Receivership/Rehabilitation programs – jurisdiction
over the subject matter
There are three basis phases in the resolution of
conflict problem:
1. Jurisdiction – concerns the power or authority of a
court to take cognizance of a case
2. Choice of Law – pertains to the determination of
the law which should be applied in a particular
conflict.
3. Recognition and enforcement of Judgments
China issued new rules to protect its companies and
citizens from what it described as unjustified use of
foreign laws.
- No more conflict of laws in China. Only Chinese
laws will apply.
- Chinese foreign corporations would not need to
comply with foreign restrictions
- Lex fori/ law of the forum – Philippine law
- Capacity – Personal law
- Powers – Personal
Personal Law of Corporations
AIDNOG
Administration, Incorporation, Domicile, Nationality,
Organization, and Governance (internal affairs rule)
Internal affairs rule – how we fix the relations between
the stockholders, members, officers of the corporation.
Personal law of a corporation – law of the State where
it is incorporated. Since a corporation is an artificial
being created by law, it possesses only the rights and
powers conferred upon in its charter.
Hence, if the law creating the corporation does not
give authority to enter into certain contracts, such
contracts made by it in another state shall be void
despite the express permission given by the laws of
that other State.
Conflict Problems of Corps. – conflict of laws with
respect to corps generally deals with laws governing
their administration, incorporation, nationality and
domicile.
Matters where the personal law of the
corporation governs:
1. Requisites for formation of the corporation
and its legal character
- Status of the corporation – de jure/ de facto
2. Capacity and powers of the corporation
-
- What the corporation can do
Note: however, two requisites should be asked
in determining the legal effect of an act of a
corporation:
a. Is the corporation authorized by its charter
to do the particular act?
b. Is this act permitted by the law of the
place where the act is done?
3. Kinds of stocks allowed and transfer of stocks
in a way that would be binding on the
corporation
4. Issuance, amount and legality of dividends
5. The internal organization of the corporate
enterprise, the rights and liabilities of
shareholders, members, directors, officers,
their relation inter se and stockholders’
participation in the management and in the
profits
6. Alteration or modification of the charter and
the dissolution of the corporation
Internal Affairs Rule –
 Question about the status of a corporation
 Compliance to restrictions to doing business or
operating business in the Philippines --- not an
internal affair – apply the law of the state
where the corporation is licensed or authorized
to do business
Incorporation Test
Purpose:
 Used to determine whether the state where it is
incorporated is the state where it filed the suit
and acquired jurisdiction
 For the purpose how we should classify
(domestic/foreign corp) it to know what laws to
apply
 To determine the nationality
Exceptions to the Incorporation Test
1. Constitution and Statutory Restrictions
- A state, if it sees fit, may by legislation exclude
a foreign corporation altogether, subject to
constitutional limitations or prescribe any
conditions it may see fit as prerequisite to the
corporation’s right to do business within its
territory
2. Control Test during war
 - In wartime, the courts may pierce the veil of SC required that the other parties cause alias
corporate identity and look into the nationality summons to the petitioner so it can acquire jurisdiction
of the controlling stockholders to determine the over the petitioner.
citizenship of the corporation

Validity corporate acts and contracts – determined by

Domicile of the corporation the law of incorporation and law of performance. The
act/contracts must be authorized by both laws.
- Articles of incorporation
If valid in the place of incorporation but void in the
- Domicile of a domestic corporaration is its principal
place of performance or vice versa, the validity may be
place of business (contained in the AOI)
doubtful and may not be given effect at all
- For foreign corporations, their domicile is in the
country under whose laws they are incorporated
If a foreign corporation sells its products in the
Philippines through a resident merchant on a
Domicile or Residence of Corporations commission basis, it is the merchant which is doing
business.
- A Foreign corporation that has been granted
license to operate in the Philippines acquires If a foreign corporation sells its products through an
domicile in the Philippines. exclusive distributing agent, it is doing business here in
the Philippines because the agent is acting only in
- The object of the Corporation Code in requiring a behalf of the foreign corporation.
foreign corporation to secue a license to transact
business in the Philippines is to prevent it from
acquiring a domicile for the purpose of business
Home Insurance vs Eastern Shipping Lines
without taking steps necessary to render it
amendable to suit in the local courts Capacity to sue - supposed to be governed by lex fori
A foreign corporation, that is granted license to
operate or to do business in the Philippines, acquires
State Investment House vs Citibank
domicile by virtue of the said license.
Facts:
Purpose of requiring a corporation to secure a license
to operate is to enable the courts to acquire
jurisdiction over its person and for the requlation of its
activities.

