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(i+ Who %a7 for% an! for =hat p'rpo$e (Section 11A+
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211&0
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
Sec. 11A. Corporation sole
For t!e purpose of administering and managing4 as trustee4 t!e
affairs4 propert# and temporalities of an# religious denomination4 sect
or c!urc!4 a corporation sole ma# 3e formed 3# t!e c!ief arc!3is!op4
3is!op4 priest4 minister4 ra33i or ot!er presiding elder of suc!
religious denomination4 sect or c!urc!6 (1&$a)
(ii+ Ho= for%e! (Section 111 an! Section 11+
Sec. 111. Articles of incorporation
:n order to 3ecome a corporation sole4 t!e c!ief arc!3is!op4 3is!op4
priest4 minister4 ra33i or presiding elder of an# religious
denomination4 sect or c!urc! must file wit! t!e 'ecurities and
"5c!ange Commission articles of incorporation setting fort! t!e
followingD
16 !at !e is t!e c!ief arc!3is!op4 3is!op4 priest4 minister4 ra33i or
presiding elder of !is religious denomination4 sect or c!urc!
and t!at !e desires to 3ecome a corporation sole7
26 !at t!e rules4 regulations and discipline of !is religious
denomination4 sect or c!urc! are not inconsistent wit! !is
3ecoming a corporation sole and do not for3id it7
36 !at as suc! c!ief arc!3is!op4 3is!op4 priest4 minister4 ra33i or
presiding elder4 !e is c!arged wit! t!e administration of t!e
temporalities and t!e management of t!e affairs4 estate and
properties of !is religious denomination4 sect or c!urc! wit!in
!is territorial ?urisdiction4 descri3ing suc! territorial ?urisdiction7
$6 !e manner in w!ic! an# vacanc# occurring in t!e office of c!ief
arc!3is!op4 3is!op4 priest4 minister4 ra33i of presiding elder is
re;uired to 3e filled4 according to t!e rules4 regulations or
discipline of t!e religious denomination4 sect or c!urc! to
w!ic! !e 3elongs7 and
&6 !e place w!ere t!e principal office of t!e corporation sole is to
3e esta3lis!ed and located4 w!ic! place must 3e wit!in t!e
%!ilippines6
!e articles of incorporation ma# include an# ot!er provision not
contrar# to law for t!e regulation of t!e affairs of t!e corporation6 (n)
Sec. 11. &ubmission of the articles of incorporation
!e articles of incorporation must 3e verified4 3efore filing4 3# affidavit
or affirmation of t!e c!ief arc!3is!op4 3is!op4 priest4 minister4 ra33i or
presiding elder4 as t!e case ma# 3e4 and accompanied 3# a cop# of
t!e commission4 certificate of election or letter of appointment of suc!
c!ief arc!3is!op4 3is!op4 priest4 minister4 ra33i or presiding elder4
dul# certified to 3e correct 3# an# notar# pu3lic6
From and after t!e filing wit! t!e 'ecurities and "5c!ange
Commission of t!e said articles of incorporation4 verified 3# affidavit
or affirmation4 and accompanied 3# t!e documents mentioned in t!e
preceding paragrap!4 suc! c!ief arc!3is!op4 3is!op4 priest4 minister4
ra33i or presiding elder s!all 3ecome a corporation sole and all
temporalities4 estate and properties of t!e religious denomination4
sect or c!urc! t!eretofore administered or managed 3# !im as suc!
c!ief arc!3is!op4 3is!op4 priest4 minister4 ra33i or presiding elder
s!all 3e !eld in trust 3# !im as a corporation sole4 for t!e use4
purpose4 3e!alf and sole 3enefit of !is religious denomination4 sect or
c!urc!4 including !ospitals4 sc!ools4 colleges4 orp!an as#lums4
parsonages and cemeteries t!ereof6 (n)
(iii+ Nee! for /7:6a=$
No need for 3#1laws since t!e 3usiness is conducted 3#
onl# one man6
(i"+ Po=er to acI'ire an! a6ienate propert7 (Section
11.+
Sec. 11.. Ac-uisition and alienation of property
2n# corporation sole ma# purc!ase and !old real estate and personal
propert# for its c!urc!4 c!arita3le4 3enevolent or educational
purposes4 and ma# receive 3e;uests or gifts for suc! purposes6 'uc!
corporation ma# sell or mortgage real propert# !eld 3# it 3# o3taining
an order for t!at purpose from t!e Court of First :nstance of t!e
province w!ere t!e propert# is situated upon proof made to t!e
satisfaction of t!e court t!at notice of t!e application for leave to sell
or mortgage !as 3een given 3# pu3lication or ot!erwise in suc!
manner and for suc! time as said court ma# !ave directed4 and t!at it
is to t!e interest of t!e corporation t!at leave to sell or mortgage
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211&1
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
s!ould 3e granted6 !e application for leave to sell or mortgage must
3e made 3# petition4 dul# verified4 3# t!e c!ief arc!3is!op4 3is!op4
priest4 minister4 ra33i or presiding elder acting as corporation sole4
and ma# 3e opposed 3# an# mem3er of t!e religious denomination4
sect or c!urc! represented 3# t!e corporation soleD %rovided4 !at in
cases w!ere t!e rules4 regulations and discipline of t!e religious
denomination4 sect or c!urc!4 religious societ# or order concerned
represented 3# suc! corporation sole regulate t!e met!od of
ac;uiring4 !olding4 selling and mortgaging real estate and personal
propert#4 suc! rules4 regulations and discipline s!all control4 and t!e
intervention of t!e courts s!all not 3e necessar#6 (1&/a)
("+ Fi66in# of "acancie$ (Section 11)+
Sec. 11). /illing of #acancies
!e successors in office of an# c!ief arc!3is!op4 3is!op4 priest4
minister4 ra33i or presiding elder in a corporation sole s!all 3ecome
t!e corporation sole on t!eir accession to office and s!all 3e
permitted to transact 3usiness as suc! on t!e filing wit! t!e
'ecurities and "5c!ange Commission of a cop# of t!eir commission4
certificate of election4 or letters of appointment4 dul# certified 3# an#
notar# pu3lic6
+uring an# vacanc# in t!e office of c!ief arc!3is!op4 3is!op4 priest4
minister4 ra33i or presiding elder of an# religious denomination4 sect
or c!urc! incorporated as a corporation sole4 t!e person or persons
aut!orized and empowered 3# t!e rules4 regulations or discipline of
t!e religious denomination4 sect or c!urc! represented 3# t!e
corporation sole to administer t!e temporalities and manage t!e
affairs4 estate and properties of t!e corporation sole during t!e
vacanc# s!all e5ercise all t!e powers and aut!orit# of t!e corporation
sole during suc! vacanc#6 (1&-a)
("i+ -i$$o6'tion (Section 113+
Sec. 113. Dissolution
2 corporation sole ma# 3e dissolved and its affairs settled voluntaril#
3# su3mitting to t!e 'ecurities and "5c!ange Commission a verified
declaration of dissolution6
!e declaration of dissolution s!all set fort!D
16 !e name of t!e corporation7
26 !e reason for dissolution and winding up7
36 !e aut!orization for t!e dissolution of t!e
corporation 3# t!e particular religious denomination4
sect or c!urc!7
$6 !e names and addresses of t!e persons w!o are to
supervise t!e winding up of t!e affairs of t!e
corporation6
>pon approval of suc! declaration of dissolution 3# t!e 'ecurities
and "5c!ange Commission4 t!e corporation s!all cease to carr# on
its operations e5cept for t!e purpose of winding up its affairs6 (n)
(/+ Re6i#io'$ $ocietie$ or corporation$ a##re#ate
(Section 114+
Sec. 114. %eligious societies
2n# religious societ# or religious order4 or an# diocese4 s#nod4 or
district organization of an# religious denomination4 sect or c!urc!4
unless for3idden 3# t!e constitution4 rules4 regulations4 or discipline of
t!e religious denomination4 sect or c!urc! of w!ic! it is a part4 or 3#
competent aut!orit#4 ma#4 upon written consent andKor 3# an
affirmative vote at a meeting called for t!e purpose of at least two1
t!irds (2K3) of its mem3ers!ip4 incorporate for t!e administration of its
temporalities or for t!e management of its affairs4 properties and
estate 3# filing wit! t!e 'ecurities and "5c!ange Commission4
articles of incorporation verified 3# t!e affidavit of t!e presiding elder4
secretar#4 or cler( or ot!er mem3er of suc! religious societ# or
religious order4 or diocese4 s#nod4 or district organization of t!e
religious denomination4 sect or c!urc!4 setting fort! t!e followingD
16 !at t!e religious societ# or religious order4 or diocese4 s#nod4 or
district organization is a religious organization of a religious
denomination4 sect or c!urc!7
26 !at at least two1t!irds (2K3) of its mem3ers!ip !ave given t!eir
written consent or !ave voted to incorporate4 at a dul# convened
meeting of t!e 3od#7
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211&2
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
36 !at t!e incorporation of t!e religious societ# or religious order4 or
diocese4 s#nod4 or district organization desiring to incorporate is
not for3idden 3# competent aut!orit# or 3# t!e constitution4 rules4
regulations or discipline of t!e religious denomination4 sect4 or
c!urc! of w!ic! it forms a part7
$6 !at t!e religious societ# or religious order4 or diocese4 s#nod4 or
district organization desires to incorporate for t!e administration of
its affairs4 properties and estate7
&6 !e place w!ere t!e principal office of t!e corporation is to 3e
esta3lis!ed and located4 w!ic! place must 3e wit!in t!e
%!ilippines7 and
)6 !e names4 nationalities4 and residences of t!e trustees elected
3# t!e religious societ# or religious order4 or t!e diocese4 s#nod4 or
district organization to serve for t!e first #ear or suc! ot!er period
as ma# 3e prescri3ed 3# t!e laws of t!e religious societ# or
religious order4 or of t!e diocese4 s#nod4 or district organization4 t!e
3oard of trustees to 3e not less t!an five (&) nor more t!an fifteen
(1&)6 (1)0a)
1). Ca$e
Lon# ". 1a$a (AA1+
'ince in matters purel# ecclesiastical t!e decisions of
t!e proper c!urc! tri3unals are conclusive upon t!e civil
tri3unals4 t!en a c!urc! mem3er w!o is e5pelled from t!e
mem3ers!ip 3# t!e c!urc! aut!orities4 or a priest or
minister w!o is 3# t!em deprived of !is sacred office4 is
wit!out remed# in t!e civil courts6 Long v6 *asa4 3))
'CR2 113 (2001)6
1).. A!!itiona6 Materia6, SEC Opinion No. A):)3@ No".
?@ AA) to Ferrer an! Ferrer La= Office re ter% of
eBi$tence of re6i#io'$ corporation.
