Full transcript
0:01good evening class uh we shall continue with title 15 of the revised corporation code of the philippines our topic foreign corporations so once again our source materials are partnerships and private corporations by the leon and de leon jr and also the revised corporation code of the philippines a short introduction by aquino and
0:21aquino so let's begin with the nationality of corporations so how to determine nationality of a corporation so there are two tests actually the incorporation test and also the control test so the incorporation test uh provides that if it is organized or incorporated under the law of the
0:42philippines it is domestic corporation now if it is incorporated uh under the laws of a foreign country it is a foreign corporation now if uh a foreign corporation is organized under the laws of another country with respect to that country remember young corporation nato is a domestic
1:02corporation uh any corporation which is incorporated uh in a place other than doing safari and katrina the foreign country will consider as a foreign corporation so nothing's incorporation test it depends on where it was incorporated so if it is incorporated in the
1:24philippines it is a domestic corporation incorporated elsewhere other than in the philippines foreign corporation now control test is um employed during war times for reason of resource of national securities so a domestic corporation controlled by enemy aliens shall be deemed a foreign corporation uh
1:48dependence uh controlling stockholders though so if the controlling stockholders are enemy aliens it is considered as a foreign corporation so employed again during times of war for reasons of national security uh please take note also of the grandfather rule they always ask this in
2:08the board exam so the grandfather rule is a method of determining whether determining the nationality of a corporation uh which is owned in part by another corporation uh by breaking down the equity structure of the shareholder corporation so this talks about two corporations so um
2:29there is partial ownership by another corporation so some corporation and kanyangstahoda [Music] structure to determine new nationality
2:52so anyway just take note of that they always ask that in the uh board exam so anyway foreign corporations formed organized existing under any laws other than those of the philippines and you know eating additions a corporation called na again uh cina manila revised corporation code uh
3:14and whose laws allow filipino citizens and corporations to do business in its own country or state so remember um foreign corporation and i recognize nothing is one incorporated elsewhere other than in the philippines and um uh
3:34foreign corporation also allows filipino citizens and corporation corporations to do business in the foreign country or state so the uh please remember class that uh when it comes to a foreign when it comes to corporation class [Music]
3:54existence is only confined to the state wherein it is incorporated so a domestic corporation philippine corporation and kanye existence is confined only in the philippines but obviously class um veteran among uh
4:17corporation uh pero with the concept of the foreign state the same is true with a foreign corporation and existence is a foreign corporation is limited only this foreign country where it is incorporated but again it can do business in the philippines
4:39so [Music] philippines provided that there is consent from our state so authorization from our state by obtaining remember a license so you and so it will impose conditions paramaga one and
5:01license conditions must be remember reasonable conditions so anyway the purpose of regulation of foreign corporations it on the island why we regulate foreign corporations or we require them to get licenses in the philippines is number one to place them on an equality uh with domestic corporations what else to
5:24subject them to inspection so that the condition will be known to protect the residents of the state doing business with them by subjecting them subjective subjecting them to the courts of the state and incidentally to require payment of fees and taxes so that we can raise revenues so you and
5:45purposes foreign corporation so anyway uh license obviously is and certificate of authority will be required from foreign corporations as a general rule class as a rule corporations foreign corporations will
6:06not be allowed to transact business in the philippines unless they have uh secured a license uh or a certificate of authority from an up from the appropriate government agency so uh remember section 141 um foreign corporation authorization
6:30business in the philippines um should pursue once to the person to the device corporation code obviously it will be bound by the terms of the revised code now if the license was issued before the rccp continues authority under the
6:51license on prior to the revised code but obviously subject to the provisions of the revised code and other special laws continues but subject to the provisions now revise code and other special laws what else the
7:14procedure for uh application for a license so number one submit to the sec and application tapos uh it will set forth the matters under section 142 so um remember your own matters uh enumerated by law in dina kailangan
7:36e legaze application kung nakala ganesha articles of incorporation so application now the contents of the application date and term of incorporation against
7:58articles application what else address including the street number of the principal office of the corporation in the country or state of incorporation uh and then a foreign corporation incorporated in germany uh foreign corporation