Chinese Corporation
 incorporated and domiciled in China
 Doing business in the Philippines, Hong Kong,
Singapore
Is there any issue on domicile?
Determine first whether it was granted license in the
Philippines. If it was, then it is deemed domiciled in the
Philippines.
Rationale: Equity; when sued in the Philippines, it may Issue: Whether or not a foreign corporation with a
set up the defense that it is not it’s principal place of branch in the Philippines and doing business therein
business if it were not for this rule. can be considered a resident.
When it referred to the Philippine laws , Lex fori ang
ginamit. It talked about the tax code and made use
What are the requirements for corporations doing banking law, General Banking Act.
business in the Philippines?
- Granted a license
- Authorized representative in the Philippines Hyatt Elevators vs Goldstar Elevators
Jurisprudence has however settled that the place
where the principal office of a corporation is located as
Was it doing business in the Philippines? stated in the articles, indeed establishes residence.
SC held that whether Leiner is doing business in the This ruling is important in determining the venue of an
Philippines would not matter any more. What is given action by or against a corporation.
more weight is the agreement that any dispute shall be
filed with the Philippine courts --- choice of law is
applied as long as it is not contrary to law.
Nationality of a corporation The right of a private corporation to bring suit in the
forum and its amenability to court processes and suits
- Nationality of a private corporation is determined
against it are governed by the Lex Fori.
by the character or citizenship of its controlling
stockholders From the theoretical viewpoint, the country like ours
may completely prohibit a foreign corporation from
transacting business in the Philippines; we may even
Test of Corporate Nationality prohibit it from filing suit here.

1. Control Test
2. Grand-father Rule
Right of Foreign Corporations to Sue
GR:
Jurisdiction over foreign corporations
Acquisition by a foreign corporation of a license to
The prevailing rule is that with the consent of a State, transact business in the Philippines is an essential pre-
a foreign corporation shall be recognized and will be requisite for filing a suit of the corporation before our
allowed to transact business in any state which gives courts.
its consent.
This rule is embodied in our Corpo Code when it
provides that such corp may be sued or proceeded
against before Philippine courts or administrative
tribunals on any valid cause of action recognized under
Philippine laws.

License Requirement; Exceptions

1. Isolated Transactions

Sec. 146.
The Revised Corporation Code mandates that all
foreign corporation lawfully doing business in the
Philippines shall be bound by all laws, rules and
regulations applicable to domestic corporations.
Hindi lng lex fori will apply. At times, if it will refer to
internal affairs, we have to refer to the personal law.
Determine the matters regarding internal affairs where
personal law applies.

Which cases fall under isolated transactions?

Service upon foreign corporations doing business in the
Isolated transaction is one that is occassional,
Philippines may be made on:
incidental or casual and not of a character to indicate a
1. Resident Agent purpose to engage in business.

2. In the absence thereof, process will be served on A business is isolated when there is no continuity of
the government official designated by law or any of conduct and intention to establish a continuous
its officers or agent within the Philippines business within the state.

3. On any officer or agent of said corporation in the

Philippines 2. Actions to protect trademark, tradename, goodwill,
patent or unfair competition
4. Serving summons through diplomatic channels

Rights of Foreign Corporation to Sue

Will it be lex fori or will it be personal law?
Lex Fori
3. Agreement to fully transact outside of the Transnational corporation – clusters of
Philippines corporations, each with a separate entity, existing and
spread out in several countries but controlled by the
headquarters in a developed state where it was
originally organized.

Pseudo-corporations/ Personal Law

Pseufo-corporations - quasi-foreign corps

- Incorporated im one state and doing business in
anotherr state
A foreign corporation may maintain an action on
transactions fully consumated abroad.
Incorporated in HK but principally doing business in the

4. Corollary Defensive Suits

Philippines

Doing business in the Philippines (cases)

What is the personal law of these pseudo-
Cargill
corporations?
Steelcase vs Design International
Philippine law should govern

GR: Personal law – where the corporation is

incorporated
Definition of Personal Law of a foreign corporation is
different from the requirement of obtaining a license
because you are doing business in the Philippines.

Incorporatated under laws of England but was

principally operating in Italy.
Apply law where it is really operating its business.

Stick to the definition of Personal law

Kelan Lex Fori – legal capacity to sue

Internal affairs rule – personal law
Foreign corp doing business in the Philippines but it
does not ( lex fori governs)
FOREIGN JUDGMENT
- A foreign judgment is recognized when it is
given the same effect that it has in the state
where it was rendered, with respect to the
parties, subject matter and issues involved
Recognition of a Foreign Judgment - where the foreign
judgment is being presented as a defense to the claim
of the plaintiff
In the absence of a special compact, no sovereign is
bound to give effect within its dominion to the
judgment rendered by a tribunal of another country
In the absence of a special compact, treaty or
convention, the Philippines is not bound to recognize
and enforce foreign judgment
Requisites of Valid Judgment: (JMJC)
1. Jurisdiction of the State
2. Reasonable method of modification employed and
opportunity to be heard if afforded to persons
affected
3. Judgment rendered by competent court
4. Compliance to such requirement of state rendition
as necessary for the valid exercise by the court
Requisites for Recognition and Enforcement of
Foreign Judgment:
1. Foreign Judgment was rendered by judicial or
quasi-judicial tribunal which has competent
jurisdiction over the parties and the case in the
proper judicial proceedings in which the defendant
is given reasonable notice and opportunity to be
heard
2. The judgment must be on civil and commercial
matters.
3. Judgment must be valid according to the court that
delivered it
4. Judgment must be final and executory to
constitute res judicata in another action
Elements:
a. It must be final
b. Rendered by a competent court
c. on the merits
5. the judgment must not be contrary to public policy
or good morals of the State where it is to be
enforced
6. There must be no:
 Lack of notice
 Lack of jurisdiction
 Collusion
 Clear mistake of law or fact
7. Foreign judgment must not be barred by
prescription under the law of the State in which it
was promulgated
Enforcement of FJ Recognition of FJ
Plaintiff or petitioner wants the Defendant or respondent is
court to positively carry-out or presenting the foreign
make effective the foreign judgment on the basis of
judgment resjudicata
Involves an act of sovereignty Involves merely a sesnse of
justice
Requires an action or Being a matter of defense,
proceeding brought precisely recognition needs no action or
to make the foreign judgment proceeding but implies that an
effective action or proceeding has
already been filed against the
defendant who is invoking the
foreign judgment
Enforcement cannot exist Recognition does not need or
without recognition shall not require enforcement
Reasons for recognizing or enforcing foreign
judgment
- Comity
- Utility and
- Convenience of nations
Have been established by which final judgments of
foreign courts are reciprocally respected and rendered
efficacious
Basis of giving effect to foreign judgment:
1. Comity
- Prevailing party has no absolute right to
require our courts to enforce a judgment
rendered in his favor by a foreign court
- If contrary to laws, morals, public policy and
rights of citizens and persons under its
protection – courts will refuse to recognize
2. Reciprocity
- If foreign court accords recognition or gives
effect to Philippine judgment, our courts
should similarly extend recognition or grant
effect to the foreign judgment
3. Creates an obligation to pay a debt and
entitles prevailing party vested rights
- Enforced in any country where the defendant is
found or property against which the judgment
may be executed
 - Vested right – absolute, complete, and
unconditional right
4. Res Judicata
 issues raised in a foreign judgment should not
be relitigated anew in another country
 final judgment or decree on the merits by a
court of competent jurisdiction is conclusive of
the rights of the parties or their privies in all
later suits on points and matters determined in
the former suit.
If a party in a foreign judgment files another action in
the Philippines against the other party, and the latter
resists action by raising the defense of res judicata.
