DOING BUSINESS

RICA

Definition of Terms

International Agreement - International agreements are formal understandings or commitments between two or more countries. An agreement between two countries is called "bilateral," while an agreement between several countries is "multilateral." The countries bound by an international agreement are generally referred to as "States Parties."

Executive Agreement - Executive agreements become binding through executive action without the need of a vote by the Senate or by Congress the right of the Executive to enter into binding agreements without the necessity of subsequent Congressional approval has been confirmed by long usage.

Contract - A contract is an agreement between two parties that creates an obligation to perform (or not perform) a particular duty.

Treaty - a treaty is any legally binding agreement between states (countries). A treaty can be called a Convention, a Protocol, a Pact, an Accord, etc.; it is the content of the agreement, not its name, which makes it a treaty.

Agreement - decision or arrangement, often formal and written, between two or more groups or people

Chapter 2 Corporation

RA 11232, RCC

• Corporation

Is an artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incidental to its existence.

• Nationality

In our Jurisdiction, there two recognized test determining the nationality of a corporation, "Control Test" or the liberal rule; and the stricter test, the "Grandfather Rule".

The Control Test, as the embodied in the definition of "Philippine National" provides that "shares belonging to corporation or partnership at least 60% of the capital of which is owned by Filipino Citizens shall be considered as Philippine Nationality".

The Grandfather Rule, when there is "doubt" over the 60-40 Filipino-Foreign Equity Ownership. This rule states that if the percentage of Filipino ownership in the corporation is less than 60%, only the number of shares corresponding to this percentage shall be declared as Filipino.

• Separate Juridical Personality

A corporation is an artificial being created by law, with a separate personality from its stockholders. It is not liable for acts or liabilities of its stockholders, and stockholders are only liable for the extent of their subscribed capital. Corporations can acquire, possess, and lease property in their name, making foreigners not the owners of corporate property. However, the separate juridical personality of a corporation can be pierced when used as a cover for fraud or illegality. The corporation can act as though it were a person, owning properties, transacting, and committing acts expressly authorized by law or incidental to its existence. The board of directors can delegate specific powers to officers, but certain corporate acts require stockholder approval. It is recommended to secure the services of a retainer firm or counsel to advise on corporate matters.

• Liability of Directors and Officers

Directors or trustees who willfully and knowingly and knowingly vote for assent to patently unlawful; acts of the corporation or who are guilty of gross negligence or bad Faith in Directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors and trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholder or member and other accrued.