F.
Foreign corporations
i. Bases of authority over foreign
corporations
i. Consent
 a foreign corporation is one
formed, organized or existing under laws
other than those of the Philippines' and
whose laws allow Filipino citizens and
corporations to do business in its own
country or State. It shall have the right to
transact business in the Philippines after
obtaining a license for that purpose in
accordance with this Code and certificate
of authority from the appropriate
government agency.
ii. Doctrine of “doing business”
“doing business” in the Philippines,
the foreign corporation must actually
transact business in the Philippines. It
must perform specific business
transactions within the Philippine territory
on a continuing business on its own name
and on its own account.  If no such
transaction takes place then the foreign
corporation is not deemed to be doing
business in the Philippines.
ii. Necessity of a license to do business.
A. Requisites for issuance of a license
A foreign corporation applying for a
license, shall submit to the Commission a
copy of its articles of incorporation and
bylaws, and their translation to an official
language of the Philippines, if necessary.
The application shall be under oath and,
unless already stated in its articles of
incorporation, shall specifically set forth
the following:
(a) The date and term
incorporation;
(b) The address including the street
number, of the principal office of
the corporation in the country or
State of incorporation;
(c) The name and address of its
resident agent authorized to
accept summons and process in all
legal proceedings and all notices
affecting the corporation, pending
the establishment of a local office;
(d) The place in the Philippines
where the corporation intends to
operate;
(e) The specific purpose or
purposes which the corporation
intends to pursue in the
transaction of its business in the
Philippines: Provided, That said
purpose or purposes are those
specifically stated in the certificate
of authority issued by the
appropriate government agency;
(f) The names and addresses of the
present directors and officers of
the corporation;
(g) A statement of its authorized
capital stock and the aggregate
number of shares which the
corporation has authority to issue,
itemized by class, par value of
shares, shares without par value,
and series, if any;
(h) A statement of its outstanding
capital stock and the aggregate
number of shares which the
corporation has issued, itemized by
of class, par value of shares, shares
without par value, and series, if specifically application for license,
any; the commission may issue the
license called for the purpose set in
(i) A statement of the amount and the applying foreign
actually paid in; and corporation may commence to
transact business in the Philippines
(j) Such additional information as and continue to do so for as long as
may be necessary or appropriate in it retains authority to act as a
order to enable the Commission to corporation under the laws of the
determine whether such State.
corporation is entitled to a license
to transact business in the B. Resident Agent
Philippines, and determine and
assess the fees payable. a. Who are?
a. RA may be either
It shall also attached in the individual or domestic
application a certificate under oath corpo.; both must be of
by the authorized officials, in sound financial
attesting standing; and in good
moral character for
1. the fact of the law of the individual.
country allow Filipino citizen b. Such corpo shall file with
and corporation to do business the commission a
therein written power of
attorney designation
2. the applicant is an existing who shall be a resident
corporation in good standing of the Philippines and
whom summons and
3. If the certificate is in a foreign other legal process may
language, a translation thereof be served.
in English under oath of the
translator shall be attached to C. Amendment of license
the application.
In the event it changes its
4. That the applicant is solvent corporate name, or desires to
and in sound financial pursue other or additional
condition, executed by the purposes in the Philippines, the
president or any authorized corpo shall obtain an amended
person of corpo. license by submitting an
application to the Commission.

If the Commission is satisfied that

the applicant has complied with all iii. Personality to Sue
the requirements set forth above
 Once the corporation acquired its
own license and is transacting or doing
business, it shall have the right such as
Domestic Corporation; further shall be
permitted to maintain or intervene in any
action, suit or proceeding in any court or
administrative agency of the Philippines.
iv. Suability of foreign corporation.
A foreign corpo may be sued if;
1. If doing business in the Phil. with
license
2. If doing business in the Phil.
without license
If no license and not doing business,
cannot be sued, because of lack of
jurisdiction.
v. Instances when unlicensed foreign
corporations may be allowed to sue.
