1.

Definition – a corporation that is formed, organized elsewhere as long as not here in the Philippines, off course it
is not a foreign corporation but a domestic one if it is organized here in the Philippines.

2. Recognition – if we are to read between the lines, this sentence or phrase implies the principle of reciprocity.
Wherein, if we are allowing foreign nationals and foreign corporations to transact and conduct business here in the
Philippines, then such foreign state must also allow Filipino citizens and domestic corporations to conduct business
in their state. In other words if they recognize us, then we would also recognize them, or otherwise.. Also why is
there a need for recognition, bear in mind class that a foreign corporation does not exist within the state in which it
is foreign

3. requirements- of course before a foreign corporation can do, transact or conduct business here in the Philippines
it must first acquire the necessary licence (it is akin to a business permit) so that the right to transact will arise,
other wise if it does not have a license then it is illegally conducting business here in the Philippines.
and also to subject such foreign corporation to the jurisdiction of the local courts. Unfortunately, the law is not clear
as to when is the expiry of such license.

4. requirements – along with the certificate of authority from the appropriate government agency.
ex: DTI
Section 141, application to existing foreign corporations,
this section refers to those already existing foreign corporations in the country
at date of the effectivity of the RCCP,

here, the date of the effectivity of the RCCP does not affect the terms and conditions in
the license of these foreign corporations, rather it places such corporations under the
scope of the RCCP and other special laws in lieu of the old corporation code.

Also, it implies that as long as these foreign corporations does not violate the terms and
conditions under its license then it shall continue to have such authority to do business
here in the Philippines.
The word “shall” therefore it is mandatory,….. And their translation to an official language of the Philippines, if
necessary (well off course anything that is not written in the official Philippine language, in which case Filipino
or English must be necessarily translated.) for a example a Chinese corporation submitting its AOI in mandarin
or cantonese.. Of course it needs to be translated. Or french… etc.

.. So technically all of this being asked is mandatory and must be complete because of the word shall, if we are to
take into consideration statutory construction, also what can be deduced from here is that the RCC through the
SEC is strict in terms of providing licenses to these foreign corporations, just by looking into these requirements
as opposed corporation sole WHEREIN IT WAS MENTIONED YESTERDAY THAT A CORPORATION SOLE
CAN ALREADY OPERATE EVEN PRIOR TO THE SUBMISSION OF ITS REQUIREMENTS

so we will just go over this requirements, and please class do your readings okay.

Whenever required by law, here not all applications for license to transact business in the Philippines requires a
previous authority .. Only those required by law… the reason here is that there are some areas of business that a
foreign corporation seeks to engage that needs prior governmental authority.
If the applicant foreign corporation submits and complies with all the necessary requirements, and that the
commission is satisfied, the latter will then issue the corresponding licence

upon issuance of the license …. Such foreign corporation may commence to transact business in the Philippines..
As long as it retains its authority to act as a corporation under the laws of the country or state of its incoporation
---- as mentioned earlier that a license to transact business here in the Philippines is indefinite or it does expire.
However there is a catch, wherein if a foreign corporation ceases to be a corporation in the place where it is
incorporated along with it its license to transact

for example, an American corporation doing business here in the Philippines, it is incorporated in the united
states under US laws,
now if the American corporation doing business here in the Philippines, ceases to exist as a corporation under
American laws. Therefore it is no longer a corporation.. It being no longer a corporation, it has no authority to
transact as a foreign corporation here in the philippines. therefore, its license is useless.
It is a condition sine qua non… wherein for the license to apply there must first be a corporation for it to apply to

lastly, such license can also be revoked in accordance with the RCC or other special laws
Within sixty (60) days after the issuance of the license to transact business in the Philippines, the
licensee, except foreign banking or insurance corporations, shall deposit with the Commission for the
benefit of present and future creditors of the licensee in the Philippines, securities satisfactory to the
Commission

- in relation to what was said earlier that an applicant foreign corporation must be solvent and in sound
financial condition, it must also DEPOSIT SECURITIES OR FINANCIAL INSTRUMENTS TO
ensure that the foreign corporation can cover for its future creditors and it will not abscond as to its
liabilities and responsibilities...
- the actual market value or the amount of 500,000 (securities/ financial intruments)
-within six (6) months after each fiscal year of the licensee, the Commission shall require the
licensee to deposit additional securities or financial instruments equivalent in actual market value to
two percent (2%) of the amount by which the licensee’s gross income for that fiscal year exceeds Ten
million pesos (P10,000,000.00).
-if the actual market value of the deposited securities or financial instruments has decreased,
THE SEC WILL THEN REQUIRE ADDITIONAL SECURITIES TO MAKE UP FOR THE
DECREASE.
The Commission may, at its discretion, release part of the additional deposit if the gross income of the
licensee has decreased, or if the actual market value of the total deposit has increased, by more than ten
percent (10%) of their actual market value at the time they were deposited.
- HERE SINCE THE GROSS INCOME OF THE FOREIGN CORPORATION IS INCREASING
THEN IT SIGNIFIES THAT IT IS BECOME MORE CAPABLE TO COMPLY WITH ALL OF ITS
DUTIES, THEREFORE THE SEC AT ITS DISCRETION MAY RETURN SOME OF ITS
DEPOSITS. BECAUSE THIS DEPOSITS BASICALLY SERVES AS A SECURITY IN CASE
THERE IS A FAILURE ON THE PART OF THE FOREIGN CORPORATION TO COMPLY UNTO
ITS DUTIES.

Q: maibabalik pa ba yung bonds or money given by these foreign corporations?

A: yes, if such foreign corporation ceases to do business here in the philippines and it along
with a proof to the commission that it has no existing liability to the Philippine government and to the
Philippine residents.