CORPORATIONS AND

OTHER JURIDICAL
ENTITIES
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.

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.

Theories in determining
the personal law or
governing law of a
corporation
1. The theory
that personal law is the
law of the place of incorporation;
2. The theory of the place or center of
management;
3. 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 (the grandfather rule)

Matters that are governed

by the personal law of the
corporation:

1. Requisites for the formation of the

corporation;
2. Required number of incorporators and the
members of the board of directors;
3. Kinds of shares of stock allowed;
4. Transfer of stocks;
5. Issuance, amount, and legality of dividends;
6. 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

Right to sue and amenability to

court process
Governed by the lex fori

Applicable Law in Intra-Corporate Disputes of a

Foreign Corporation

What is an intra-corporate dispute?

Is a controversy which: 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.
Is intrinsically connected with the regulation of
corporations, partnerships or associations or with
those dealing with the internal affairs of such
entities.

Applicable Law in Intra-Corporate Disputes of a

Foreign Corporation

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.

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.

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.

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.

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.

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.

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.

Rule on receivership
Principal receiver
State of incorporation

Ancillary receiver
State where the corporation has assets-

Some rule 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 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

Other juridical entities:

1: Partnership

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

2. Foundations

Foundations
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.
2.
3.
4.
5.

Organization
Capacity
Powers
Liabilities
Dissolutions

Taxation of juridical Persons

Domestic and resident foreign
corporations are taxed on income
derive from all sources
Non-resident foreign corporation are
taxed from all sources within the Phil