If the court sustains the defense, they are actually
recognizing the foreign judgment and giving it effect in
the country.
2 Grounds of Res Judicata
1. public policy and necessity - Res Judicata is
a public policy or necessity which makes it the
interest of the state that there should be an
end to a litigation
2. individual should not be vexed twice for
the same cause
If the judgment is interlocutory or provisional in
charater which contemplates that a fuller investigation
leading to the final decision may later be held, it
creates no obligation on the forum court to recognize
it.
Enforcement of Foreign Judgment – necessarily
includes its recognition
The court cannot enforce the judgment by granting
affirmative reliefs without recognizing it as valid.
Recognition does not require enforcement in the sense
that no affirmative relief is prayed for as when it is
presented as a defense to defeat the claim of the
plaintiff.
He cannot repudiate the foreign judgment and ask for
the enforcement of the Philippine Judgemnt which he
previously abandoned
 this is contrary to policy and interest of the Phil
to disturb the orderly administration of justice
Husband is regarded to have abandoned his rights
under Philippine judgment and is therefore precluded
by his conduct and the doctrine of Res Judicata from
seeking their enforcement.
2 actions filed – one in a foreign country and one in
the Phil
Judgment has been rendered in the foreign country
- does not constitute RES JUDICATA as basis for its
enforcement without giving the losing party the
opportunity to show that the judgment is vitiated
by want of jurisdiciton, notice, collusion, fraud or
clear mistake of law or fact
Effect of foreign judgment rendered by a foreign
country having jurisdiction:
a. in case of judgment or final order upon a
specific thing, the judgment or final order is
conclusive to the title to the thing
b. in case of judgment against a person, the
judgment or final order is a presumptive
evidence of the right as between the parties
and their successors-in-interest
In both cases, the judgment or final order may be
repelled by evidence of:
 want of notice
 want of jurisdiction
 collusion
 fraud
 clear mistake of law or fact
Judgment upon a specific thing
- real action
- action in rem
Judgment against a person
- recovery of damages; recovery of personal
property; enforcemnet of a contract
No decision shall be rendered by any court without
expressing therein clearly and distinctly the facts and
the law on which it is based.
Reasons why Philippine courts refuse to recognize
foreign judgment
1. the requisite proof may not have been
presented
2. the foreign judgment contravenes a recognized
and established policy in the country
3. administration of justice in the country where
the judgment came from may be shockingly
corrupt or not beyond reproach
Grounds to repel foreign judgment
1. want of jurisdiction
- foreign court must have acquired jurisdiction
over the defendant either by his:
a. voluntary appearance or
b. proper service of summons upon him
Action in Personam – non-resident of the foreign
country
 - foreign court would not acquire jurisdiction
over his person absent any voluntary
appearanace, otherwise, the judgment against
him shall be is null and void and cannot be NOA vs CA
recognized in the country
The service of summons is valid. The judgment is
presumed valid and binding in the country where it
2. want of notice to the party comes from, unless the contrary shown. The
proceedings and the giving due notice is likewise
-
presumed. Here, the party attacking has the burden of
3. collusion – mutual fraud of both parties to secure proving the irregularity in the service of summons.
a judgment they mutually desire either for or
Sharp failed to prove the applicable Japanese law to
against one party
base its claim since in matter of procedure, lex fori
- no violation of due process of the party who applies.
lost the case
Service of summons may be made to:
4. fraud
1. resident agent designated
Extrinsic fraud – done outside of the court; effect 2. if none, the government official designated by
of which prevents a party from having a trial law
3. other officers or agents within the Philippines
Intrinsic fraud – acts of a party during the trial
such as use of forged instruments and perjured
testimony

5. clear mistake of fact or law

Mistake of Law
- incorrect application of law on a set of given
facts
- one which warrants a review of the
proceedings or vitiated the proceedings and
warrants the reversal of the judgment

Mistake of Fact
- mistaken judgment or incorrect belief as to the
existence of effects of matters of fact or
misapplication or misapprehension of facts
- a court commits mistake of fact when it
overlooked, ignored or misinterpreted certain facts
which if considered would alter the result of the
case

Recognition and enforcement – involves extra-

territorial application of law
Philippines has not entered into a treaty to serve as a
basis for the enforcement and recognition of a foreign
judgment.