SEC Opinion No. A):)3@ (No". ?@ AA)+
Re, Ter% of EBi$tence of Re6i#io'$ Corporation$
'ection 11) (as well as 'ec6 1)0 of t!e former Corporation Law) does not
provide for a term of e5istence of religious corporations4 w!et!er classified as
a corporation sole or a corporation aggregate6 2s suc!4 t!e law intends t!at
religious organizations ma# e5ist perpetuall# ('"C Opinion dated +ec6 104
1/-1)6 .oreover4 w!ere t!e 2rticles of :ncorporation does not provide for a
term of e5istence4 it s!all 3e understood t!at t!e intention is for t!e
corporation to e5ist for an indefinite period ('"C Opinion dated Oct6 234 1//&)
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211&3
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
13. -ISSOLUTION
-i$$o6'tion of a corporation is t!e e5tinguis!ment of t!e
franc!ise of a corporation and termination of its corporate
e5istence6
Mo!e$ of -i$$o6'tion,
(1) Goluntar# +issolution
(2) :nvoluntar# +issolution
(3) '!ortening of term7 and
($) "5piration of term (=R' at 311)
(&) Failure to organize and commence 3usiness wit!in
two #ears from t!e date of issuance of certificate of
incorporation7
()) Legislative +issolution (CLG8s CLR at /3))
Effect$ of -i$$o6'tion,
(1) ransfer of Legal title to corporate propert#7
(2) !e corporation ceases as a 3od# corporate to continue t!e
3usiness for w!ic! it was esta3lis!ed7
(3) Continuation of a 3od# corporation (t!e corporation
continues as a 3od# corporate for 3 #ears for purposes of
winding up or li;uidation)
($) 2fter t!e e5piration of t!e 3 #ear winding up period4 t!e
corporation ceases to e5ist for all purposes6 (=R' at 31$)6
!e termination of t!e life of a ?uridical entit# does not 3#
itself cause t!e e5tinction or diminution of t!e rig!ts and
lia3ilit# of suc! entit#4 since it is allowed to continue as a
?uridical entit# for 3 #ears for t!e purpose of prosecuting and
defending suits 3# or against it and ena3ling it to settle and
close its affairs4 to dispose of and conve# its propert#4 and to
distri3ute its assets6 Repu3lic v6 ancinco4 3/$ 'CR2 3-)
(2002)6
2 3oard resolution to dissolve t!e corporation does not
operate to so dissolve t!e ?uridical entit#6 For dissolution to 3e
effective BNtO!e re;uirements mandated 3# t!e Corporation
Code s!ould !ave 3een strictl# complied wit!6C Gesagas v6
Court of 2ppeals4 3,1 'CR2 &0/4 &1) (2002)6
2 corporation cannot e5tend its life 3# amendment of its
articles of incorporation effected during t!e t!ree1#ear
statutor# period for li;uidation w!en its original term of
e5istence !ad alread# e5pired4 as t!e same would constitute
new 3usiness6 2l!am3ra Cigar W Cigarette .anufacturing
Compan#4 :nc6 v6 '"C4 2$ 'CR2 2)/ (1/)-)6
9!en t!e period of corporate life e5pires4 t!e corporation
ceases to 3e a 3od# corporate for t!e purpose of continuing
t!e 3usiness for w!ic! it was organized6 %N* v6 Court of First
:nstance of Rizal4 %asig4 *r6 PP:4 20/ 'CR2 2/$ (1//2)6
)ac*+s Lecture
-ISSOLUTION
!ere are different wa#s to dissolve a corporation one
is voluntaril# and t!e ot!er involuntaril#4 under t!e law t!ere are
t!ree provisions governing voluntar# dissolution6 !e first one is if
no creditors are affected6 :n all t!e met!ods of voluntar#
dissolution4 #ou need a resolution approved 3# a ma?orit# of
directors and a resolution approved 3# at least 2K3 of t!e
stoc(!olders :n 'ection 11-4 w!ere no creditors are affected t!e
directors and t!e stoc(!olders pass t!e resolution dissolving t!e
corporation and t!at will 3e filed in t!e '"C for approval6 :n a
case w!ere a suit was filed and t!e corporation said4 we !ave
alread# 3een dissolved and t!e# su3mitted a 3oard resolution4 t!e
'C !eld t!at it is not enoug! to dissolve a corporation6
!e 'econd one4 is under 'ection 11/ w!ere creditors
are affected6 @ere t!e 3oard and t!e stoc(!olders will approve t!e
dissolution 3ut a petition will 3e filed signed 3# t!e ma?orit# of t!e
directors and verified 3# t!e president4 secretar# or one of t!e
directors w!ic! will indicate t!e claims of creditors6 !at will 3e
set for !earing and not less t!an t!irt# (30) da#s nor more t!an
si5t# ()0) da#s after t!e entr# of t!e issuance of t!e order and a
cop# of t!e order will 3e pu3lis!ed once a wee( for t!ree
consecutive wee(s in a newspaper of general circulation and t!at
will also 3e posted for t!ree wee(s in t!ree pu3lic places li(e t!e
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211&$
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
3ulletin 3oard of a municipal !all4 post office4 t!e plaza and t!en
t!e '"C will set t!at for !earing and determine wKn t!e
corporation s!ould 3e dissolved6
!e t!ird one #ou will ?ust s!orten t!e corporate life and
t!is is t!e simplest and fastest wa# of dissolving t!e corporation
voluntaril# li(e w!en Ford %!ilippines decided to close its
su3sidiar# t!e# simpl# amended t!e articles of corporation t!at
t!e corporation will e5ist until +ecem3er 314 1/,-6
!e '"C will re;uire to get a ta5 clearance from t!e
*:R and t!e stoc(!olders will 3e re;uired to sign an underta(ing
t!at t!e# will answer for t!e claim of t!e creditors to t!e e5tent of
t!e li;uidating dividends t!e# will receive6
!en #ou can !ave a involuntar# dissolution6 !is could
3e done 3# filing a ;uo warranto case under rule )) of t!e ROC
on t!e ground mentioned t!ere or a corporation can 3e dissolved
for certain violation of t!e corporation code as mentioned in t!e
Corporation Code or %+ /0212 and also a minorit# stoc(!older
ma# file a petition to dissolve t!e corporation w!ere t!e ma?orit# is
mismanaging t!e assets of t!e corporation4 dissipating its assets4
and fraudulentl# disposing of its properties and a receiver ma# 3e
appointed in an action for involuntar# dissolution6
!e 'C !eld in t!e leading case of 6l 5ogar @ilipino/ F<
Phil. K==+;=:D) t!e first corporation organized under t!e
Corporation 2ct4 t!e government filed a case to dissolve t!at
corporation and invo(ed 1, grounds4 t!e 'C denied t!e petition6
*uilding and loans association li(e 3an(s are re;uired to dispose
of wit!in & #ears of an# properties t!e# foreclosed t!e# disposed
of t!e properties after ) #ears 3ut t!e# e5erted t!eir 3est efforts4
t!e# !ired real estate 3ro(ers4 t!e# advertised in newspapers 3ut
t!e# ?ust could not find 3u#ers4 t!e# ac;uired t!is land and
3uilding4 t!e 'C !eld t!at it is not illegal4 t!at t!e# leased t!e
space t!at t!e# did not need for t!eir office4 t!at is not illegal t!e#
are ma5imizing t!eir propert#4 t!at t!e# provide a provision in t!e
3#1laws t!at stoc(!olders can 3e compelled to surrender t!eir
s!ares4 to 3e 3oug!t out well t!e court said t!at t!at is void 3ut
t!at is not sufficient ground to dissolve t!e corporation6 In other
=or!$ the co'rt i$ $a7in# that 7o' !o not !i$$o6"e a
corporation for e"er7 infraction@ the infraction %'$t /e
$erio'$@ /eca'$e !i$$o6'tion i$ i%po$in# the !eath pena6t7
'pon the corporation.
!e Court said t!e emplo#ees of a railroad are re;uired
to wear uniform indicating t!eir positions in t!eir nameplate4 now
tell me if one emplo#ee did not !ave suc! a nameplate #ou are
going to dissolve a corporation 3ecause t!at is a legal
re;uirementL :t !as to 3e a serious violationS
*ut in one case4 t!e 'C dissolved a corporation w!ic!
was engaging in 3an(ing wit!out aut!orization from t!e monetar#
3oard4 it was accepting deposits from t!e pu3lic4 t!e court
considered t!at as a serious violation6
9!en a minorit# stoc(!older files a case and as(s to
dissolve t!e corporation4 t!e court said t!at t!at is a !ars! remed#
unless t!e situation is reall# 3e#ond redemption #ou s!ould not
impose t!at remed#6
!e corporation !as t!ree #ears after it s!ould !ave
3een dissolved for t!e purpose of winding up its affairs6 !e '"C
!as said t!e t!ree #ear period s!ould 3e counted from t!e time
t!e dissolution was approved 3# t!e '"C even if t!e directors and
stoc(!olders pass a resolution dissolving t!e corporation t!at is
not effective until it !as 3een approved 3# t!e '"C6
For t!ree #ears 4 t!e corporation will continue to e5ist it
will no longer 3e a going concern 3ut onl# for t!e purpose of
winding up t!at is w!# t!e 'C !as said t!at t!e corporation
cannot for e5ample renew its contract of lease 3ecause it is no
longer a going concern6
+uring t!e t!ree #ear period4 it s!ould devote its time
prosecuting and defending law suits4 winding up its affairs
disposing its properties so t!e# can 3e used to pa# off its creditors
and to distri3ute 3alance to t!e stoc(!olders6
!ere are two wa#s of providing for t!e winding up of its
affairs under t!e law6 !is is voluntar# eit!er t!e directors
t!emselves ma# ta(e care of winding up t!e affairs of t!e
corporation or t!e# ma# appoint a trustee li(e w!en Ford
%!ilippines decided to close its su3sidiar# !ere one of t!e last
acts of t!e *O+ was to pass a resolution appointing Ricardo
Romulo as trustee vesting upon !im legal title to all t!e assets of
Ford %!ilippines to 3e used to pa# off its creditors and to dispose
of its properties of Ford %!ilippines6 to distri3ute t!e 3alance as
li;uidating dividends6
'upposed to 3e4 t!is was t!e rule /efore if an# case
is not finis!ed wit!in t!e t!ree #ear period4 t!e case will 3e a3ated
w!et!er t!e corporation is plaintiff or w!et!er it is defendant 3ut
recent ?urisprudence !as rendered t!at o3solete6 !at rule is
applica3le if it is t!e directors winding up t!e corporation6 if t!e
corporation is under receivers!ip4 it is t!e receiver w!o ma# wind
up t!e affair of t!e corporation6 *ut if it is t!e trustee4 t!at will not
appl#4 t!e trust will su3sist until t!e affairs of t!e corporation are
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211&&
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
wound up and until an# creditor can sue t!e trustee provided t!at
t!e applica3le prescriptive period !as not #et lapsed6 'o if !is
cause of action is 3ased on a written contract !e !as ten (10)
#ears to sue t!e trustee6
!e Court !as said t!at t!e remed# t!ere if t!e t!ree
#ears will end and t!ere are still pending cases4 is for t!e 3oard to
appoint a trustee 3ut more recent ?urisprudence !as fas!ioned a
practica3le solution to t!at t!e law#er !andling t!e cases ma# 3e
considered as trustee of t!e corporation and t!erefore t!e cases
will not 3e a3ated 3ut s!ould continue6
:n one case4 t!e 'C !eld t!at t!e directors ma# 3e
considered as trustees after t!ree #ears so t!at t!e# can continue
to wind up t!e affairs of t!e corporation and in effect t!e t!ree
#ear period !as 3ecome ineffectual6
13.1 What are the "ario'$ %etho!$ of !i$$o6"in#
corporation$D
(a+ &o6'ntar7
(i+ ReI'ire%ent$ =here no cre!itor$ are affecte!