It must be noted that the
unlicensed corporation doing business
cannot sue; but unlicensed corpo NOT
doing business CAN sue.
a. Cases of isolated transactions with
other entities, even if it is done
pursuant to the usual business of
the corporation. (Western supply v.
Reyes)
b. To protect its trademark,
tradename, corporate name,
reputation, or goodwill; even in
cases of unfair competition. (
Fredco Manufacturing vs. Harvard)
c. Merely defending a suit against it
(Time Inc. vs. Reyes.)
d. In cases of estoppel (Rimbunan
Hijau vs. Oriental Wood.)
vi. Grounds for revocation of license.
(a) Failure to file its annual report
or pay any fees as required by this
Code;
(b) Failure to appoint and maintain
a resident agent in the Philippines
as required by this Title;
(c) Failure, after change of its
resident agent or address, to
submit to the Commission a
statement of such change as
required by this Title;
(d) Failure to submit to the
Commission an authenticated copy
of any amendment to its articles of
incorporation or bylaws or of any
articles of merger or consolidation
within the time prescribed by this
Title;
(e) A misrepresentation of any
material mater in any application,
report, affidavit or other document
submitted by such corporation
pursuant to this Title;
(f) Failure to pay any and all taxes,
imposts, assessments or penalties,
if any, lawfully due to the Philippine
Government or any of its agencies
or political subdivisions;
(g) Transacting business in the
Philippines outside of the purpose
or purposes for which such
corporation is authorized under its
license;
 (h) Transacting business in the
Philippines as agent of or acting on
behalf of any foreign corporation
or entity not duly licensed to do
business in the Philippine; or
(i) Any other ground as would
render it unfit to transact business
in the Philippines.
13. Merger and Consolidation
i. Definition and Concept.
Merger, it is an agreement of two
companies, forming together where the
company taking over is left as the existing
entity.
Consolidation, takes place when
different ventures come together,
combine forces, and join into one
completely new venture
The combination of one or
more corporations, or
other business entities into a and, in case of consolidation, all the
single business entity; the joining of two
or more companies to achieve greater
efficiencies of scale and productivity
ii. Constituent vs. Consolidated Corporation
Constituent corporation means a the proposed merger or consolidation as
corporation which is merged with or into one
or more other corporations or one or more
other business entities and includes a
surviving corporation.  members,articles of merger or articles of
Simply those are the corporation involved
in the merger.
Consolidated corpo. is the union of two or
more corpo. forming into one corporation.
iii. Plan of merger or consolidation.
Two (2) or more corporations may merge
into a single corporation which shall be one
of the constituents corporations or may
consolidate into a new single corporation
which shall be the consolidated corporation.
The board of directors or trustees of each
corporation, party to the merger or
consolidation, shall approved a plan of
merger or consolidation, setting forth the
following:
(a) The names of the corporations
proposing to merge or consolidate
hereinafter referred to as the constituent
corporations;
(b) The terms of the merger or
consolidation and the mode of carrying
the same into effect;
(c) A statement of the changes, if any, in
the articles of incorporation of the
surviving corporation in case of merger;
statements required to be set forth in the
articles of incorporation for corporations
organized under this Code; and
(d) Such other provisions with respect to
are deemed necessary or desirable.
iv. Articles of Merger or Consolidation. -
After the approval by the stockholders or
consolidation shall be executed by each of
the constituent corporations, to be signed
by the president or vice president and
certified by the secretary or assistant
secretary of each corporation setting forth
(a) The plan of the merger or the
plan of consolidation;
(b) As to stock corporations, the
number of shares outstanding, or
in the case of nonstock
corporations, the number of
members;
(c) As to each corporation, the
number of shares or members
voting for or against such plan,
respectively;
(d) The carrying amounts and fair
values of the assets and liabilities
of the respective companies as of
the agreed cut-off date;
(e) The method to be used in the
merger or consolidation of
accounts of the companies;
(f) The provisional or pro forma
values, as merged or consolidated,
using the accounting method; and
(g) Such other information as may
be prescribed by the Commission.
v. Steps to achieve merger or
consolidation
1. The BoD of each corporation must draw
up a plan of merger or consolidation.
2. A plan must be submitted to the S/M of
each corporation for approval. The vote or
two-thirds (members) or two-thirds of the
outstanding capital stock (stockholders)
would be required.
3. There has to be a formal agreement
known as the articles of M/C by the
officers of each of the constituent
corporations.
4. The articles of M/C must be submitted
to the SEC for approval.
5. The SEC shall if it deems necessary set a
hearing giving notice to all corporations
concerned.
6. The SEC issues the certificate of M/C.
The M/C becomes effective upon the
issuance of the corresponding certificate.
 vi. Effectivity.
The articles of M/C, signed and
certified shall be submitted to the
Commission for approval; if the Comm. is
satisfied that it is consistent with the law,it
shall issued a certificate of approval of
articles/ plan of merger/consolidation, at
which time it is deemed effective.
If not and the Comm, has reason to
believed it is inconsistent with the law, it
shall set a hearing give the corpo the
opportunity to be heard. Notice of time,
date, place shall be given at least 2 weeks
before the hearing.
vii. Effects.
a) The constituent corporations shall
become a single corporation, in case of
merger, shall be the surviving corporation
designated in the plan of merger; and in
case of consolidation, shall be the
consolidated corporation designated in
the plan of consolidation;
(b) The separate existence of the
constituent corporations shall cease,
except that of the surviving or the
consolidated corporation;
(c) The surviving or the consolidated
corporation shall possess all the right,
privileges, immunities and franchises of
each constituent corporation; and all real
or personal property, all receivables due
on whatever account, including
subscriptions to shares and other choses
in action, and every other interest of,
belonging to, or due to each constituents
corporation, shall be deemed transferred
to and vested in such surviving or
consolidated corporation as though such
surviving or consolidated corporation had
itself incurred such liabilities or
obligations; and any pending claim, action
or proceeding brought by or against any
constituent corporation may be
prosecuted by or against the surviving or
consolidated corporation. The rights of
creditors or liens upon the property of
such constituent corporations shall not be
impaired by the merger or consolidation.
14. Investigations, Offenses and Penalties.
A. Authority of Commissioner
i. Investigation and prosecution of
offenses
 The Commission may investigate an
alleged violation of this Code, or of a rule,
regulation, or order of the Commission.
The Commission may publish its findings,
orders, opinions, advisories, or
information concerning any such violation,
as may be relevant to the general public or
to the parties concerned, subject to the
provisions of Republic Act No. 10173,
otherwise known as the "Data Privacy Act
of 2012", and other pertinent laws.
The Commission shall give reasonable
notice to and coordinate with the
appropriate regulatory agency prior to any
such publication involving companies
under their regulatory jurisdiction.
ii. Administration of oath and issuance of
subpoena.
The Commission, through its
designated officer, may administer oaths
and affirmations,
issue subpoena and subpoena duces
tecum, take testimony in any inquiry or
investigation, and may perform other acts
necessary to the proceedings or to the
investigation.
iii. Cease and desist power
If the Commission believe that a
person has violated or is about to violate
this Code, it may direct such person to
desist from committing the act constitute
violation.
The comm., has the power to issue
cease and desist order ex parte, if the act
would result significant, imminent,
irreparable danger or injury to public
safety/welfare. Order is valid for 20 days,
without prejudice to make it permanent
after notice/hearing.
iv. Contempt
The Commission may after due
notice and hearing held in contempt and
fined in an amount not exceeding 30,ooo
to any person who unjustifiable cause,
fails, refusesto comply with lawful order,
decision or subpoena. Further, the
comm., may impose daily fine of 1,000
when the refusal to order, decision,
subpoena amounts to clear and open
defiance
B. Sanctions for Violations
i. Admin. Sanctions
If after due notice and hearing, the
commission finds the its order has
been violated or to any law, rules
and regulations, code, the comm,
may impose any or all of these
sanctions:
(a) Imposition of a fine ranging from Five
thousand pesos (₱5,000.00) to Two
million pesos (₱2,000,000.00), and not
more that One thousand pesos
(₱1,000.00) for each day of continuing
violation but in no case to exceed Two
million pesos (₱2,000,000.00);
(b) Issuance of the permanent cease and
desist order;
(c) Suspension or revocation of the
certificate of incorporation; and
(d) Dissolution of the corporation and
forfeiture of its assets under the
conditions in Title XIV of this Code.