A foreign judgment may be recognized and enforced in

the Philippines if the losing party is in the Phil and he
has property in the country against which the
judgment may be executed.

Res Judicata – seeks to end litigation by disallowing

suit on the claim
Collateral Estoppel – concerned with preclusion by
barring relitigation of an issue already litigated on in a
prior proceeding.
We hold that the divorce obtained by Lorenzo H.
Llorente from his first wife Paula was valid and
recognized in this jurisdiction as a matter of comity.
Now, the effects of this divorce (as to the succession to
the estate of the decedent) are matters best left to the
determination of the trial court.
Validity of the Will
The Civil Code provides:
"Art. 17. The forms and solemnities of contracts,
wills, and other public instruments shall be governed
by the laws of the country in which they are
executed.
"When the acts referred to are executed before the
diplomatic or consular officials of the Republic of the
Philippines in a foreign country, the solemnities
established by Philippine laws shall be observed in
their execution." (underscoring ours)
The clear intent of Lorenzo to bequeath his property to
his second wife and children by her is glaringly shown
in the will he executed. We do not wish to frustrate his
wishes, since he was a foreigner, not covered by our
laws on "family rights and duties, status, condition and
legal capacity."
Whether the will is intrinsically valid and who shall
inherit from Lorenzo are issues best proved by foreign
law which must be pleaded and proved. Whether the
will was executed in accordance with the formalities
required is answered by referring to Philippine law. In
fact, the will was duly probated.
As a guide however, the trial court should note that
whatever public policy or good customs may be
involved in our system of legitimes, Congress did not
intend to extend the same to the succession of foreign
nationals. Congress specifically left the amount of
successional rights to the decedent's national law.
A divorce decree obtained abroad by a foreigner may
be recognized in our jurisdiction, provided the decree
is valid according to the national law of the foreigner.
Divorce decree and the national law of the alien
spouse, who obtained the divorce decree must be
proven.
Our courts do not take judicial notice of foreign laws
and judgment.
Divorce decree and the national law of the alien spouse
must be alleged and proven according to our law on
Evidence.
In mixed marriages, Art 26, FC allows the filipino
spouse to contract a subsequent marriage in case the
divorce is validly obtained abroad by the alien spouse
capaciting him to remarry.
A divorce obtained by a couple who are both aliens,
may be recognized in the Philippines provided it is
consistent with their respective national laws.
A divorce decree obtained abroad by an alien may be
recognized in the Philippines provided it is valid
according to his national law.
Before a divorce decree can be recognized by our
courts, the party must prove the divorce as a fact and
demonstrate its conformity to the foreign law allowing
it.
Before a foreign judgment be given evidentiary value,
the document must first be presented and admitted in
evidence.
A divorce obtained abroad is proven by the divorce
decree itself. The best evidence is the judgment itself.
The decree purports to be a written act or record of an
act of an officially body or tribunal of a foreign country.
Under Sections 24 and 25 of Rule 132, on the other
hand, a writing or document may be proven as a public
or official record of a foreign country by either (1) an
official publication or (2) a copy thereof attested 33 by
the officer having legal custody of the document. If the
record is not kept in the Philippines, such copy must be
(a) accompanied by a certificate issued by the proper
diplomatic or consular officer in the Philippine foreign
service stationed in the foreign country in which the
record is kept and (b) authenticated by the seal of his
office.
The divorce decree between respondent and Editha
Samson appears to be an authentic one issued by an
Australian family court. However, appearance is not
sufficient; compliance with the aforemetioned rules on
evidence must be demonstrated.
the legal capacity to contract marriage is determined
by the national law of the party concerned.
The certificate mentioned in Article 21 of the Family
Code would have been sufficient to establish the legal
capacity of respondent, had he duly presented it in
court. A duly authenticated and admitted certificate is
prima facie evidence of legal capacity to marry on the
part of the alien applicant for a marriage license.
What the Illinois court retained was "jurisdiction x x x
for the purpose of enforcing all and sundry the various
provisions of [its] Judgment for Dissolution."
Petitioner’s suit seeks the enforcement not of the
"various provisions" of the divorce decree but of the
post-divorce Agreement on joint child custody. Thus,
the action lies beyond the zone of the Illinois court’s
so-called "retained jurisdiction." 