8:19state of incorporation which is uh germany so into young street number etc a name and address of its resident agent authorized to accept summons and process in all legal proceedings and all legal notices affecting the corporation pending the establishment of a local office
8:40champion apply kaplan for licensing foreign corporations so probably it will not yet establish a local office now in the meantime papano makiki
9:00remember through a resident agent the resident agent will be authorized to accept someone's and other legal processes getting sec resident agent which we will discuss more about them later on so what else also number
9:22four the place in the philippines where the corporation intends to uh operate establishing office business establishment but as specific purpose or purposes which the corporation intends to pursue in the transaction of its business in the philippines so the purposes are those specifically
9:43stated in the certificate of authority issued by the appropriate government agency what else names addresses of the present directors and officers of the corporation a statement of the authorized capital
10:04stock in case of uh par value shares a statement of the capital stock in case of no par value shares number of shares issued corporation are itemized by class per value or if shares are without par value and series if any so it again classification
10:24what else number eight statement of the outstanding capital stock the aggregate number of shares which the corporation has issued itemized by class par value shares without far value and series if any so again you must tax
10:47other than the corporation such as your stockholders etc etc so you know outstanding capital stock statement of paid in capital what else number 10 such additional very important such additional information as may be necessary to determine uh for the sec to determine whether or not the corporation is
11:08entitled to be issued a license and also to determine and assess the fees payable by the corporation after that the uh the west foreign corporation must submit to the sec the application with the uh accompanying documents so and documents under 142
11:30copy of articles and by laws as a foreign language with uh official translation uh you know if necessary uh what else and number two oat of reciprocity so if the oath of reciprocity is in a foreign language of course official translation under oath so
11:51remember the oath of reciprocity is a certificate under oath uh issued by an authorized official or officials of uh their uh the jurisdiction of its incorporation attesting to the fact that the laws of the country or state of the aptico allow filipino citizens and corporations to do business they're in and the
12:13applicant is an existing corporation in good standing so on south of incorporation diane i oyd it is a foreign
12:35it is allowed here in this foreign country so out of reciprocity as a reciprocal we allow these foreign countries to transact business in the philippines they also allow uh foreign um they also allow filipino corporations and citizens to do business in their for in their country so
12:59foreign reciprocity reciprocal rights or privileges are granted what else number three statement uh under oath of the president or any other person authorized by the corporation that the applicant is solvent and in some financial standing social
13:20illegal assets and liabilities as of date not exceeding one year prior to the filing of the application so long says being a foreign corporation getting um remember class uh no application for license to transact
13:42business will be accepted by the sec without previous authority from the appropriate government agency if it is whenever it is required by a law also number five you unwritten power of attorney which designated a resident agent and also there must be an agreement that the
14:03sec is designated as a receiver of someone's and all legal processes in case the foreign corporation shall cease to conserve business or be without a resident agent in the philippines anyway provision 145 in 145 uh
14:26the name the foreign corporation hereby stipulates and agrees in consideration for of being granted a license to trans services in the philippines that if the corporation shall cease to transact business in the philippines or shall be without a resident agent in the philippines on whom any summons or other legal processes may be served
14:47then service of any summons or other legal process may be made upon the commission or the sec in any action or proceeding arising out of any business or transaction which occurred in the philippines and jung service dao shall have the same force and effect as if made on the duly authorized officers of the
15:09corporation at the home office so yo section 145 so also please take note of the definition of a resident agent actually it is defined by its function so resident agent
15:29will receive summons and other legal processes in all actions uh or legal proceedings involving the corporation so again kung walang resident agent or there is uh if the corporation ceased to transact business um
15:49the service may be made to the sec now anyway remember class that service to the resident agent is the same as service to the duly authorized officers of the foreign corporation at the uh at the home office so para pakistan
16:10officers foreign corporation uh what else um in case of change of address then resident agent the resident agent must duly was immediately notified sec in writing of uh yunkanyang bagoon address so appointment of a resident agent
16:31revocable at any time by the corporation society resident agent fighting individual that's the good moral character sound financial standing by the name corporation as long as the corporation is registered with sec it is lawfully transacting business in the philippines some financial standing
16:52and macho proof of good finance good standing as certified by the sec so then now um compliance well with a special laws please uh i remember also before before we move on with this if a service is made
17:13upon the sec casing resident agent or the foreign corporation ceases to ceases in transacting business in the philippines so if the service is made upon the sec it was uh s-e-c must within 10 days transmit by mail a copy of the summons or other legal process
17:34to the foreign corporation at the home or principal office address and sec so you again is within 10 days from receipt from the courts or etc now um all expenses incurred uh by the sec
17:56shall be paid in advance by the party who wants to uh who in whose uh instance the service is made so young party no guston mcpasser is a foreign corporation augustus for mailing so anyway compliance with special laws foreign
18:18banking financial insurance corporation shall comply with uh provisions of existing laws which are applicable to them now lastly uh sec is satisfied that all the requirements uh young applicant uh has complied with all the requirements it will issue a
18:38license to transact business in the philippines for the purposes specified in the license business so um
19:00in the philippines as long as a license a license certificate of incorporation is revoked in the foreign country or a young licensed yet it is a
19:21philippines is also surrendered revoked or suspended or announced in accordance with our laws so what else um conditions after the issuance of license so after issue one's non-licensing uh rules so foreign corporation shortens
19:43up business only for the purposes which is which it is authorized under the license so whatever is uh written in the license you learned 60 days after the license is issued this applies except to a foreign or banking foreign banking or insurance corporation as a young licensee or you own foreign
20:06corporation shall deposit with the sec uh your own securities satisfactory to the s-e-c wedding bans other financial instruments uh determined suitable by the sec actual market value must be 500 000 or such other amount as may be set by
20:27the sec so the deposit now may consist of shares of stock in domestic corporations are listed in the stock market shares of stock in domestic insurance companies and banks or any financial instrument are deemed suitable by the sec or a combination
20:48they're off so in short mcquaffin uh security um in the amount of 500 000 pesos market value at least
21:09after uh each fiscal year of the license so every time the anniversary unlicensed each fiscal year of a fiscal year of the license remember sec will require you on um a foreign corporation to deposit additional securities
21:29but additional securities will be will be deposited only if the gross income of the licensee exceeds uh for each fiscal year exceeds 10 million pesos so uh 2 percent market value
21:51known excess 10 million so 10 million um uh securities or financial instruments now um if the income is gross is 12 million remember mcfarland
22:12additional securities um two percent on excess which is uh two million so do not be based on um uh additional two percent additional securities so also young deposited additional securities i um deposited the securities foreign
22:40value so if there is depreciation of 10 percent of their actual market value securities foreign corporation but obviously
23:05gross income and a decrease so sec can also release young manga uh addition ayuma securities so in this number nation additional irrelease name my security is already deposited current decrease or if the actual market value of the total
23:25the securities on deposit has increased so there is an appreciation no uh market value number securities uh wedding irrelevant portion corresponding to the uh increase in the market value or you own a decreased gross income so obviously licensee may be allowed to
23:47substitute securities and also entitled to collect interest for dividends securities are deposited uh what else number five comply with the provisions of existing uh laws rules and regulations otherwise as easy may common sense it will revoke its license what else
24:08if um the licensee or foreign corporation stops doing business in the philippines iba balikuma securities liabilities and foreign corporation nato so remember class that the purpose of licenses
24:29is to subject the foreign corporation doing business to the jurisdiction of uh the court so and purposely license is uh para uma foreign corporation doing business in the philippines
24:51jurisdiction um performed a single transaction [Music]
25:11isolated business transaction rule which we will discuss later on um continuous business so [Music]
25:36so anyway please take note of the definition of doing engaging or transacting business walang fixed role no hard and fast rule to define what constitutes doing business and it depends on the circumstances so but necessary
25:59the business must be continuous and not of a temporary character also it should be profit making business and profit making
26:20business param consider us and up doing engaging or transacting business now um the rules regarding doing engaging or transacting in business the acts included due to doing engaging or transacting business number one soliciting orders purchases
26:42service contracts orders customers etc number two you open offices in the philippines number three you appoint representative or distributors who are based in the philippines or any person who in any calendar year stays in the philippines for a period or periods totaling 180 days or
27:04more so you might distribute on burrito or representative pilipinas uh it's either siladito perios totaling 180 days or more but else you participate in the management supervision or control of a domestic corporation or business because i doing business in
