Choice of Law Affecting

Corpotions and Other

Juridical Entities
Aldrin Tang
Religious Societies and the Corporation
Sole
Sec. 109.Classes of religious corporations.- Religious corporations may be incorporated by
one or more persons. Such corporations may be classified into corporations sole and religious
societies.
Sec. 116.Religious societies.- Any religious society or religious order, or any diocese, synod,
or district organization of any religious denomination, sect or church, unless forbidden by the
constitution, rules, regulations, or discipline of the religious denomination, sect or church of
which it is a part, or by competent authority, may, upon written consent and/or by an
affirmative vote at a meeting called for the purpose of at least two-thirds (2/3) of its
membership, incorporate for the administration of its temporalities or for the management of
its affairs, properties and estate by filing with the Securities and Exchange Commission,
articles of incorporation verified by the affidavit of the presiding elder, secretary, or clerk or
other member of such religious society or religious order, or diocese, synod, or district
organization of the religious denomination, sect or church, setting forth the following:
Religious Societies

1. That the religious society or religious order, or diocese, synod, or district organization is a religious
organization of a religious denomination, sect or church;
2. That at least two-thirds (2/3) of its membership have given their written consent or have voted to
incorporate, at a duly convened meeting of the body;
3. That the incorporation of the religious society or religious order, or diocese, synod, or district organization
desiring to incorporate is not forbidden by competent authority or by the constitution, rules, regulations or
discipline of the religious denomination, sect, or church of which it forms a part;
4. That the religious society or religious order, or diocese, synod, or district organization desires to incorporate
for the administration of its affairs, properties and estate;
5. The place where the principal office of the corporation is to be established and located, which place must
be within the Philippines; and

6. The names, nationalities, and residences of the trustees elected by the religious society or religious order,
or the diocese, synod, or district organization to serve for the first year or such other period as may be
prescribed by the laws of the religious society or religious order, or of the diocese, synod, or district
organization, the board of trustees to be not less than five (5) nor more than fifteen (15). (160a
Register of deeds vs Ung Siu Si

Religious society the trustees of which are composed of Chinese nationals may
not acquire and register an agricultural land in view of the Constitutional
provision requiring at least 60% of the capital to be owned by Filipino
Citizens.
Ratio

The fact that the appellant religious organization has no capital stock does
not suffice to escape the Constitutional inhibition, since it is admitted that its
members are of foreign nationality. The purpose of the sixty per centum
requirement is obviously to ensure that corporations or associations allowed
to acquire agricultural land or to exploit natural resources shall be controlled
by Filipinos; and the spirit of the Constitution demands that in the absence of
capital stock, the controlling membership should be composed of Filipino
citizens.
To permit religious associations controlled by non-Filipinos to acquire
agricultural lands would be to drive the opening wedge to revive alien
religious land holdings in this country. We can not ignore the historical fact
that complaints against land holdings of that kind were among the factors
that sparked the revolution of 1896.
Corporation Sole

Sec. 110.Corporation sole.- For the purpose of administering and

managing, as trustee, the affairs, property and temporalities of any religious
denomination, sect or church, a corporation sole may be formed by the chief
archbishop, bishop, priest, minister, rabbi or other presiding elder of such
religious denomination, sect or church.

Corporation sole is an incorporated office composed of only one person,

Article 110 of the Corporation Code states that the chief archibishop, bishop,
priest, minister or other presiding elder of a religious sect may form a
corporation sole for the purpose of managing its affairs, property, and
temporalities.
Roman Catholic Apostolic Administrator of
Davao v. Land Registration Commissioner
FACTS On October 4, 1954, Mateo L. Rodis, a Filipino citizen and resident of the
City of Davao, executed a deed of sale of a parcel of land located in the same
city covered by Transfer Certificate No. 2263, in favor of the Roman Catholic
Apostolic Administrator of Davao Inc., s corporation sole organized and existing
in accordance with Philippine Laws, with Msgr. Clovis Thibault, a Canadian
citizen, as actual incumbent. When the deed of sale was presented to Register of
Deeds of Davao for registration, the latter.