ii. Prohibited Acts
a. Unauthorized use of corporate
names
b. Violation of disqualifications
provisions
c. Violation of duty to maintain
records, to allow their inspection
and reproduction
d. Willful certification of incomplete,
inaccurate false, or misleading
statement or reports
e. Independent auditor collusion
f. Obtaining Corporate Registration
Through Fraud
g.  Fraudulent Conduct of Business
h. Acting as Intermediaries for Graft
and Corrupt Practices
i. Engaging Intermediaries for Graft
and Corrupt Practices
j. Tolerating Graft and Corrupt
Practices
k. Retaliation Against Whistleblowers
l. Other Violations of the Code
iii. Who are liable?
If the offender is a corporation, the
penalty may, at the discretion of the court,
be imposed upon such corporation and/or
upon its directors, trustees, stockholders,
members, officers, or employees
responsible for the violation or
indispensable to its commission.
Commission may also punished
with a fine not exceeding that imposed on
the principal offender, to anyone who aid,
abet, counsel, command, induce or cause
the violation of this Code.
C. Authority of the SEC
D. The Commission shall have the
power and authority to:
E. (a) Exercise supervision and
jurisdiction over all corporations
and persons acting on their behalf,
except as otherwise provided
under this Code;
F. (b) Pursuant to Presidential Decree
No. 902-A, retain jurisdiction over
pending cases involving intra-
corporate disputes submitted for
final resolution. The Commission
shall retain jurisdiction over
pending suspension of
payment/rehabilitation cases filed
as of 30 June 2000 until finally
disposed;
G. (c) Impose sanctions for the
violation of this Code, its
implementing rules and orders of
the Commission;
H. (d) Promote corporate governance
and the protection of minority
investors, through, among others,
the issuance of rules and
regulations consistent with
international best practices;
I. (e) Issue opinions to clarify the
application of laws, rules and
regulations;
J. (f) Issue cease and desist orders ex
parte to prevent imminent fraud or
injury to the public;
K. (g) Hold corporations in direct and
indirect contempt;
L. (h) Issue subpoena duces tecum and
summon witnesses to appear in
proceedings before the
Commission;
M. (i) In appropriate cases, order the
examination, search and seizure of
documents, papers, files and
records, and books of accounts of
any entity or person under
investigation as may be necessary
for the proper disposition of the
cases, subject to the provisions of
existing laws;
N. (j) Suspend or revoke the
certificate of incorporation after
proper notice and hearing;
O. (k) Dissolve or impose sanctions on
corporations, upon final court
order, for committing, aiding in the
commission of, or in any manner
furthering securities violations,
smuggling, tax evasion, money
laundering, graft and corrupt
practices, or other fraudulent or
illegal acts;
P. (l) Issue writs of execution and
attachment to enforce payment of
fees, administrative fines, and
other dues collectible under this
Code;
Q. (m) Prescribe the number of
independent directors and the
minimum criteria in determining
the independence of a director;
R. (n) Impose or recommend new
modes by which a stockholder,
member, director, or trustee may
attend meetings or cast their
votes, as technology may allow,
taking into account the company’s
scale, number of shareholders or
members, structure, and other
factors consistent with the basic
right of corporate suffrage;

S. (o) Formulate and enforce

standards, guidelines, policies,
rules and regulations to carry out
the provisions of this Code; and

T. (p) Exercise such other powers

provided by law or those which
may be necessary or incidental to
carrying out the powers expressly
granted to the Commission.