1

WHEN GLOBAL MEETS

LOCAL: A Comprehensive
Handout on Foreign
Corporations under
Philippine Corporate Law

Brought to you by: BEBOT PRODUCTIONS

(Aplasca Baluca Barrameda Carreon Carunungan
Defensor Eguia Gamboa Lahoz Pamatmat Pimentel
Sayson)
2 - E 2021
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1. DEFINITION OF FOREIGN CORPORATION AND

PUBLIC POLICY (Sec. 23)
● Foreign Corporation → one formed, organized, or
existing under any laws other than those of the PH,
and whose laws allow Filipino citizens and
corporations to do business in its own country or
state.
● Element of reciprocity → this emphasizes our
country’s policy that unless our own nationals are
granted business access in a foreign state, then the
corporate entities of such foreign state would
likewise not be granted legal business access
within the Philippine territory.
● Sec. 123 provides that foreign corporations from
the state that grants reciprocity rights to PH
nationals “shall have the right to transact
business in the PH after it shall have obtained
license to transact business in this country in
accordance with this Code and a certificate of
authority from the appropriate government
agency.”
● Despite this provision, it is clear that ALL
corporations organized and existing other than
under the PH laws are foreign corporations,
irrespective of the issue of reciprocity.

2. LICENSE TO DO BUSINESS IN THE PHILIPPINES

A. Application for license (Section 124 and 125)
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Summary of Rules on Application:

1. Foreign corporations already authorized to
do business in the Philippines under license
shall continue to have the same authority
under the same terms and conditions of their
license, now subject to the provisions of the
Corporation Code and other laws (Sec. 124)
2. Foreign corporations applying for license to
transact in the must submit to the SEC a
copy of their Articles and the by-laws, with
the official translation to official language of
the Philippines if necessary. (Sec. 125)
3. The Articles must contain: (Sec. 125)
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;
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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.
4. Additional requirements for license: (Sec.
125)
a. Duly executed certificate under oath
by the official of the jurisdiction of the
corporation, attesting that:
i. the laws of their country allow
Filipinos to do business, and
ii. that the corporation is in good
standing
iii. If ever, the oath of the translator
who translated
b. Statement under oath of President or
any other person authorized by the
Corporation...
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i. Showing to the SEC that he

corporation is solvent and in good
financial conditions
ii. Setting forth assets and liabilities
of the corporation as of the date
not exceed 1 year prior to the filing
of application
5. Additional requirement for banking, financial,
and insurance corporations:
a. Comply with the provisions of existing
laws applicable to them
6. As needed: previous authority from the
appropriate government agency

Rationale behind requiring license:

Marshall-Wells v. Elser: Getting a license in the
Philippines was intended to subject the foreign
corporation doing business to the jurisdiction of our
courts, not to prevent the foreign corporation from
performing single acts. It is meant to prevent it
from acquiring domicile for the purpose of business
without taking necessary steps to render it
amenable to suit in the local courts.

B. Appointment of a Resident Agent (Sec. 127

and 128)
Who may be a resident agent? (Sec. 127)
1. An individual residing in the Philippines, of
good moral character and of sound financial
standing, OR
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2. Domestic corporation lawfully transacting

business in the Philippines
Why have a resident agent? (Sec. 128)
● Before the SEC can give license, there must
be a written power of attorney
designating some person who must be a
resident of the Philippines, on whom
summons may be served validly
● As an additional requirement, there must be
an agreement or stipulation which, in
essence, puts forth that if the corporation
ceases to transact, or if there is no such
resident agent, summons may be
serviced on the SEC validly.
○ Should this happen, the SEC must
transmit by mail the summons to the
corporation at its home or principal
office
○ Expenses are to be shouldered by the
party at whose instance the service is
made
● If the resident agent changes address, he
must inform the SEC in writing of his new
address.

C. Issuance of License, and incident securities

(Sec. 126)
When the SEC is satisfied with the foreign
corporation’s application, it will issue a license to
conduct business for the purposes specified
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therein.

