Securities and Exchange Commission Philippines' Opinion on the Sony Entertainment Network

In April 2017, the Securities and Exchange Commission (SEC) of the Philippines issued its opinion regarding the legality of the Sony Entertainment Network (SEN) "doing business" in the Philippines. SEN is the precursor to the modern PlayStation Network (PSN).

The issued opinion, SEC-OGC Opinion No. 17-03, confirmed that if Sony Computer Entertainment Hong Kong (SCEH) operated the SEN in the Philippines, it would constitute as "doing business" thereby SCEH would be required to obtain a license for protection in Philippine courts. The document also revealed that Sony had been interested in opening SEN support in the Philippines since 2012, and again in 2017 (as the PSN) with the release of the PlayStation VR.

SEC-OGC Opinion No. 17-03 has since been cited by various law firms when discussing foreign corporations doing business in the Philippines using online platforms.

• March 27, 2010: The PlayStation 3 was launched in the Philippines, making it the first Sony console to have proper support.
• 2011: Sony Entertainment Network (SEN) was launched.
• July 25, 2012: Sony files a Request for Opinion to Securities and Exchange Commission (SEC) Philippines, asking if the SEN's activities are considered "not doing business" and therefore Sony Computer Entertainment Hong Kong (SCEH) does not require a license to operate in the Philippines. At this time, SEN was managed under SCEH in the SEA region until 2019.
• January 14, 2014: The PlayStation 4 was launched in the Philippines.
• January 28, 2015: SEN was shut down and was succeeded by the PlayStation Network (PSN).
• October 13, 2016: The PlayStation VR was launched in the Philippines.
• January 17, 2017: Sony Philippines submitted a Letter addressed to the President of the Philippines which mentions the lack of confirmation from the SEC regarding the license issue of the PSN (previously SEN). This letter was referred to the SEC.
• April 4, 2017: SEC issued its opinion to the 2012 request.

The Sony Entertainment Network (SEN) was a digital media delivery service operated by Sony. The PlayStation Network (PSN) was included as a part of SEN, however, on January 28, 2015, the PSN absorbed all the functionalities of SEN making the PSN the digital platform for all Sony services.

In 2012, the PlayStation brand was managed by Sony Computer Entertainment Hong Kong (SCEH) in the SEA region.

"Request for Opinion" is a request filed by an individual or company to the Securities and Exchange Commission of the Philippines in which the former asks for the SEC's "opinion" or legal advice regarding a topic. Request for Opinion is part of the responsibilities of the Office of the General Counsel (OGC) of the SEC.

Issued opinions are publicly available in the archives of the SEC Philippines website.

"Doing business" is a legal phrase in the Philippines and is defined under Section 3d of Republic Act No. 7042 (Foreign Investments Act of 1991). There are legal implications when a foreign corporation is considered "doing business" in the Philippines.

On July 25, 2012, Sony, through SyCipLaw Center, filed a Request for Opinion to the SEC Philippines. SCEH was a Hong Kong company, and the SEN was a digital service where its employees and servers were not located in the Philippines. With these facts, Sony asked for confirmation if SEN's activities, if applied in the Philippines, would not be considered "doing business" as a foreign corporation and is therefore not required to obtain a license from the SEC.

On January 17, 2017, Sony Philippines submitted a Letter addressed to the President of the Philippines regarding the PlayStation VR (PSVR). The letter mentioned that the PSVR offered a variety of games that could enhance learning skills. However, Filipinos could not avail of the service online as the PlayStation Network is not available in the country since SCEH still lacked confirmation from the SEC. The letter was referred back to the SEC, prompting a response.

On April 4, 2017, the SEC issued Opinion No. 17-03 as a reply to the 2012 Request for Opinion.^{[doc 1]} Through a variety of legal precedents and tests, the SEC determined that SEN's activities,^{[note 1]} if performed in the Philippines, would constitute as "doing business". The opinion is concluded with advice on how to register a corporation in the country, and lists requirements such as fees and the submission of annual reports.

Since the PSN is still not supported in the Philippines as of May 2024, it is speculated that Sony does not want to apply for a license in the Philippines. By not supporting the Philippines, the service could be argued as "not doing business" with the country.^{[note 2]}

The main question regarding the Request for Opinion was whether SEN's activities - a foreign-owned online platform that markets and sells digital goods and services with no physical footprint in the Philippines - would constitute as "doing business" as defined in the Foreign Investments Act of 1991. The answer affects the application of Section 150 of The Revised Corporation Code of the Philippines^{[note 3]} entitled "Doing business without a license".

Section 150 states that "No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws."

As SCEH operating SEN in the Philippines would constitute as "doing business", SCEH would require a license from the SEC to have, among other things, the ability to enforce its rights and file criminal cases in Philippine courts. If SCEH did not acquire a license, it would lose its protection from Philippines courts while still being susceptible to being proceeded against before the same courts. To put it simply, in the Philippines, SCEH can be sued, but it cannot sue.^[1]

If SCEH were found "not doing business" when operating SEN (as what it was trying to confirm in its Request for Opinion), SCEH could enforce its rights and file cases in Philippine courts even without a license.

1. By 2017, SEN was already replaced by the PSN.
2. This is pure speculation, as Sony has not stated any reason as to why the PSN is not supported in the Philippines.
3. The Corporation Code was revised in 2019. The original section was Section 133 of The Corporation Code of the Philippines.

1. PHILIPPINES: The internet and doing business in the Philippines. October 13, 2017. Jacquelyn Ann Marie G Anzures, ACCRA Law. In-House Community. Retrieved on 2024-05-22.

1. SEC-OGC Opinion No. 17-03 Re: Foreign Corporation; Doing business; Online Gaming