the Agreement’s object to establish a post-divorce
joint custody regime between respondent and
petitioner over their child under seven years old
contravenes Philippine law.
no child under seven years of age shall be
separated from the mother
The Agreement is not only void ab initio for being
contrary to law, it has also been repudiated by the
mother when she refused to allow joint custody by the
father.
The Agreement would be valid if the spouses have not
divorced or separated because the law provides for
joint parental authority when spouses live together.
However, upon separation of the spouses, the mother
takes sole custody under the law if the child is below
seven years old and any agreement to the contrary is
void.
The petition before us puts at issue an arbitration
clause in a contract mutually agreed upon by the
parties stipulating that they would submit themselves
to arbitration in a foreign country.
Established in this jurisdiction is the rule that the law
of the place where the contract is made governs. Lex
loci contractus. The contract in this case was perfected
here in the Philippines. Therefore, our laws ought to
govern. Nonetheless, Art. 2044 of the Civil Code
sanctions the validity of mutually agreed arbitral clause
or the finality and binding effect of an arbitral award.
Art. 2044 provides, "Any stipulation that the
arbitrators’ award or decision shall be final, is
valid, without prejudice to Articles 2038, 2039 and
2040."
The arbitral clause which was mutually and voluntarily
agreed upon by both parties is valid. There is no
showing that IT WAS CONTRARY TO LAW,
MORALS, GOOD CUSTOMS, PUBLIC ORDER OR
PUBLIC POLICY.
There is no showing that the parties have not dealt
with each other in equal footing.
CMI that there is a conflict-of-laws issue that needs to
be resolved first. Where the facts establish the
existence of foreign elements, he case presents a
conflict-of-laws issue.39 The foreign element in a case
nay appear in different forms, such as in this case,
where one of the parties s an alien and the other is
domiciled in another state.
Jurisdiction over Basso was acquired when he
filed the complaint, whereas jurisdiction over
CMI was obtained through the coercive process
of summons.
The purpose of the law in requiring foreign
corporations doing business in the Philippines to be
licensed to do so is to subject them to the jurisdiciton
of the courts.
Considering that the LA and NLRC acquried jurisdiction
over the persons of the parties and the subject matter,
these tribunals can proceed to try the case even if the
rules on conflicts of law or the convenience of
the parties POINTS TO A FOREIGN FORUM, THIS
BEING A SOVEREIGN PREROGATIVE OF THE COUNTRY
WHERE THE CASE IS FILED.
Considering that LA and NLRC had acquired jurisdiction
over the parties and the SM, they may proceed to try
the case, even if the rules on the conflict of law points
to a foreign forum, this being a sovereign prerogative
of the country where the case is filed.
Forum non-conveniens (CPP)
1. Philippine is one to which the parties can
conveniently resort to
2. It is in a position to make an intelligent
decision as to the facts and the law
3. It is likely to have the power to enforce its
decision
Applying the foregoing in this case, we conclude that
Philippine law the applicable law. Basso, though a US
citizen, was a resident here from he time he was hired
by CMI until his death during the pendency of the case.
CMI, while a foreign corporation, has a license to do
business in the Philippines and maintains a branch
here, where Basso was hired to work.
The contract of employment was negotiated in the
Philippines. A purely consensual contract, it was also
perfected in the Philippines when Basso accepted the
terms and conditions of his employment as offered by
CMI. The place of performance relative to Biasso's
contractual duties was in the Philippines. The alleged
prohibited acts of Basso that warranted his dismissal
were committed in the Philippines.
Clearly, the Philippines is the state with the most
significant relationship to the problem.
French Rule – crimes committed on board a foreign
merchant vessel shall not be prosecuted by the country
within whose territorial jurisdiciton the crime was
committed, unless the crime affects the peace and
security of the territory
English Rule – crimes committed within the territory
are generally triable within the courts of the country
where they were committed.