Summary of rules on securities:

1. Within 60 days of issuing the license, the
Corporation has to deposit with the SEC, for
the future creditors of the corporation,
securities amounting to 100,000, consisting
of:
● Bonds
● Other evidence of indebtedness of the
Government of the PH, its GOCCs
● Shares of stock in registered enterprises
as defined in RA 5186
● Shares of stock in domestic corporations
registered in LSE
● Shares of stock in domestic insurance
companies
● Combination of the above
2. Within 6 months of every fiscal year, the
SEC shall require the ff:
● Another deposit of securities equal to
the actual market value of 2% of the
corporation’s gross income for the
fiscal year over 5,000,000 pesos.
● Another deposit of securities if the
actual market value has decreased by
at least 10% from the time they were
deposited first
● If the corporation is still solvent, SEC
can release securities to allow the
Corporation to substitute it.
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3. If the corporation stops doing business, the

securities deposited will be returned.
Corporation need only apply, and present
proof to the SEC that it have no liability to
Philippine residents, or the Philippine
Government.
4. The securities during this time shall still earn
dividends.

D. Effect of failure to obtain license (Sec. 133

and 144)
What if the corporation fails to obtain a
license?
● The corporation cannot maintain or intervene
in any action, suit, or proceeding in any
court of administrative agency of the
Philippines.
● HOWEVER: the Corporation can still be sued
or proceeded against before Philippine courts
or administrative tribunals on any valid
cause of action recognised by Philippine
Laws.
○ Under Sec. 144, there can also be
penal/criminal liability.

What about the contracts of the Corporation?

● Home Insurance Co v. Eastern Shipping
Lines: The contracts are still valid despite
the absence of a license. However, if such
contracts are to be enforced in court, the
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corporation must obtain a license to have

standing.

E. Amendment of license (Sec. 131)

● A foreign corporation authorized to transact
business in the Philippines shall obtain an
amended license in the event it changes its
corporate name, or desires to pursue in the
Philippines other or additional purposes, by
submitting an application therefor to the
SEC, favorably endorsed by the appropriate
government agency in the proper cases.

F. Revocation of license (Sec. 134 and 135)

Grounds to revoke or suspend license by the
SEC: (Sec. 134)
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;
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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.

- Afterwards, SEC must:

● issue a corresponding certificate of
revocation, furnishing a copy to the
appropriate government agency as the case
may be
● mail the notice of revocation to the
Corporation, along with the copy of the
certificate.

3. CONCEPTS OF “DOING BUSINESS IN THE

PHILIPPINES”
A. Statutory definition of doing business
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A “Philippine National” means:

a. Citizen of the Philippines or a domestic
partnership/ association wholly owned by
Filipino citizens; or
b. Domestic corporation, at least 60% of the
capital stock outstanding and entitled to vote
is owned and held by Filipino citizens; or
c. Trustee of funds for pension or other
employee retirement or separation benefits,
trustee being a Philippine national and at
60% of the fund will accrue to the benefit of
the Philippine nationals:

- Provided, if a corporation and its non-Filipino

stockholders own stocks in a SEC-registered
enterprise, at least 60% of the capital stocks
outstanding and entitled to vote of both
corporations must be owned and held by
Filipino citizens and at least 60% of the
members of the BoD Filipino citizen, to be
considered a Philippine national.
“Doing business in the PH” includes:
1. Soliciting orders, service contracts, opening
offices;
○ Whether called "liaison" offices or
branches
2. Appointing representatives or distributors
domiciled in the PH or one who stays in the
PH for 180 days or more;
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3. Participating in the management, supervision

or control of any domestic business, firm,
entity or corporation in the PH; and
4. Any other act/s implying a continuity of
commercial dealings and to that extent the
performance of acts or works is for
commercial gain.
Not considered doing business in the PH
when:
1. Mere investment as a shareholder in
domestic corporations registered to do
business;
2. Having a nominee director or officer to
represent its interests in such corporation;
3. Appointing a representative or distributor
domiciled in the Philippines which transacts
business in its own name and for its own
account.

B. Jurisprudential concepts of “Doing business”

● Metholatum v. Mangaliman provides 2 tests
in determining whether or not a foreign
corporation is engaged in business in the
Philippines:
1. The nature or act of the transaction
→ Whether a foreign corporation is
maintaining or continuing in the
Philippines "the body or substance of
the business or enterprise for which it
was organized or whether it has
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substantially retired from it and turned

it over to another."
2. The existence of a continuing intent
→ Whether there was intent on the part
of the foreign corporation to undertake
a continuity of commercial dealings and
arrangements in the Philippines, as to
distinguish it from an “isolated
transaction”
■ For trademark, currently, whether they
have a license to do business or not, PH
courts have an obligation under International
Law (treaties) to protect trademark,
copyright, and intellectual property rights of
all corporations, whether domestic or
foreign.
■ If a broker is actually engaging in his own
name, and he buys products from the
foreign corporation and sells it in his own
name, at whatever price he wants, the
foreign corporation selling the products to
the broker would NOT be considered to be
engaged in doing business in the Philippines.
But because of the principle of agency, if the
agent (distributor) represents the principal
(the foreign corporation) and the agent
sends back all money to the principal, the
foreign corporation is considered engaged in
doing business in the Philippines even if just
through its agents.
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■ Territoriality Rule
● B. Van Zuiden Bros., Ltd v. GTVL
Manufacturing Industries, Inc.: to be
“transacting business in the PH” for
purposes of Section 133, the foreign
corporation must actually transact
business in the PH, that is, perform
specific business transactions
within the PH territory on a
continuing basis in its own name and
for its own account.

