Valdez, Ereso, Valdes and Associates

March 26, 1991 Valdez, Ereso, Valdes and Associates 5th Flr.,CJVC Bldg., 103 Aguirre St.,Legaspi Vill., Makati, M. M. Attention : Atty. Jose N. Rodulfa SUBJECT : SWEDPOWER Gentlemen : This refers to your letter dated 12 February, 1991 requesting confirmation of this Commission that the above foreign corporation is exempted from the licensing requirements under the Corporation Code. From your letter, we gathered the following facts: 1. SWEDPOWER (the "company") is a Swedish consultancy company which entered into a contract with the National Power Corporation (NAPOCOR) for consultancy services regarding the implementation of proposed extensions in the master plan for the power system in the Philippines; 2. The transaction is an isolated one and the company does not intend to undertake other projects in the Philippines; 3. The BOI has granted the company an exemption from the registration requirements under the Omnibus Investments Code (Exec. Order No. 226) in a letter to the company dated January 22, 1991. Under Sec. 123 of the Corporation Code of the Philippines, a foreign corporation 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 the Code and a certificate of authority obtained from the appropriate government agency which is the Board of Investments (BOI). The phrase "doing business" as defined under Executive Order 226, implies a "continuity of commercial dealings or arrangements" and contemplates "the performance of acts or works or the exercise of the functions normally incident to and in progressive prosecution of commercial gain or of the purpose and object of the business organization". Where the transaction is single and isolated, with no intention of repeating the same, the corporation cannot be said to be doing business within the state (17 Fletcher, Cys. Corp. 1977 rev. vol. sec 8469 at 517). In such case, the foreign corporation may apply for exemption from the registration requirements as stated in Sec. 123 of the Code, with this Commission. However, in your particular case, please be advised that the National Economic and Development Authority (NEDA), pursuant to Executive Order No. 164 has issued "Guidelines on the Hiring of Foreign Consultants for Government Projects" dated May 5, 1987. Under the guidelines, foreign consultants for government projects are required to be registered with the Securities & Exchange Commission (SEC) as a pre-condition to the awarding and/or approval of consultancy contracts involving foreign consultants. The guidelines provide for no exceptions. Accordingly, all foreign consultants firms of government projects, regardless of whether or not they are transacting an isolated transaction, shall be required to secure a license from or be registered with this Commission. Attached is a xerox copy of SEC letter dated June 5, 1990 to NEDA Director-General Cayetano W. Paderanga, Jr. regarding this matter for your information and guidance. Very truly yours, (SGD.) ARMANDO Z. GONZALES Associate Commissioner