FOREIGN CORPORATIONS DISCUSSION OUTLINE

Defined-

Section 140 defines a foreign corporation as one formed or organized or

existing under any laws other than the Philippines whose laws allow Filipino
citizens and corporations to do business in its own country or state.

These corporations can transact business after it has obtained a license and a
certificate of authority from the appropriate government agency.

Section 141 provides that corporations already doing business in the

Philippines with licenses shall continue to have such authority under the terms
of its license subject to the provisions of the Code and other special laws.

Procedure in the application for a license -

Section 142 provides that the foreign corporation must submit to the SEC the
following documents: (a) Articles and By-laws, certified in accordance with law
and translated to an official language if necessary (b) Application containing (1)
date and term of incorporation (2) address, including the street number of the
principal office of the corporation in the country or state of incorporation (3)
name and address of a resident agent authorized to accept summons and process
in all legal proceedings and pending establishment of the office, all notices
affecting the corporation (4) place in the Philippines where it intends to operate
(5) the purpose/s which it intends to pursue in transacting business ,which
should be stated in the certificate of authority issued by the appropriate
government agency (6) name and address of present directors and officers of
the corporation (7) statement of authorized capital stock and the aggregate
number of shares that the corporation has authority to issue, itemized by class,
par value of shares, shares without par value, and series, if any issued duly
itemized (8) statement of outstanding capital stock and the aggregate number
of shares which the corporation has issued, itemized by class, par value, shares
without par value, and series, if any, (9) statement of amount actually paid in
(10) such other information that may be necessary or appropriate to determine
whether corporation is entitled to a license to transact business, and to
determine and assess the fees payable.

Attached to the application are: (a) Certificate under oath of the officials of
the jurisdiction of its incorporation attesting that its laws allow Filipino citizens
and corporations to do business thereon and that the applicant is an existing
corporation and in good standing, which if in a foreign language, should be
accompanied by an English translation under oath by the translator, (b)
Statement under oath by the president or authorized officer showing to the
satisfaction of the SEC that it is solvent and in sound financial condition: setting
forth its assets and liabilities as of a date not exceeding 1 year prior to the filing
of its application
Foreign banking, financial and insurance corporations shall also comply with
existing laws applicable to them. In case of other foreign corporations, no
application for a license shall be accepted by the SEC without previous authority
from an appropriate government agency, whenever, required by law.

Resident agent-

Section 144 provides that the resident agent can be an individual or a

corporation who is a resident of and is transacting business in the Philippines.

If an individual, he must be of good moral character and of sound financial

standing. If a domestic corporation, it must be of sound financial standing and
must show proof that it is in good standing to the SEC.

Section 145 provides that as a condition to the issuance of the license for a
foreign corporation to transact business in the Philippines, such corporation
shall file with the SEC a written power of attorney designating a person who
must be a resident of the Philippines, on whom summons and other legal
processes may be served in all actions or other legal proceedings against such
corporation, and consenting that service upon such resident agent shall be
admitted and held as valid as if served upon the duly authorized officers of the
foreign corporation at its home office. Such foreign corporation shall likewise
execute and file with the SEC an agreement or stipulation, executed by the
proper authorities of said corporation, in form and substance required by law.

Whenever such service of summons or other process is made upon the SEC, the
SEC shall, within ten (10) days thereafter, transmit by mail a copy of such
summons or other legal process to the corporation at its home or principal office.
The sending of such copy by the SEC shall be a necessary part of and shall
complete such service. All expenses incurred by the SEC for such service shall be
paid in advance by the party at whose instance the service is made.

It shall be the duty of the resident agent to immediately notify the SEC in writing
of any change in the resident agent’s address.

