Governor Gabriel C. Singson

October 7, 1981 Governor Gabriel C. Singson Senior Deputy Governor Central Bank of the Philippines Manila Dear Governor Singson: This refers to your letter of 25 September 1981, requesting opinion on whether or not the signing of the loan agreement in Manila covering the $100 million loan of the Central Bank to be extended by foreign banks constitutes doing business in the Philippines in the light of the provisions of the Corporation Code. We share your view that the signing of the loan agreement does not constitute doing business in the Philippines as it is merely a preliminary act of the parties. The loan itself and the delivery of funds will be consummated abroad so that it would not necessitate the licensing of foreign lenders in accordance with Philippine laws. In this connection, it is very appropriate to refer to Republic Act No. 5455, as amended (now the Omnibus Investments Code or PD 1789), as it defines the legal phrase "doing business" in the Philippines, to wit: "SECTION 1. ...;and the phrase 'doing business' shall include soliciting orders, purchases, service contracts, opening offices, whether called 'liaison' offices or branches, appointing representatives or distributors who are domiciled in the Philippines or who in any calendar year stay in the Philippines for a period or periods totalling one hundred eighty days or more, participating in the management, supervision or control of any domestic business firm, entity or corporation in the Philippines; and any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization". In view thereof, we believe that the mere act of signing the loan agreement is not of a character to indicate a purpose to engage in business within the meaning of the abovequoted provision of law. LibLex Please be advised accordingly. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman