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Choice of Law Affecting Corporations

1. When do conflict of law issues arise in re: corporations?


2. What is a corporation?
3. What is the personal law of a corporation?
4. What is the effect of having a personal law?
5. What happened n Gray v Insular Lumber Company?
a. In this case, gray, a SH of Insular Lumber sought to examine the records of the
defendant company. Defendant company was incorporated in NY but is licensed to do
business in the Ph. Following NY state law, gray was incapacitated to examine the record
because he lacked the minimum shareholdings to do so. However, in the Ph, he was
fully capacitated under Ph law, there being no requisite shareholdings to exercise such
right. The CFI, as affirmed by the SC, did not allow gray to examine the records there NY
law being the personal law of the defendant company.
6. What is the anglo-americal legal theory on corporation?
7. What happened to the case of Bank of Augusta v Earle?
a. The bank of augusta, a corporation whose personal law is Georgia law, sued in the
circuit court for the district Alabama against its citizen for the non-payment of bills of
exchange. The circuit court held that the plaintiffs could not recover on the bills of
exchange due to the fact that a bank incorporated by the laws of Georgia, with a
power among other things to purchase bills of exchange, could not lawfully
exercise that power in the State of Alabama, and that the contract for this bill was
therefore void and did not bind the parties to the payment of the money. On
appeal, the SC reversed this ruling, finding that plaintiff corporation was fully
capacitated to enter into contracts on account of the ff principles:
i. Comity of nations- sovereignty respects foreign corporation
ii. There is no interest of Alabama being hindered by recognizing the
capacity of def. cotp
1. Alleged policy of non enforcement of contract is spurious
2. When the policy of a state is thus manifest, the courts of the US
would be bound to notice it as part of its code of laws and to
declare all contracts in the state repugnant to it
8. What are the four basic theories drawn from BA v Earle?
9. What is necessary for the recognition of the legal status of a foreign corporation?
10. What issue arises from the fact that a foreign corp can sue in the courts of another?
a. If principal is not recognized, how can we recognize agent?
11. What was the significance of the ruling of Paul v Virginia?
a. Corporations are not deemed as citizens—there are certain rights it does not
have—no right to confidentiality.
b. Foreign corp does not have the same rights as domestic corp
i. Ex: Economic assistance, incetives
12. What is a commerce clause? (inter state contracts)
a. Ans: one of 2 important clauses, make them act as one nation
b. And full faith and credit clause- judgement rendered in sister state is recognized
c. What is the underlying principle behind the commerce cause?
13. What are the two exceptions to the rule of incorporation?
a. What is not included in the constitutional prohibition?
b. What happened in the case of Palting v San Juan Petroleum
i. In 1956, San Jose Petroleum, Inc. (SJP), a mining corporation
organized under the laws of Panama, was allowed by the Securities
and Exchange Commission (SEC) to sell its shares of stocks in the
Philippines. Apparently, the proceeds of such sale shall be invested in
San Jose Oil Company, Inc. (SJO), a domestic mining corporation.
Pedro Palting opposed the authorization granted to SJP because said
tie up between SJP and SJO is violative of the constitution; that SJO is
90% owned by SJP; that the other 10% is owned by another foreign
corporation; that a mining corporation cannot be interested in another
mining corporation. SJP on the other hand invoked that under the
parity rights agreement (Laurel-Langley Agreement), SJP, a foreign
corporation, is allowed to invest in a domestic corporation.
ii. ISSUE: Whether or not SJP is correct.
iii. HELD: No. The parity rights agreement is not applicable to SJP. The
parity rights are only granted to American business enterprises or
enterprises directly or indirectly controlled by US citizens. SJP is a
Panamanian corporate citizen. The other owners of SJO are
Venezuelan corporations, not Americans. SJP was not able to show
contrary evidence. Further, the Supreme Court emphasized that the
stocks of these corporations are being traded in stocks exchanges
abroad which renders their foreign ownership subject to change from
time to time. This fact renders a practical impossibility to meet the
requirements under the parity rights. Hence, the tie up between SJP
and SJO is illegal, SJP not being a domestic corporation or an
American business enterprise contemplated under the Laurel-Langley
Agreement
iv. For a corp to be considered domestic corp, 60 %. Protectionist
measure
c. What happened in the case of Filipinas Campania De Seguros v Christern, Huenefeld?
i. On account of the declaration of war between US and Germany, petitioner
insurance company regarded as void, the policy obtained by respondent
company that was needed to be issued on account of a fire that occurred after
the declaration of war. The Court ruled that Filipinas must not satisfy the
requested issuance of the policy, but must however refund any premium
payment made after the war was declared. This ruling is due to the fact that Ph
insurance law provides that anyone except a public enemy may be insured. The
concept of piercing the corporate veil was necessary to determine citizenship of
the corporation—WON it be considered a public enemy
d. What was the ruling in the case of Daimler v Continental Tire?
i. A company’s citizenship does not depend on place of incorporation, but rather
ownership of stocs
ii. ~altho personal law provides for the rights of a corporation, THIS MUST BE
QUALIFIED BY ITS CITIZENSHIP ine re particular requirements of different
sovereignties
iii.  ONLY FALLS UNDER EXCEPTION, GENERAL RULE IS THAT PERSONAL LAW AND
CITIZENSHIP IS ONE AND THE SAME
14. When may a foreign corporation bring suit?
15. What happened in the case of Aboitiz v Insurance Company of America?
16. What happened in the case of Cargill v Intra Strata?
17. What happened in the case of Home Insurance Company v Eastern Shipping Lines?
a. Home Insurance filed suits to recover payments it made to its policy holders, under the
right of subragation. The defendants argue that when the contracts were entered into,
HOME was not yet licensed to the business in the PH. The lower court and CA held the
incapacity of HOME to sue due to this defect. The SC reversed this ruling that Home was
capacitated to sue as the law does not provide for the nullification of contracts enetered
into prior to licensing, but merely to give penal sanctions. Also the general denials made
by the defendants fail. Later registration cured this defect
18. What happened in the case of Atlantic Mutual Insurance Co v Cebu Stevedoring Co?
a. In this case, the petitioner sues the defendant on accunt of damaged goods it was
obliged to deliver. Cebu argues that petitioner is not licensed to do business in the PH
hence its incapacity to sue. The lower court dismissed the suit. The SC affirmed the
dismissal on account of the fact that the pleadings failed to allege whether petitioner
was doing business in the Ph. If it was, a license would be required. If it wasn’t, then
there is no requirement.
19. What are the exceptions to the license requirement?
a. What happened in the case of Eastboard Navigatuin Juan Ysmael
b. What happened in the case of Leviton Industries v Salvador
c. What was the ruling in Universal Shipping Lines v IAC?
d. What happened in the case of Hung Lung Bank v Saulog
e. What happened in the case of Phil Columbia v Lantin

Isolated Eastboard Charter party Enforcement Defense: THERE IS RIGHT TO SUE.


Transaction Navigation v arrangement of arbitration no right to Plaintiff is not engaged
(is not a single Juan Ysmael judgement sue here in business in the PH
transaction- 2
different Vs
corporations) GRANGER- 1
One that is transaction
occasional, but it was
incienatl and meant to
casual, not of lead to
a character to future
indicate a transactions
purpose to
engage in
business
Protect Converse Use of patent Demanded No right to Right to sue falls under
trademark, Rubber Corp of chuck that sue exception + convention
trade name, (US) v Jacinto taylor respondent of Paris for the
goodwill, stop selling Protection of Industrial
patent or shoes that Property- Ph is
unfair look like chuck signatory
competition taylors
Protect Leviton Selling the Writ of No No capacity to sue, the
trademark, Industries same injunction and capacity to averments in the
trade name, (US) v products damages sue complaint do not
goodwill, Salvador (wiring comply with section 21-
patent or devices) A of RA 166
unfair under their 1) Registration of
competition name, hence trademark
causing 2) OR as an
confusion assignee
3) Reciprocal
rights
CAB: I am a foreign corp
SC: Procedural rules
qualify right
Agreements Universal Inusurance Reimbusment OK. There is right to sue
fully Shipping company files of claim
transacted Lines v IAC a suit
outside the therough
Ph subrogation
Ratio: against a
stabilize domestic corp
commercial Hung Lung Worlder See Different
transactions Bank v enterprise general interpretation. There is
Saulug was indebted banking capacity to sue
to Hung Lung act- needs
Bank, with license, no
Cordova Chin capacity to
San as a sue
guarantor
(thru 2
continuing
agreements).
Worlder
defaulted.
Hence Hung
Lung filed a
suit against
Saulus (a local
resident for a
sum of money
based on a
transaction
which was
perfected,
executed in
HK
Petition is Philippine Enforcement Filing of a counterclaim
merely a Columbia v of payment of by a Ph corp =/=
corollary Lantin items shipped recognition of foreign
defense in a by Katoh and corps legal capacity.
suit against it Co (Japanese) Filing a counterclaim
against Ph would not mean
Columpia maintaining a suit,
hence outside the
scope of Sec 69 of the
corp law

20. Define “Transacting Business”


a. What was the ruling in Avon Insurance PLC v CA?
i. Reinsurance is not covered
b. What happened in the case of Wang Lab v Mendoza?
c. Whenever a corporation makes a contract, it is the contract of the legal entity, of
d.
e. the artificial being created by the charter, and not the contract of the individual
members. The only rights it can claim are the rights which are given to it in that
character, and not the rights which belong to its members as citizens of a state.
21. JAL is taxable kahit agent niya Ph:
a. Because sales fort he ebenfit of JAL (its lifeblood) was sourced the Ph.
22. What is the rule in jurisdiction?
a. Incorporated?
i. YES: WHERE IT IS INCORPORATED
ii. NO: Any partner--- probably managing partner?
23. What is a conflicts partnership problem?
a. State A (common law) recognizes seprate identity of partnership, place of
incorporatin
b. State B (civil law) does not recognize, place of transaction
c. Company has a property in State B. Who owns property if suit is filed in State B?
i. PARTNERSHIP.
24. What’s the problem in re: limited partner?

RECOGNITION AND ENFORCEMENT OF FOREIGN JUDGEMENT

1. What is the scope of the term foreign judgement?


2. What is the effect of enforcement of a foreign judgement?
a. Bars
b. Enforcement in a diff jurisdiction
3. Difference of recognition and enforcement
a. Recognition: Defense, no process
b. Enforcement: Res Judicata
i. As applied in Divorce: you recognize the document
4. What are the 2 bases for R & E of FJ?
a. Comity
i. Full faith and credit
ii. reciprocal
iii. ** THERE ARE CERTAIN EXCEPTION:
1. Public policy
2. Fraud
3. Lack ofjurisdictions
b. OBLIGATION OF FOREIGN JUDGMEMENT
i. Vested rights
5. What happened in Godard v Gray?
a. In this case we see the enforcement of a French decision in the English court despite the
erroneous application of the English law. England was the place where the contract was
made. The court ruled that such must be enforced bec:
b. Court may deny or enforce. It cannot
6. Policies underlying R & E?
a. Red Judicata- give finality to litigatin
i. Rule 39, ROC:
1. Conclusive upon title to the thing
2. Presumptive evidence: liability of a person
ii. Merger & Bar
iii. Direct estoppel
b. Collateral estoppel – refers to issue
7. Requsites for R of FJ
a. Jurisdiction over parties and the case in a proper judicial proceedings
i. In personam:
1. Consent
2. Relation to forum court
ii. In rem:
1. State’s power (SEE)
iii. NW v CA & CF Sharp
1. In this case, we observe the fact that jurisdiction by the parties must be
acquired by the forum court for the foreign court to enforce the
judgement. The jurisdiction over the defendant was validly acquired by
determining whether the service of summons to the Phil agent was
proper in Japan law (forum court—procedural rules lex fori). It was thru
processual presumption. It was given to a Govt official in acc with sec 14
(THERE WAS NO AGENT) of ROC. Also it can be said that as a resident of
japan, it was amenable to jurisdiction of the court
iv. Boudard v Tait
1. This case, differentiated from NW, ruled that the forum court did not
acquire jurisdiction over the defendant by the former did not follow its
own rules on service of summons. Added to this is the fact that when
the forum court rendered the decision, the defendant was not even in
Vietnam.
2. + So kawawa yung widow who filed the suit as she cannot obtain relief
from Boudard
3. Ruling of Hanoi court: prima faci evidence only
v. Ramirez v Gmur
1. This is a dispute on the settlement of the estate of a rich swiss
domiciled in the PH. The heirs argue over their title to the property, as
there are 2 sets of grandchildren, one from the first marriage of his
daughter, the second set from the second marriage. The Court ruled
that the second set could not be recognized as legal heirs for the reason
that the French court who dissolved the daughter marriage had no
jurisdiction to do so. Note that it was a marriage contracted in the Ph
by PD domiciliaries.
