guaranteed certain basic
rights, including freedom from expropriation,
repatriation of investment and remittance of earnings
in the currency in which the investment was
originally made.

In addition, tax incentives are granted such BOI

registered enterprises, including among others,
exemption from income tax for 6 yrs for pioneer
enterprises and 4 yrs for non-pioneer ones, and
exemption from taxes and duties on imported capital
equipment for 5 yrs from the effectivity of the Code.
Only Philippine Nationals may register with BOI and
take advantage of these incentives.
A Philippine National is defined as a Filipino citizen or
a corporation organized under Philippine laws, of which
at least 60% of its capital stock outstanding and
entitled to vote is owned by Filipino citizens and at least
60% of the members of its board of directors are Filipino
citizens.
A foreign corporation, as such, can therefore not be
registered with the BOI for the purposes of these
incentives.
3. Non-preferred areas of investment
Foreign equity investment in a non-registered
enterprise, i.e., in a non-preferred area, needs no
prior authority from the BOI provided it does not
exceed 40% of the outstanding capital stock of such
enterprise, and subject to the nationalization laws.
Subject to nationalization laws, foreign corporations
can invest in:
1. All BOI registered pioneer enterprises, without
prior BOI authority up to 40% of the voting stocks
of such enterprise, but in exceptional cases
where the area of investment is not adequately
exploited by Philippine capital, possibly up to
100%, with prior BOI authority;
2. In a registered preferred non-pioneer enterprise,
without prior BOI authority, up to 40% of the
latters voting stocks;
3. In a non-registered enterprise, without prior BOI
authority, if the investment is not more than 40%
of the outstanding capital of such enterprise; if it
should exceed said 40%, only with BOI authority
and only if the investment will not conflict with
nationalization laws and the Investment Priorities
Plan, nor would pose a clear and present danger
of promoting monopolies, nor is in an area
adequately
being
exploited
by
Philippine
nationals, nor would not contribute to the sound

and balanced development of the national

economy.
In all of these cases whether the foreign
corporation will in addition need a license will
depend on whether its acts amount to doing
business in the Philippines.
A. Legal Requirements Prior to Transaction of Business
Section 123 of the Corporation Code, aside from defining
what a foreign corporation is, lays down the general
conditions under which it may transact business in the
Philippines.
Section
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. (n)

Both the license and certificate must be obtained prior to

transacting business in the Philippines. Once the foreign
corporation has complied with these requirements, it can
commence doing business, and becomes subject to the
absolute jurisdiction, supervision and control of the SEC
in accordance with existing laws.
1. BOI Certificate
The certificate of authority referred to in Section 123
includes the one which must be obtained from the Board of
Investments, the agency charged with the responsibility of
determining whether or not the business operations of a
foreign corporation will contribute to the sound and
balanced development of the national economy on a selfsustaining basis. No SEC license to do business can be
granted without this BOI certificate.

Article 48. Authority to Do Business. No alien, and

no firm association, partnership, corporation or any other
form of business organization formed, organized,
chartered or existing under any laws other than those of
the Philippines, or which is not a Philippine national, or
more than forty per cent (40%) of the outstanding capital
of which is owned or controlled by aliens shall do
business or engage in any economic activity in the
Philippines or be registered, licensed, or permitted by the
Securities and Exchange Commission or by any other
bureau,
office,
agency,
political
subdivision
or
instrumentality of the government, to do business, or
engage in any economic activity in the Philippines
without first securing a written certificate from the Board
of Investments to the effect:
(1) That the operation or activity of such alien,
firm, association, partnership, corporation or other form
of business organization, is not inconsistent with the
Investment Priorities Plan;
(2) That such business or economic activity will
contribute to the sound and balanced development of
the national economy on a self-sustaining basis;
(3) That such business or economic activity by
the applicant would not conflict with the Constitution or
laws of the Philippines;
(4) That the field of business or economic activity
is not one that is being adequately exploited by
Philippine nationals; and
(5) That the entry of applicant therein will not
pose a clear and present danger of promoting
monopolies or combinations in restraint of trade.