27:27the philippines but as any other apps implying continuity continuity because anyway of commercial dealings or arrangement and contemplate commercial gains so continuity of business contemplate profit or commercial gain so what else acts which are not included in the term
27:48doing business number one investment loan investment in a domestic corporation billiken and shares of stock management not doing business now what else number two um exercise of rights as such investor investor kalang naman nikanam
28:10nakakaramsa management you exercise only your rights as an investor this is not doing business what else having a nominee or director or officer to represent is its interest in such corporations so if you will appoint a director or officer or nominee to vote for you in um or to represent
28:32you in the corporation econo foreign corporation indica parent considered as doing business in the philippines investors what else appointing a representative or distributor dom site in the philippines but this distributor or representative will transact business in its own name
28:52and for its own account so american representative distribute does not use the name of the foreign corporation this is considered not doing business in the philippines so anyway
29:13applicable loss uh under 146 uh philippine laws are applicable to a licensed foreign corporation obviously uh loss of state of creation will apply also lost the foreign corporation wherein they were incorporated will
29:36govern in cases of matters relative to creation formation organization or dissolution of corporations and relations liabilities responsibilities or duties of members stockholders officers to each other or to the corporation so yeah um in short class
29:57in case of organizational or internal affairs they are the foreign corporation is governed by the foreign country where in it incorp were in it incorporated what else um foreign laws must be proven in our
30:17courts so uh if they are not proven as a fact in our court they will be presumed to be the same as the philippines uh what else amendment of the articles of incorporation and also the bylaws so
30:41amendments will be effective this is based on the law of the foreign country remember amid the articles
31:07so the loss of the foreign country will uh uh govern so anyway um um so human amendments may become effective even before they are filed with sec obviously effective dependence done so even before
31:28you file with sec amended articles more quite effective now so anyway um [Music] amendments articles or bylaws software and corporation in foreign corporation lion within 60 days after the amendment becomes effective
31:54appropriate government agency we didn't remember 60 days so a newly authenticated copy of the articles or the bylaws and also there must be an indication in capital letters or underscoring of the change or changes made duly certified by the authorized official or
32:16officials of the country of the state of incorporation take note also of the instances when an amended license is required under section 148 so the first one is when a foreign corporation changes its corporate name so remember a foreign corporation will amend its articles of incorporation
32:36in its home country to change the to change its corporate name so also remember that the um license uh issued in the philippines has been issued uh in the original name of the said corporation now don't license unauthorized to do business is you own a corporation under its
32:59original name indiana which unnecessates uh an amendment of the license issued to such foreign corporation what else foreign corporation decides to do business pursue in the philippines other or additional purposes so remember
33:37said that is uh outside of the coverage of the issued license uh what else merger or consolidation so here the foreign corporation will merge with another corporation so the merger may merger or consolidation may be between a foreign corporation and a
33:58domestic corporation or it may be between two foreign corporations so now remember in 149 and rules with respect to merger or consolidation with a domestic corporation this is allowed actually as long as there is a concurrent legislation in each state of the constituent foreign
34:21and domestic corporation authorizing the merger or consolidation kungsa philippines law authorizing merger or consolidation and nuns of home country non-foreign corporation merudin silang law authorizing merger or consolidation
34:42puedes wedding mug merchant de la huang corporations nyon provided class that um the requirements on merger or consolidation as provided for in title ix of the revised corporation code of the philippines are followed pasta kailangan reciprocal
35:14domestic corporations so obviously here in the philippines we are already aware that there is such a law under title nine of the revised corporation uh code now also take note that merger or consolidation with a foreign corporation obviously um this will be covered or this will be in accordance with the
35:35loss of the home country or state of the foreign corporation i say it is in accordance with their rules now what will happen here because um obviously young foreign
35:55corporation is licensed to transact business in the philippines foreign corporation at the list um within 60 days after such merger or consolidation becomes effective you own a foreign corporation licensed to do business in the philippines must
36:16file a copy of their articles of merger or consolidation duly authenticated by the proper official or officials of the country or state under the laws of which the merger or consolidation was affected so foreign corporation nanaki page say bank
36:50of incorporation articles of merger or articles of consolidation sec and in proper cases appropriate government agency now also please take note that if the foreign corporation license to do business in the philippines is the absorbed corporation remembers a