When the license is issued-

Section 143 provides thati f the SEC is satisfied that the applicant has complied
with all the requirements of this Code and other special laws, rules and
regulations, the SEC shall issue a license to transact business in the Philippines to
the applicant for the purpose or purposes specified in such license. Upon
issuance of the license, such foreign corporation may commence to transact
business in the Philippines and continue to do so for as long as it retains its
authority to act as a corporation under the laws of the country or State of its
incorporation, unless such license is sooner surrendered, revoked, suspended, or
annulled in accordance with this Code or other special laws.

After the license has been issued-

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 SEC, consisting of
bonds or other evidence of indebtedness of the Government of the Philippines,
its political subdivisions and instrumentalities, or of government-owned or -
controlled corporations and entities, shares of stock or debt securities that are
registered under Republic Act No. 8799, otherwise known as “The Securities
Regulation Code”, shares of stock in domestic corporations listed in the stock
exchange, shares of stock in domestic insurance companies and banks, any
financial instrument determined suitable by the SEC, or any combination thereof
with an actual market value of at least Five hundred thousand pesos
(P500,000.00) or such other amount that may be set by the SEC:

That within six (6) months after each fiscal year of the licensee, the SEC 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). The SEC shall also require the deposit of additional securities
or financial instruments if the actual market value of the deposited securities or
financial instruments has decreased by at least ten percent (10%) of their actual
market value at the time they were deposited.

The SEC 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. The SEC may, from time to time, allow the
licensee to make substitute deposits for those already on deposit as long as the
licensee is solvent. Such licensee shall be entitled to collect the interest or
dividends on such deposits. In the event the licensee ceases to do business in the
Philippines, its deposits shall be returned, upon the licensee’s application and
upon proof to the satisfaction of the SEC that the licensee has no liability to
Philippine residents, including the Government of the Republic of the
Philippines. For purposes of computing the securities deposit, the composition of
gross income and allowable deductions therefrom shall be in accordance with
the rules of the SEC.

The corporation shall then transact business only for the purpose/s for which it
was granted a license.

Applicable law-

Section 146 provides that a foreign corporation lawfully doing business in the
Philippines shall be bound by all laws, rules and regulations applicable to
domestic corporations of the same class, except those which provide for the
creation, formation, organization or dissolution of corporations or those which
fix the relations, liabilities, responsibilities, or duties of stockholders, members,
or officers of corporations to each other or to the corporation.
Amendments of the articles or by-laws-

Section 147 provides that amendments are to be governed by the laws of the
country of incorporation but it must within 60 days after the effectivity of the
amendment file with the SEC and appropriate government agency, a duly
authenticated copy of the Articles or By-Laws clearly underscoring the changes,
duly certified by the authorized official of the state of incorporation but the filing
thereof shall not of itself enlarge or alter the purpose for which foreign
corporations was granted a license.

Section148 provides that if so enlarged or amended it must obtain an amended

licensed or if it changes its corporate name by submitting an application with the
SEC favorably enclosed by the appropriate regulating agency.

Mergers and consolidations

Under Section 149, if the foreign corporation merges or consolidates with a

domestic corporation, it will be allowed if such is permitted by Philippines laws
and laws of the state of incorporation, provided it complies with the laws of the
Philippines on merger or consolidation

If it merges or consolidates with another corporation in the country or state of

incorporation, it shall file a duly certified copy of the articles of merger or
consolidation with the SEC and appropriate regulating agency within 60 days
from its date of effectivity.

Provided, that if the absorbed corporation is the foreign corporation, the

corporation must file a petition to withdraw its license because it is in effect
dissolved.

Withdrawal-

Under Section 153, subject to existing laws and regulations, it may file a petition
for withdrawal of the license but no certificate of withdrawal can be granted if
the following requirements are not met:

All claims that have accrued in the Philippines have been paid, compromised or
settled

1All taxes, imposts, assessments, penalties, if any, lawfully due the Philippine
Government, any of its agencies or political subdivisions have been paid

The petition for withdrawal has been published in a newspaper of general

circulation in the Philippines once a week for 3 consecutive weeks.