Section 48 and 49 of the Omnibus Investments Code lay

down the conditions under which the BOI certificate may be
granted. By express provision of law, banks are not required
to obtain this certificate.

Article 49. Requirements to be Imposed by the

Board. Upon granting said certificate, the Board shall
impose the following requirements on the alien or the
firm, association, partnership, corporation or other form
of business organization that is not organized or existing
under the laws of the Philippines
(1) To appoint a citizen of the Philippines, of legal
age, good moral character and reputation, and sound
financing standing, as resident agent, who shall be
authorized to accept summons and other legal process in
behalf of the applicant;
(2) To establish an office in the Philippines and to
notify the Securities and Exchange Commission in writing
of the applicant's exact address and of every
contemplated transfer thereof or of the opening of new
offices, at least fifteen (15) days before the same are to
be effected; and once effected, not later than ten (10)
days afterwards;
(3) To bring assets into the Philippines to
constitute the capital of the office or offices, of such kind
and value as the Board may deem necessary to protect
those who may deal with the applicant, and to maintain
that capital unimpaired during the period it does
business in the Philippines;
(4) To present prior proof that citizens of the
Philippines and corporations or other business
organizations organized or existing under the laws of the
Philippines are allowed to do business in the country or
individual state within the federal country of which
applicant is a citizen or in which it is domiciled: Provided,
however, That if the state or country of domicile of the
applicant imposes on, or requires of, Philippine nationals
other conditions, requirements or restrictions besides
those set forth in this Code, the Board of Investments
shall impose the said other conditions, requirements or
restrictions on the applicant, if in its judgment, the
imposition thereof shall foster the sound and balanced
development of the national economy on a selfsustaining basis;

(5) To submit to the Securities and Exchange

Commission certified copies of applicant's charter and
by-laws and all amendments thereto, if any, with their
translation into an official language within twenty (20)
days after their adoption or after the grant of the
prescribed certificate by the Board of Investments and
annually of applicant's financial statements showing all
assets, liabilities and net worth and results of operations,
setting out separately those pertaining to the branch
office;
(6) To keep a complete set of accounting records
with the resident agent, which shall fully and faithfully
reflect all transactions within the Philippines, and to
permit inspections thereof by the Securities and
Exchange Commission, the Bureau of Internal Revenue
and the Board of Investments;
(7) To give priority to resident creditors as
against
non-resident
creditors
and
owners
or
stockholders in the distribution of assets within the
Philippines upon insolvency, dissolution or revocation of
the license;
(8) To give the Securities and Exchange
Commission at least six (6) months advance notice in
writing of applicant's intention to stop doing business
within the Philippines; and to give such public notice
thereof as the Securities and Exchange Commission may
require for the protection of resident creditors and others
dealing with the applicant; and
(9) Not to terminate any franchise, licensing or
other agreement that applicant may have with a resident
of the Philippines authorizing the latter to assemble,
manufacture or sell within the Philippines the products of
the applicant, except for violation thereof or other just
cause and upon payment of compensation and
reimbursement of investment and other expenses
incurred by the licensee in developing a market for the
said products: Provided, however, That in case of
disagreement, the amount of compensation or
reimbursement shall be determined by the country
where the licensee is domiciled or has its principal office

who shall require the applicant to file a bond in such

amount as, in its opinion, is sufficient for this purpose.
The above requirements shall be in addition to
those set forth in the Corporation Code of the Philippines
for authorizing foreign corporations to transact business
in the Philippines.