37:11merger you absorb corporation no i will not legal personality and not absorb so obviously the absorbed corporation must file a petition for withdrawal of license in accordance with 153 of the revised corporation code also please take note of
37:32the effects of doing business without a license under one five zero so um remember class you know foreign corporations now without a license they are not ipso facto incapacitated from bringing an action in philippine courts young licensed talaga is kailangan
37:53if uh the corporation intends to do business in the philippines so hindi nina van porque license foreign corporation
38:14and you are here doing business and you do not have a license hindi foreign so please take note of a suit by a foreign corporation meaning a foreign corporation and file the general rule is that if the foreign corporation is transacting
38:34business without a license transactional business they will they will not be permitted they shall not shall not be permitted to maintain or intervene in any action suit or proceeding in any court or administrative agency of the philippines in short they have no right to
38:56sue so not licensed but doing business philippine courts foreign corporation nato but there is an exception in case of estoppel so unlicensed foreign corporation
39:17doing business in the philippines um magda manda against a philippine citizen or entity nana nakipak contracts and the benefit from the unlicensed foreign corporation filipino citizen or filipino corporation
39:38unlicensed a foreign corporation of their uh personality um hindi pueding
40:01you are already stopped from denying young existence down for unlicensed foreign corporation nato so you an exception in cases of estoppel uh only but uh in cases of estopian german only and cases when a foreign corporation
40:22is allowed to file action even if it is unlicensed number two suit against a foreign corporation obviously so on any valid cause of action recognized under philippine laws and it shall not be permitted to
40:44continue business unless it obtains a license so so the rules are very simple if you are a licensed foreign corporation in the philippines you can be sued you can sue yen now if you are an unlicensed foreign
41:06corporation doing business in the philippines remember class na you can be sued puede kang edemanda but as a general rule you cannot
41:27you are doing business in the philippines unlicensed foreign corporation and again doing business in the philippines subject to exceptions uh please take note also of
41:48suits by or against a foreign corporation not doing business in the philippines suits that are allowed but here class remember here class that the corporation
42:09unlicensed corporation is doing business without a license effects of doing business without a license so here the foreign corporation is doing business but without a license now um here suits by or against a foreign
42:29corporation the foreign corporation is not doing business in the philippines so remember the hindu syrian agreement and they are open to these kinds of foreign corporations so anyway in case of the isolated business transaction rule
42:51along ebik's opinion uh one transaction
43:23this is an isolated transaction is along the catalan so the foreign corporation here is not excluded from receiving a redress in philippine courts to tulum philippine courts what else number two if the action is for the protection of trade
43:44name or trademark so an trade name or trademark is right in rem right to use a corporate name so remember a right in dream is enforceable against the entire world and it it is a right that can be protected
44:04in any courts in the world even in countries where this foreign corporation does not transact business so young protection of trade name or trademark is for uh protecting the reputation corporate name and goodwill acquired by the corporation so alibaba incorporation of foreign
44:24corporations [Music]
44:52so to protect your reputation corporate name and good will acquired by this foreign corporation they can file an action in the philippines only to protect their corporate name trade name trademark etc non-business transaction in the philippines also allowed to sue um here the business transaction
45:13did not arise out of the philippines except there is a cost of action then is a pilipinas so let's say singaporean corporation deals with uh hong kong china corporation in china so so it important
45:41[Music]
46:17so anyway a young transaction between the singaporean corporation and this chinese corporation to the singaporean corporation there is
46:38a course of action filipinas but remember here the business transaction did not arise from the philippines damages cost to the singaporean or foreign corporation they can sue uh in the philippines in the philippine courts so until not
47:00then non-business transaction in the philippines non-exception from suit in the philippines um here if a foreign corporation nahindi business due to the philippines is allowed to file action in the philippines later on uh such corporation cannot claim exception
47:21from being sued in the philippine courts so for accident against a person or persons in the philippines so in a loud non-philippines and is a foreign corporation and indeed agree business need to namaksu uh based on an isolated transaction based on a non-business transaction in the philippines based on protection of trademark or trade name
47:42in alausa philippine courts in the philippines now um please take note also of the question are contracts entered
48:04into by unlicensed foreign corporations valid uh contracts so revised corporation code is silent american decisions are conflicting view that the contract is void based on