HOW IS A REVOCATION SUSPENSION OR ANNULMENT EFFECTED

Under Section 152, without prejudice to the other grounds, a suspension or
revocation of the license may arise when the foreign corporation: (a)Fails to pay
fees or file annual reports (b) Fails to appoint and maintain a resident agent
(c) Fails, after change of a resident agent or his address, to submit to the SEC a
statement of such change (d)Fails to submit an authenticated copy of any
amendment of its Articles/By-Laws or any articles of merger or consolidation
within the time prescribed (e) Misrepresentation of any material matter in
the application, report, affidavit or other document submitted pursuant to the
required documents (f) Failure to pay any and all taxes, imposts,
assessments, penalties (g) Transacting business outside the purpose/s for
which it was issued a license (h) Transacting business in the Philippines as an
agent of or acting in behalf of a foreign corporation or entity not duly licensed in
the Philippines (i) Any other ground that would render it unfit to transact
business.

Section 152 provides that upon a revocation, the SEC shall issue a certificate of
revocation furnishing the appropriate government agency and it shall also mail
to the corporation at its registered office in the Philippines a notice of revocation
with a corresponding certificate of revocation.

Transaction of business-

Upon the grant of a license, a foreign corporation can now transact business.

Under Section 150, if it is without a license, it can still transact business but the
difference is that if it is transacting business with a license it is permitted to
maintain or intervene in any action suit or proceeding in any court or
administrative agency with the Philippines, otherwise it, or its successors or
assigns will not permitted to maintain or intervene in any action, suit or
proceeding in any court or administrative agency of the Philippines but may be
proceeded against before Philippine courts on any valid cause of action.

The principles governing a foreign corporation’s right to sue are: (a) if it does
business without a license, it cannot sue before Philippine courts (b) if it is not
doing business, it needs no license to sue before Philippine courts on an isolated
business transaction or on a cause of action entirely independent of any business
transaction (c) if it does business with the required license, it can sue before
Philippine courts on any transaction (d) if it does business without a license, a
Philippine national who has contracted with it might be estopped from
challenging the foreign corporation’s personality in a suit before Philippine
courts.

Based on the governing principles, there is a need to define transacting business-

The simplest way of defining it is to take a look at the character of the act of the
foreign corporation. The question is: Is it of such a character as to distinctly
indicate a purpose to do other business in the state or the performance of act/s
for which it was created?

Transacting business can be inferred from: (a) continuous business acts or

transactions (b) isolated transaction or business act if an inference can be drawn
or of such a character as distinctly to indicate a purpose or the part of the foreign
corporations to do business and to make the state the base of its operations for
the conduct of its ordinary business.

Exceptions-

1. When the foreign corporation is suing to seek redress for an isolated

business transaction, which is a transaction or a series of transactions set apart
from the common business of a foreign enterprise in the sense that there is no
intention to engage in the progressive pursuit of the object/purpose of the
business organization. This is an exception as it is not the intention of the law to
favor a domestic corporation who later on repudiate obligations on account of
the foreign corporation’s lack of a license

The requisites for its application are (a) It must disclose that it is not doing
business in the Philippines and is suing under the Isolated Business Transaction
Rule (b) It must prove its juridical personality as a foreign corporation (c) It
must name its duly authorized representatives or resident agent.

2. The foreign corporation is suing to protect its name reputation and

goodwill. If the foreign corporations are well known through products bearing
its corporate and trade names, it has a legal right to maintain an action and it is
also allowed by treaties to which the Philippines is a party to.

Section 160 of Republic Act No. 8293 otherwise known as the Intellectual
Property Code provides that any foreign national or juridical person who does
not engage in business in the Philippines may bring a civil or administrative
action for opposition, cancellation, infringement, unfair competition, or false
designation of origin and false description, whether or not it is licensed to do
business in the Philippines. Similarly, Section 77 of the Intellectual Property
Code provides that any foreign national or juridical entity and not engaged in
business in the Philippines to which a patent has been granted or assigned under
the Intellectual Property Code may bring an action for infringement of patent
whether or not it is licensed to do business in the Philippines under existing law.

However, it is indispensable under both Section 160 and 77 that the right of the
foreign national or juridical person to file a case is conditioned on the
satisfaction of the reciprocity rule under Section 3 of the Intellectual Property
Code. Section 3 provides that any person who is a national or who is domiciled or
has a real and effective industrial establishment in a country which is a party to
any convention, treaty or agreement relating to intellectual property rights or
the repression of unfair competition, to which the Philippines is also a party, or
extends reciprocal rights to nationals of the Philippines by law, shall be entitled
to benefits to the extent necessary to give effect to any provision of such
convention, treaty or reciprocal law, in addition to the rights which any owner of
an intellectual property right is otherwise entitled by the Intellectual Property
Code.

In addition, under the “reverse reciprocity rule” under Section 231 of the
Intellectual Property Code, “any condition, restriction, limitation, diminution,
requirement, penalty or any similar burden imposed by the law of a foreign
country on a Philippine National seeking protection of intellectual property
rights in that country shall reciprocally be enforceable upon the nationals of said
country, with Philippine jurisdiction.”

3. The foreign corporation is suing to enforce a right not arising out of

business transaction with a party in the Philippines.

4. To hold it liable for acts and omissions. Conversely, if a foreign

corporation is allowed to sue without a license, it may also be sued in the
Philippines for acts done to persons in the Philippines. It means that it cannot
avoid suit due to the lack of a license. A foreign corporation shall not be allowed
to impugn jurisdiction due to the lack of a license.

That notwithstanding, the Supreme Court has ruled:

In Home Insurance Company v. Eastern Shipping (L-34382, July 1983) that the
contract that is entered into is not void ab initio. Thus, when a foreign
corporation, which is doing business without, a license, contracts with a third
party, any defect will subsequently be cured if it obtains a license to transact
business.

In Merrill Lynch Futures v. CA (211 SCRA 824) If a foreign corporation is doing

business in the Philippines without a license, the move of the defendant to
dismiss the complaint that the foreign corporation filed might still be neutralized
by invoking the doctrine of estoppel. The principle will be applied to prevent a
person contracting with a foreign corporation from later taking advantage of its
noncompliance with the statues, chiefly in cases where such person has received
the benefits of the contract.

In Top-Weld Manufacturing v. ECED SA the in pari delicto rule was adopted

holding that no remedy could be afforded to the parties because of their
presumptive knowledge that the transaction was tainted with illegality. The
Court said that equity could not lend its aid to the enforcement of an alleged right
claimed by virtue of an agreement entered into in contravention of law.
TRANSCRIPT
FOREIGN CORPORATIONS
Defined. Foreign Corporation as defined in Section 140 is one formed or
organized or existing under any laws other than the Philippines and whose laws
allow Filipino citizens and corporations to do business in its own country or
state.

When a foreign corporation would wish to transact business in the Philippines, it

should apply for a license and that is the principal manner by which the state can
regulate the operations of a foreign corporation.

How does a Foreign Corporation apply for a license? The procedure is laid down
in Section 142:
(a) Articles and By-laws, certified in accordance with law and translated
to an official language if necessary
(b) Application containing:
(1) date and term of incorporation
(2) address, including the street number of the principal office of
the corporation in the country or state of incorporation
(3) name and address of a resident agent authorized to accept
summons and process in all legal proceedings and pending establishment
of the office, all notices affecting the corporation
(4) place in the Philippines where it intends to operate
(5) the purpose/s which it intends to pursue in transacting
business ,which should be stated in the certificate of authority issued by
the appropriate government agency
(6) name and address of present directors and officers of the
corporation
(7) statement of authorized capital stock and the aggregate
number of shares that the corporation has authority to issue, itemized by
class, par value of shares, shares without par value, and series, if any
issued duly itemized
(8) statement of outstanding capital stock and the aggregate
number of shares which the corporation has issued, itemized by class, par
value, shares without par value, and series, if any,
(9) statement of amount actually paid in
(10) such other information that may be necessary or appropriate
to determine whether corporation is entitled to a license to transact
business, and to determine and assess the fees payable.