(Section 11?+
Sec. 11?. Voluntary dissolution (here no creditors are affected
:f dissolution of a corporation does not pre?udice t!e rig!ts of an#
creditor !aving a claim against it4 t!e dissolution ma# 3e effected 3#
ma?orit# vote of t!e 3oard of directors or trustees4 and 3# a resolution
dul# adopted 3# t!e affirmative vote of t!e stoc(!olders owning at
least two1t!irds (2K3) of t!e outstanding capital stoc( or of at least
two1t!irds (2K3) of t!e mem3ers of a meeting to 3e !eld upon call of
t!e directors or trustees after pu3lication of t!e notice of time4 place
and o3?ect of t!e meeting for t!ree (3) consecutive wee(s in a
newspaper pu3lis!ed in t!e place w!ere t!e principal office of said
corporation is located7 and if no newspaper is pu3lis!ed in suc!
place4 t!en in a newspaper of general circulation in t!e %!ilippines4
after sending suc! notice to eac! stoc(!older or mem3er eit!er 3#
registered mail or 3# personal deliver# at least t!irt# (30) da#s prior to
said meeting6 2 cop# of t!e resolution aut!orizing t!e dissolution
s!all 3e certified 3# a ma?orit# of t!e 3oard of directors or trustees
and countersigned 3# t!e secretar# of t!e corporation6 !e 'ecurities
and "5c!ange Commission s!all t!ereupon issue t!e certificate of
dissolution6 ()2a)
9!en a corporation is contemplating dissolution4 it must
su3mit ta5 return on t!e income earned 3# it from t!e
3eginning of t!e #ear up to t!e date of its dissolution and
pa# t!e corresponding ta5 due6 *%: v6 Court of 2ppeals4
3)3 'CR2 -$0 (2001)6
(ii+ ReI'ire%ent$ =here cre!itor$ are affecte!
(Section 11*+
Sec. 11*. Voluntary dissolution (here creditors are affected
9!ere t!e dissolution of a corporation ma# pre?udice t!e rig!ts of an#
creditor4 t!e petition for dissolution s!all 3e filed wit! t!e 'ecurities
and "5c!ange Commission6 !e petition s!all 3e signed 3# a
ma?orit# of its 3oard of directors or trustees or ot!er officers !aving
t!e management of its affairs4 verified 3# its president or secretar# or
one of its directors or trustees4 and s!all set fort! all claims and
demands against it4 and t!at its dissolution was resolved upon 3# t!e
affirmative vote of t!e stoc(!olders representing at least two1t!irds
(2K3) of t!e outstanding capital stoc( or 3# at least two1t!irds (2K3) of
t!e mem3ers at a meeting of its stoc(!olders or mem3ers called for
t!at purpose6
:f t!e petition is sufficient in form and su3stance4 t!e Commission
s!all4 3# an order reciting t!e purpose of t!e petition4 fi5 a date on or
3efore w!ic! o3?ections t!ereto ma# 3e filed 3# an# person4 w!ic!
date s!all not 3e less t!an t!irt# (30) da#s nor more t!an si5t# ()0)
da#s after t!e entr# of t!e order6 *efore suc! date4 a cop# of t!e
order s!all 3e pu3lis!ed at least once a wee( for t!ree (3)
consecutive wee(s in a newspaper of general circulation pu3lis!ed in
t!e municipalit# or cit# w!ere t!e principal office of t!e corporation is
situated4 or if t!ere 3e no suc! newspaper4 t!en in a newspaper of
general circulation in t!e %!ilippines4 and a similar cop# s!all 3e
posted for t!ree (3) consecutive wee(s in t!ree (3) pu3lic places in
suc! municipalit# or cit#6
>pon five (&) da#Js notice4 given after t!e date on w!ic! t!e rig!t to
file o3?ections as fi5ed in t!e order !as e5pired4 t!e Commission s!all
proceed to !ear t!e petition and tr# an# issue made 3# t!e o3?ections
filed7 and if no suc! o3?ection is sufficient4 and t!e material
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211&)
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
allegations of t!e petition are true4 it s!all render ?udgment dissolving
t!e corporation and directing suc! disposition of its assets as ?ustice
re;uires4 and ma# appoint a receiver to collect suc! assets and pa#
t!e de3ts of t!e corporation6 (Rule 10$4 RCa)
(/+ In"o6'ntar7 (Section 11+
Sec. 11. In#oluntary Dissolution
2 corporation ma# 3e dissolved 3# t!e 'ecurities and "5c!ange
Commission upon filing of a verified complaint and after proper notice
and !earing on t!e grounds provided 3# e5isting laws4 rules and
regulations6 (n)
Gro'n!$ for In"o6'ntar7 -i$$o6'tion,
(1) Failure to organize and commence 3usiness wit!in 2 #ears
from incorporation7
(2) Continuousl# inoperative for & #ears
(3) Continuance of 3usiness not feasi3le as found 3# t!e
management committee or re!a3ilitation receiver7
($) Fraud in procuring Certificate of RegistrationK
(&) 'erious .isrepresentation
()) Failure to file reports (=R' at 313)
(,) Refusal to adopt or approve 3# laws (%+ /0212)
(-) >ltra vires1 mala pro!i3ita4 3ut too numerous infractions4
w!ic! are persistent despite '"C warnings6 (CLG8s CLR at
/3/)
(a+ M'o Warranto (Repu3lic v6 *isa#a Land ransportation Co64
-1 'CR2 / N1/,-O7 Repu3lic v6 'ecurit# Credit W 2cceptance
Corp64 1/ 'CR2 &- N1/),O7 <overnment v6 "l @ogar Filipino4 &0
%!il6 3// N1/2,O)6
(/+ EBpiration of Ter%
(c+ Shortenin# of Corporate Ter% ('ec6 120)
UP Class Notes
Dissolution ta*es effect upon its appro#al of the &C. 5owever/ if
the petition contains a date of dissolution earlier than the date of S6!
approval/ dissolution takes effect on this date since S6! approves of it
anyway.
(!+ Non:'$er of Charter an! Contin'o'$ Inoperation ('ec6
22)
BOrganizeC involves t!e election of officers4 providing for
t!e su3scription and pa#ment of t!e capital stoc(4 t!e
adoption of 3#1laws4 and suc! ot!er steps as are
necessar# to endow t!e legal entit# wit! t!e capacit# to
transact t!e legitimate 3usiness for w!ic! t!e corporation
was created6 BOrganizationC relates merel# to t!e
s#stematization and orderl# arrangement of t!e internal
and managerial affairs and organs of t!e corporation6
*enguet Consolidated .ining Co6 v6 %ineda4 /- %!il6 ,116
!e failure to file t!e 3#1laws does not automaticall#
operate to dissolve a corporation 3ut is now considered
onl# a ground for suc! dissolution6 C!ung Ea *io v6
:ntermediate 2ppellate Court4 1)3 'CR2 &3$ (1/--)6
(f+ -e%an! of Minorit7 Stoc9ho6!er$ for -i$$o6'tion.
Financing Corp6 of t!e %!il6 v6 eodoro4 /3 %!il6 $0$ (1/&3)6
Corporate dissolution due to mismanagement of ma?orit#
stoc(!older is too drastic a remed#4 especiall# w!en t!e
situation can 3e remedied suc! as giving minorit#
stoc(!olders a veto power to an# decision6 C!ase v6
*uencamino4 13) 'CR2 3)& (1/-&)6
(c+ Shortenin# of corporate ter% (Section 1A+
Sec. 1A. Dissolution by shortening corporate term
2 voluntar# dissolution ma# 3e effected 3# amending t!e articles of
incorporation to s!orten t!e corporate term pursuant to t!e provisions
of t!is Code6 2 cop# of t!e amended articles of incorporation s!all 3e
su3mitted to t!e 'ecurities and "5c!ange Commission in accordance
wit! t!is Code6 >pon approval of t!e amended articles of
incorporation of t!e e5piration of t!e s!ortened term4 as t!e case ma#
3e4 t!e corporation s!all 3e deemed dissolved wit!out an# furt!er
proceedings4 su3?ect to t!e provisions of t!is Code on li;uidation6 (n)
SEC Interna6 r'6e$ reI'ire the fo66o=in#,
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211&,
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
(1) Notice of t!e dissolution to 3e pu3lis!ed in a newspaper of
general circulation for 3 consecutive wee(s7
(2) List of corporate creditors4 wit! t!eir consent to t!e
s!ortening of corporate term7
(3) 'u3mission 3# ma?orit# stoc(!oldersKprincipal officers an
>nderta(ing to personall# answer for an# outstanding
corporate o3ligations of t!e corporation7 and
($) Latest financial statements w!ic! must not 3e earlier t!an
t!e date of t!e stoc(!olders8 meeting approving amendment
to t!e articles of incorporation4 and a *:R clearance on t!e
ta5 lia3ilities of t!e corporation6(SEC Opinion@ 2'67 3@ 1*5*)
13. What i$ 6iI'i!ationD (Section 1+
Sec. 1. Corporate li-uidation
"ver# corporation w!ose c!arter e5pires 3# its own limitation or is
annulled 3# forfeiture or ot!erwise4 or w!ose corporate e5istence for
ot!er purposes is terminated in an# ot!er manner4 s!all nevert!eless
3e continued as a 3od# corporate for t!ree (3) #ears after t!e time
w!en it would !ave 3een so dissolved4 for t!e purpose of prosecuting
and defending suits 3# or against it and ena3ling it to settle and close
its affairs4 to dispose of and conve# its propert# and to distri3ute its
assets4 3ut not for t!e purpose of continuing t!e 3usiness for w!ic! it
was esta3lis!ed6
2t an# time during said t!ree (3) #ears4 t!e corporation is aut!orized
and empowered to conve# all of its propert# to trustees for t!e 3enefit
of stoc(!olders4 mem3ers4 creditors4 and ot!er persons in interest6
From and after an# suc! conve#ance 3# t!e corporation of its
propert# in trust for t!e 3enefit of its stoc(!olders4 mem3ers4 creditors
and ot!ers in interest4 all interest w!ic! t!e corporation !ad in t!e
propert# terminates4 t!e legal interest vests in t!e trustees4 and t!e
3eneficial interest in t!e stoc(!olders4 mem3ers4 creditors or ot!er
persons in interest6
>pon t!e winding up of t!e corporate affairs4 an# asset distri3uta3le
to an# creditor or stoc(!older or mem3er w!o is un(nown or cannot
3e found s!all 3e esc!eated to t!e cit# or municipalit# w!ere suc!
assets are located6
"5cept 3# decrease of capital stoc( and as ot!erwise allowed 3# t!is
Code4 no corporation s!all distri3ute an# of its assets or propert#
e5cept upon lawful dissolution and after pa#ment of all its de3ts and
lia3ilities6 (,,a4 -/a4 1)a)
LiI'i!ation is a process 3# w!ic! all t!e assets of t!e
corporation are converted into li;uid assets (cas!) in order to
facilitate t!e pa#ment of o3ligations to creditors4 and t!e
remaining 3alance if an# is to 3e distri3uted to t!e stoc(!olders6
UP Class Notes
4hat is li-uidation5 Process of converting corporate assets B
properties into cash for proper distribution to persons entitled thereto.
