Atty. Miguelito V. Ocampo

March 7, 1988 Atty. Miguelito V. Ocampo Ocampo & Ocampo Mezzanine Floor Century Park Sheraton Hotel Vito Cruz cor. M. Adriatico Malate, Manila Sir : This has reference to your undated letter requesting opinion as to the extent and scope of the license of your client, Papillon International (UK) Ltd., vis-a-vis its charter and original articles of incorporation. The abovenamed foreign corporation was granted Certificate of Registration No. 1151 on July 9, 1986. It now intends to import semi-finished goods as part of its export trading business. Some indigenous materials will be added to the said goods to form finished products for export to your foreign buyers. In your letter, you quoted the following provisions of the certificate of registration: "The applicant proposes to establish a branch office in the Philippines to engage in the export trading of Philippine products, such as capiz items, baskets, ceramics, wood carvings, etc. to West Germany, Holland, Italy, Switzerland, England and U.S.A., subject to the condition imposed in the Certificate of Authority issued by the Board of Investments, (BOI) dated November 15, 1985." "Now, therefore, by virtue of the powers and duties vested in me by law, I do hereby license PAPILLON INTERNATIONAL (UK) LTD, to transact said business in the Philippines as it is authorized to do under its charter and the Corporation Code, Batas Pambansa Blg. 68, subject to the prohibitions and limitation of the Laws of the Philippines as regards foreign corporation and regards domestic corporation of like nature, including the Omnibus Investments Code (P.D. 1789) and other similar laws." In the light of the foregoing, you posed the following queries: 1. Will undertaking the abovementioned project violate the terms and conditions of its certificate of registration or any pertinent laws of the Philippines? 2. In undertaking the above described project our client is acting as a "contractor" and is pursuing a line of business which is incidental to its corporate purposes? Relative to these queries, quoted hereunder is the pertinent provision of the Corporation Code of the Philippines: "SECTION 123. Definition and rights of foreign corporations . For the purposes of this Code, a foreign corporation is one formed, organized or existing under any 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 it shall have obtained a license to transact business in this country in accordance with this Code and a certificate of authority from the appropriate government agency ." (emphasis supplied) In its application for a license filed with the Commission, a foreign corporation is explicitly required to state therein "the specific purpose or purposes of the corporation which it 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", which in your case is the B.O.I. (Section 125, par. 6, C.C.P.) It is therefore clear that aside from a license, a foreign corporation should also obtain a certificate of authority from the appropriate government agency, i.e., the Board of Investments which is charged with the responsibility of determining whether "such business or economic activity will contribute to the sound and balance development of the national economy on a self-sustaining basis." (Article 48, par. 2, the Omnibus Investments Code of 1987). In this connection, BOI Certificate of Authority No. 1664 authorizing Papillon International (UK) Ltd. "to establish a branch office in the Philippines to engage in the export trading of Philippine cottage products, such as capiz, items, basket, ceramics, wood carvings, etc. to West Germany, Holland, Italy, Switzerland, England and U.S.A. was granted subject to the following conditions: 1. That it shall not engage in any other line of business activity without prior Board Authority ; xxx xxx xxx." The above authority does not extend to other lines of business of the corporation, such as importation of semi-finished goods. Hence, your queries are answered in the negative. Please be advised, however, that should the foreign corporation desire to pursue in the Philippines other or additional purposes, it may submit to this Commission an application for an amended license, favorably indorsed by the appropriate government agency, i.e., the Board of Investments. (Section 131, C.C.P.) Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman