Registration of Foreign Corporation in the Philippines

The Executive Branch of the Philippine Government has various agencies, instrumentalities, departments, bureaus and entities that are under the control and supervision of the Philippine President. The different heads of the agencies and departments are considered as an alter-ego of the President. The Philippine Economic Zone Authority (PEZA) and Board of Investment (BOI) are instrumentalities under the Executive Department of the Philippine Government.

It is a well-settled rule that a corporation established under foreign laws is considered a foreign corporation. In this jurisdiction, a foreign corporation duly registered in or licensed by government entities like the PEZA and the BOI can acquire legal personality, engage in internal trade, and is obliged to respect the Principle of Reciprocity among nations.

Legal Personality

Registration of a foreign corporation in the appropriate departments and government entities vest legal title or personality to foreign corporation to engage business inside the Philippine jurisdiction.

A duly licensed or registered foreign corporation has the power to sue and can be sued in Philippine courts. Absence of licensed or registration will not entitle the foreign corporation to sue but can be sued instead. However, a foreign corporation is authorized to sue even if not licensed or registered when it only engages in isolated transactions and when the law specifically provides.

Under the Philippine law, a court can obtain jurisdiction over foreign corporation by the proper service of summons. Service of summons to foreign corporation which has transacted business in the Philippines whether licensed/ registered or in an isolated transaction maybe made on its resident agent designated by law for that purpose, or in case there is no agent, the government official designated by law, such as the Insurance Commissioner (in cases of foreign insurance corporation), the Superintendent of Banks (in cases of Foreign banks) and the Security and Exchange Commission (for other foreign corporation registered or licensed to do business in the Philippines).

Whenever service of Summons is so made to the government official, the government official shall be obliged to transmit the same by mail or other legal process to the corporation concerned.

Internal Trade

Foreign Corporation registered in PEZA and BOI can carry on substantial internal trade. The foreign corporation can also direct and develop operations and enterprises of domestic corporations. Furthermore, it can invest a considerable amount of capital to certain enterprises.

Moreover, the corporation can also purchase shares of stocks in a legitimate stock market for a minimum share authorized by law. Thus, registration in PEZA and BOI authorizes the foreign corporation to freely engage in business ventures with in the Philippine jurisdiction.

Under the law, the President of the Philippines may allow entry of foreign corporation when warranted by public interest, such as oil drilling companies, Board of Investments, registered enterprises and Philippine Economic Zone Authority registered enterprises.

Principle of Reciprocity

The principle of reciprocity speaks of mutuality among the party states. Benefits given by a state to citizens of another state who are found within the country of the granting state shall also be granted to the citizens found within the partner state. Usually, the Principle of Reciprocity is in a form of a treaty, signed by different representatives of party states. In this jurisdiction, the legislative departments can enact laws that can be favorable to a registered foreign corporation, provided such is also granted to the Filipino citizens who are within the jurisdiction of the grantee state.

The President of the Philippines can issue Executive Orders, and Presidential Decrees that are favorable to the conduct of foreign corporation. Some of these favor personnel of offshore banking units which is provided under Presidential Decree 1034 and Required Area headquarters of Multinational Companies under Executive Order 226, wherein they are entitled for Multiple Entry Special Visa to the Philippines. Also, their respective spouses and minor dependents below 21 years old are benefited. The multiple entry special visas are valid for 1 year and can be extended based on legal or meritorious grounds. Holders of this visa type are exempted from immigration fees and registration apart from all clearances from any form of government agency before final departure.

Dennis Ramm is the Managing Partner for Siam Legal International, Thailand's largest legal service network with offices in Bangkok, Phuket, Pattaya, Hua Hin, Chiang Mai and Samui. The firm has international locations in London and Los Angeles. Siam Legal is a full-service law firm and provides a wide range of legal and visa services. Reach Siam Legal at +(66) 2-253-8100, or info@siam-legal.com