1t begins on the day after the approval of the S6! of the dissolution. 1n
the meantime/ where a petition for dissolution has already been
submitted/ but the S6! has not yet approved/ the 7A8 may make
advances to the S5s and other persons9in9interest.
Metho!$ of LiI'i!ation
Li;uidation4 in corporation law4 connotes a winding up or
settling wit! creditors and de3tors6 :t is t!e winding up of a
corporation so t!at assets are distri3uted to t!ose entitled to
receive t!em6 :t is t!e process of reducing assets to cas!4
disc!arging lia3ilities and dividing surplus or loss6 %G*
"mplo#ees >nion1N6>6*6"6 v6 Gega4 3)0 'CR2 33 (2001)6
!ere can 3e no dou3t t!at under 'ecs6 ,, and ,- of
Corporation Law4 t!e Legislature intended to let t!e
s!are!olders !ave t!e control of t!e assets of t!e corporation
upon dissolution in winding up its affairs6 !e normal met!od
of procedure is for t!e directors and e5ecutive officers to !ave
c!arge of t!e winding up operations4 t!oug! t!ere is t!e
alternative met!od of assigning t!e propert# of t!e
corporation to t!e trustees for t!e 3enefit of its creditors and
s!are!olders6 B9!ile t!e appointment of a receiver rests
wit!in t!e sound ?udicial discretion of t!e court4 suc!
discretion must4 !owever4 alwa#s 3e e5ercised wit! caution
and governed 3# legal and e;uita3le principles4 t!e violation
of w!ic! will amount to its a3use4 and in ma(ing suc!
appointment t!e court s!ould ta(e into consideration all t!e
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211&-
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
facts and weig! t!e relative advantages and disadvantages of
appointing a receiver to wind up t!e corporate 3usiness6C
C!ina *an(ing Corp6 v6 .6 .ic!elin W Cie4 &- %!il6 2)1 (1/33)
!ere is not!ing in 'ec6 122 w!ic! 3ars an action for t!e
recover# of t!e de3ts of t!e corporation against t!e li;uidator
t!ereof4 after t!e lapse of t!e said t!ree1#ear period6 B:s
immaterial t!at t!e present action was filed after t!e
e5piration of t!e t!ree #ears 6 6 6 for at t!e ver# least4 and
assuming t!at ?udicial enforcement of ta5es ma# not 3e
initiated after said t!ree #ears despite t!e fact t!at actual
li;uidation !as not terminated and t!e one in c!arge t!ereof
is still !olding t!e assets of t!e corporation4 o3viousl# for t!e
3enefit of all t!e creditors t!ereof4 t!e assessment
aforementioned4 made wit!in t!e t!ree #ears4 definitel#
esta3lis!ed t!e <overnment as a creditor of t!e corporation
for w!om t!e li;uidator is supposed to !old assets of t!e
corporation6C Repu3lic v. (arsman 8ev. !o./ $$ 'CR2 $1-
(1/,2)6
(a+ Who %a7 'n!erta9e the 6iI'i!ation of a
corporationD
(1) !e *o+7
(2) !e c!osen li;uidator w!o acts as a trustee (3 #ear winding
up period not applica3le)
(3) Creditors (acting as receiver) w!o petitioned for t!e
declaration of 3an(ruptc# of t!e corporation6 (3 #ear winding
up period not applica3le6) (>% Class notes at $/)
($) *# management committee or re!a3ilitation receiver6 (=R' at
31$)
(/+ For ho= 6on# %a7 the 6iI'i!ation of a corporation
%a7 /e 'n!erta9enD
"ver# corporation w!ose corporate e5istence !as 3een
terminated in an# manner s!all nevert!eless 3e continued as
a 3od# corporate for 3 #ears after its dissolution6 (>% Class
Notes at $/)
2ac9>$ Lect're
!e Court !as said t!at t!e remed# t!ere if t!e t!ree
#ears will end and t!ere are still pending cases4 is for t!e 3oard to
appoint a trustee 3ut more recent ?urisprudence !as fas!ioned a
practica3le solution to t!at t!e law#er !andling t!e cases ma# 3e
considered as trustee of t!e corporation and t!erefore t!e cases
will not 3e a3ated 3ut s!ould continue6
:n one case4 t!e 'C !eld t!at t!e directors ma# 3e
considered as trustees after t!ree #ears so t!at t!e# can continue
to wind up t!e affairs of t!e corporation and in effect t!e t!ree
#ear period !as 3ecome ineffectual6
(c+ What co'6! an! $ho'6! /e !one !'rin# the perio!
of 6iI'i!ationD
%rosecuting and defending suits 3# or against it and
ena3ling it to settled and close its affairs4 to dispose of and
conve# its propert# and to distri3ute its assets4 3ut not for t!e
purpose of continuing t!e 3usiness for w!ic! it was
esta3lis!ed7 an#time during t!e 3 #ear period4 t!e corporation
is aut!orized and empowered to conve# all of its propert# to
trustees for t!e 3enefit of '@s and ot!er persons in interest6
(!+ What happen$ if an a$$et cannot /e !i$tri/'te!D
2n# asset distri3uta3le to an# creditor or stoc(!older or
mem3er w!o is un(nown or cannot 3e found s!all 3e
e$cheate! to the cit7 or %'nicipa6it7 w!ere suc! asset is
located6 (>% Class Notes at $/)
Who are 6ia/6e after !i$$o6'tion an! =in!in# 'pD
2lt!oug! a corporate officer is not lia3le for corporate
o3ligations4 suc! as claims for wages4 !owever4 w!en suc!
corporate officer NceasesO corporate propert# to appl# to !is
own claims against t!e corporation4 !e s!all 3e lia3le to t!e
e5tent t!ereof to corporate lia3ilities4 since (nowing full# well
t!at certain creditors !ad similarl# valid claims4 !e too(
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211&/
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
advantage of !is position as general manager and applied t!e
corporationJs assets in pa#ment e5clusivel# to !is own claims6
+e <uzman v6 NLRC4 211 'CR2 ,23 (1//2)6
:f t!e 31#ear e5tended life !as e5pired wit!out a trustee or
receiver !aving 3een designated4 t!e 1oar! of -irector$
itself4 following t!e rationale of t!e decision in <elano4 ma#
3e permitted to so continue as BtrusteesC to complete
li;uidation7 and in t!e a3sence of a *oard4 t!ose !aving
pecuniar# interest in t!e assets4 including t!e s!are!olders
and t!e creditors of t!e corporation4 acting for and in its
3e!alf4 mig!t ma(e proper representations wit! t!e
appropriate 3od# for wor(ing out a final settlement of t!e
corporate concerns6 Clemente v6 Court of 2ppeals4 2$2
'CR2 ,1, (1//&)6
:n <elano case4 t!e counsel of t!e dissolved corporation was
considered a trustee6 :n t!e later case of Clemente v6 Court of
2ppeals4 t!e *oard of +irectors was permitted to complete
t!e corporate li;uidation 3# continuing as BtrusteesC6 >nder
'ec6 1$& BNo rig!t of remed# in favor or against an#
corporation 6 6 6 s!all 3e removed or impaired eit!er 3# t!e
su3se;uent dissolution of said corporation or 3# an#
su3se;uent amendment or repeal of t!is Code or of an# part
t!ereof6C !is provision safeguards t!e rig!ts of a corporation
w!ic! is dissolved pending litigation6 Re3uriano v6 Court of
2ppeals4 301 'CR2 3$2 (1///)7 Enec!t v6 >nited Cigarette
Corp64 3-$ 'CR2 $- (2002)6
13. . Ca$e$
C6e%ente ". CA (1**3+
Corporation continues to 3e a 3od# corporate for 3 #ears
after its dissolution for purposes of prosecuting and defending
suits 3# and against it and for ena3ling it to settle and close
its affairs6
!e termination of t!e life of a ?uridical entit# does not 3#
itself cause t!e e5tinction or diminution of t!e rig!ts and
lia3ilities of suc! entit# nor t!ose of its owners and creditors6
Re/'riano ". CA (1***+
!e 3oard of directors ma# 3e permitted to complete t!e
corporate li;uidation 3# continuing as BtrusteesC 3# legal
implication6
'ince t!e law specificall# allows a trustee to manage t!e
affairs of t!e corporation in li;uidation4 an# supervening fact4
suc! as t!e dissolution of t!e corporation4 repeal of a law4 or
an# ot!er fact of similar nature would not serve as an
effective 3ar to t!e enforcement of suc! rig!t6
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211)0
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
14. FOREIGN CORPORATIONS
Forei#n corporation1 corporation formed4 organized or e5isting
under an# law ot!er t!an t!ose of t!e %!ilippines4 and w!ose laws
allow Filipino citizens and corporations to do 3usiness in its own
countr# or state6 ('ection 123)
)ac*+s Lecture
'ection 123 defines w!at is a foreign corporation4 one
formed4 organized4 or e5isting under an# laws ot!er t!an t!ose of
t!e %!ilippines and w!ose laws allow Filipino citizens and
corporations to do 3usiness in its own countr# or state6 Note t!e
element of reciprocit7 is included in t!e definition of a foreign
corporation as an ingredient of a foreign corporation6
9e said t!at a corporation is an artificial person4 it !as
a ?uridical personalit# 3# legal fiction6 'o it !as personalit#
3ecause of t!e law under w!ic! it was incorporated and since it
e5ists onl# 3ecause of t!e law under w!ic! it was incorporated4 if
