c. Nationality of Corporations

Nationality of Corporation

Serves as a legal basis for subjecting the enterprise or its activities to the laws, the economic and fiscal powers, and various social and financial policies of the state to which it is supposed to belong.

Tests:

• Place of Incorporation
• Control Test
• Grandfather Rule
• War-time – in times of war, nationality of corporation is determined by the character or citizenship of its controlling stockholders
• Investment Test
• Place of Principal Business

In order to determine the nationality of a corporation, the following steps should apply:

1st Step: The nationality of a corporation is determined by the country under whose laws it is incorporated (Place of Incorporation Test).

2nd Step: If a corporation seeks a public-utility franchise, regardless of whether it is its first franchise, determine whether it meets the applicable Filipino-ownership requirement using the Test of Controlling Ownership (1987 Constitution, Art. XII, Sec. 11).

3rd step: If there is doubt as to the domestic control of the percentage of stock in a corporation with corporate stockholders, Grandfather test would be applied (Narra Nickel Mining and Development Corp v. Redmont Consolidated Mines Corp, G.R. No. 195580, 28 January 2015)¹

Place of Incorporation Test

A corporation is a national of the country under whose laws it has been organized and registered

War-Time Test

In wartime, a corporation may be treated as an enemy corporation if enemy nationals control it, notwithstanding its place of incorporation.

“Philippine National”

• A corporation organized under Philippine laws of which at least 60% of the outstanding capital stock entitled to vote is owned and held by Filipino citizens; and