Corporations 13.2: Foreign Corporations - Resident Agent, Doing Business, Isolated Transactions

Summary

In this episode of 'Attorneys of Vlogger,' the discussion centers on the requirements for foreign corporations to do business in the Philippines, emphasizing the necessity of obtaining a license. The host explains the role of a resident agent, the conditions under which foreign entities can be sued or sue in Philippine courts, and clarifies the concepts of 'doing business' versus 'isolated transactions.' Key points include the implications of conducting business without a license, the types of activities that constitute doing business, and the legal consequences of contracts formed by unlicensed foreign corporations.

Takeaways

• 😀 A foreign corporation must obtain a license to legally transact business in the Philippines.
• 😀 A resident agent is required to receive legal documents on behalf of the foreign corporation.
• 😀 The absence of a license does not prevent a foreign corporation from being sued in Philippine courts.
• 😀 'Doing business' involves continuous activities such as soliciting orders and opening offices, which suggest profit-making intent.
• 😀 Two tests determine if a foreign corporation is doing business: the substance test and the continuity test.
• 😀 An isolated transaction does not indicate a broader business intention and does not require a license.
• 😀 Contracts made by unlicensed foreign corporations may be unenforceable but can still allow them to sue under specific conditions.
• 😀 Filipino entities engaging with unlicensed foreign corporations may be estopped from challenging the corporation's legal status.
• 😀 The law aims to prevent unjust enrichment by ensuring that those who benefit from contracts cannot later deny the corporation's legitimacy.
• 😀 The requirement for a license is primarily to ensure that foreign corporations can be held accountable under Philippine law.

Q & A

What is the purpose of a resident agent for foreign corporations in the Philippines?

The resident agent serves as the entity upon whom legal summons and processes against the foreign corporation can be served, allowing Philippine courts to acquire jurisdiction over the corporation.

What are the requirements for a resident agent in the Philippines?

A resident agent can be an individual of good moral character and sound financial standing or a domestic corporation in good standing, certified by the SEC.

What happens if a foreign corporation conducts business in the Philippines without a license?

Such a corporation cannot sue in Philippine courts but can be sued on valid causes of action recognized under Philippine law.

What distinguishes 'doing business' from 'isolated transactions' for foreign corporations?

'Doing business' implies a continuity of commercial dealings, while 'isolated transactions' refer to actions that are not intended to establish a regular business presence.

What criteria define whether a foreign corporation is 'doing business' in the Philippines?

Criteria include soliciting orders, opening offices, appointing representatives, and engaging in acts that imply ongoing commercial activity.

Can a foreign corporation sue in the Philippines if it has no license?

Yes, it can sue for isolated transactions that do not indicate an intention to do business, such as protecting trademarks or addressing non-business disputes.

What is an example of an act that is not considered 'doing business' in the Philippines?

Maintaining a stock of goods solely for processing by another entity is not considered doing business.

How does the law treat contracts entered into by a foreign corporation without a license?

Contracts may be unenforceable and potentially void, but they do not affect innocent parties who entered into agreements in good faith.

What is the 'substance test' and 'continuity test' in the context of foreign corporations?

The substance test assesses if a foreign corporation is continuing its core business activities, while the continuity test looks at whether its actions indicate ongoing commercial relationships.

What could indicate that a foreign corporation has the intention to conduct business in the Philippines?

Engaging in activities such as repeated sales or hiring agents to sell products can suggest an intention to establish a business presence.