it wis!es to participate in t!e economic processes of anot!er
countr#4 it must get permission from t!at ot!er countr# also and it
will get permission 3# getting a license to do 3usiness and our
code now re;uires reciprocit# so normall# li(e if it is an 2merican
corporation it will su3mit a certification from t!e 'ecretar# of 'tate
of t!at particular state under w!ic! it was incorporated li(e New
Qor(4 California 3ecause t!e 'ecretar# of 'tate is t!e custodian of
t!e laws and !e will certif# t!at under t!e laws of New Qor(4
Filipinos are allowed to do 3usiness in New Qor(6
!ere are different wa#s 3# w!ic! a foreign corporation
can esta3lis! its presence !ere6 one is 3# setting a 3ranc! office4
anot!er is 3# setting up su3sidiar#4 for ta5 purposes t!ere are no
trade1offs 3ecause a 3ranc! and a su3sidiar# are ta5ed in t!e
same wa# 3ut a su3sidiar# ma# 3e 3eneficial in t!e sense t!at it
limits t!e e5posure of t!e mot!er compan# to its su3scription
instead of ris(ing all t!e assets of t!e mot!er compan#6 2not!er is
t!e regional !ead;uarters w!ic! does not do 3usiness4 it is ?ust a
coordinating and communication center6 Foreign companies are
setting up regional !ead;uarters !ere 3ecause it !as su3sidiaries
in 'out!east 2sia or licensees and franc!isees and its function is
to supervise and coordinate wit! t!ose su3sidiaries or franc!isees
so normall# a regional !ead;uarter would !ave a one room
office !ere pro3a3l# wit! countr# manager and secretar#4 a
telep!one4 computer and fa5 mac!ine6
:f a foreign corporation wants to do 3usiness !ere it !as
to appoint a resident agent w!o ma# 3e a corporation4 partners!ip
or individual4 if individual !e must 3e of good moral c!aracter4
sound financial standing4 alt!oug! !is onl# function is to receive
summonses in 3e!alf of t!e corporation6
14.1 What con$tit'te$ !oin# /'$ine$$ in the
Phi6ippine$ (See Section .(!+ RA 5A) a$ a%en!e!+
RA 5A)@ Section .G!H
!e p!rase Bdoing 3usinessC s!all include soliciting orders4 services
contracts4 opening offices4 w!et!er called BliaisonC offices or
3ranc!es7 appointing representatives or distri3utors domiciled in t!e
%!ilippines or w!o in an# calendar #ear sta# in t!e countr# for a
period or periods totaling one !undred eig!t# (1-0) da#s or more7
participating in t!e management4 supervision or control of an#
domestic 3usiness4 firm4 entit# or corporation in t!e %!ilippines7 and
an# ot!er act or acts t!at impl# a continuit# of commercial dealings or
arrangements4 and contemplate to t!at e5tent t!e performance of
acts or wor(s4 or t!e e5ercise of some of t!e functions normall#
incident to4 and in progressive prosecution of4 commercial gain or of
t!e purpose and o3?ect of t!e 3usiness organizationD %rovided4
!owever4 t!at t!e p!rase Bdoing 3usinessC s!all not 3e deemed to
include mere investment as a s!are!older 3# a foreign entit# in
domestic corporations dul# registered to do 3usiness4 andKor t!e
e5ercise of rig!ts as suc! investor7 nor !aving a nominee director or
officer to represent its interest in suc! corporation7 nor appointing a
representative or distri3utor domiciled in t!e %!ilippines w!ic!
transacts 3usiness in its own name and for its own account7
4hen is a foreign corporation doing business5
2merican ?urisprudence ma(es a distinction6 9!en #ou
tal( of foreign corporation doing 3usiness #ou will as( for w!at
purpose are we tr#ing to determine w!et!er or not a foreign
corporation is doing 3usiness6
:s it for t!e purpose of determining w!et!er or not it can
3e suedL :f t!at is t!e purpose4 to determine its amena3ilit# to t!e
?urisdiction of t!e courts t!e# appl# a li3eral interpretation4 t!e
>''C sa#s minimal contact t!at would satisf# t!e re;uirements of
due process is sufficient6 :n fact t!e different states !ave t!ese
long1arm statutes 3# w!ic! state t!e instances w!en a foreign
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211)1
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
corporation ma# 3e sued6 !ere is one state <eorgia !as t!is
provision t!at if a foreign corporation commits a tort4 it will 3e
considered to 3e doing 3usiness and can 3e sued6 !e >''C !as
said times !ave c!anged now t!e means of communications are
ver# rapid so t!at if #ou !ave a representative !ere !e can ;uic(l#
communicate wit! t!e !ome office so it can ta(e steps to defend
itself6
On t!e ot!er !and4 if #ou are tal(ing of determining
w!et!er a foreign corporation is doing 3usiness for t!e purpose of
prosecuting officers criminall#4 t!at is pena64 it must 3e strictl#
construed6
:n t!e middle is t!e ;uestion of w!et!er or not t!e
foreign corporation is doing 3usiness and t!erefore is ta5a3le as a
resident foreign corporation6
'o man# decisions !ave 3een !anded down to
determine w!et!er t!e foreign corporations are doing 3usiness
3ut t!ere are t!ree principal guidelines6
16 Tran$action$ %'$t not /e i$o6ate!. ransactions must 3e
!a3itual li(e in t!e .ent!olatum case6 :n t!e 2msterdam
case w!ere a foreign s!ipping compan# it !as a vessel
w!ic! roam around going to places w!ere t!e# can find
cargo and t!e# ?ust pass 3# !ere in 1/)34 t!e court said t!at
it is an isolated transaction and not doing 3usiness !ere6
:n one case4 a foreign corporation 3oug!t copra4 seller
failed to deliver and t!e# negotiated and t!e# agreed to give !im
more time still !e failed to deliver t!en t!e# negotiated again and
!e was given more time still !e failed to deliver and finall# t!e
foreign corporation filed suit4 t!e seller claimed doing 3usiness
wit!out a license4 t!e 'C said no t!at is an isolated transaction6
!e 3etter rule(according to =ac() is t!at t!at is 3u#ing t!at is not
doing 3usiness #ou do not ma(e profit from 3u#ing t!at is settled
in 2merican ?urisprudence6 Qou ma(e profit from selling not from
3u#ing6
:n t!e @ang lung 3an( case4 t!e 'C said t!at it is not
doing 3usiness !ere so it can sue6
@owever4 an isolated transaction w!ic! indicates an
intention to !a3ituall# do 3usiness ma# constitute doing 3usiness6
:f t!e foreign corporation leased space for e5ample at t!e Luneta
@otel and t!e# sent t!eir officers !ere6 !ere was indication of
t!eir intention to do 3usiness6
26 It %'$t in"o6"e a $'/$tantia6 portion of the /'$ine$$ of
the pri%ar7 p'rpo$e of the corporation. :n one case4
t!ere was a foreign s!ipping compan# w!ic! pass 3# !ere
and !ired a Filipino a coo( in one of its vessels4 t!e 'C !eld
t!at t!at is not doing 3usiness !iring a coo( is not a
su3stantial portion of its 3usiness its 3usiness is transporting
passengers and cargo6
36 If the contract i$ con$'%%ate! a/roa! then the forei#n
corporation i$ not !oin# /'$ine$$ here. :n t!e case of
Colum3ia %ictures vs6 C24 Colum3ia %ictures filed a case
3ecause its films were 3eing pirated !ere and it was argued
t!at it was doing 3usiness wit!out a license4 t!e 'C said no
3ecause t!e contracts are consummated a3road6 :n t!e
2von %lc case4 t!e Court said t!at a foreign insurance
compan# w!ic! accepted reinsurance is not doing 3usiness
!ere 3ecause t!e contract is e5ecuted a3road6
What con$tit'te$ !oin# /'$ine$$ in the Phi6ippine$ for forei#n
corporation$D
>nder t!e contin'it7 te$t@ doing 3usiness implies a
continuit# of commercial dealings and arrangements4 and
contemplates to some e5tent t!e performance of acts or
wor(s or t!e e5ercise of some functions normall# incident to
and in progressive prosecution of4 t!e purpose and o3?ect of
its organization6
>nder t!e $'/$tance te$t4 a foreign corporation is doing
3usiness in t!e countr# if it is continuing t!e 3od# or
su3stance of t!e enterprise of 3usiness for w!ic! it was
organized6 (=R' at 31&)
Ho= !o =e !eter%ine =hether a forei#n corp i$ !oin# /'$ine$$
in the Phi6ippine$D (1a$e! on 2'$tice AI'ino>$ o't6ine+
!ere is no general rule or governing principle t!at !olds for
t!e determination of w!et!er or not a foreign ?uridical entit# is
doing 3usiness in t!e %!ilippines to ena3le our court to
ac;uire ?urisdiction over it6 9!en suc! foreign corporation
!owever participates in a 3idding process4 its mere
participation manifests an intention to engage in 3usiness in
t!e %!ilippines4 t!erefore participating in t!e 3idding process
is Bdoing 3usinessC in t!is ?urisdiction6 .ore directl# put4
=hen a forei#n corporation perfor%$ act$ for =hich it
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211)2
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
=a$ create!@ re#ar!6e$$ of "o6'%e@ it i$ !oin# /'$ine$$.