■ Contract Theory
● Doing business in the PH requires that
the contract must be perfected or
consummated in PH soil. Where the
main points of the contract happened
abroad or in the Philippines, the
corporation is considered engaged
in doing business in the place
where the main points of the
contract were consummated.
● If it’s CIF Manila, it can be presumed
the case was consummated in Manila.
CIF means that cost, insurance and
freights were paid by the buyer, and
that the sale was already
consummated at that point. A “CIF,
West Coast” arrangement makes
delivery outside of the Philippines, and
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is not doing business in the

Philippines.
● This is only relevant where the sale
was not fully performed in the
Philippines, where certain parts of the
contract were implemented here or
abroad.
● Pacific Vegetable Oil Corp. v.
Singson: One must use the point of
contact doctrine to determine
jurisdiction. If the point of contact
is in the Philippines, and the
essential parts of the contract
were performed in the Philippines,
then the corporation is engaged in
doing business here and must
obtain a license. If the essential
parts of the contract are performed
abroad, then the foreign corporation
need not obtain a license. HOWEVER,
in any case, if the transaction is an
isolated transaction, the foreign
corporation need not obtain a license
to be able to sue in the Philippines.
○ Under this case, as long as the
perfection and
consummation of a series of
transactions are done
outside PH territorial
jurisdiction, the same would
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not constitute doing

business in the PH, even if
the products themselves
should be manufactured or
processed in the PH by
locals.
○ The implication is that if the
salient points of a contract do
not find themselves in the PH,
Philippine authorities have no
business subjecting the parties
to local registration and
licensing requirements.
○ EXCEPTION TO THE
TERRITORIALITY RULE IN
PACIFIC VEGETABLE:
Solicitation of business
contracts constitutes doing
business in the Philippine

■ Profit-seeking Transactions Rule

● Agilent Technologies Singapor v.
Integrated Silicon Technology: Agilent
was not deemed to be “doing
business” in the PH because it acts
were confined to:
○ maintaining a stock of goods in the
PH solely for purposes of having
the same processed by Integrated
Silicon; and
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○ consignment of equipment with

Integrated Silicon to be used in the
processing of products for export

● Examples:
○ Insurance business
- A foreign corporation with
a Philippine settling agent
that issues 12 marine
policies covering different
shipments in the
Philippines (General
Corp., 1950)
- A foreign corporation
which had been collecting
premiums on outstanding
policies (Manufacturing
Life, 1951)
- BUT those that file
collection suits with
Philippine courts arising
from insurance contracts
entered into and
premiums paid abroad
are not doing business in
the PH (Aetna Casualty,
1977)
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○ Air carriers
- Off-line air carriers
having general sales
agents in the PH are
engaged in business in
the PH and that their
income from sales or
passage here is income
from within the PH
(South African Airways,
2010)

C. Special cases on infringement of business

names and trademarks
- The right to corporate name and trade
name of a foreign corporation is a
property right in rem, which it may assert
and protect in any of the courts of the world
even in countries where it does not
personally transact any business (Western
Equipment, 1972)
● HOWEVER: When a foreign corporation
transacts business in the PH without
obtaining a license, there is a public policy of
prohibiting it from seeking any remedy from
PH courts and administrative bodies.
● A foreign corporation has a right to maintain
an action in the forum even if it is not
licensed to do business and is not actually
doing business on its own therein to protect
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its corporate and trade names, since it is a

property right in rem. Which it may assert to
protect against all the world, in any of the
courts of the world (Converse Rubber,
1987).
○ Infringement trademark may be
pursued in local courts separate from
the issue of whether there is proper
license to do business in the PH
(Universal Rubber, 1988)

D. Doctrine on unrelated or isolated transactions

- Definition: A transaction or series of transactions
set apart from the common business of a foreign
enterprise in the sense that there is no intention to
engage in a progressive pursuit of the purpose and
object of the business organization (Ericks Pte. Ltd.
v. Court of Appeals)

