This document summarizes key provisions from Title XV of the Philippines Corporation Code regarding foreign corporations. It defines a foreign corporation and outlines their rights to do business in the Philippines after obtaining proper licensing. It also discusses the application process, requirements for licensing and continued compliance, legal treatment of unlicensed foreign corporations conducting business, and penalties for violations of the Code.

1. TITLE XV
Foreign Corporation
Legal rules that ultimately create not only
economic problems but solutions from the court

2.  Sec. 123 Definition and rights of foreign
corporation
◦ A foreign corporation is one formed,
organized or existing under any laws apart
from those of the Philippines and whose laws
allows Filipino citizens and corporation to do
business in its own country or state
◦ Rights to transact business in the
Philippines
 After It obtained a license to transact
business in this country in accordance with
this Code and certificate of authority from
appropriate government agency. (SEC)

3.  Sec. 124 Application to existing foreign
corporations
◦ Every corporation is authorized to do
business in the Philippines under a license,
theretofore issued to it. i.e theretofore =
before the time
◦ Shall continue to have such authority under
the terms and condition of the license,
subject to the provisions of this Code and
other special laws

4.  Sec 124
 Corporation exist only within state
limits
◦ It must dwell in the place of its creation, and
cannot migrate to another sovereignty
◦ This principle does not prevent corporation
from acting in another state or country with
the latters express or implied consent
◦ It is bound by the law of the sovereign
country it is acting

5.  Foreign corporation doing business in
the Philippines
◦ Two instances:
 Direct transaction with resident
persons, firm or corporations
 Creating a domestic subsidiary
corporation which would have its own
distinct personality
◦ It is still obligated to secure a license for the
purpose if it participates in the management,
supervision or control of its subsidiary

6.  Licensed foreign corporation need not
secure new license
◦ Under section 148 however “where any such
corporation is affected by the new
requirements of this Code, said corporation
shall, unless otherwise herein provided be
given a period of not more than 2 years from
the effectivity of this Code within which to
comply with the same.

7.  Sec. 125 Application for the license
◦ A foreign corporation shall submit to the SEC a
copy of its articles of incorporation and by-
laws, certified in accordance with the law. And
their translation to an official language if
necessary.
 Requirement to acquire a license
◦ Copy of its articles of incorporation and by-
laws, certified in accordance with the law.

8. ◦ Duly executed certificate under oath by the
authorized official/s of the jurisdiction of its
incorporation
 Attesting to the fact that allows Filipino citizen and
corporation to do business therein
 The applicant is an existing corporation and in good
standing
◦ Statement under oath of the president or any
other person authorized by the corporation
◦ Foreign banking, financial and insurance
corporation shall, in addition to the above
requirements, comply with the provisions of
existing laws applicable to them

9.  Sec 126 Issuance of a license
◦ Where SEC is satisfied that the applicant has
complide with all the requirement of this
Code and other special laws, rules and
regulation
◦ The SEC shall issue a license to the
applicant to transact business in the
Philippines

10.  Within 60 days after issuance of the
licensee, except a foreign banking or
insurance corporation the applicant is
required to:
◦ Deposit with the SEC for the benefit of the
present of future creditors licensee in the
Philippines, securities satisfactory to the SEC ,
consisting of bonds or other evidence of
indebtedness of the Government of the
Philippines.
◦ Deposit at least 100 000 pesos

11.  Provided however, that within 6 months
after each fiscal year of the licensee, the
SEC shall require the licensee to deposit
additional 2% of the amount by which the
licensee’s gross income for that fiscal year
exceeds 5 million pesos.
 The securities and exchange commision
shall also require deposit of additional
securities if the actual market value of the
securities decrease by at least 10%

12.  The SEC may allow the licensee to
substitute other securities for those
already on deposit as long as the licensee
is Solvent.
 In the event the licensee ceases to do
business in the Philippines, The securities
shall be returned.

