Director-General Cayetano W. Paderanga Jr.

June 5, 1990 Director-General Cayetano W. Paderanga Jr. National Economic and Development Authority Amber Avenue, Pasig, Metro Manila S i r : This refers to your letter dated March 30, 1990 requesting clarification on the alleged report that foreign consultants/consultancy firms registering with the Commission for purposes of complying with the "Guidelines on the Hiring of Consultants for Government Projects" formulated and prepared by the NEDA, which require foreign consultants to register with the SEC as a pre-condition to the awarding and/or approval of consultancy contracts, have been informed by SEC officials that they need not register with the Commission. As a general rule, a foreign corporation formed, organized and existing under any law other than those of the Philippines and whose laws allow Filipino citizens and corporations to do business in its own country or state 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 Corporation Code. (Sec. 23) However, there are instances wherein a foreign corporation may be exempted therefrom if its commercial dealing is limited to a single or isolated transaction and indicates no element of continuity of conduct in that respect. There is a unanimity of authorities to the effect that "where the corporation enters into a single agreement, or engages in some isolated business act or transaction within a particular state, with no intention to repeat the same or make such state a basis for the conduct of any part of its corporate business, such corporation cannot be said to be doing business or transacting business within the state, within the meaning of the usual statutory provisions regulating the transaction of business by foreign corporations." (17 Fletcher, Cyc. Corp. 1977. rev. vol.,sec. 8469 at 517) Thus, the Commission, on several occasions, has ruled that where a corporation enters into a single agreement or engages in an isolated business act or transaction within the Philippines, with no intention to repeat the same, such corporation cannot be said to be doing business or transacting business within the meaning of Section 23 of the Corporation Code. Under the present policy of the Commission, foreign corporations may be exempted from the licensing requirements by filing with the Commission an application for exemption stating the ground for such exemption. The Commission, upon favorable recommendation from the BOI and on the basis of circumstances presented, will determine on a case-to-case basis whether a particular act or limited undertaking constitutes an act of doing or transacting business in the Philippines. It appears, however, that under the "Guidelines on the Hiring of Consultants for Government Projects" formulated by NEDA foreign consultants for government projects are required to be registered with the Securities and Exchange Commission as a pre-condition to the awarding and/or approval of consultancy contracts involving foreign consultants. The said guidelines provide for no exception. In view thereof and in line with the Commission's policy to coordinate and cooperate with other government agencies to protect and serve the best interest of the government and the public in general, the Commission, in its meeting on June 1, 1990, resolved to implement the aforementioned NEDA requirement. Henceforth, foreign consultant firms of government projects, regardless of whether or not they are doing an isolated transaction, shall be required to be registered with the Commission. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman