A foreign corporation must be licensed by the Securities and Exchange Commission (SEC) to do business in the Philippines. Section 133 of the Corporation Code of the Philippines (B.P. No. 68) provides the adverse legal effect of doing business without license, as follows:
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.
In other words, an unlicensed foreign corporation shall have no recourse in the courts to enforce its rights against other persons and corporations in the country. Section 3(d) of the Foreign Investments Act of 1991 (R.A. No. 7042) provides examples constituting the act of “doing business”, as follows:
- Soliciting orders, service contracts, opening offices, whether called "liaison" offices or branches;
- Appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country 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.
The same Section also defines what shall not be deemed as “doing business”, as follows:
- Mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or the exercise of rights as such investor; nor
- Having a nominee director or officer to represent its interests in such corporation; and
- Appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account.
Respicio & Co. Law Firm can help you establish your business in the Philippines.