Then attached to the application would be a certification indicating that the

country or state of incorporation allows Filipino nationals and Filipino
corporations to do business in the country or state of incorporation. Attached
likewise is a statement indicating that it is in a solvent and sound financial
condition which should set forth its assets and liabilities as of a date not
exceeding one year prior to the date of the filing of the application for a license.

Foreign banking, financial and insurance corporation should also comply with
existing laws that are applicable to them and in no case would the SEC accept an
application for license for the issuance of a license without proper authority from
the appropriate regulating agency.

Another thing that needs to be attached would be the documentation as to a

resident agent. The purpose of having a resident agent is to have somebody who
is authorized to receive summons.

When we are speaking of a foreign private juridical entity, service of summons

should be made upon the resident agent.

Section 144 provides that this resident agent can be an individual or it can be a
corporation or judicial entity. If it is an individual, he must be of good moral
character and of sound financial standing. If it is a domestic corporation, it must
be of sound financial standing and must show proof that it is in good standing
with the Securities and Exchange Commission.

Part of the documentation of or in connection with a resident agent is the need to

have a written special power of attorney indicating the designation of a person
as a resident agent and whatever stipulations which may have been executed
between the foreign corporation and the resident agent. Furthermore, it shall be
the duty of the resident agent to immediately notify the SEC in writing of any
change in the address of the resident agent.

So when is a license issued to the Foreign Corporation? If the SEC is satisfied that
the applicant has complied with all the requirements of the Revised Cooperation
Code and other special laws rules and regulation, the SEC now will issue a license
which would allow the foreign corporation to transact business in the
Philippines. So this license which will allow it to transact business in the
Philippines. Upon issuance will signal commencement of the authority to
transact business and it will be allowed to transact business as long as it retains
its authority to act as a corporation under the laws of the country or state of
incorporation and unless the license is sooner surrendered, revoked, suspended
or annulled in accordance with the provisions of The Revised Corporation Code
after a license has been issued, there is the matter of the required deposit to
answer for liabilities in favor of the state and third persons.

These deposits shall initially start at a value of 500,000 pesos and within six
months after the end of each fiscal year, this actually required the licensee to
deposit additional securities or financial instruments equivalent to two percent
of the amount by which the licenses gross income for that fiscal year exceeds 10
million pesos.
There can also be a requirement for an additional deposit if the value of the
deposited securities or financial instruments have decreased by at least 10% of
their actual market value at the time they were deposited, then there is also the
possibility of a release of part of the deposit if there has been an increase in value
by more than 10% of their actual market value at the time they were or it was
deposited.

We now go to the applicable law to a foreign corporation. In so far as its

operations in the Philippines, Philippine law will be applicable but in so far as
creation, deformation, organization, and dissolution of a foreign corporation or
those which fix the relationships liabilities and responsibilities of stockholders
members or officers of that corporation, they will be governed by the law of the
country of incorporation.

If the articles or bylaws of a foreign corporation are to be amended that will be

covered by the law of the country of incorporation, however, within 60 days after
the effectivity of the amendment, they must file with the SEC, an appropriate
government agency, a duly authenticated copy of the articles or bylaws clearly
indicating the changes duly certified by the authorized official of the state of
incorporation.

What is important in this case is that the amendment should not enlarge or alter
the purpose for which it was issued a license because if the purpose is enlarged
or it is altered, then it should secure an amended license. If it does not secure an
amended license, we will have a situation where it is transacting business
without a license.