2. SEC License to do business

In addition to obtaining a BOI certificate, a foreign corporation

wishing to do business in the Philippines must secure a license
from the SEC to do so. The pertinent provision of the
Corporation Code follow:
Section 125. Application for a license. A foreign
corporation applying for a license to transact business in
the Philippines shall submit to the Securities and
Exchange Commission a copy of its articles of
incorporation and by-laws, certified in accordance with
law, and their translation to an official language of the
Philippines, if necessary. The application shall be under
oath and, unless already stated in its articles of
incorporation, shall specifically set forth the following:
1. The date and term of incorporation;
2. The address, including the street number, of
the principal office of the corporation in the country or
state of incorporation;
3. The name and address of its resident agent
authorized to accept summons and process in all legal
proceedings and, pending the establishment of a local
office, all notices affecting the corporation;
4. The place in the Philippines where the
corporation intends to operate;
5. The specific purpose or purposes which the
corporation intends to pursue in the transaction of its
business in the Philippines: Provided, That said purpose

or purposes are those specifically stated in the certificate

of authority issued by the appropriate government
agency;
6. The names and addresses of the present
directors and officers of the corporation;
7. A statement of its authorized capital stock and
the aggregate number of shares which the corporation
has authority to issue, itemized by classes, par value of
shares, shares without par value, and series, if any;
8. A statement of its outstanding capital stock
and the aggregate number of shares which the
corporation has issued, itemized by classes, par value of
shares, shares without par value, and series, if any;
9. A statement of the amount actually paid in;
and
10. Such additional information as may be
necessary or appropriate in order to enable the
Securities and Exchange Commission to determine
whether such corporation is entitled to a license to
transact business in the Philippines, and to determine
and assess the fees payable.

Attached to the application for license shall be a duly

executed certificate under oath by the authorized official
or officials of the jurisdiction of its incorporation,
attesting to the fact that the laws of the country or state
of the applicant allow Filipino citizens and corporations to
do business therein, and that the applicant is an existing
corporation in good standing. If such certificate is in a
foreign language, a translation thereof in English under
oath of the translator shall be attached thereto.

The application for a license to transact business in the

Philippines shall likewise be accompanied by a statement

under oath of the president or any other person

authorized by the corporation, showing to the
satisfaction of the Securities and Exchange Commission
and other governmental agency in the proper cases that
the applicant is solvent and in sound financial condition,
and setting forth the assets and liabilities of the
corporation as of the date not exceeding one (1) year
immediately prior to the filing of the application.

Foreign banking, financial and insurance corporations

shall, in addition to the above requirements, 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 Securities and Exchange Commission
without previous authority from the appropriate
government agency, whenever required by law. (68a)

Section 126. Issuance of a license. If the Securities

and Exchange Commission is satisfied that the applicant
has complied with all the requirements of this Code and
other special laws, rules and regulations, the Commission
shall issue a license to the applicant to transact business
in the Philippines for the purpose or purposes specified in
such license. Upon issuance of the license, such foreign
corporation may commence to transact business in the
Philippines and continue to do so for as long as it retains
its authority to act as a corporation under the laws of the
country or state of its incorporation, unless such license
is sooner surrendered, revoked, suspended or annulled in
accordance with this Code or other special laws.

Within sixty (60) days after the issuance of the license to

transact business in the Philippines, the license, except
foreign banking or insurance corporation, shall deposit
with the Securities and Exchange Commission for the
benefit of present and future creditors of the licensee in
the Philippines, securities satisfactory to the Securities

and Exchange Commission, consisting of bonds or other

evidence of indebtedness of the Government of the
Philippines,
its
political
subdivisions
and
instrumentalities, or of government-owned or controlled
corporations and entities, shares of stock in "registered
enterprises" as this term is defined in Republic Act No.
5186, shares of stock in domestic corporations registered
in the stock exchange, or shares of stock in domestic
insurance companies and banks, or any combination of
these kinds of securities, with an actual market value of
at least one hundred thousand (P100,000.) pesos;
Provided, however, That within six (6) months after each
fiscal year of the licensee, the Securities and Exchange
Commission shall require the licensee to deposit
additional securities equivalent in actual market value to
two (2%) percent of the amount by which the licensees
gross income for that fiscal year exceeds five million
(P5,000,000.00) pesos. The Securities and Exchange
Commission shall also require deposit of additional
securities if the actual market value of the securities on
deposit has decreased by at least ten (10%) percent of
their actual market value at the time they were
deposited.
The Securities and Exchange Commission may at its
discretion release part of the additional securities
deposited with it if the gross income of the licensee has
decreased, or if the actual market value of the total
securities on deposit has increased, by more than ten
(10%) percent of the actual market value of the
securities at the time they were deposited. The Securities
and Exchange Commission may, from time to time, allow
the licensee to substitute other securities for those
already on deposit as long as the licensee is solvent.
Such licensee shall be entitled to collect the interest or
dividends on the securities deposited. In the event the
licensee ceases to do business in the Philippines, the
securities deposited as aforesaid shall be returned, upon
the licensees application therefor and upon proof to the
satisfaction of the Securities and Exchange Commission
that the licensee has no liability to Philippine residents,
including the Government of the Republic of the
Philippines. (n)

