Article 12Supplement v1, p. 12

COMMERCIAL LAWS SUPPLEMENT

(c) Would be made in an enterprise engaged in an area

adequately being exploited by Philippine nationals; or

(d) Would conflict or be inconsistent with the Investment

Priorities Plan in force at the time the investment is

sought to be made; or

(e) Would not contribute to the sound and balanced

development

of

the

national

economy

on

a

self-sustaining basis.

Investments made in the form of foreign exchange or

other assets actually transferred to the Philippines shall

also be registered with the Central Bank. The Board shall

assess and appraise the value of such assets other than

foreign exchange.

CHAPTER III License to Do Business

ARTICLE 48. Authority to Do Business . — No alien, and no

firm, association, partnership, corporation or any other

form

of

business

organization

formed,

organized,

chartered or existing under any laws other than those of

the Philippines, or which is not a Philippine national, or

more than forty per cent (40%) of the outstanding capital

of

which is owned or controlled by aliens shall do

business or engage in any economic activity in the

Philippines or be registered, licensed, or permitted by the

Securities and Exchange Commission or by any other

bureau,

office,

agency,

political

subdivision

or

instrumentality of the government, to do business, or

engage

in

any

economic activity in the Philippines

without first securing a written certificate from the Board

of Investments to the effect:

(1) That the operation or activity of such alien, firm,

association, partnership, corporation or other form of

business

organization,

is

not

inconsistent

with

the

Investment Priorities Plan;

(2) That such business or economic activity will contribute

to the sound and balanced development of the national

economy on a self-sustaining basis;

(3)

That

such business or economic activity by the

applicant would not conflict with the Constitution or laws

of the Philippines;

(4) That the field of business or economic activity is not

one that is being adequately exploited by Philippine

nationals; and

(5) That the entry of applicant therein will not pose a clear

and

present

danger

of

promoting

monopolies

or

combinations in restraint of trade.

ARTICLE 49. Requirements to be Imposed by the Board .

— Upon granting said certificate, the Board shall impose

the following requirements on the alien or the firm,

association, partnership, corporation or other form of

business organization that is not organized or existing

under the laws of the Philippines —

(1) To appoint a citizen of the Philippines, of legal age,

good

moral

character

and

reputation,

and

sound

financial

standing,

as

resident

agent,

who

shall be

authorized to accept summons and other legal process in

behalf of the applicant;

(2) To establish an office in the Philippines and to notify

the Securities and Exchange Commission in writing of

the applicant's exact address and of every contemplated

transfer thereof or of the opening of new offices, at least

fifteen (15) days before the same are to be effected; and

once effected, not later than ten (10) days afterwards;

(3) To bring assets into the Philippines to constitute the

capital of the office or offices, of such kind and value as

the Board may deem necessary to protect those who

may deal with the applicant, and to maintain that capital

unimpaired during the period it does business in the

Philippines;

(4) To present prior proof that citizens of the Philippines

and

corporations

or

other

business

organizations

organized or existing under the laws of the Philippines

are allowed to do business in the country or individual

state within a federal country of which applicant is a

citizen or in which it is domiciled: Provided, however , That

if the state or country of domicile of the applicant

imposes on, or requires of, Philippine nationals other

conditions, requirements or restrictions besides those set

forth in this Code, the Board of Investments shall impose

the said other conditions, requirements or restrictions on

the applicant, if in its judgment, the imposition thereof

shall foster the sound and balanced development of the

national economy on a self-sustaining basis;

(5) To submit to the Securities and Exchange Commission

certified copies of applicant's charter and by-laws and all

amendments thereto, if any, with their translation into an

official language within twenty (20) days after their

adoption or after the grant of the prescribed certificate by

the Board of Investments and annually of applicant's

financial statements showing all assets, liabilities and net

worth and results of operations, setting out separately

those pertaining to the branch office;

(6) To keep a complete set of accounting records with the

resident agent, which shall fully and faithfully reflect all

transactions

within

the

Philippines,

and

to

permit

inspection

thereof

by

the

Securities

and

Exchange

Commission, the Bureau of Internal Revenue and the

Board of Investments;

(7)

To

give

priority

to

resident

creditors as against

non-resident creditors and owners or stockholders in the

distribution

of

assets

within

the

Philippines

upon

insolvency, dissolution or revocation of the license;

(8) To give the Securities and Exchange Commission at

least

six

(6)

months

advance

notice

in

writing

of

applicant's intention to stop doing business within the

Philippines; and to give such public notice thereof as the

Securities and Exchange Commission may require for the

protection of resident creditors and others dealing with

the protection of resident creditors and others dealing

with the applicant; and

(9) Not to terminate any franchise, licensing or other

agreement that applicant may have with a resident of the

Philippines

authorizing

the

latter

to

assemble,

manufacture or sell within the Philippines the products of

the applicant, except for violation thereof or other just

cause

and

upon

payment

of

compensation

and

reimbursement

of

investment

and

other

expenses

incurred by the licensee in developing a market for the

said

products:

Provided,

however,

That

in

case

of

disagreement,

the

amount

of

compensation

or

reimbursement

shall

be determined by the country

where the licensee is domiciled or has its principal office

who shall require the applicant to file a bond in such

amount as, in its opinion, is sufficient for this purpose.

The above requirements shall be in addition to those set

forth in the Corporation Code of the Philippines for

authorizing foreign corporations to transact business in

the Philippines.

ARTICLE 50. Cause for Cancellation of Certificate of

Authority or Payment of Fine . — A violation of any of the

requirements set forth in Article 49 or of the terms and

conditions

which

the

Board

may

impose

shall

be

sufficient cause to cancel the certificate of authority

issued pursuant to this Book and/or subject firms to the

payment of fines in accordance with the rules and

regulations issued by the Board: Provided, however , That

aliens

or

foreign

firms,

associations,

partnerships,

corporations or other forms of business organization not

organized or existing under the laws of the Philippines

which may have been lawfully licensed to do business in

the Philippines prior to the effectivity of R.A. 5455 , shall,

with respect to the activities for which they were licensed

and actually engaged in prior to the effectivity of said Act,

not be subject to the provisions of Articles 48 and 49 but

shall be subject to the reporting requirements prescribed

by the Board: Provided, further , That where the issuance

of said license has been irregular or contrary to law, any

person adversely affected thereby may file an action with

the Regional Trial Court where said alien or foreign

business organization resides or has its principal office to

© Compiled by RGL

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