Having in mind a previous resolution of the Fourth Branch of the Court of First
Instance of Manila wherein the Carmelite Nuns of Davao were made to prepare
an affidavit to the effect that 60 per cent of the members of their corporation
were Filipino citizens when they sought to register in favor of their congregation
of deed of donation of a parcel of land
Roman Catholic Apostolic Administrator of
Davao v. Land Registration Commissioner
ISSUE-Who are considered "qualified" to acquire and hold agricultural lands in
the Philippines? What is the effect of these constitutional prohibition of the
right of a religious corporation recognized by our Corporation Law and
registered as acorporation sole, to possess, acquire and register real estates
in its name when the Head, Manager, Administrator or actual incumbent is an
alien?
Petitioners Argument

Petitioner consistently maintained that a corporation sole, irrespective of the

citizenship of its incumbent, is not prohibited or disqualified to acquire and
hold real properties. The Corporation Law and the Canon Law are explicit in
their provisions that a corporation sole or "ordinary" is not the owner of the
of the properties that he may acquire but merely the administrator
thereof. The Canon Law also specified that church temporalities are owned
by the Catholic Church as a "moral person" or by the diocess as minor "moral
persons" with the ordinary or bishop as administrator.
Ruling

That leaves no room for doubt that the bishops or archbishops, as the case
may be, as corporation's sole are merelyadministratorsof the church
properties that come to their possession, in which they hold in trust for the
church. It can also be said that while it is true that church properties could
be administered by a natural persons, problems regarding succession to said
properties can not be avoided to rise upon his death. Through this legal
fiction, however, church properties acquired by the incumbent of a
corporation sole pass, by operation of law, upon his death not his personal
heirs but to his successor in office. It could be seen, therefore, that a
corporation sole is created not only to administer the temporalities of the
church or religious society where he belongs but also to hold and transmit the
same to his successor in said office. If the ownership or title to the properties
do not pass to the administrators, who are the owners of church properties?.
RULING

In matters regarding property belonging to the Universal Church and to the

Apostolic See, the Supreme Pontiff exercises his office of supreme
administrator through the Roman Curia;in matters regarding other church
property, through the administrators of the individual moral persons in the
Church according to that norms, laid down in the Code of Cannon Law.This
does not mean, however, that the Roman Pontiff is the owner of all the
church property; but merely that he is the supreme guardian
RULING

It could be distilled from the foregoing that the farmers of the Constitution
intended said provisions as barrier for foreigners or corporations financed by
such foreigners to acquire, exploit and develop our natural resources, saving
these undeveloped wealth for our people to clear and enrich when they are
already prepared and capable of doing so. But that is not the case of
corporations sole in the Philippines, for, We repeat, they are mere
administrators of the "temporalities" or properties titled in their name and
for the benefit of the members of their respective religion composed of an
overwhelming majority of Filipinos. No mention nor allusion whatsoever is
made in the Constitution as to the prohibition against or the liability of the
Roman Catholic Church in the Philippines to acquire and hold agricultural
lands. Although there were some discussions on landholdings, they were mostly
confined in the inclusion of the provision allowing the Government to break big
landed estates to put an end to absentee landlordism.
Ratio

POWER AND QUALIFICATION TO PURCHASE IN ITS NAME PRIVATE LANDS; 60 PER

CENTUM FILIPINO CAPITAL REQUIREMENT NOT INTENDED TO CORPORATION
SOLE.Under the circumstances of the present case, it is safe to state that
even before the establishment of the Philippine Commonwealth and of the
Republic of the Philippines every corporation sole then organized and
registered had by express provision of law (Corporation Law, Public Act No.
1459) the necessary power and qualification to purchase in its name private
lands located in the territory in which it exercised its functions or ministry
and for which it was created, independently of the nationality of its
incumbent unique and single member and head, the bishop of the diocese.
Transnational Corporations

Transnational Corporations are clusters of several 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.
How Organized

Established under and governed by each host countrys national laws.

Applying the incorporation test to determine the personal law or the national
law of a foreign corporation, the transnational corporation which is originally
a foreign corporation organized in a foreign country eventually becomes a
local corporation in any of the host states by associating with local
entrepreneurs and incorporating them under its local laws.
How does it Operate?