- An isolated transaction would not place a

foreign corporation within the term “doing
business.”
● The purpose of the law is not to prevent the
foreign corporation from performing a single
act, but to prevent it from acquiring a
domicile for the purpose of business without
taking the steps to render it amenable to suit
in local courts.
● Foreign corporations which are not engaged
in doing business in the PH, and whose
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involvement within the PH territory consists

of merely isolated transactions are NOT
required to obtain a license to do business
from the SEC in order to enter into any of
such transactions and/or obtain relief from
local courts or administrative tribunals.
● Isolated transactions, even when perfected
and/or consummated within PH territory, do
not constitute “doing business” in the PH.

Examples:
● Collision of two vessels at the harbor of Manila
(Dampfschieffs rhederel Union v. La Campañia
Transatlantica)
● Goods bound for Hong Kong, erroneously
discharged in Manila (The Swedish East Asia
Co., Ltd. v. Manila Port, Service)
● Infringement of trade name (General
Garments Corporation v. Director of Patents)
● Recovery of damages sustained by cargo
shipped to the Philippines (Bulakhidas v.
Navarro)
● Sale to the government of road construction
equipment and spare parts with no intent of
continuity of transaction (Gonzales v. Raquiza)
● Recovery on a Hong Kong judgment against a
resident in Manila (Hang Lung Bank, Ltd. v.
Saulo)
● Single or isolated acts, contracts, or
transactions of foreign corporations are not
regarded as a doing or carrying on of business.
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Typical examples of these are the making of a

single contract, sale, sale with the taking of a
note and mortgage in the state to secure
payment thereof, purchase, or note, or the
mere commission of a tort. In these instances,
there is no purpose to do any other business
within the country (MR. Holdings, Ltd. V.
Bajar)

- When single transactions constitute doing

business
● Where a single act or transaction is not
merely incidental or casual but indicates the
foreign corporation’s intention to do other
business in the Philippines, said single act or
transaction constitutes doing business.

4. LOCAL SUITS BROUGHT BY FOREIGN

CORPORATIONS
A. Need to allege Capacity to Sue
■ The allegation of the standing of the foreign
corporation is an integral part of standing
and cause of action, and failure to make
proper allegation subjects complaint to
dismissal. (Atlantic Mutual Ins. Co. v. Cebu
Stevedoring Co., Inc.)
■ Filing of action by a foreign corporation =
voluntary submission to the court’s
jurisdiction
B. Need to allege Resident Agent
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■ A complaint filed by a foreign corporation is

fatally defective for failing to allege its duly
authorized representative or resident agent
in Philippine jurisdiction.
C. Certificate of Non-forum shopping
■ A resident agent is not per se authorized to
execute the requisite certification against
forum shopping—while a resident agent may
be aware of actions filed against his
principal, he may not be aware of actions
initiated by its principal, whether in the
Philippines or abroad.
D. Discredited Pari Delicto Doctrine
■ A local party to a contract with a foreign
corporation that does business in the
Philippines without license cannot maintain
suit against the foreign corporation just as
the foreign corporation cannot maintain suit,
under the principle of pari delicto.
E. Estoppel Doctrine
■ A party is estopped to challenge the
personality of a corporation after having
acknowledged the same by entering into a
contract with it. And the “doctrine of
estoppel to deny corporate existence applies
to foreign as well as to domestic
corporations;” “one who has dealt with a
corporation of foreign origin as corporate
entity is estopped to deny its corporate
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existence and capacity.” (Merrill Lynch

Futures, Inc. v. CA)
F. Prevailing Doctrine: Eriks Ltd. v CA
■ Foreign corporations which conduct regular
business should be denied any access to
courts until they secure a license so as to
ensure that they will abide by the decisions
of our courts, even if adverse. Dismissal of
the petition would be without prejudice to
the foreign corporation subsequently re-filing
when it has obtained the license.

5. LOCAL SUITS AGAINST FOREIGN CORPORATIONS

● A fundamental international law principle is that no
state can by its laws, and no court as a creature
thereof, can by its judgments and decrees directly
bind or affect property or persons beyond
state limits.

