A foreign corporation seeking to do business in the Philippines may choose between establishing a subsidiary or a branch office in the country. The two have different requirements to comply with. On one hand, a subsidiary requires the establishment of incorporators and directors. On the other hand, the law requires branch offices to appoint a resident agent before the Securities and Exchange Commission grants them a license to do business in the Philippines.
A resident agent may be either an individual residing in the Philippines or a domestic corporation lawfully transacting business in the Philippines: Provided, that in the case of an individual, he must be of good moral character and of sound financial standing.[1] Notices, summonses and legal processes against the company are served upon the duly appointed and authorized resident agent of the foreign corporation.
A Board Resolution from the corporation is necessary to appoint a resident agent in the Philippines. Such appointment is revocable at the instance of the Company. Should the foreign corporation decide to change its resident agent, it must submit to the SEC a duly authenticated copy of the board resolution or certification from the duly authorized officer of the corporation formally revoking the appointment as resident agent, together with a duly authenticated written power of attorney designating a new person as resident agent.
A foreign corporation must also execute and file with the SEC an agreement or stipulation, executed by the proper authorities of the 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 SEC 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 summons or other legal processes may be made upon the SEC and that such service shall have the same force and effect as if made upon the duly authorized officers of the corporation officers of the corporation at its home office.
Finally, it is worth noting that the failure of a foreign corporation to appoint or maintain a resident agent as mandated by the law is a ground for the revocation of the license granted to a foreign corporation to do business.
[1] Section 127, Corporation Code of the Philippines.