3. Certificate from appropriate governmental agency

2. A foreign corporation doing business

in the Philippines in the Philippines
whether with or without a license,
can be sued before Philippine courts.
And since a counterclaim partakes of
the nature of a complaint against the
plaintiff, even if the latter is a foreign
corporation doing business in the
Philippines without a license, the
defendant who has questioned the
plaintiffs capacity to sue will not by
filing the counterclaim be deemed to
have admitted such legal capacity.

In addition to the BOI certificate and the SEC license,

there are certain areas of activities where a
certificate of authority is required from some
governmental agency prior to entry into such areas
by any person, firm or corporation, Philippine or
otherwise.

Effects of Failure to Secure SEC License

When a foreign corporation does business in the

Philippines without the proper license, its officers
or agent in the Philippines responsible for the
violation of the Corporation Code will be
criminally liable and will be subject to fine and/or
imprisonment.

3. If a foreign corporation is not doing

business in the Philippines, it cannot
be sued here because Philippine
courts cannot acquire jurisdiction
over it. On the other hand, it needs
no license to sue before Philippine
courts on an isolated transaction, for
infringement of trademark and unfair
competition, or on a cause of action
entirely independent of any business
transactions. The object of the
statute is not to prevent the foreign
corporation from performing single
acts, but to prevent the foreign
corporation from performing single
acts, but to prevent it from acquiring
a domicile for the purpose of
business without taking the steps
necessary to render it amenable to
suit in the local courts.

Section
133. Doing
business
without
a
license. No foreign corporation transacting
business in the Philippines without a license, or its
successors or assigns, shall be permitted to maintain
or intervene in any action, suit or proceeding in any
court or administrative agency of the Philippines; but
such corporation may be sued or proceeded against
before Philippine courts or administrative tribunals
on any valid cause of action recognized under
Philippine laws. (69a)

The following principles laid down by the

Supreme Court under the Corporation Law would
still be applicable under the above-quoted
provision:

1. If a foreign corporation does business

in the Philippines without a license, it
cannot sue before Philippine courts.

With respect to actions for infringement of trade

mark and unfair competition, the following
provision of the Trademark Law would be
relevant:

Sec. 21-A. Any foreign corporation or juristic person

to which a mark or trade name has been registered
or assigned under this Act may bring an action
hereunder for infringement , for unfair competition,
or false designation or origin and fake description,
whether or not it has been licensed to do business in
the Philippines under Act No. 1459, as amended,
otherwise known as the Corporation Law, at the time
it brings complaint: Provided, that the country of
which the said foreign corporation or juristic person
is a citizen, or in which it is domiciled by treaty,
convention or law, grants a similar privilege to
corporate or juristic persons of the Philippines.

B. What constitutes Doing Business

The Corporation Code does not define the term transacting
business in the Philippines but the Omnibus Investments
Code does enumerate certain acts which are deemed
included in the phrase doing business: Article 44 provides:
Article 44. Definition of terms. As used in this Book,
the term "investment" shall mean equity participation in
any enterprise formed, organized or existing under the
laws of the Philippines; and the phrase "doing business"
shall include soliciting orders, purchases, service
contracts, opening offices, whether called "liaison"
offices or branches; appointing representatives or
distributors who are domiciled in the Philippines for a
period or periods totalling one hundred eighty (180) days
or more; participating in the management, supervision or
control of any domestic business firm, entity or
corporation in the Philippines, and any other act or acts
that imply a continuity of commercial dealings or
arrangements and contemplate to that extent the
performance of acts or works, or the exercise of some of
the functions normally incident to, and in progressive
prosecution of, commercial gain or of the purpose and
object of the business organization.

