Subic and Clark launch 14-day business registration process

Good news for potential locators and investors in the Subic Bay Freeport and Clark Freeport Corridor.

Both the Subic Bay Metropolitan Authority (SBMA) and the Clark Development Corp. (CDC) have simplified and streamlined the business registration process into a tight 14-day timeline, to wit:

STAGE 1

Day 1
• The applicant shall submit a Letter of Intent, Business Proposal and other necessary documents to the Business & Investment Departments (BIDs)/Marketing Department

STAGE 2

Day 2, 3, 4, 5
• The BIDs/Marketing Department, in coordination with other concerned departments shall evaluate the documents.
• The BIDs/Marketing Department shall facilitate the signing of Letter of Conformity (LOC) between the applicant and the Freeport Authority. The LOC shall contain the area, location, lease rate and terms and conditions agreed upon.
• The BIDs/Marketing Department shall submit its recommendation to the CEO based on existing policies, rules and regulations.
• In case of disapproval the BIDs/Marketing Department shall state the specific reason/s for the same and the applicant may file for reconsideration.

STAGE 3

Day 6, 7, 8
• Upon the approval of the proposal by the CEO, based on the favorable recommendation of the BIDs/Marketing Department, a 30-Day Business Permit may be issued. In case of disapproval, the same shall be stated in writing, and the applicant shall be allowed to re-submit appropriated requirements for consideration and approval.

STAGE 4

Day 9, 10, 11
• The Applicant shall submit other documentary requirements and clearances necessary for the issuance of CRTE/RC.

STAGE 5

Day 12, 13, 14
• The applicant and Freeport Zone Authority shall sign the Lease Agreement provided that the lessee has already acquired juridical personality either from Securities and Exchange Commission (SEC) or the Department of Trade and Industry (DTI), in case of local companies; or license from SEC in case of foreign-registered corporation.
• The applicant shall pay the necessary fees.
• The Freeport Authority shall issue the CRTE/RC. (From the SBMA website)

The application for SEC registration may be pursued once the SBMA or CDC issues an endorsement which is usually given during Stage 2, after an initial evaluation of the documents has been done. Kudos to both Freeport managements!

Creative and innovative ways of developing and managing your real estate portfolio

Real estate owners and developers in the Philippines may take a look at and consider co-development agreements as an efficient and creative way of developing and managing their land bank, even as such agreements also point to inexhaustible sources of funds (both local and foreign), and without risking the potential loss of the property from their hands. Funding, operation and control of businesses may be amply addressed by this kind of arrangement. Excerpts:

MEMORANDUM OF AGREEMENT

FOR CO-DEVELOPMENT

KNOW ALL MEN BY THESE PRESENTS:

This Memorandum of Agreement for Co-Development made and entered into by and between: 

__________________________ (hereinafter referred to as “____________”), a corporation duly organized and existing under and by virtue of the laws of the Republic of Philippines, with principal place of business located at _______________________, Philippines, represented herein by its President __________________, of legal age, Filipino citizen, married;   

- and -

__________________________ (hereinafter referred to as “____________”), of legal age, ________________ citizen, ________________ , with business address at _________________________________________________________;

WITNESSETH, That:

           

Whereas, _________________, by virtue of the Lease Agreement (“Lease”) it entered into with ___________________ (“___________”), has leasehold rights over a _________-hectare parcel of land located at ___________________________, said property identified  under the Lease and is known as ______________________;

            Whereas, ____________ is obliged to develop the _____________ pursuant to its commitment under the Lease;

            Whereas, _________________________ having the necessary capability and the required funds, offered to develop and/or finance the development of a portion of _________________, which offer ___________has accepted;

            NOW THEREFORE, for and in consideration of the covenants and stipulations, terms and conditions herein contained, the parties have agreed as follows:

1.      ________________________ , for a minimum budget of Five Million Pesos (Php5,000,000.00), shall cause the development and finance the construction of _______________, fully furnished, complete with landscaping, pathways, private fences, water system (septic tanks and other applicable accessories), electrical facilities, which will have a separate entrance to ___________ area (hereinafter referred to as the “Project.”) The specifications are as follows:

 xxx

The units and related facilities and amenities shall be built in accordance with the drawings, plans and specifications submitted by ____________________ to _________ which shall approve the same and have the right of inspection and visitation anytime during the construction.

