Professional Documents
Culture Documents
CONTENTS
1. Domestic and Foreign Corporations
2. “Doing Business”
3. Residence of Corpration
4. The “Internal Affairs” Rule
5. State of Incorporation
6. Domicile of Corporations
7. Nationality of Corporations
8. Test of Corporate Nationality: Control Test and Grandfather Rule
9. Controlling Doctrine: Control Test
What is Corporation?
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Domestic and Foreign Corporations
DOMESTIC CORPORATIONS
• Those organized and existing under the
laws of the Philippines.
FOREIGN CORPORATION
• Those formed, organized or existing under
any laws other those of the Philippines and
whose laws allow Filipino citizens and
corporations to do business in its own
country or state (Section 123, Corporation
Code of the Phil.).
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Foreign Corp. cont...
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Personal Law of a Corporation
GENERAL RULE: Personal law is the law of the state where it was incorporated or formed.
EXCEPTIONS:
1. Constitutional and Statutory Restrictions (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 the corporation
If the law creating it does not authorized it to enter into certain contracts, such contracts which can
be made in other states shall be void despite the express permission given by other state.
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Residence of Corporations
A corporation may only have one (1) domicile but it can be a resident of several states.
The domicile of a juridical person is the state of its incorporation. However, it may do business in
other states and thus become resident thereof.
In Northwest Orient Airlines, Inc. V. CA (1995) GR No. 112573, dated February 9, 1995
Northwest sued C.F. Sharp & Company in Tokyo, Japan, for collection of the unremitted
proceeds of the ticket sales, with claim for damages. After the 2 attempts of service of summons
were unsuccessful, Supreme Court of Japan sent the summons together with the other legal
documents to the Japanese Embassy in Manila, then to the Department of Foreign Affairs, then to
the Judge of the Regional Trial Court of Manila who ordered Deputy Sheriff Rolando Balingit to
bring the summons to the C.F. Main Office but failed to appear at the scheduled hearing.
Issue: WON Japanese court has jurisdiction over CF whose main office is in Manila?
Held: Accordingly, the extraterritorial service of summons on it by the Japanese Court was valid not
only under the processual presumption but also because of the presumption of regularity of
performance of official duty. Where the corporation has no such agent, service shall be made on
the government official designated by law. 9
Residence of Corporations
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State of Incorporation
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Domicile of Corporation
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Test of Corporate Nationality
1. Control Test
when shares belonging to corporation or partnership at
least 60% of the capital of which is owned by Filipino
citizens, the corporation shall be considered of Philippine
nationality (sec. 3, Foreign Investment Act).
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Test of Corporate Nationality
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What “nationality test” is controlling?
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Jurisdiction over Foreign Corporations
• With the consent of the state a foreign corporation will be recognized and will
be allowed to transact business in any state which gives it consent. This
consent doctrine is established in section 125, 126, 127, and 128 of the
Corporation Code of the Philippines
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Jurisdiction over Foreign Corporations
• All foreign corporations lawfully doing business here in the Philippines shall be bound by all laws rules
and regulations applicable to domestic corporations except provisions for the creation, formation,
organization or dissolution of corporations or those which fix the relations the relations, liabilities,
responsibilities or duties of stockholders, members or officers of the corporation to each other.
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Jurisdiction over Foreign Corporations
SERVICE OF SUMMONS
• Service of summons upon foreign corporations doing business in the
Philippines may be made on:
1. Its resident agent;
2. In the absence thereof, process will be served on the government official
designated by law or any of its officers or agent within the Philippines;
and
3. on any officer or agent of said corporation in the Philippines
4. serving summons through diplomatic channels
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Right of a Foreign Corporation to bring suit
GENERAL RULE:
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 the Philippine laws (Section 133 Corporation Code).
Hence, acquisition by a foreign Corporation of a license to transact business in the
Philippines is an essential prerequisite for the filing of suits before courts.
EXCEPTIONS:
1. Isolated transactions
2. Action to protect trademark, trade name, goodwill, patent or for unfair competition
3. Agreements fully transacted outside the Philippines
4. Petition filed is merely a corollary defense in a suit against it
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Exception to License Requirements
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