48:27article 5 of the civil code of the philippines sabika article 5 acts which are executed against the provisions of mandatory or prohibitory laws shall be void so pilipinas would be business it is a philippines foreign corporation
48:48[Music] and i think uh there is a prohibition to transact business if you do not have a license so mandatory to prohibit
49:13or doing business in the philippines without a license remember sabine article 5 so the contract here sabine article 5 is a void remember and even if the foreign corporation subsequently complies with the legal requirements it will not
49:33cure the defect now um the second view is uh the contract is valid as to innocent uh parties so sabby's uh second view your own prejudice will is limited only to the guilty corporation and not the innocent parties who have dealt with the said
49:55unlicensed a foreign corporation but in good faith is a guilty unlicensed foreign corporation so uh hindi according
50:17maybe probably misrepresentation licensed foreign corporation so this according to makassar
50:53better better reason wiser and fairer rap policy so sabinya when there is where there is a prohibition with penalty and there is no express or implied declaration respecting the validity or enforceability of contracts made by a foreign corporation the
51:15contracts are enforceable upon compliance with a law so meaning yuma foreign unlicensed foreign corporation nato um wedding uh defect upon compliance with the law yuma contracts nato pointing my curing defect upon
51:35compliance with the law so what else number section 151 runs for revocation of license for of a foreign corporation so there are actually several grounds for revocation
51:55so uh these grounds are without prejudice to other grounds provided by a special law so the sec upon revocation is required to issue a certificate of revocation and it will furnish a copy thereof to the appropriate government agency
52:15in case you own a foreign corporation nato is covered by such appropriate government agency so uh obviously young foreign corporation will also be given a copy of the certificate of revocation of license so grounds are failure to file and will report failure to file any fees required by the
52:37revised code failure to appoint and maintain a resident agent but else um fundamental address and resident agent or humanism resident agent and palette there is failure to submit a statement of the change as required by the revised code a failure of the sec to submit to the sec
52:58amended articles amended by laws or in articles of merger or consolidation within the time prescribed by law usually this is 60 days what else misrepresentation of any material matter in the application uh report affidavit or other documents so kaita numerous representations
53:19document submitted to the sec what else failure to pay any and all taxes impose assessment penalties due to the philippine government what else consumpting business outside of the purposes for which the license is issued but else um consulting business as a dummy
53:42and accepting business in the philippines as a dummy for a foreign corporation not licensed to do business in the philippines is an unlicensed foreign corporation so uh young miss moon license mo wedding maribor uh philippines uh what else any very
54:03important no any other ground which would rather eat and fit to transact business in the philippines so the effects of revocation of a license remember um any contract entered into before the revocation valid pointing back file and cause of action based on these valid contracts
54:24even if the cost of action is felt after long revocation license now obviously if a contract is entered into after the license is revoked these contracts are invalid and enforceable without prejudice to rights of innocent parties what else under 150 foreign corporation can no longer
54:44transact business in the philippines it cannot maintain any suit or action in court or other administrative uh agency in the philippines pero puede parishan de manda so 150 it cannot sue but it can be sued pakana revoked license now corporation
55:07also withdrawal of uh foreign corporations so here voluntarily they will withdraw application for they will withdraw young licensed new application the license so under 153 they must comply with the
55:27following um insufficient for withdrawal they must indicate number one uh all claims which have accrued in the philippines uh have been paid compromised or settled so illallah gained a certification for withdrawal i mean what else number two
55:51etc which are due to the philippine government so what else number three the petition for withdrawal of license has been published once a week for three consecutive weeks in a newspaper of general circulation in the philippines and also please take note that the sec
56:14will examine and inspect the book creditors etc and um if there is compliance with the requirements sec will issue a certificate of um withdrawal so also the courts may review your own action of the sec in approving
56:37uh uh your own petition for withdrawal so anyway class that's it for a title 15. um next week we will be talking about title 16 and 17 so that will be our last meeting and you will have your uh final quiz
56:58also uh that will be i think december five so please prepare and also you own i think december five quiz will cover um chapters five uh eight nine ten eleven twelve and uh
57:20thirteen sigi again special uh corporations nella so uh excluded are obviously title six meetings title seven stock and stockholders title of 14 dissolution title 15 um foreign corporations and obviously
57:40the other uh titles we have not uh discussed yet so please prepare obvious class [Music] lectures nothing
58:00final quiz class so uh thank you class and uh good night