13.  Purpose of requiring license
◦ To subject foreign corporation doing business
in the Philippines to the jurisdiction of its
courts.
 Transacting Business
◦ Carrying on the operation of the corporation
for profit
 Doing business
◦ Soliciting orders, purchases, service contracts,
opening office whether called liaison offices or
branches

14.  Licensing of foreign corporations under
BOI (Board of Investments)Rules
◦ Requires license of corporation organize
abroad
◦ License of domestic corporation
 If more than 40% of its voting shares are
owned and held by aliens or more than
30% of its total capitalization is in the
hands of the aliens.
◦ The law considers the nationality of
stockholders as well

15.  Guidelines for the issuance of certificate of
authority to do business under BOI
1. The operation or activity is not inconsistent
with the Investment Priorities Plan
2. The business or economic activity will
contribute to the sound and balance
development of the national economy on the
self-sustaining basis
3. The activity does not conflict with the
constitution and laws of the Philippines.
4. The business or economic activity is not one
adequately exploited by Philippine Nationals

16. 5. The entry of the applicant will not pose a
clear and present danger of promoting
monopolies or combination in restraint of
trade
Sec. 127 Who may be the resident agent
◦ Individual residing in the Philippines or
domestic corporation lawfully transacting
business in the Philippines
◦ Must be of good moral character and of sound
financial standing

17.  Sec. 128 Resident agent; service of
process
◦ SEC shall require the corporation to file with
the SEC 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 corporations 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

18.  Whenever such service of summons or
other legal process shall be made upon
the SEC, it must, within 10 days mail a
copy of such summon or other legal
process to the corporation at its home or
principal office
 Sec. 129 Law applicable
◦ Any foreign corporation lawfully doing
business in the Philippines shall be bound by
all laws, rule and regulations applicable to
domestic corporation of the same class

19. Section 130. Amendments to articles of
Incorporation or by laws of foreign
corporation
A foreign corporation authorized to transact
business in the Philippines which amends its
article of incorporation or by laws must file with
Securities and Exchange Commission , and proper
cases with appropriate government agency, within
sixty (60) after such amendments becomes
effective, a duly authenticated copy of its article
of incorporation or by- laws, as amended.

20. Section 131. Amended license.
A foreign corporation authorized to transact
business in the Philippines shall amend it license
in the following cases:
 When it change its corporate name
 When it desire to pursue in the Philippines other
or additional purposes.
By submitting an application therefore to
the Securities and Exchange Commission,
favorably endorsed by the appropriate
government agency in the proper cases.

21. Section 132. Merger or consolidation
involving a foreign corporation licensed in
the Philippines
Merger or consolidation involving foreign
corporations authorized to transact business in
the Philippines.
 With domestic corporation
1.) Such merger or consolidation must permitted
under Philippine laws and by the law of the
incorporation of foreign corporation
2.) The requirements of merger or consolidation
must be complied.

22.  With another foreign corporation
1.) The foreign corporation party to the merger or
consolidation in its home country or state as permitted by
the law of its incorporation , must file with the Securities
and Exchange Commission, and in proper cases with the
appropriate government agency, within (60) days after
such merger or consolidation become effective , a copy of
the articles merger or consolidation duly authenticated by
the proper officials of the country or state under whose
laws the merger or consolidation was effected.
2.) If absorbed corporation is the foreign
corporation authorized to transact business in the
Philippines , it must file with the Securities and Exchange
Commission, a petition for the withdrawal of its license

23. Section 133. Doing business without
license
 Consequence of doing business without license
A foreign corporation doing business in the
Philippines without license shall not permitted to
maintain or intervene in any action, but it may be
sued or proceeded against before Philippines courts
or administrative tribunals.
 Suits by or against a foreign corporation
a.) Doing business in the Philippines , with
license
It my sue and be sued in the Philippines.

24. b.) Doing business in the Philippines, without
license
It cannot sue, but it may be sued in the
Philippines.
 Foreign corporation doing business without
license subject to penal sanction.

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

26. 4.) Failure to submit to the Securities and Exchange
Commission an authenticated copy of any amendment to its
articles of incorporation or by- law s or any article 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
any penalties, if any, lawfully due to the Philippines Government
or any of its agencies or political subdivisions;
7.) Transacting business in the Philippines outside of the
purposes for which such corporation is authorized under its
license;

27. 8.) Transacting business in the Philippines as agent
of or acting for and in behalf of any foreign entity not
duly licensed to do business in the Philippines ; or
9.) Any other grounds as would render it unfit to
transact business in the Philippines.

28. Section 135. Issuance of certification of
revocation
Upon the revocation of any such license to transact
business in the Philippines, the Securities and Exchange
Commission shall issue a corresponding certificate of
revocation, furnishing a copy thereof to the appropriate
government agency in the proper cases.
The Securities and Exchange Commission shall also
mail to the corporation at its registered office in the
Philippines a notice of such revocation accompanied by a
copy of certificate of revocation.

