Ms. Odette A. Javier

March 7, 2000 Ms. Odette A. Javier Diamond Drilling 344 South Superhighway Paraaque, Metro Manila Madam: This refers to your letter dated February, 11. 2000 requesting a certification that no service of summons may be effected thru the Securities and Exchange Commission upon a foreign entity which is not licensed to do business in the Philippines. As stated, there is a pending case with the Regional Trial Court of Makati. Branch 133 against Pacific Falkon Resources Corporation, a Canadian company. which is not registered with the Commission. Inasmuch as the defendant corporation is unlicensed in the Philippines, you moved the Court to allow the summons to be served by publication pursuant to the Rules of Court. The Court, however, ordered you to secure a certification from the SEC that the summon cannot be served thru the SEC, without which the motion will be denied. Hence, the above request. The scope of the Commission's jurisdiction is clearly defined under Presidential Decree No. 902-A, as amended which provides: "SECTION 3. The Commission shall have absolute jurisdiction ,supervision and control over all corporations, partnerships or associations, who are the grantees of primary franchises. and/or a license or permit issued by the government to operate in the Philippines ,and in the exercise of its authority, it shall have the power to enlist the aid and support of and to deputized any and all enforcement agencies of the government, civil or military as well as any private institutions, corporation, firm association or person."(Emphasis supplied) "SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving. .." (Emphasis supplied) It is clear from the above provisions that the Commission has no jurisdiction over foreign companies which are not registered with it. Likewise. the requirement under the Corporation Code relative to service of summons upon foreign corporations, quoted hereunder is applicable only to foreign corporations which are licensed to do business in the Philippines. "SECTION 128. Resident agent; service of process . The Securities and Exchange Commission shall require as a condition precedent to the issuance of the license to transact business in the Philippines by any foreign corporation that such corporation file with the Securities and Exchange Commission a written power of attorney designating some person who must be a resident of the Philippines, on whom any 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 corporation as its home office. Any such foreign corporation shall likewise execute and file with the Securities and Exchange Commission an agreement or stipulation, executed by the proper authorities of said corporation, in form and substance as follows. "The (name of foreign corporation) does hereby stipulate and agree, in consideration of its being granted by the Securities and exchange Commission a license to transact business in the Philippines , that if at any time said corporation shall cease to transact business in the Philippines, or shall be without any resident agent in the Philippines on whom any summons or other legal processes may be served, then in any action or proceeding arising out of any business or transaction which occurred in the Philippines, service of any summons or other legal process may be made upon the Securities and Exchange Commission and that such service shall have the same force and effect as if made upon the duly-authorized officers of the corporation at its home office." cdlex Whenever such service of summons or other process shall be made upon the Securities and Exchange Commission, the Commission 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 Commission shall be a necessary part of and such service shall be paid in advance by the party at whose instance the service is made. . . " (Emphasis supplied) Accordingly, service of summons upon a foreign corporation which is not licensed to do business in the Philippines cannot be effected thru the SEC. While the SEC, under the New Rules of Procedure of the Securities and Exchange Commission, quoted hereunder, may effect service of summons upon an unlicensed foreign corporation, the same applies only in situations where the company is a party to a case filed with it . "SECTION 9. Service by Publication . ...Likewise, when the respondent does not reside or is not found in the Philippines, service may, by leave of the Commission, be effected out of the Philippines by personal service in the manner provided under Section 6 hereof, and which may be effected through the Office of the Department of Foreign Affairs :or by publication of the complaint or petition once in a newspaper of general circulation and in such places as the Commission may order. ..." (Emphasis Supplied) Inasmuch as the case is not filed with the SEC, the above provision cannot be invoked. Instead, the pertinent provisions of the Rules of Court should be followed. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner