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creation,

on
equitable
considerations, this fiction will
be
disregarded
and
the
individuals composing it will be
treated as identical.

Group Members:
Aban, Janus Mari A.
Caete, Rizza Rica R.
Gaudiel, Daniel Kien T.
Lunsayan, Daphne B.
Mental, Daniel V.
Roldan, Rener Michael C.
Zambrano, Annalou Q.

Corporations and
Juridical Entities

Other

Corporations
Corporation, defined
Section 2, Corporation Code: an
artificial
being
created
by
operation of law, having the right
of succession and the powers,
attributes,
and
properties
expressly authorized by law or
incident to its existence.
Attributes of a corporation
An artificial being.
Created by operation of law.
It has the right of succession.
It has only the powers,
attributes
and
properties
expressly authorized by law or
incident to its existence.
Doctrine of Corporate Entity
A corporation is a legal or
juridical
person
with
a
personality separate and apart
from its individual stockholders
or members and from any
other legal entity to which it
may be connected or related.
Dotrine of Piercing the veil of
Corporate Entity
Where the fiction of corporate
entity is being used as a cloak
or cover for fraud or illegality,
or
to
defeat
public
convenience, justify wrong,
protect fraud, or defend crime
or for ends subversive of the
policy and purpose behind its

Theories in determining the


personal law or governing law of
a corporation.
The theory that personal law is
the
law
of
the
place
of
incorporation;
The theory of the place or center
of management;
The theory of the place of
exploitation
*the Philippines follows the theory
of the place of incorporation.
General Rule: personal law is the law
of
the
state
where
it
was
incorporated.
Exception:
1) Constitutional
and
statutory
restrictions (Consti. Art.XII)
2) Control test during war courts
may pierce the veil of corporate
identity and look into the
nationality of stockholders to
determine
citizenship
of
corporation.
Matters that are governed by the
personal law of the corporation:
Requisites for the formation of the
corporation;
Required number of incorporators
and the members of the board of
directors;
Kinds of shares of stock allowed;
Transfer of stocks;
Issuance, amount, and legality of
dividends;
Power and duties of the officers,
stockholders, and members.
Foreign Corporation, defined
Section 123, Corporation Code:
one formed, organized, or existing
under any laws other than those
of the Philippines and whose laws
allows
Filipino
citizens
and

corporations to do business in its


own country or state.
Right to lawfully transact business
in the Philippines requires 2
prerequisites:
The law of the country of its
incorporation allows Filipino
citizens and corporations to do
business in said country;
It must secure a license to
transact
business
in
this
country in accordance with this
Code and a certificate of
authority from the appropriate
government agency.
Classifications
of
Foreign
Corporations
Resident Foreign Corporations
those which have been issued
license to transact business in
the country and are thus taxed
in the same manner as
domestic corporations insofar
as their income from within the
Philippines is concerned.
Non-resident
Foreign
Corporations corporations
without license to do business
in the country, whether or not
they
are
actually
doing
business, and are taxed on
their gross income from within
the Philippines.
Validity of corporate acts and
contract
Both law of the place of
incorporation and law of the
place of performance must
allow it
If one law does not allow such
acts or contract, then it is
doubtful if it can be given any
effect
Subject to doctrine of estoppel

Applicable Law in Intra-Corporate


Disputes of a Foreign Corporation
Relationship Test: Arises out of
intra-corporate or partnership

relations between and 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; and between such
corporation,
partnership
or
association and the State
insofar as it concerns their
individual franchise of right to
exist.
Nature of Controversy Test: Is
intrinsically connected with the
regulation
of
corporations,
partnerships or associations or
with those dealing with the
internal affairs of such entities.
Applicable Law
The law of the country where the
foreign
corporation
is
incorporated.

Scope of Transacting or Doing


Business
Doing Business, defined
A corporation is doing business
when it is continuing the body or
substance of the business or
enterprise for which it was
organized.
The term implies a continuity of
commercial arrangements and
contemplates, to that extent, the
performance of acts and works or
the exercise of some of the
functions normally incident to,
and in progressive prosecution of,
the purpose and objective of its
organization.
Not the number or quantity of
transactions, but the intention to
continue its business in the
country.
Philippine
jurisdiction
foreign corporation
CONSENT DOCTRINE

over

A foreign corp will be


recognized and will be
allowed
to
transact
business in any state
which gives its consent

Note
All foreign corp lawfully
doing business here in
the Phil shall be bound
by all laws, rules and
regulations applicable to
domestic
corp
XPNs
provisions
for
the
creation,
formation,
organization
or
dissolution of corp or
those which fix the
relationships
and
liabilities or duties of the
stockholders, members
or officers of the corp to
each other.

License Requirements
Application shall be under oath and
shall specifically set forth the
following, unless already stated in its
articles of incorporation:
1) Date and term of incorporation;
2) Address,
including
street
number, of the principal office of
the corporation in country or
state of incorporation;
3) Name and address of its resident
agent authorized to accept
summons and process in all
legal proceedings, and pending
the establishment of a local
office, all notices affecting the
corporation;
4) Place in the Philippines where
the
corporation
intends
to
operate;
5) Specific
purpose/s
of
the
corporation which it intends to
pursue in the transaction of its
business in the Philippines;
6) Names and addresses of present
directors and officers;
7) Statement of its authorized
capital stock and the aggregate

number
of
shares
which
corporation has authority to
issue;
8) Statement of its outstanding
capital stock and the aggregate
number of shares issued;
9) Statement
of
the
amount
actually paid in;
10) Such additional information as
may be appropriate in order to
enable
SEC
to
determine
whether such corporation is
entitled to a license.
Grounds for revocation of the
license of a foreign corporation:
Failure to appoint and maintain
a resident agent in the
Philippines;
Failure, after change of its
resident agent or of his address
to submit to submit to the SEC
a statement of such change;
Transacting business in the
Philippines outside of the
purpose or purposes for which
such corporation is authorized
under its license;
Transacting business in the
Philippines as an agent of or
acting for and in behalf of any
foreign corporation or entity
not duly licensed to do
business in the Philippines; or
Any other grounds as would
render it unfit to transact
business in the Philippines.
Doing Business without a License
Section 133, Corporation Code
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.
Rule is subject to exceptions,
which is based on the doctrine
of estoppel. A party is estopped
to challenge the personality of
a corporation after having
acknowledged the same by
entering into a contract with it.

Instances when a foreign corporation


not doing business in the Philippines
can sue in Philippine courts
1) Isolated transactions;
2) To
protect
its
reputation,
corporate name, and goodwill;
and
3) For infringement of trademark or
trade name.

Right to bring a suit


GR

If foreign corp.,
not duly licensed, it cannot be
permitted to maintain or
intervene in any action BUT it
can be sued before any court
XPN
Isolated transaction
Action to protect trademark,
trade name, good will,
patent
or
for
unfair
competition
Agreement fully transacted
outside the Phil
Petition filed is merely a
corollary defense in a suit
against it
In case of estoppel

Rights of a Foreign Corporation


Right to transact business in the
Philippines after it obtains a
license to transact business in this
country;
Right to maintain a suit or
intervene in any action, suit or
proceeding in any court or
administrative agency in the
Philippines, provided it has a
license to transact business in the
Philippines.

May a foreign corporation sue and be


sued in the Philippines?
- Yes, if it has the necessary license
to do business in the Philippines.
The license is required not to
forbid the foreign corporation
from performing single acts but to
prevent it from acquiring a
domicile for purposes of business
without
taking
the
steps
necessary to render it amenable
to suit in the local courts.

Some rules in foreign corporation


1. If a foreign corp. transact
business in the Phil, it must
have the necessary license;
otherwise it cannot sue on such
business
2. If a foreign corp. is not doing
business in the Phil, such fact
must be disclosed if it wants
to sue in Phil court under the
isolated transaction rule;
otherwise, the right to sue may
be denied
3. If a foreign corp. duly licensed
to transact business desires to
withdraw, it must file a
petition for withdrawal with the
following requirements (a) all
claims must be settled, (b) all
taxes paid, (c) petition for
withdrawal must be publish
once a week for 3 consecutive

Status of a contract of a foreign


corporation who transacts business
here without the necessary license
- Unenforceable, but the person
who
contracted
with
the
corporation may be in estoppel if
he had received benefits from
contract.

Rule on receivership
Principal receiver
State of incorporation
Ancillary receiver
State where the corporation
has assets.

weeks
(newspaper
of
Gen.circulation)
4. If the foreign corp. sues merely
on isolated acts, the action
may be allowed even w/o a
license
Multi-national corporations
Are cluster of corporation of
diverse
nationalities
joined
together by ties of common
ownership and responsive to a
common management strategy
Jurisdiction
over
a
local
counterpart may amount to
jurisdiction on the parent
company if the local if the local
counterpart is only a branch
and is w/o separate judicial
personality from the mother
company and when such local
counterpart is but a conduit or
alter-ego
of
the
parent
company
However, if the local counter is
a subsidiary with an entirely
distinct
personality,
jurisdiction over the local
counterpart is not jurisdiction
over the parent company
Note: A subsidiary is one which is
incorporated separately from the
mother company, thus obtaining its
own judicial personality.
Partnerships
Conflict rules on partnership
The personal law of the partnership
(law of the place where it was
created) shall govern the following:
1. The existence or non-existence
of the legal or juridical
personality of the partnership
2. The capacity of the firm to
contract
3. The liability of the firm and the
partners to third person
* Those formed not in the Phil dont
have juridical personality in the Phil

Alien partnership limitation in


Philippine law
1. Minimum 60% capital
2. They may lease lands provided
the period does not exceed
25years
3. They may be the mortages of
land for 5years, renewable for
another 5years
The dissolution, winding up,
and termination of branches of
the foreign partnership in the
Phils are likewise governed by
Phil law (simply law of the
place where the branches were
created)
Receivership governs Phil law
insofar as the assets in the Phil
are concerned
Foundations
Foundation defined.
Are combinations of capital,
independent of individuals, and
organized
principally
for
charitable,
medical,
or
educational purposes (nonprofit purposes)
Gains are not distributed to the
founders but to be put back in
the
enterprise
for
the
improvement.
It is the personal law (the law of
the place from which it is
administered) that governs it:
1. Organization
2. Capacity
3. Powers
4. Liabilities
5. Dissolutions
Taxation of juridical Persons
Domestic
corporations
are
taxed from sources worldwide.
Resident foreign corporations
are taxed on net income
derived
from
within
the
Philippines.

Non-resident corporations are


taxed on gross income derived
from within the Philippines.

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