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The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
Foreign investment shall mean an equity investment made by a non-Philippine national in the form of foreign exchange and/or other assets actually transferred to the Philippines and duly registered with the Central Bank which shall assess and appraise the value of such assets other than foreign exchange.
Under the Foreign Investment Act of 1991, as amended, the phrase “doing business” shall include:
- soliciting orders, service contracts, opening offices, whether called “liaison” offices or branches;
- appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totaling one hundred eighty (180) days or more;
- participating in the management, supervision or control of any domestic business, firm, entity or corporation in the Philippines; and
- any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or in the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization.
Provided, however, That the phrase “doing business” shall not be deemed to include mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or the exercise of rights as such investor; nor having a nominee director or officer to represent its interest in such corporation; nor appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account.
In the case of Magna Ready Mix Concrete Corp v. Andersen Bjornstad Kane Jacobs, Inc., the Supreme Court held that the term “doing business” implies a continuity of commercial dealings and arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally incident to, and in the progressive prosecution of, the purpose and object of its organization.
The number of the transactions entered into is not determinative whether a foreign corporation is doing business in the Philippines; the intention to continue the body of its business prevails. The number or quantity is merely an evidence of intention. A single act or transaction may then be considered as doing business when a corporation performs acts for which it was created or exercises some of the functions for which it was organized.
As an exception, a foreign corporation may sue without a license on the basis of an isolated transaction.
The phrase “isolated transaction” has a definite and fixed meaning, i.e. a transaction or series of transactions set apart from the common business of a foreign enterprise in the sense that there is no intention to engage in a progressive pursuit of the purpose and object of the business organization. Whether a foreign corporation is “doing business” does not necessarily depend upon the frequency of its transactions, but more upon the nature and character of the transactions.
A single act may be considered as either doing business or an isolated transaction depending on its nature. It may be considered as doing business if it implies a continuity in the commercial dealings and contemplates the performance of acts or the exercise of functions normally incidental to and in the progressive pursuit of its purpose. Contrarily, it may be considered as an isolated transaction if it is different from or not related to the common business of the foreign corporation in the sense that there is no objective to increasingly pursue its purpose or object.
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- Do Foreign Corporations doing business in the Philippines have the capacity to sue?
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 0917-5772207/ 09778050020.
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