A. Jurisdiction Over Foreign Corporations (Sec.

12, Rule 14, Rules of Court)
● For purposes of venue, a foreign
corporation, its “residence” includes the
country where it exercises corporate
functions or the place where its business is
done.
● For service of summons under Sec. 14,
Rule 14, it is sufficient that it be alleged
in the complaint that the foreign
corporation is doing business in the
Philippines.
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● When a foreign corporation has designated a

person to receive service of summons, the
designation is exclusive and service of
summons on any other person is
inefficacious.
○ For foreign corporations doing
business in PH, it may be served on:
■ Designated resident agent
■ If no resident agent,
government official designated
by law
■ Any of its officers or agents
within the PH
○ Mere allegation in the complaint that a
local company is the agent of the
foreign corporation is NOT sufficient to
allow proper service to that agent.
■ Necessary that there be
specific allegations that
establish the connection
between the foreign corporation
and its alleged agent.
B. Objection to Jurisdiction: Appearance of a foreign
corporation to a suit only to question the tribunal’s
jurisdiction over its person is NOT equivalent to service of
summons, nor does it constitute acquiescence to the
court’s jurisdiction. (Avon Insurance PLC v. CA)
● Participation of the counsel of a foreign corporation
in the trial process, e.g., cross-examination of
witnesses, agreement and objection to
documentary evidence, and the introduction of
witnesses and documentary evidence, vacates the
plea of lack of jurisdiction over such foreign
corporation. General Corp. of the Phil. v. Union
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Insurance Society of Canton

● General Corp. of the Phil. v. Union Insurance

Society of Canton
○ SC says:
■ With or without a license, foreign
corporation doing business in PH, may
be served summons and sued.
■ If the foreign corporation participates
in the process and makes allegations
in the Answer other than lack of
jurisdiction → deemed to have
submitted itself to the court’s
jurisdiction (like voluntary
appearance)
○ Prevailing Rule: As long as the foreign
corporation is doing business in the PH,
regardless of whether or not it has a license,
it can be sued in relation to its transactions,
as well as those outside of commercial
transactions.
○ Doing business here means you’re
submerging yourself to the jurisdiction of
domestic courts.

● Ways of Serving Summons on Foreign

Corporations based on General Corp:
■ If licensed → to the resident agent or
SEC
■ If NOT → against the agent, against
SEC, or in accordance with Rules of
Court

● How to sue foreign corporation without

license:
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1. Sue through the DFA in the consul where the

principal place of business of the corporation
is.
2. Publish in a newspaper of general circulation,
with a copy of the summons.
3. Because of the E-Commerce Act, summons
may be served thru e-mail.
4. The courts can find a way to serve summons
at the expense of the plaintiff
○ Only applies if the corporation is doing
business in the PH without a license
○ If isolated transaction, it will be hard
for the court to acquire jurisdiction.
C. ODD DOCTRINE: If a foreign corporation, not engaged in
business in the Philippines, is not barred from seeking
redress from the courts in the Philippines, a fortiori, that
same corporation cannot claim exemption from being
sued in Philippine courts for acts done against a person or
persons in the Philippines.” (Facilities Management Corp.
v. De la Osa)
● By filing a complaint in PH courts, a foreign
corporation not doing business in the PH voluntarily
surrenders jurisdiction over its “person” to the local
courts
● However, the reverse does not follow. Foreign
corporations with isolated transactions cannot be
sued by Philippine companies or domestic
counterparts.
● Facilities Management Corp. v. De la Osa
○ SC says: The performance within the Philippines of
any act or combination of acts enumerated in
section l(l) of Rep. Act 5455 shall constitute 'doing
 27

business' therein. in particular, 'doing business

includes
■ Appointing a representative or distributor
who is doc- iled in the Philippines, unless
said representative or dis- tributor has an
independent status, i.e., it transacts busi-
ness in its name and for its own account,
and not in the name or for the account of the
principal.
■ Opening offices, whether called “liaison
offices, agencies or branches, unless proved
otherwise.

● CONTRA: Sine qua non requirement for service of

summons and other legal processes or any such agent or
representative is that the foreign corporation is doing
business in the Philippines. (Signetics Corp. v. CA)
● A foreign corporation must be one which is DOING
BUSINESS IN THE PH so that summons can be
made and jurisdiction acquired
● Signetics Corp. v. Court of Appeals
○ SC says: The fact of doing business must be
established by appropriate allegations in the
complaint. It must be noted that jurisdiction
and venue of actions are initially determined
by the allegations of the complaint.
○ Evidence is not necessary to establish that a
foreign corporation is doing business in the
Philippines. The minimum requirement for
one to sue a foreign corporation is to ALLEGE
FACTS in the complaint that the corporation
is doing business in the Philippines
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● Prevailing Rule: Avon Insurance PLC v. CA