(E'ropean Re$o'rce$ ". In#enie'/'ro 1ir9ahn4 200$)
-oe$ an Ki$o6ate! tran$actionL /7 a forei#n corporation I'a6if7
a$ K!oin# /'$ine$$L in the Phi6ippine$D
:t depends6 :f a single or isolated transaction is incidental
and casual transaction4 it cannot ;ualif# as Bdoing 3usinessC
since it lac(s t!e element of CON:N>:Q6 @owever4 w!ere a
single or isolated transaction is not merel# incidental or
casual 3ut indicates t!e foreign corporation8s intention to do
ot!er 3usiness in t!e %!ilippines4 said single act or
transaction constitutes Bdoing 3usinessC in t!e %!ilippines6
(=R' at 31&)
14. ReI'ire%ent$ for the e$ta/6i$h%ent of a /ranch
(Section 1.+
Sec. 1.. Definition and rights of foreign corporations
For t!e purposes of t!is Code4 a foreign corporation is one formed4
organized or e5isting under an# laws ot!er t!an t!ose of t!e
%!ilippines and w!ose laws allow Filipino citizens and corporations to
do 3usiness in its own countr# or state6 :t s!all !ave t!e rig!t to
transact 3usiness in t!e %!ilippines after it s!all !ave o3tained a
license to transact 3usiness in t!is countr# in accordance wit! t!is
Code and a certificate of aut!orit# from t!e appropriate government
agenc#6 (n)
(a+ -oc'%entar7 ReI'ire%ent$ (Section 13+
Sec. 13. Application for a license
2 foreign corporation appl#ing for a license to transact 3usiness in
t!e %!ilippines s!all su3mit to t!e 'ecurities and "5c!ange
Commission a cop# of its articles of incorporation and 3#1laws4
certified in accordance wit! law4 and t!eir translation to an official
language of t!e %!ilippines4 if necessar#6 !e application s!all 3e
under oat! and4 unless alread# stated in its articles of incorporation4
s!all specificall# set fort! t!e followingD
16 !e date and term of incorporation7
26 !e address4 including t!e street num3er4 of t!e principal office
of t!e corporation in t!e countr# or state of incorporation7
36 !e name and address of its resident agent aut!orized to accept
summons and process in all legal proceedings and4 pending
t!e esta3lis!ment of a local office4 all notices affecting t!e
corporation7
$6 !e place in t!e %!ilippines w!ere t!e corporation intends to
operate7
&6 !e specific purpose or purposes w!ic! t!e corporation intends
to pursue in t!e transaction of its 3usiness in t!e %!ilippinesD
%rovided4 !at said purpose or purposes are t!ose specificall#
stated in t!e certificate of aut!orit# issued 3# t!e appropriate
government agenc#7
)6 !e names and addresses of t!e present directors and officers
of t!e corporation7
,6 2 statement of its aut!orized capital stoc( and t!e aggregate
num3er of s!ares w!ic! t!e corporation !as aut!orit# to issue4
itemized 3# classes4 par value of s!ares4 s!ares wit!out par
value4 and series4 if an#7
-6 2 statement of its outstanding capital stoc( and t!e aggregate
num3er of s!ares w!ic! t!e corporation !as issued4 itemized
3# classes4 par value of s!ares4 s!ares wit!out par value4 and
series4 if an#7
/6 2 statement of t!e amount actuall# paid in7 and
106 'uc! additional information as ma# 3e necessar# or
appropriate in order to ena3le t!e 'ecurities and "5c!ange
Commission to determine w!et!er suc! corporation is entitled
to a license to transact 3usiness in t!e %!ilippines4 and to
determine and assess t!e fees pa#a3le6
2ttac!ed to t!e application for license s!all 3e a dul# e5ecuted
certificate under oat! 3# t!e aut!orized official or officials of t!e
?urisdiction of its incorporation4 attesting to t!e fact t!at t!e laws of
t!e countr# or state of t!e applicant allow Filipino citizens and
corporations to do 3usiness t!erein4 and t!at t!e applicant is an
e5isting corporation in good standing6 :f suc! certificate is in a foreign
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211)3
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
language4 a translation t!ereof in "nglis! under oat! of t!e translator
s!all 3e attac!ed t!ereto6
!e application for a license to transact 3usiness in t!e %!ilippines
s!all li(ewise 3e accompanied 3# a statement under oat! of t!e
president or an# ot!er person aut!orized 3# t!e corporation4 s!owing
to t!e satisfaction of t!e 'ecurities and "5c!ange Commission and
ot!er governmental agenc# in t!e proper cases t!at t!e applicant is
solvent and in sound financial condition4 and setting fort! t!e assets
and lia3ilities of t!e corporation as of t!e date not e5ceeding one (1)
#ear immediatel# prior to t!e filing of t!e application6
Foreign 3an(ing4 financial and insurance corporations s!all4 in
addition to t!e a3ove re;uirements4 compl# wit! t!e provisions of
e5isting laws applica3le to t!em6 :n t!e case of all ot!er foreign
corporations4 no application for license to transact 3usiness in t!e
%!ilippines s!all 3e accepted 3# t!e 'ecurities and "5c!ange
Commission wit!out previous aut!orit# from t!e appropriate
government agenc#4 w!enever re;uired 3# law6 ()-a)
(/+ -epo$it ReI'ire%ent (Section 14+
Sec. 14. Issuance of a license
:f t!e 'ecurities and "5c!ange Commission is satisfied t!at t!e
applicant !as complied wit! all t!e re;uirements of t!is Code and
ot!er special laws4 rules and regulations4 t!e Commission s!all issue
a license to t!e applicant to transact 3usiness in t!e %!ilippines for
t!e purpose or purposes specified in suc! license6 >pon issuance of
t!e license4 suc! foreign corporation ma# commence to transact
3usiness in t!e %!ilippines and continue to do so for as long as it
retains its aut!orit# to act as a corporation under t!e laws of t!e
countr# or state of its incorporation4 unless suc! license is sooner
surrendered4 revo(ed4 suspended or annulled in accordance wit! t!is
Code or ot!er special laws6
9it!in si5t# ()0) da#s after t!e issuance of t!e license to transact
3usiness in t!e %!ilippines4 t!e license4 e5cept foreign 3an(ing or
insurance corporation4 s!all deposit wit! t!e 'ecurities and "5c!ange
Commission for t!e 3enefit of present and future creditors of t!e
licensee in t!e %!ilippines4 securities satisfactor# to t!e 'ecurities
and "5c!ange Commission4 consisting of 3onds or ot!er evidence of
inde3tedness of t!e <overnment of t!e %!ilippines4 its political
su3divisions and instrumentalities4 or of government1owned or
controlled corporations and entities4 s!ares of stoc( in Rregistered
enterprisesR as t!is term is defined in Repu3lic 2ct No6 &1-)4 s!ares
of stoc( in domestic corporations registered in t!e stoc( e5c!ange4 or
s!ares of stoc( in domestic insurance companies and 3an(s4 or an#
com3ination of t!ese (inds of securities4 wit! an actual mar(et value
of at least one !undred t!ousand (%10040006) pesos7 %rovided4
!owever4 !at wit!in si5 ()) mont!s after eac! fiscal #ear of t!e
licensee4 t!e 'ecurities and "5c!ange Commission s!all re;uire t!e
licensee to deposit additional securities e;uivalent in actual mar(et
value to two (2A) percent of t!e amount 3# w!ic! t!e licenseeJs
gross income for t!at fiscal #ear e5ceeds five million (%&40004000600)
pesos6 !e 'ecurities and "5c!ange Commission s!all also re;uire
deposit of additional securities if t!e actual mar(et value of t!e
securities on deposit !as decreased 3# at least ten (10A) percent of
t!eir actual mar(et value at t!e time t!e# were deposited6 !e
'ecurities and "5c!ange Commission ma# at its discretion release
part of t!e additional securities deposited wit! it if t!e gross income of
t!e licensee !as decreased4 or if t!e actual mar(et value of t!e total
securities on deposit !as increased4 3# more t!an ten (10A) percent
of t!e actual mar(et value of t!e securities at t!e time t!e# were
deposited6 !e 'ecurities and "5c!ange Commission ma#4 from time
to time4 allow t!e licensee to su3stitute ot!er securities for t!ose
alread# on deposit as long as t!e licensee is solvent6 'uc! licensee
s!all 3e entitled to collect t!e interest or dividends on t!e securities
deposited6 :n t!e event t!e licensee ceases to do 3usiness in t!e
%!ilippines4 t!e securities deposited as aforesaid s!all 3e returned4
upon t!e licenseeJs application t!erefor and upon proof to t!e
satisfaction of t!e 'ecurities and "5c!ange Commission t!at t!e
licensee !as no lia3ilit# to %!ilippine residents4 including t!e
<overnment of t!e Repu3lic of t!e %!ilippines6 (n)
(c+ Appoint%ent of re$i!ent a#ent (Section 1?+
Sec. 1?. %esident agentB ser#ice of process
!e 'ecurities and "5c!ange Commission s!all re;uire as a
condition precedent to t!e issuance of t!e license to transact
3usiness in t!e %!ilippines 3# an# foreign corporation t!at suc!
corporation file wit! t!e 'ecurities and "5c!ange Commission a
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211)$
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
written power of attorne# designating some person w!o must 3e a
resident of t!e %!ilippines4 on w!om an# summons and ot!er legal
processes ma# 3e served in all actions or ot!er legal proceedings
against suc! corporation4 and consenting t!at service upon suc!
resident agent s!all 3e admitted and !eld as valid as if served upon
t!e dul# aut!orized officers of t!e foreign corporation at its !ome
office6 2n# suc! foreign corporation s!all li(ewise e5ecute and file
wit! t!e 'ecurities and "5c!ange Commission an agreement or
stipulation4 e5ecuted 3# t!e proper aut!orities of said corporation4 in
form and su3stance as followsD
R!e (name of foreign corporation) does !ere3# stipulate and agree4
in consideration of its 3eing granted 3# t!e 'ecurities and "5c!ange
Commission a license to transact 3usiness in t!e %!ilippines4 t!at if
at an# time said corporation s!all cease to transact 3usiness in t!e
%!ilippines4 or s!all 3e wit!out an# resident agent in t!e %!ilippines
on w!om an# summons or ot!er legal processes ma# 3e served4
t!en in an# action or proceeding arising out of an# 3usiness or
transaction w!ic! occurred in t!e %!ilippines4 service of an#
summons or ot!er legal process ma# 3e made upon t!e 'ecurities
and "5c!ange Commission and t!at suc! service s!all !ave t!e
same force and effect as if made upon t!e dul#1aut!orized officers of
t!e corporation at its !ome office6R
9!enever suc! service of summons or ot!er process s!all 3e made
upon t!e 'ecurities and "5c!ange Commission4 t!e Commission
s!all4 wit!in ten (10) da#s t!ereafter4 transmit 3# mail a cop# of suc!
summons or ot!er legal process to t!e corporation at its !ome or
principal office6 !e sending of suc! cop# 3# t!e Commission s!all
3e necessar# part of and s!all complete suc! service6 2ll e5penses
incurred 3# t!e Commission for suc! service s!all 3e paid in advance
3# t!e part# at w!ose instance t!e service is made6
:n case of a c!ange of address of t!e resident agent4 it s!all 3e !is or
its dut# to immediatel# notif# in writing t!e 'ecurities and "5c!ange
Commission of t!e new address6 (,2a7 and n)
14.. Per%itte! area$ of in"e$t%ent ($ee SiBth
Re#'6ar Forei#n In"e$t%ent Ne#ati"e Li$t (Li$t$ A
an! 1+ anneBe! to EO No. .?* !ate$ No". .A@ AA)+
!e )
t!