While ostensibly the personal law of the transnational is that of the host
country, the major decisions regarding its operation and management come
from the parent corporation in the industrialized state.

The main characteristic of a transnational is that all the locally incorporated

branches are joined together by the common control and management of
higher officials in the home state.
 Since profit is their main objective, it is not unusual for transnationals to
drive unfair bargains with local employees, customers and suppliers.

When this happens, the single unit comprising the cluster of corporations is
held liable according to the laws of the host country, but the transnational
corporation, in its entirety, is not answerable to any legal order.
Derivative Jurisdiction over Foreign
Corporations
Questions have been raised as to whether a state has jurisdiction over a
parent corporation by reason of the fact that it has jurisdiction over the
parents subsidiary corporation

Conversely
Which state has jurisdiction over a subsidiary by reason of the fact that it has
jurisdiction over the parent.
Queries

1. Whether ownership by the parent over the subsidiarys stock is enough to

give jurisdiction over the parent to a state which has jurisdiction over the
subsidiary.

2. Whether the activities of the subsidiary in a state will give that state
jurisdiction over the parent corporation.
Answer

1. The restatement Second on Conflict of Laws suggests that jurisdiction over

the parent will exist if the parent controls and dominates the subsidiary.

2. In determining whether the separate corporate existence of the subsidiary

has been adequately preserved, the courts will consider whether the
subsidiary has its own records, assets, advertising, employees, payroll and
accounting and whether its directors and headquarters are different from
those of the parent1

1 Frummer v. Milton Hotels International, Inc., 19 N.Y. 2d

Answer

American courts have ruled that jurisdiction over the parent corporation can
be acquired when the separate existence of the subsidiary has not been
faithfully maintained.

The activities of a subsidiary in the state will provide a basis for a jurisdiction
over the parent if these activities
Provide a basis for jurisdiction over the subsidiary
Can be said to have been done in the course for the parent corporation or on its
behalf2
Such agency relations is frequently found in the case of consignment
arrangments, control of prices, merchandising or advertising 3
2 Frummer v. Milton Hotels International, Inc., 19 N.Y. 2d
3 Filding v. Superior Court, 111 Cal. App. Ct. 2d 490
Answer

In the converse situation, jurisdiction over the parent corporation may give
jurisdiction over the subsidiary if the separate corporate existence of each
has not been adequately maintained or if the parent has acted within the
state as the subsidiarys agent.
Partnerships

A partnership is formed by two or more persons who bind themselves to

contribute money , property, or industry to a common fund with the intention
of dividing the profits among themselves4

Philippine internal law provides that if the domicile of the partnership is not
identified by the law creating it, it is deemed domiciled in the place where
its legal representation is established or where it exercises its principal
functions5

A partnership formed in one state but conducts its main business in another
state may be considered domiciled in the latter.

4 CIVIL CODE Art. 1767.

5 CIVIL CODE Art. 51.
Partnerships

Its status as a domiciliary has a direct bearing on the entitlements and

limitations applicable to it

The law of creation sets the nature of the partnership thus formed as either
one which acquires a separate juridical personality or one which does not

Letter A Letter B
Has Personality Has No Personality
Some of the problems regarding choice
of law affecting partnerships
Rights and duties and liabilities of partners acting as agents and fiduciaries

Partners dealings with third persons

Extent of contractual , tort, criminal liabilities.

All these aspects are wholly dependent on the governing law

Extraterritorial Enforcement of Summons in
personam judgements against partnerships

Q: Whether service upon a partner gives jurisdiction to bind partnership

property outside the state?

A: Depends [ If the firm is owned by an individual, his presence in the state

might be sufficient basis for a valid personal judgement that could be
enforced against the firms property elsewhere. On the other hand if the non-
resident firm was incorporated , mere presence of a share holder, officer or
director on personal business would not furnish a basis for an action in
personam judgement against the corporation

Riverside and Dan River Cotton Mills v. Menaefee, 237 U.S. 189 (1915)