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CONFLICTS

CONFLICTS

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Published by Irish Precion
conflicts of law foreign corporations
conflicts of law foreign corporations

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Published by: Irish Precion on Feb 25, 2013
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07/13/2014

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 CONFLICT OF LAWS:CHOICE OF LAW AFFECTING FOREIGNCORPORATIONS
SUBMITTED TO: ATTY. MARCIANO G. DELSONProfessorSUBMITTED BY:LAISA AGUILAJOANNE CARLA CATALLARON ERWIN ESQUIVELLEA OBEJERAIRISH PRECIONJO MARIE ANGELI VIBANDOR15 FEBRUARY 2013
 
FOREIGN CORPORATION
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Is one formed, organized or existing under any laws other than those of the Philippinesand whose laws allows Filipino citizens and corporations to do business in its owncountry or state.
PREREQUISITE FOR A FOREIGN CORPORATION TO LAWFULLY TRANSACT BUSINESS IN THEPHILIPPINES:
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The law of the of its incorporation allows Filipino citizens and corporations to dobusiness in said country;
 
There must be reciprocity in business relations between the country where theforeign corporation was incorporated and the Philippines, where it intends to dobusiness.
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It must secure a license to transact business in this country in accordance with this codeand a certificate of authority from the appropriate government agency.
 
If it transacts business in the Philippines without such license, it may not bepermitted to maintain or intervene in any action, suit or proceed in any court oradministrative agency of the Philippines; its official or agent responsibletherefor may also be held criminally thereof.
CLASSIFICATION OF FOREIGN CORPORATIONS:
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Under the Tax Code:
 
RESIDENT FOREIGN CORPORATION
are those which have been issued licenseto transact business in the country and are thus taxed in the same manner asdomestic corporations insofar as their income from within the Philippines areconcerned and are thus entitled to claim deductions for expenses.
 
NON RESIDENT FOREIGN CORPORATIONS
are those without license to dobusiness in the country, whether or not they are actually doing business, andthey are taxed on their gross income from within the Philippines by a certainpercentage thereof.
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Under the Corporation Code:
 
A domestic corporation or corporation organized under the Corporation codemay, for certain purposes, be classified as corporation with foreign nationalityor citizenship of the country of the foreign investors who own certainpercentage of the capital stock of said corporation.
 
In times of war, a domestic corporation will be regarded as a foreign corporationwhere its controlling stockholders are foreigners, which means that they own at least 51% of the outstanding capital stock of said corporation.
 
 
For purposes of investment by foreign investors in partly nationalizedindustries or businesses, the test applied to determine when a corporation idFilipino corporation is whether at least 60% of its capital stock is owned byFilipino citizens or by corporations the capital stock of which is owned to theextent of at least 60% thereof. If the Filipino ownership is less than 60%, onlythe shares owned by Filipino citizens are considered Filipino owned, and thecorporation is then disqualified from engaging in any business which requiresFilipino ownership to the extent of at least 60% thereof.
 APPLICABLE LAW IN INTERNAL AFFAIRS AND INTRACORPORATE DISPUTES
Under Section 129 of the Corporation Code of the Philippines, any corporation lawfullydoing business in the Philippines shall be bound by all laws, rules and regulations applicable todomestic corporations of the same class, save and except such only as provide for the creation,formation, organization or dissolution of corporations or those which fix the relations, liabilities,responsibilities, or duties of stockholders, members or officers of corporations to each other or tothe corporation.
GENERAL RULE:
Philippine laws applicable to domestic corporations are applicable to any foreigncorporation lawfully doing business in the Philippines.
EXCEPTIONS:
1.
 
The creation, formation, organization or dissolution of the foreign corporation;2.
 
Those which fix the relations, liabilities, responsibilities, or duties of stockholders,members, or officers of foreign corporations to each other or to the corporation
 
These are governed by the law of the country where the foreign corporation isincorporated and organized.
INTRA-CORPORATE DISPUTE
Is a controversy: (a) which arises out of intra-corporate or partnership relations betweenand among stockholders, members or associates; between any or all of them and the corporation,partnership or association of which they are stockholders, members or associates, respectively; andbetween such corporation, partnership or association and the State insofar as it concerns theirindividual franchise or right to exist and (b) which is intrinsically connected with the regulation of corporations, partnerships or associations or with those dealing with the internal affairs of suchentities.
WHAT INTRACORPORATE DISPUTES INCLUDE:
1.
 
Where a director/president of a corporation offered to sell his shares to the corporationand to resign as director and officer thereof effective as soon as his shares are fully paid,which the corporation accepted by passing a board resolution replacing him as

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