Regular Foreign :nvestment Negative List too( effect in =anuar# -4
200&6 !e list does not include 3an(ing and ot!er financial institutions4 w!ic!
are governed and regulated 3# t!e <eneral *an(ing Law of 20004 and ot!er
laws administered 3# t!e *'%6
Li$t A
Li$t A. Foreign owners!ip is limited 3# mandate of t!e Constitution and
specific laws6
No forei#n eI'it7
16Ma$$ Me!ia "5cept recording (2rt6 PG:4 'ec6 11 of t!e Constitution7
%residential .emorandum dated .a# $4 1//$)
.Practice of a66 profe$$ion$
a6 "ngineering
36 .edicine and allied professions
c6 2ccountanc#
d6 2rc!itecture
e6 Criminolog#
f6 C!emistr#
g6 Customs *ro(erage
!6 "nvironmental %lanning
i6 Forestr#
?6 <eolog#
(6 :nterior +esign
l6 Landscape 2rc!itecture
m6 Law
n6 Li3rarians!ip
o6 .arine +ec( Officers
p6 .arine "ngine Officers
;6 .aster %lum3ing
r6 'ugar ec!nolog#
s6 'ocial 9or(
t6 eac!ing
u6 2griculture
v6 Fis!eries
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211)&
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
(2rt6 P::4 'ection 1$ of t!e Constitution4 'ec6 1 of R626 No6
&1-1)
..Retai6 Tra!e Enterpri$e$ =N a pai! 'p capita6 of 6e$$ than US P
@3AA@AA; Sec. 3 of RA ?54
). Cooperati"e$ (Ch III@ Art. 4@ RA 4*.?+
3.Pri"ate Sec'rit7 A#encie$ (Sec. )@ RA 3)?5+
4.S%a66 Sca6e Minin# (Sec. .@ RA 5A54+
5.Uti6i0ation of Marine Re$o'rce$ in archipe6a#ic =ater$@ territoria6
$ea@ an! eBc6'$i"e econo%ic 0one a$ =e66 a$ $%a66 $ca6e
'ti6i0ation of nat'ra6 re$o'rce$ in ri"er$@ 6a9e$@ /a7$@ an!
6a#oon$ (Art. QII@ Sec. Con$tit'tion
?.O=ner$hip@ operation@ an! %ana#e%ent of coc9pit$ (Sec. 3 of P-
)**+
*.Man'fact're@ repair@ $toc9pi6in# an!Nor !i$tri/'tion of n'c6ear
=eapon$ (Art. II Sec ? of the Con$tit'tion+
1A. Man'fact're@ repair@ $toc9pi6in#@ an!Nor !i$tri/'tion of
/io6o#ica6@ ra!io6o#ica6@ che%ica6 =eapon$ an! anti:per$onne6
%ine$ ("ario'$ treatie$ to =hich the Phi6ippine$ i$ $i#nator7@
an! con"ention$ $'pporte! /7 the Phi6ippine$+
11. Man'fact're of firecrac9er$ an! other p7rotechnic !e"ice$
(Sec. 3 of RA 51?.+
Up to AR Forei#n EI'it7
1. Pri"ate ra!io co%%'nication$ net=or9 (RA .?)4+
Up to 3R Forei#n EI'it7
1.. Pri"ate recr'it%ent@ =hether for 6oca6 or o"er$ea$ e%p6o7%ent
(Art. 5 of P- ))+
1). Contract$ for the con$tr'ction an! repair of 6oca667 f'n!e!
p'/6ic =or9$ (Sec. 1 of Co%%on=ea6th Act No. 3)1@ LOI No.
4.A@ eBcept,
a6 :nfrastructure K development pro?ects covered in R2
,,1-4 and
36 %ro?ects w!ic! are foreign funded or assisted or
re;uired to undergo international competitive 3idding
('ec6 2 NaO of R2 ,,1-)
13. Contract$ for con$tr'ction of !efen$e:re6ate! $tr'ct're$ (Sec.
1 of CA 3)1+
Up to .AR Forei#n EI'it7
14. A!"erti$in# (Art. Q&I@ Sec. 11 Con$tit'tion+
Up to )AR Forei#n EI'it7
15. EBp6oration@ !e"e6op%ent@ 'ti6i0ation of nat'ra6 re$o'rce$ (Art.
QII@ Sec. of the Con$tit'tion+
1?. O=ner$hip of Pri"ate Lan!$ (Art. QII Sec. 5 Con$tit'tion@ Ch. 3
Sec. of CA 1)1@ Sec. ) of RA *1?+
1*. Operation an! %ana#e%ent of p'/6ic 'ti6itie$ (Art. QII Sec. 11
Con$tit'tion@ Sec. 14 of CA 1)4+
A. O=ner$hip N e$ta/6i$h%ent an! a!%ini$tration of e!'cationa6
in$tit'tion$ (Art. QI& Sec. ) of the Con$tit'tion+
1. C'6t're@ pro!'ction@ %i66in#@ proce$$in#@ tra!in#@ eBcept
retai6in# or rice an! corn an! acI'irin#@ /7 /arter@ p'rcha$e@ or
other=i$e@ rice an! corn an! the /7:pro!'ct$ thereof (Sec. 3 of
P- 1*); Sec. 13 of RA ?54+
. Contract$ for the $'pp67 of %ateria6$@ #oo!$@ an! co%%o!itie$
to #o"ern%ent o=ne! or contro66e! corporation@ co%pan7@
a#enc7@ or %'nicipa6 corporation$ ($ec. 1 of RA 31?.+
.. Pro<ect proponent an! faci6it7 operator of a 1OT Pro<ect
reI'irin# a p'/6ic 'ti6itie$ franchi$e (Art. QII Sec. 11
Con$tit'tion@ Sec. GaH of RA 551?+
). Operation of !eep:$ea co%%ercia6 fi$hin# "e$$e6$ (Sec. 5 of
RA ?33A+
3. A!<'$t%ent Co%panie$ (Sec. .. of P- 41 a$ a%en!e! /7 P-
1?1)+
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211))
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
4. O=ner$hip of con!o%ini'% 'nit$ =here the co%%on area$ in
the con!o%ini'% pro<ect are co:o=ne! /7 the o=ner$ of the
$eparate 'nit$ or o=ne! /7 a corporation (Sec. 3 of RA )54+
Up to 4AR Forei#n EI'it7
5. Financin# Co%panie$ re#'6ate! /7 the SEC (Sec. 4 RA 3*?A a$
a%en!e! /7 RA ?334+
?. In"e$t%ent ho'$e$ re#'6ate! /7 the SEC (Sec. 3 of P- 1* a$
a%en!e! /7 RA ?.44+
Li$t 1
Li$t 1, Foreign owners!ip is limited for reasons of securit#4 defense4 ris( of
!ealt!4 and morals4 and protection of small and medium scale enterprises
Up to )AR Forei#n EI'it7
1.Man'fact're@ repair@ $tora#e@ an!Nor !i$tri/'tion of pro!'ct$
an!Nor in#re!ient$ reI'irin# PNP c6earance
elescopic sig!ts4 sniper scope4 and ot!er similar devices6
@owever4 t!e manufacture or repair of t!ese items ma# 3e
aut!orized 3# t!e C!ief of t!e %N% to non1%!ilippine nationals7
provided t!at a su3stantial percentage of t!e output as determined
3# t!e said agenc# is e5ported6 %rovided furt!er t!at t!e e5tent of
foreign e;uit# owners!ip allowed s!all 3e specified in t!e said
aut!orit# K clearance (R2 ,0$2 as amended 3# R2 -1,/)
.Man'fact're@ repair@ $tora#e@ an!Nor !i$tri/'tion of pro!'ct$
reI'irin# -epart%ent of Nationa6 -efen$e (-N-+ c6earance,
a6 <uns and ammunition for warfare
36 .ilitar# ordinance and parts t!ereof (torpedoes4 dept!
c!arges4 3om3s4 grenades4 missiles)
c6 <unner#4 3om3ing4 and fire control s#stems and
components
d6 <uided missiles s#stems and components
e6 actical aircraft (fi5ed and rotar# winged)4 parts and
components t!ereof
f6 'pace ve!icles and component s#stems
g6 Com3at vessels (air4 land4 naval) and au5iliaries
!6 9eapons repair and maintenance e;uipment
i6 .ilitar# communications and e;uipment
?6 Nig!t vision and e;uipment
(6 'imulated content radiation devices4 components4 and
accessories
l6 2rmament training devices
m6 Ot!ers as ma# 3e determined 3# t!e 'ecretar# of t!e
+N+
@owever4 t!e manufacture or repair of t!ese items ma#
3e aut!orized 3# t!e 'ecretar# of t!e +N+ to non1
%!ilippine nationals7 provided t!at a su3stantial
percentage of t!e output4 as determined 3# t!e said
agenc#4 is e5ported6 %rovided furt!er t!at t!e e5tent of
t!e foreign e;uit# owners!ip allowed s!all 3e specified in
t!e said aut!orit#Kclearance (R2 ,0$2 as amended 3# R2
-1,/)
..Man'fact're an! !i$tri/'tion of !an#ero'$ !r'#$ (RA 5A) a$
a%en!e! /7 RA ?15*+
).Sa'na an! $tea% /athho'$e$@ %a$$a#e c6inic$ an! other 6i9e
acti"itie$ re#'6ate! /7 6a= /eca'$e of ri$9$ po$e! to the p'/6ic
hea6th an! %ora6$ (RA 5A) a$ a%en!e! /7 RA ?15*+
3.A66 for%$ of #a%/6in#@ i.e. race trac9 operation (RA 5A) a$
a%en!e! /7 RA ?15*+
4.-o%e$tic %ar9et enterpri$e$ =ith pai! in eI'it7 capita6 of 6e$$
than the eI'i"a6ent of US P AA@AAA (RA 5A) a$ a%en!e! /7
RA ?15*+
5.-o%e$tic %ar9et enterpri$e$ =hich in"o6"e a!"ance! techno6o#7
or e%p6o7 at 6ea$t 3A !irect e%p6o7ee$ =ith pai! in eI'it7
capita6 of 6e$$ than the eI'i"a6ent of US P 1AA@AAA (RA 5A) a$
a%en!e! /7 RA ?15*+
14.) La=$ app6ica/6e to forei#n corporation$ 6icen$e!