Going to mergers and consolidations. A foreign corporation can merge or

consolidate with a domestic corporation if the laws of the Philippines and the
laws of the state of incorporation will allow it. However, in implementing the
merger, the laws of the Philippines on merger or consolidation will be followed
so in this particular case, you have to understand that if a foreign corporation
will merge with a domestic corporation and the domestic corporation will be the
surviving corporation, then this is transformed into a domestic corporation. The
same is true when it is going to consolidate with a domestic corporation, the new
corporation would be considered as a domestic corporation. If it merges or
consolidates with another corporation in the country or state of incorporation
then it is required to file a duly certified copy of the Articles of Merger and
Consolidation with the SEC, an appropriate government regulating agency within
60 days from the date of effectivity.

But when the foreign corporation is absorbed be it a merger or a consolidation, it

is required to file a petition to withdraw its license because it is in effect
dissolved. Remember we were discussing earlier that the license will allow you
to transact business in the Philippines as long as it retains its authority to act as a
corporation. Once it is absorbed in a merger or a consolidation, it loses its
authority to act as a corporation.
Withdrawal of the license can happen by the filing a petition for withdrawal but
no certificate of withdrawal can be granted unless the following requirements
are met:
a. all claims that have accrued in the Philippines have been paid
b. compromised or settled all taxes imposed assessment and penalties if any
lawfully due the Philippine government any of its agencies or political
subdivisions have been paid
c. and the petition for withdrawal must be published in the newspaper of
general circulation in the Philippines once a week for three consecutive
weeks

Then you have the matter of revocation suspension or announcement under

Section 152. The license can be suspended or revoked based on the following
grounds:
a. the failure to pay fees or annual file annual reports
b. the failure to appoint and maintain a resident agent
c. the failure offered after a change of a resident agent or his address to
submit to dissect a copy or statement of the change
d. the failure to submit an authenticated copy of any amendment or any
article of merger or consolidation misrepresentation of any material
matter in the application report or affidavit failure to pay any and all taxes
in positions assessments and penalties transacting business outside the
purpose for which it was issued a license consulting business as an agent
or acting on behalf of a foreign corporation or entity not duly licensed in
the Philippines
e. or any other ground that would render it and fit to transact business in
this particular situations.

There can be a suspension or revocation of the license

Second part of this discussion the matter of transacting business. The

relevant provision is Section 150. Under Section 150, you will see the
consequence of transacting business without a license. If it is transacting
business with a license it is permitted to maintain or intervene in any action, suit
or proceeding in any court or administrative agency in the Philippines. If
otherwise it or its successors or assigns will not be permitted to maintain or
intervene in any action, suit or proceeding in any court or administrative agency
of the Philippines but it can be proceeded against before Philippine courts on any
valid cause of action.

So under section 150 you have this rule if it has a license and it transacts
business, it has access to our courts or to administer agencies. If it has no license
but transacts business, it has no access however there have been situations
where a foreign corporation with no license but transacting business would still
have access.

So with that situation, what is important to determine now is the manner by

which it transacts business that is determinative of access so the principles that
govern a foreign corporation's right to sue to simplify are as follows:
 1. It is transacting business without a license. It has no access.
2. It is not transacting business. There is no license. It has access. It is
transacting business with a license. It has access.

And if it is transacting business without a license there is the possibility of

estoppel because a Philippine national with which it may have transacted with
would be estopped from challenging the corporation's personality in a suit
before the Philippine courts.

So as already mentioned, we need to understand transacting business. Before we

can apply the rules that we have just discussed in the discussion outline, the
simplest way of defining it is to take a look at the character of the arc of the
foreign cooperation.

So you look at what is being performed and you ask yourself “Is it of such a
character as to distinctly indicate a purpose to do other business in the
Philippines?” If the answer is yes, it is transacting business.

What about the situation where you are talking of volume or amount? Here if
there are indications of the volume or the amounts of the business being
undertaken, then in all likelihood it is transacting business but if there is no
indication of volume or amount but you can see that there is an intent to
continue transacting business, it would be transacting business.