○ There is no reason to subject to Philippine
jurisdiction foreign corporations not doing
business here; insofar as the State is
concerned, such foreign corporations have
no legal existence, and to subject foreign
corporations not doing business to the
courts’ jurisdiction would violate the essence
of sovereignty. The Court is not persuaded
by the position taken invoking the ruling in
Facilities Management.
○ To question the jurisdiction of a foreign
corporation to file suit, one must
immediately file a Motion to Dismiss. A
Motion to Dismiss could include the lack of
jurisdiction over person, as well as
impugning other bases for the dismissal of
the complaint in a MTD.
D. Stipulation on VENUE:
● When the contract sued upon has a venue clause
within the Philippines, it is deemed a confirmation
by the foreign corporation, even though not doing
business in the Philippines, to be sued in local
courts. (Linger & Fisher GMBH v. IAC)
● When the contract stipulates venue to be within
courts of the PH this is recognized by the Supreme
Court as CONSENT to being sued in the PH even
when a foreign corporation does not engage in
business in the PH
● If a local plaintiff and a foreign corp have agreed
on Philippine venue, summons by publication can
be made on the foreign corporation under the
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principle of liberal construction of the rules to

promote just determination of actions

6. LAWS APPLICABLE TO FOREIGN CORPORATIONS (Sec.

129)

Sec 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 stockholders, members, or
officers of corporations to each other or to the corporation.
General Rule: Foreign corporations doing business in the PH
are bound by all laws applicable to domestic corporations

EX:
1. Rules providing for the creation, formation, organization
or dissolution of corporations
2. Rules which fix the relations, liabilities, responsibilities, or
duties of stockholders, members, or officers of
corporations to each other or to the corporation

7. AMENDMENT OF ARTICLES OF INCORPORATION (Sec.

130)

Sec 130. Amendments to articles of incorporation or by-laws of

foreign corporations. -
Whenever the articles of incorporation or by-laws of a foreign
corporation authorized to transact business in the Philippines are
amended, such foreign corporation shall, within sixty (60) days after
the amendment becomes effective, file with the Securities and
Exchange Commission, and in the proper cases with the appropriate
 30

government agency, a duly authenticated copy of the articles of

incorporation or by-laws, as amended, indicating clearly in capital
letters or by underscoring the change or changes made, duly certified
by the authorized official or officials of the country or state of
incorporation. The filing thereof shall not of itself enlarge or alter the
purpose or purposes for which such corporation is authorized to
transact business in the Philippines.

THINGS TO NOTE:
● When the AoI of a foreign corporation authorized to
transact business in the PH is amended, they must file
such changes with the SEC
● They must do so within 60 days after the amendment
● The amendments must not enlarge or alter the purpose
for which the corporation is authorized to transact
business in the PH

8. MERGER AND CONSOLIDATION (Sec. 132)

Sec. 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
 31

same time file a petition for withdrawal of it license in accordance with

this Title.

1. Merger or consolidation with domestic corporation/s

a. A foreign corporation authorized to transact
business here may merge with domestic
corporation/s IF
i. Permitted under
1. Philippine laws
2. Law of its incorporation
ii. Requirements on merger or consolidation are
followed
2. Merger or consolidation with foreign corporation/s
a. A foreign corporation authorizing to transact
business in the Philippines is a party to a merger or
consolidation in its home country or state, as
permitted by the law of its incorporation shall file
the articles of merger or consolidation
i. File with the SEC and with appropriate
government agency, in the proper cases
ii. File within 60 days after such merger and
consolidation
iii. The articles of merger or consolidation must
be duly authenticated by the proper official
or officials of the country or state under the
laws of which merger or consolidation was
effected
b. If the absorbed corporation is the foreign
corporation doing business in the Philippines, that
foreign corporation must file a petition for
withdrawal of its license in accordance with
this Title
 32

9. WITHDRAWAL OF FOREIGN CORPORATION (Sec. 136)

Sec. 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;
1. All claims which have accrued in the Philippines have been paid,
compromised or settled;
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.

1. A foreign corporation licensed to transact business in the

Philippines may be allowed to withdraw from the
Philippines
○ This is subject to existing laws and regulations
2. This is done by filing a petition for withdrawal of
license issued by the SEC
● Requirements
i. Claims accrued in the Philippines have been paid,
compromised, or settled
ii. Taxes, imposts, assessments, and penalties due
to the Government (or agencies or political
subdivisions) have been paid
iii. Petition for withdrawal of license has been
published
1. Once a week for three consecutive weeks
2. Newspaper of general circulation