to tran$act /'$ine$$ in the Phi6ippine$ (Section 1*+
Sec. 1*. La( applicable
2n# foreign corporation lawfull# doing 3usiness in t!e %!ilippines
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211),
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
s!all 3e 3ound 3# all laws4 rules and regulations applica3le to
domestic corporations of t!e same class4 e5cept suc! onl# as provide
for t!e creation4 formation4 organization or dissolution of corporations
or t!ose w!ic! fi5 t!e relations4 lia3ilities4 responsi3ilities4 or duties of
stoc(!olders4 mem3ers4 or officers of corporations to eac! ot!er or to
t!e corporation6 (,3a)
UP C6a$$ Note$
16 !is is limited to Filipino citizens save in cases prescri3ed 3# law
26 Full foreign participation is allowed for retail trade enterprisesD (a)
wit! paid1up capital of >' ^ 24&004000 or more provided t!at
investments for esta3lis!ing a store is not less t!an >' ^ -3040007 or
(3) specializing in !ig! end or lu5ur# products4 provided t!at t!e paid1
up capital per store is not less t!an >' ^ 2&04000 ('ec6 & of R2 -,)2)
36 +omestic investments are also pro!i3ited (2rt6 :: 'ec6 - Constitution7
Conventions W reaties to wKc t!e %!ilippines is signator#
$6 Full foreign participation is allowed t!roug! financial or tec!nical
assistance agreement wK t!e %resident (2rt6 P:: 'ec6 2 Constitution)
&6 Full foreign participation is allowed provided t!at wit!in t!e 30 #ear
period from start of operation4 t!e foreign investor s!all divest a
minimum of )0A of t!eir e;uit# to Filipino citizens ('ec6 & %+ 1/$7
NF2 Council Resolution No6 1/3 s6 1//-)
)6 No foreign national ma# 3e allowed to own stoc( financing
companies or investment !ouses unless t!e countr# of w!ic! !e is a
national accords t!e same reciprocal rig!ts to Filipinos ('ec6 ) of R2
&/-0 as amended 3# R2 -&&)7 %+ 12/ as amended 3# R2 -3)))
14.3 Con$eI'ence$ of !oin# /'$ine$$ in the
Phi6ippine$ =itho't a 6icen$e (Section 1..+
Sec. 1... Doing business (ithout a license
No foreign corporation transacting 3usiness in t!e %!ilippines wit!out
a license4 or its successors or assigns4 s!all 3e permitted to maintain
or intervene in an# action4 suit or proceeding in an# court or
administrative agenc# of t!e %!ilippines7 3ut suc! corporation ma# 3e
sued or proceeded against 3efore %!ilippine courts or administrative
tri3unals on an# valid cause of action recognized under %!ilippine
laws6 ()/a)
S'a/i6it7 of Forei#n Corporation$, (CLG8s CLR at /$,)
+oing 3usiness in t!e %!ilippines
=ith a 6icen$e
.a# sue and can 3e sued in t!e
%!ilippines
+oing 3usiness in t!e %!ilippines
=itho't 6icen$e
Cannot sue4 3ut ma# 3e sued in t!e
%!ilippines
Not doing 3usiness in t!e
%!ilippines4 on isolated transactions
.a# sue
.a# 3e sued (Facilities .gt v6 dela
Osa4 1/,/)
)ac*+s Lecture
:f a foreign corporation is 3eing sued4 t!e summons
must 3e served on t!e resident agent6 !e corporation is also
re;uired to file wit! t!e '"C a power of attorne# or resolution
w!ic! sa#s t!at if it !as no resident agent it agrees t!at t!e
summons 3e served wit! t!e '"C w!ic! will forward t!e
summons and t!e complaint to t!e foreign corporation6 :f no
resident agent and an# officer w!o will 3e in t!e %!ilippines ma#
3e served wit! summons6
'ection 133 sa#s t!at if t!e foreign corporation will 3e
doing 3usiness wit!out a license it cannot sue or intervene in an#
action in court or administrative agenc#6
!e 'C !ad said t!at if a foreign corporation is doing
3usiness !ere wit!out a license4 a contract it entered into is valid4
it is not rendered void so t!e court said t!e legislature made a
?udgment call t!at imposing penal sanctions and den#ing access
to t!e courts are sufficient penalties for doing 3usiness wit!out a
license6 !e legislature did not provide t!at t!e contract it entered
into is void6 2lt!oug! t!e foreign corporation did not !ave license
to do 3usiness w!en it entered into in t!at contract4 it could sue if
later on it ac;uired a license to do 3usiness6
:f a foreign corporation is not doing 3usiness it can sue
3ecause it is not re;uired to get a license 3ut it can not 3e sued
3ecause it !as no presence !ere it will violate due process6
:n t!e farm mac!iner# case4 t!e court made an o3iter
dictum t!at a foreign corporation not doing 3usiness can 3e sued4
t!e reasoning of =ustice .a(asiar4 if t!e foreign corporation not
doing 3usiness can sue4 t!en it s!ould also 3e allowed to 3e sued
is wrong 3ecause t!at will violate due process 3ecause it !as no
presence !ere6 Our courts cannot ac;uire ?urisdiction over it6 !e
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211)-
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
remed# is to ma(e t!e action an action ;uasi in rem #ou attac! its
propert# serve it summons6
:f t!e corporation is doing 3usiness w!et!er or not it is
licensed it can 3e sued4 t!e law sa#s t!at if it is doing 3usiness
3ut it !as no license it cannot sue6
:f a foreign corporation is suing it must alleged eit!er
t!at it is not doing 3usiness or it is doing 3usiness 3ut it is
licensed 3ecause a plaintiff must indicate in t!e complaint t!at it
!as t!e legal capacit# to sue6 :n t!e case of a foreign corporation
it must s!ow it is eit!er not doing 3usiness or it doing 3usiness
and it is licensed6
@owever4 in t!e .errill L#nc! case4 t!e court said t!at if
a foreign corporation is doing 3usiness wit!out a license4 it t!e
ot!er part# was aware of it4 it can not claim t!at t!e plaintiff
cannot sue4 !e will 3e in estoppel !aving 3enefited from t!e
contract6 "5cept in two cases4 t!e 'C !as followed t!is most of
t!e su3se;uent cases6
Other than in ca$e$ of i$o6ate! tran$action$@ %a7 a forei#n
corporation not !oin# /'$ine$$ in the Phi6ippine$ $'eD
Qes
o protect its reputation4 corporate name and goodwill ('ec
3 of R2 -2/3)
For infringement of trademar( or trade1name4 unfair
competition or false description of products and infringement
of patent6 ('ection 1)0 R2 -2/3) (@and3oo( of Conflict of
Laws at 1$-)
14.4 Mer#er or con$o6i!ation in"o6"in# 6icen$e!
forei#n corporation (Section 1.+
Sec. 1.. Merger or consolidation in#ol#ing a foreign corporation
licensed in the Philippines
One or more foreign corporations aut!orized to transact 3usiness in
t!e %!ilippines ma# merge or consolidate wit! an# domestic
corporation or corporations if suc! is permitted under %!ilippine laws
and 3# t!e law of its incorporationD %rovided4 !at t!e re;uirements
on merger or consolidation as provided in t!is Code are followed6
9!enever a foreign corporation aut!orized to transact 3usiness in
t!e %!ilippines s!all 3e a part# to a merger or consolidation in its
!ome countr# or state as permitted 3# t!e law of its incorporation4
suc! foreign corporation s!all4 wit!in si5t# ()0) da#s after suc!
merger or consolidation 3ecomes effective4 file wit! t!e 'ecurities
and "5c!ange Commission4 and in proper cases wit! t!e appropriate
government agenc#4 a cop# of t!e articles of merger or consolidation
dul# aut!enticated 3# t!e proper official or officials of t!e countr# or
state under t!e laws of w!ic! merger or consolidation was effectedD
%rovided4 !owever4 !at if t!e a3sor3ed corporation is t!e foreign
corporation doing 3usiness in t!e %!ilippines4 t!e latter s!all at t!e
same time file a petition for wit!drawal of it license in accordance wit!
t!is itle6 (n)
14.5 Re"ocation of 6icen$e an! i$$'ance of certificate
of re"ocation (Section 1.) an! 1.3+
Sec. 1.). %e#ocation of license
9it!out pre?udice to ot!er grounds provided 3# special laws4 t!e
license of a foreign corporation to transact 3usiness in t!e %!ilippines
ma# 3e revo(ed or suspended 3# t!e 'ecurities and "5c!ange
Commission upon an# of t!e following groundsD
16 Failure to file its annual report or pa# an# fees as re;uired 3#
t!is Code7
26 Failure to appoint and maintain a resident agent in t!e
%!ilippines as re;uired 3# t!is itle7
36 Failure4 after c!ange of its resident agent or of !is address4 to
su3mit to t!e 'ecurities and "5c!ange Commission a statement
of suc! c!ange as re;uired 3# t!is itle7
$6 Failure to su3mit to t!e 'ecurities and "5c!ange Commission an
aut!enticated cop# of an# amendment to its articles of
incorporation or 3#1laws or of an# articles of merger or
consolidation wit!in t!e time prescri3ed 3# t!is itle7
&6 2 misrepresentation of an# material matter in an# application4
report4 affidavit or ot!er document su3mitted 3# suc! corporation
pursuant to t!is itle7
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211)/
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
)6 Failure to pa# an# and all ta5es4 imposts4 assessments or
penalties4 if an#4 lawfull# due to t!e %!ilippine <overnment or
an# of its agencies or political su3divisions7
,6 ransacting 3usiness in t!e %!ilippines outside of t!e purpose or
purposes for w!ic! suc! corporation is aut!orized under its
license7
-6 ransacting 3usiness in t!e %!ilippines as agent of or acting for
and in 3e!alf of an# foreign corporation or entit# not dul#
licensed to do 3usiness in t!e %!ilippines7 or
/6 2n# ot!er ground as would render it unfit to transact 3usiness in
t!e %!ilippines6 (n)
Sec. 1.3. Issuance of certificate of re#ocation
>pon t!e revocation of an# suc! license to transact 3usiness in t!e
%!ilippines4 t!e 'ecurities and "5c!ange Commission s!all issue a
corresponding certificate of revocation4 furnis!ing a cop# t!ereof to
t!e appropriate government agenc# in t!e proper cases6
!e 'ecurities and "5c!ange Commission s!all also mail to t!e
corporation at its registered office in t!e %!ilippines a notice of suc!
revocation accompanied 3# a cop# of t!e certificate of revocation6 (n)
14.? With!ra=a6 of forei#n corporation (Section 1.4+
Sec. 1.4. 4ithdra(al of foreign corporations
'u3?ect to e5isting laws and regulations4 a foreign corporation
licensed to transact 3usiness in t!e %!ilippines ma# 3e allowed to
wit!draw from t!e %!ilippines 3# filing a petition for wit!drawal of
license6 No certificate of wit!drawal s!all 3e issued 3# t!e 'ecurities
and "5c!ange Commission unless all t!e following re;uirements are
met7
16 2ll claims w!ic! !ave accrued in t!e %!ilippines !ave 3een paid4
compromised or settled7
26 2ll ta5es4 imposts4 assessments4 and penalties4 if an#4 lawfull# due
to t!e %!ilippine <overnment or an# of its agencies or political
su3divisions !ave 3een paid7 and
36 !e petition for wit!drawal of license !as 3een pu3lis!ed once a
wee( for t!ree (3) consecutive wee(s in a newspaper of general
circulation in t!e %!ilippines6
4e are (hat (e repeatedly do.
=cellence then1 is not an act1 but a habit.
:Aristotle
'he secret of li#ing a life of e=cellence is
merely a matter of thin*ing thoughts of
e=cellence
:Li#ing Abo#e Mediocrity
=cellence is .eing
:Marsius 'igris
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211,0
FRATERNAL ORDER OF UTOPIA
ATENEO DE MANILA UNIVERSITY
SCHOOL OF LAW
ARIS S. MANGUERA
I sweat, I bleed, I soar
Service, Sacrifice, Excellence
211,1