C. How Courts Acquire Jurisdiction over Foreign

Corporation
As a rule, jurisdiction over a foreign corporation is acquired by
the courts through service of summons on its resident agent.
The Corporation Code requires that such agent be either an
individual residing in the Philippines, of good moral character
and good financial standing, or a domestic corporation

lawfully transacting business in the Philippines. Section 128 of

said code provides:
Section 128. Resident agent; service of process.
The Securities and Exchange Commission shall require as
a condition precedent to the issuance of the license to
transact business in the Philippines by any foreign
corporation that such corporation file with the Securities
and Exchange Commission a written power of attorney
designating some person who must be a resident of the
Philippines, on whom any summons and other legal
processes may be served in all actions or other legal
proceedings against such corporation, and consenting
that service upon such resident agent shall be admitted
and held as valid as if served upon the duly authorized
officers of the foreign corporation at its home office. Any
such foreign corporation shall likewise execute and file
with the Securities and Exchange Commission an
agreement or stipulation, executed by the proper
authorities of said corporation, in form and substance as
follows:

"The (name of foreign corporation) does hereby stipulate

and agree, in consideration of its being granted by the
Securities and Exchange Commission a license to
transact business in the Philippines, that if at any time
said corporation shall cease to transact business in the
Philippines, or shall be without any resident agent in the
Philippines on whom any summons or other legal
processes may be served, then in any action or
proceeding arising out of any business or transaction
which occurred in the Philippines, service of any
summons or other legal process may be made upon the
Securities and Exchange Commission and that such
service shall have the same force and effect as if made
upon the duly-authorized officers of the corporation at its
home office."

Whenever such service of summons or other process

shall be made upon the Securities and Exchange

Commission, the Commission shall, within ten (10) days

thereafter, transmit by mail a copy of such summons or
other legal process to the corporation at its home or
principal office. The sending of such copy by the
Commission shall be necessary part of and shall
complete such service. All expenses incurred by the
Commission for such service shall be paid in advance by
the party at whose instance the service is made.

stockholders, members, or officers of corporations to

each other or to the corporation.

Income Tax Liability of Foreign Corporations

In case of a change of address of the resident agent, it

shall be his or its duty to immediately notify in writing
the Securities and Exchange Commission of the new
address.

Rule 14 of the Rules of Court also provides for

service of summons on foreign corporation:
Section 14. Services upon private foreign
corporations. If the defendant is a foreign corporation,
or a non-resident joint stock company, or association,
doing business in the Philippines, service may be made
on its resident agent designated in accordance with law
for that purpose, or, if there is no such agent, on the
government official designated by law to that effect, or
any of its officers or agents within the Philippines. (Rule
14, Rules of Court.)

D. Laws
Governing
Corporations

Licensed

Foreign

Section 129. Law applicable. Any foreign corporation

lawfully doing business in the Philippines shall be bound
by all laws, rules and regulations applicable to domestic
corporations of the same class, except such only as
provide for the creation, formation, organization or
dissolution of corporations or those which fix the
relations, liabilities, responsibilities, or duties of

Under the Tax Code, foreign corporations are

subject to income tax on all income from
sources within the Philippines.

Merger of Licensed Foreign Corporations

Section
132. Merger
or
consolidation
involving a foreign corporation licensed in
the
Philippines. One or more
foreign
corporations authorized to transact business in the
Philippines may merge or consolidate with any
domestic corporation or corporations if such is
permitted under Philippine laws and by the law of
its incorporation: Provided, That the requirements
on merger or consolidation as provided in this Code
are followed.