One case that comes to mind as an example would be the case of Japan Airlines
where it established a ticketing office. In that case, there was still no actual
transaction that was undertaken but the act of putting up a ticketing office is
indicative of the purpose to do other business in the Philippines or to perform an
act that will further the purpose for which it was created.

That is the easiest way by which you can determine whether it is transacting
business or not. So if you are aware or you are now able to determine that it is
transacting business, then you can go to the rules which again are as follows:

Transacting business with license (access)

Consulting business without a license (no access)
Not transacting business, no need for a license (it has access)

The exceptions to this rule are:

1. the isolated business transaction rule
2. when the foreign corporation is suing to protect its name reputation or its
goodwill
3. when it is soon to enforce a right that does not does not arise from a
business transaction in the Philippines
4. it is to be held answerable for any act or omission

Briefly when we speak of the isolated business transaction rule, it refers to a

business transaction or a series of business transaction that is set apart from the
normal or common business transactions of a foreign corporation. Where there
is no need or no intent rather to actively pursue the object or purpose for the
creation of the foreign cooperation.

The best example of an isolated business transaction would be when a

corporation is the only possible source of a material or a commodity and does
not really do business in the Philippines and you have somebody from the
Philippines who seeks them out to secure that commodity or that product. So
notwithstanding its reluctance, it will by way of an exception, enter into a
transact transaction. Yes, it is transacting business without a license but it would
have access because it would be covered by this rule because it is not actually
transacting business in the Philippines

We have defined it to be a situation where we can or there is an indication of a

purpose to do other business in the Philippines or to perform acts for which it
was created

The second is when a foreign corporation is suing to protect its name

reputation or goodwill. This exception is brought about or is based on our
membership in treaties and it is expressively recognized under our Intellectual
Property Code that we extend reciprocity to foreigners or aliens in so far as the
enforcement of their intellectual property rights. I remind you though of the
principles of reverse reciprocity

The third exception is when the foreign corporation is suing to enforce a

right thus that which does not arise out of a business transaction with a
party in the Philippines. So no business transaction was actually entered into
with a party in the Philippines or the business transaction was entered
elsewhere but the circumstances will allow it to sue in the Philippines. One
example would be when a business transaction is entered into between two
foreign corporations. Let us say in Hong Kong, where one of them is to ship
goods to Singapore and the carrier that is going to be utilized is a foreign carrier.
Yes, that was a business transaction but if something happens to the goods
attributable to the fault of the carrier a foreign corporation that is transacting
business can actually come to the Philippines and sue. The foreign carrier sued
the Philippine carrier because in this case it is suing to enforce a right which does
not arise out of a business transaction with a party in the Philippines

The fourth exception is to hold it liable for acts or omissions. A foreign

corporation may come to the Philippines not to engage in part any particular
business but may cause or may perform an act that will allow or will create a
cause of action in favor of a Filipino national or a Filipino corporation or entity so
they can be sued to hold it liable for acts or omissions.

To end this discussion, I have pointed out in the discussion outline certain cases
which may be helpful. So the first case has something to do with the status of the
contract entered into with the foreign corporation. The contract based on the
cited case of Home Insurance Company vs. Eastern Shipping is not void initially
so the contract is still one that may be enforceable.
In the case of Marilyn’s Futures, it illustrated the application of the doctrine of
estoppel because our laws were never intended to allow Filipino nationals or
Filipino corporations or juridical entities to allow them to enter into contracts
with foreign corporations and afterwards avoid their obligation to the foreign
corporation on account of the absence of a license.

And the last case the case of Top Weld Manufacturing illustrates the application
of the pari delicto rule where a parties meaning a foreign corporation and a
Filipino national or Filipino corporation enters into a corporate enters into a
transaction with knowledge that the transaction is tainted with illegality, the
doctrine or departed elector rule may be held to apply.