2. MARITILE DOMICILE, WE DO NOT ENCOURAGE PEOPLE TO LOOK FOR A
STATE
3. NOT GOOD LAW ANYMORE: AN ILLEGITIMATE CHIL CAN STILL INHERIT.
BUT WHAT MAKES THIS COMPLICATED IS THAT THEY WERE INHERITING
BY THE RIGHT OF REPRESENTATION. (ILLEGITMATE MAY NOW INHERIT
THRU ILLEGITIMATE)
vi. Somportex v Philedelphia: JUDGEMENT IN DEFAULT IS A VALID JUDGEMENT
AND CAN BE ENFORCEABLE AS LONG AS NOTICE WAS GIVEN TO THE
DEFAULTING PARTY
vii. Borthwick v castro
1. In this case, a judgement rendered in Hawaii court was to be enforced
by the Phil court for his properties here. The judgement was rendered in
default in Hawaii. In the Ph court Borthwick argues that the forum court
never acquired jurisdiction over cause of action (WALA DAW SA HAWAII
YUNG TRANSACTION and PROPERTIES NIYA) and his person. Court said
he was properly served summons in Hawaii—but he never showed up
to dsipite facts hence, he cannot allege as defense the absence of
jurisdiction of the Hawaii court
b. Judgement is valid under laws that rendered it
i. Pemberto v hughes: 9 days instead of10 to make appearance in forum court.
Foreign court said, its okay. No substantial justice is offended
c. Judgement must be final and executory to constitute res judicata
i. Nouvion v Freeman:
1. This a dispute on the administration of the estate of William
hendersson, a creditor of the deceased desired to be the administrator--
- the credit was recognized by a remate judgement. The English court
refused to recognize this judgement as such is not a final one. It should
be remembered that to constiture res judicata, the following elements
must be present
a. (1) the former judgment or order must be final; (2) the
judgment or order must be on the merits; (3) it must have
been rendered by a court having jurisdiction over the subject
matter and the parties; (4) there must be, between the first
and the second action, identity of parties, of subject matter
and cause of action
b. Danger avoided: That the former judgement be overturned
ii. Querubin v Querubin
1. The Ph court did not grant the decree of Habeas corpus as the forum
judgement where it was granted was merely interlocutory--- one
conditioned on the fact that querubina was in LA. Things have changed
now
a. There was an amendment to the decree when the wife
remarried—the kabit, order was for chld to stay with them
2. In general, a divorce decree entrusting the custody of a child of the
marriage to one of the spouses is respected by the courts of other
states "at the time and under the circumstances of its rendition but that
such a decree has no controlling effects in another And the courts of the
latter state may, in proper proceedings, award the custody on the basis
of the proof of the facts subsequent to the decree which justify the
change in the interest of the child . " (20 A.L.R., 815.)
3. Philippine law adheres to the policy that prohibitive laws in Ph remain
prohibitive for Ph citizens, no matter where they are
4. The courtesy requested has not been recognized by this Court when it
declares that the rights and duties of family, status, status and legal
capacity of persons are governed by the laws of the Philippines and not
by those of America (
5. Mukhang mas kaya ng husband palakihan yng unak
iii. FOREIGN COURT MAY STILL GRANT ENFORCEMENT ON ISSUES OF SUPPORT
DESPITE THE FACT THAT SUCH IS TEMPORARY. There will just be a clause
providing for the temporary character of the enforcement.
iv. NY CON. Cross border maintenance:
1. OSG transmits decision
d. RECIPROCALITY- state whose judgement will be enforced allows
recognition/enforcement of Phil Judgements
i. Reiteration of international comity as basis for recognition and enforcement of
a foreign state/foreign-country decree
ii. Hilton v Guyot: French judgement was not deemed conclusive bec of a French
law which allowed review of American judgement on the merits
1. Comity became a means of retaliation
2. In effect, the court discriminated against the litigants on account of the
policies of their government
3. Remember: Power to further policies should not be practiced by courts
iii. Criticisms on reciprocity requirement
1. Lower standards of practice—no constructive effect
2. Litigants may not be closely attached to the legal order sought to be
changed
3. Administration of reciprocity clauses can be complicated—hard to
identify these t
iv. Cowans v Teconderoga
1. This case shoes to us the reversal of the Hilton v Guyot case. There was
a judgement made by quebec court for the payment of a debt. It was
now being enforced by NY court. The NY court did not follow the ruling
of Hilton, in light of the absence of recirprocity in both states, and
enforced the quebec judgement.
2. The application of the doctrine of res judicata does not
rest in discretion; and it is for the government, and not
for its courts, to adopt the principle of retorsion, if
deemed under any circumstances desirable or
necessary."
3. Among other things it is said that private rights are
acquired under the foreign judgment; that "the
question is one of private rather than public
international law, of private right rather than public
relations;" and "our courts will recognize private rights
acquired under foreign laws and the sufficiency of the
evidence establishing such rights;" the rule, though it
had its source in comity, "prevails to-day by its own
strength;" it "rests not on the basis of reciprocity but
rather upon the persuasiveness of the foreign
judgment
4. Comity does not add to the persuasiveness of the foreign judgement.
Both
e. Must be for a fixed sum of money, or specifies performance
i. Sadler v Roberis
1. Eng court refused enforcement bec Jamaican judgement’s decision on
money claim was not yet ascertainable in light of taxation laws.
f. Not be contrart to the public policy/good morals
i. MUST BE REPUGNANT TO NORMS
ii. Addressed the unfair result of vested rights theory
iii. Querubin v Querubin:
1. How can you expect the child to go back to the erring mom
g. Not have been obtained by fraud, collusion, mistake of fact/law
i. Decided by the enforcing court, through internal law
ii. Rule 38, Sec 48:
1. Want of jurisdiction
2. Want of notice
3. Collusion, fraud, clear mistake of law or fact
a. EXTRINSIC FRAUD
8. Grounds for non recognition: Unform money- judgement recognition Act of US
a. Foreign judgement not conclusive if:
i. Impartial tribunal, no due process
ii. No personal jurisdiction over def
1. Most debatable in light of minimum contacts rules
iii. No juris over SM
b. No need for recognition if: (MAYBE)
i. Def did not receive noticce of proceedings in foreign court -mandatory
ii. Obtained by fraud- mandatory
iii. Repugnant to public policy- Mandatory
iv. There is conflict w/ another final and conclusive judgement- discretionary
v. Contrary to settlement - discretionary
vi. Forum non conveniens- discretionary
1. No more need for defs person to be w/in jurisdiction of the court
Discretionary

9. Modern Devt
a. Thru treatis and conventions to regulate
i. Hague Con on PRIL
1. Most significant contributions:
a. Applicability regardless of nationality
b. Nonrefusal of cases wherein court of origin did not apply PRIL
rules
c. Whether default judgement is enforceable
d. Establishes enforcement procedures
2. Supplementary protocol:
a. Applies to habitual residents of contracting states
3. Con on R & F of Decisions relating to maintenance obligations (Family
relations)
4. 17th session of Hague conference: PROCEDURE FOR ENFORCEMENT
ii. EEC Con of 1998
1. Jurisdiction in common market area
iii. Uniform Foreign money-judgements Recog Act
1. Scope: Final and conclusive even though subject of appeal
2. Excludes:: judgements from taxes, penalties for child and spousal
support
10. Procedure for enforcement
a. Laws provide for a procedure: authentication of judgement thru Phil Consul
b. Attempt to reconcile the principle of territorial jurisdiction of courts ( DEMANDS
ENFORCEMENT TO HAVE BASIS OTHER THAN AUTHORITY OF RENDERING COURT) and
res judicata
c.

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