29. Section 136. Withdrawal of foreign corporation
Subject to the existing laws and regulations, a
foreign corporation licensed to transact business in the
Philippines may be allowed to withdraw from the
Philippines by filling a petition for withdrawal of
license. No certificate of withdrawal shall be issued by
the Securities and Exchange Commission unless all the
ff. requirements are met.
1.) All claims which have accrued in Philippines have
been paid, compromised or settled;
2.) All taxes, imposts, assessments , and penalties, if
any , lawfully due to the Philippines Government or any of its
agencies or political subdivision have been paid; and
3.) The petition for withdrawal of license has been
published once a week for three consecutive weeks in the
newspaper of general circulation in the Philippines.

30. Section 137. Outstanding capital stock
defined
The term “outstanding capital stock,” as
used in this Code, means the total shares of
stock issued to subscriber or stockholders,
whether or not fully or partially paid (as long
as there is a binding subscription agreement)
except treasure shares.

31. Section 138. Designation of governing
boards
Non-stock or special corporation may,
through their article of incorporation or
their by- laws, designate their governing
boards by any name than as board of
trustees.

32. Section 139. Incorporation and other
fees
The Securities and Exchange Commission
us hereby authorized to collect and receive
fees as authorized by the law or by rules
and regulation promulgated by the
Commission

33. Sec. 140. Stock ownership in
certain corporations
The NEDA shall, from time to time,
make a determination of whether the
corporate vehicle has been used by any
corporation or by business or industry to
frustrate the provisions thereof or of
applicable laws, and shall submit to the
Batasang Pambansa, whenever deemed
necessary, a report of its findings, including
recommendations for their prevention or
correction.

34. Sec. 141. Annual report or
corporations
Corporation lawfully doing business in
the Philippines whether domestic or
foreign, shall submit to the Securities
and Exchange Commission the
following:
 Annual report of its operations.
 Financial statement of its assets and
liabilities.
 Other requirements as the Securities
and Exchange Commission may

35. Sec. 142. Confidential nature
of examination results
Visitorial Power refers to the power of a
regulator or superintendent to inspect,
examine, supervise, and regulate the
affairs of an entity.
Visitorial Power refers to the visitorial
power of the state through the proper
government agency like the SEC to
conduct examination of business
operations, administration and condition of
private corporations.

36. Other agencies authorized for visitorial
power:
 Bureau of Internal Revenue
 Insurance Commissioner
 Authorized officials of the Central
Bank
 National Telecommunication
Commission
 Department of Labor and Employment

37. Sec. 143. Rule-making power of
the Securities and Exchange
Commission
The SEC shall have the power and
authority:
 To implement the provisions of this Code
 To promulgate rules and regulations
reasonably necessary to enable it to perform
its duties hereunder, particularly in the
prevention of fraud and abuses on the part of
the controlling stockholders, members,
directors, trustees or officers.

38. Sec. 144. Violations of the
Code
Violation is committed by creditor,
trustee or officer of the Corporation he
shall be punished by:
 A fine of not less than P1,000.00
pesos but not more than P10,000.00
pesos.
 Imprisonment for not less than 30
days but not more than 5 years.
 Or both, in the discretion of the court.

39. Violation is committed by a Corporation:
 The same may, after notice and
hearing, be dissolved in appropriate
proceedings before the Securities and
Exchange Commission.

40. Sec. 145. Amendment or
repeal
No right or remedy in favor of or
against any corporation, its stockholders,
members, directors, trustees, or officers,
nor any liability incurred by any such
corporation, stockholders, members,
directors, trustees, or officers, shall be
removed or impaired either by the
subsequent dissolution of said corporation
or by any subsequent amendment or
repeal of this Code or of any part thereof.

41. Sec. 146. Repealing clause
Except as expressly provided by
this Code, all laws or parts thereof
inconsistent with any provision of this
Code shall be deemed repealed.

42. Sec. 147. Separability of
provisions
Should any provision of this Code
or any part thereof be declared invalid or
unconstitutional, the other provisions, so
far as they are separable, shall remain
in force.

43. Sec. 148. Applicability to
existing corporations
Corporation organized under the
Old Corporation Law (Act 1459) may,
notwithstanding the approval of the
Corporation Code (May 1, 1980)
continue as such. However, if such
corporation is affected by the new
requirements of the new Corporation
Code, it shall have a period of 2 years
within which to comply the Code.

44. Sec. 149. Effectivity
This Code shall take effect
immediately upon its approval.

45. Reporters:
 Van Elcid Afuang
 Charlene Reduta
 Kimberly Guno