2.      ___________ shall allow _______________________  to take actual physical possession of a _____________-square meter (_____-sq.m.) portion of _______________, solely for purposes of construction. The sketch map of its location within _____________ shall be provided by ____________.

3.      ____________________ shall construct those enumerated in par. 2, i.e., the Project, in accordance with the terms and conditions set forth under the Lease, and with the laws, ordinances, rules and regulations of the City pertinent to building of structures.

4.      ________________, at __________________ ‘s expense, shall secure all the necessary clearances, approval and/or permits from the City, the power, water and telecommunication supplies from _________________________, respectively.

  

5. ____________________ binds itself to finish the construction within _____ days, counted from the date of signing of this Agreement, xxx

Basic queries of foreigners desiring to do business in the Philippines

Our company is an LLC (limited liability company). It provides an umbrella under which individuals may operate and receive individual immunity similar to those enjoyed by shareholders in a corporation.  It has the advantage that income flows through to the members of the LLC and is taxed at their individual rates.  There is no “corporate” tax.  My questions are as follows:

a.  Is there a similar entity in the Philippines? There is none.

b.  Would the Philippines give full faith and credit to this American entity under the rules of comity? Recognition as such legal entity in America, yes. But to actually conduct business in the Philippines pursuant to its purpose/s, an entity must be duly registered as a Philippine corporation.

c.   Would the American LLC be recognized in the Philippines as a legitimate owner of the entity which we form there? Yes.

d.   Are shareholders or the individual owners and officers shielded from individual legal liability for the acts of the corporation?  If not, what is their exposure? As a general rule, shareholders and officers of the corporation are not liable for such acts. However, directors and other officers who willfully and knowingly vote for or assent to patently unlawful acts of the corporation, or who are guilty of gross negligence or bad faith in directing the affairs of the corporation, or acquire any personal or pecuniary interest in conflict with their duty as such directors, trustees or officers, shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons.

With respect to debts or monetary obligations of the corporation, shareholders are liable only to the extent of their subscriptions.

e.   In some civil law countries, officers and owners of corporations can face criminal penalties for what we consider civil matters in this country.  What is the law in the Philippines and what risks must we consider? Please elaborate on the acts or omissions considered civil matters in America. At any rate, the Philippine Corporation Code (“Code”) provides that, violations of any of the provisions of the Code or its amendments shall be punished by a fine of not less than one thousand (P1,000.00) pesos but not more than ten thousand (P10,000.00) pesos, or by imprisonment for not less than thirty (30) days but not more than five (5) years, or both, in the discretion of the court.

f.   Likewise, can the officers and shareholders of a company be held liable for the acts of the corporation in the Philippines? In the absence of malice, bad faith, or specific provision of law, a director or an officer of a corporation cannot be made personally liable for corporate liabilities.

g.   How difficult or easy is for someone to pierce the corporate veil in the Philippines? This one really depends on the lawyer and the surrounding circumstances.The doctrine of piercing the corporate veil applies only in three (3) basic instances, namely: a) when the separate and distinct corporate personality defeats public convenience, as when the corporate fiction is used as a vehicle for the evasion of an existing obligation; b) in fraud cases, or when the corporate entity is used to justify a wrong, protect a fraud, or defend a crime; or c) is used in alter ego cases, i.e., where a corporation is essentially a farce, since it is a mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation.

h.   Are employees permitted to sue their employers for personal injury? In cases of work-connected disability, sickness or death, the Philippines has a law entitled  Employees’ Compensation and State Insurance Fund (“Fund”). The liability of the Fund is exclusive and in place of all other liabilities of the employer to the employee or his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents.However, under our law on quasi-delicts (in the New Civil Code), employees may still sue the corporation and its officers for civil damages if malice or bad faith on the part of the latter contributed to such injuries.     For injuries caused by fellow employees? Again, under our law on quasi-delicts, the owners and managers of an establishment or enterprise are responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions.

Such responsibility ceases when the owners and managers prove that they observed all the diligence of a good father of a family to prevent damage.

i.    Are there any special labor laws we should be aware of, i.e. labor relations, pension and health benefits, are employees, employees at will, etc.?

Yes. The Labor Code, the Social Security Law, the Employees’ Compensation and State Insurance Fund, and the National Health Insurance Act are the most important laws.