Whenever a foreign corporation authorized to

transact business in the Philippines shall be a party
to a merger or consolidation in its home country or
state as permitted by the law of its incorporation,
such foreign corporation shall, within sixty (60)
days after such merger or consolidation becomes
effective, file with the Securities and Exchange
Commission, and in proper cases with the
appropriate government agency, a copy of the
articles
of
merger
or
consolidation
duly
authenticated by the proper official or officials of
the country or state under the laws of which
merger or consolidation was effected: Provided,
however, That if the absorbed corporation is the
foreign corporation doing business in the
Philippines, the latter shall at the same time file a

petition for withdrawal of its license in accordance

with 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;

E. Withdrawal of Foreign Corporation

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;

Section 136. Withdrawal of foreign corporations.

Subject to existing laws and regulations, a foreign
corporation licensed to transact business in the
Philippines may be allowed to withdraw from the
Philippines by filing a petition for withdrawal of license.
No certificate of withdrawal shall be issued by the
Securities and Exchange Commission unless all the
following requirements are met;

5. A misrepresentation of any material matter in

any application, report, affidavit or other
document submitted by such corporation
pursuant to this Title;

1. All claims which have accrued in the Philippines have

been paid, compromised or settled;

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;

2. All taxes, imposts, assessments, and penalties, if any,

lawfully due to the Philippine Government or any of its
agencies or political subdivisions have been paid; and
3. The petition for withdrawal of license has been
published once a week for three (3) consecutive weeks in
a newspaper of general circulation in the Philippines.

7. Transacting business in the Philippines outside

of the purpose or purposes for which such
corporation is authorized under its license;

Revocation and Suspension of License

Section 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;

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.

The Insurance Code and the General Banking

Act have special provisions regarding
revocation of license of insurance and banking
corporations, respectively.

Section 247 of the Insurance Code provides:

Section 247. If the Commissioner is of the
opinion upon examination of other evidence that

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any domestic or foreign insurance company is in

an unsound condition, or that it has failed to
comply with the provisions of law or regulations
obligatory upon it, or that its condition or method
of business is such as to render its proceedings
hazardous to the public or to its policyholders, or
that its paid-up capital stock, in the case of a
domestic stock company, or its available cash
assets, in the case of a domestic mutual
company, or its security deposits, in the case of a
foreign company, is impaired or deficient, or that
the margin of solvency required of such company
is deficient, the Commissioner is authorized to
suspend or revoke all certificates of authority
granted to such insurance company, its officers
and agents, and no new business shall thereafter
be done by such company or for such company
by its agent in the Philippines while such
suspension, revocation or disability continues or
until its authority to do business is restored by
the Commissioner. Before restoring such
authority, the Commissioner shall require the
company concerned to submit to him a business
plan showing the company's estimated receipts
and disbursements, as well as the basis therefor,
for the next succeeding three years. (As
amended by Presidential Decree No. 1455)

Section 16 of the General Banking Act

provides:

Section 16.
The Monetary Board, by the
affirmative vote of at least five of its members
and with the approval of the President of the
Philippines, may revoke the license to transact
business in the Philippines of any foreign bank or
banking corporation not formed, organized, or
existing under the laws of the Philippines, if the
said Board finds after due investigation at which
such bank or banking corporation is given a
chance to be heard by itself or counsel, that the
foreign bank or banking corporation is in
imminent danger of insolvency or that its
continuance in business will involve probable loss
to those transacting business with it. After the
revocation of its license, it shall be unlawful for
any such foreign bank or banking corporation to
transact business in the Philippines unless its
license is renewed or reissued. After the
revocation of such license the Solicitor General
shall take such proceedings as may be proper to
protect creditors of such foreign bank or banking
institution and the public.

Existing Licensed Foreign Corporations

A foreign corporation which was licensed to

do business in the Philippines prior to the
effectivity of the Corporation Code, shall
continue to have authority to do so under the
terms and conditions of its license, but subject
to the provisions of said Code and other
special laws.

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