Historical Background

HARDEN V. BENGUET- Benguet mining was organized under a Sociedad anonima while Balatoc mining was created under corp. law.
Balatoc was in need of funds in order to solve they outsourced interested corp. to invest in their company, Balatoc agreed to invest.
In return a certificate of shares was given to Benguet. Due to improvements Balatoc’s value per share increase in stockmarket.
Harden being one of the stockholders of Balatoc now questioned the transfer of shares and ask to annul the certificate. Harden
argued that it is unlawful for Benguet company to hold interest over other mining company because in the former corporation law
there is a provision that it shall be unlawful for a corporation to engaged in another mining business. The court said Benguet
commited no wrong it was the fault of Harden and Balatoc for agreeing the same transaction. The court is also silent WON Balatoc is
a corporation within the prohibitory provision since it was created under Sociedad anonima. Under the corpo law those who are
created under the Sociedad anonima has the option to continue business as such or to reform and organize under the provision of
the corpo law.

CORPORATION LAW or ACT NO. 1459 -effective 1 April 1906

CORPORATION CODE OF THE PHILIPPINES or BP BLG. 68- effective 1 May 1980

CASTILLO V. BALINGHASAY- Petitioners and respondents are stockholders of Medical Center with the former holding class B and the
latter class A. Class B has no right to vote during election. They claim they have been deprived to vote. Under their art. Of
incorporation it states ‘’except when otherwise provided by law” only class A can vote. During that time the old civil code was
enforce. Upon the enforcement of corpo code, the court said in the ruling that Class B holders should not be deprived unless they
are classified as holders of “preferred or redeemable shares” as provided under the corpo code Sec. 6 and since their art. Of
incorporation states “ unless otherwise provided by law’’. Class B should therefore not be deprive of their voting rights.

CONCEPTS

Art. 44 (2) CC- corporations begins their personality as soon as they have been constituted according to law. (3)- Corporations are
separate and distinct from that of each shareholder, partner or member.

Art. 46- Juridical persons may acquire and possess property of all kinds can sue and be sued (crim. Or civil)

PNB V. ANDRADA- A corporation assuming some assets from other company due to its insolvency is not liable to 3 rd person of their
incurred debts. A corpo has a legal personality separate and distinct from the persons and entities owning it. Liability may only
happen if such was done by the assuming corpo that it has a complete control and domination of all its assets, such control was used
to commit fraud and that such fraud was the proximate caused the injury or unjust loss complained of. Which in this case are not
present.

FOUR CORPORATE ATTRIBUTES

AN ARTIFICIAL BEING- has a personality with capacity to enter into contractual relations, separate and distinct from those persons
comprising it as well as from any other legal entity to which it may be related.

CREATURE OF LAW- dependent upon the grant or consent of the State. Cannot come by mere consent of parties, there must be a
law granting it.

RIGHT OF SUCCESSION (strong juridical personality)- it can continue to exist despite death or replacement of its SH or members.

CREATURE OF ENUMERATED POWERS, ATTRIBUTES AND PROPERTIES- it has powers limited to those granted to it by the law.

PASCUAL V. SANTOS-The subsequent submission of proof of authority to act in behalf of the corporation justifies the relaxation of
the Rules for the purpose of allowing its petition to be given due course.

DE LIANO V. CA- The act of corporations officer or agent is binding to the corporation as long as there is a resolution authorizing the
same except for the B.O.D.

Sec. 23 of the corporation code states that the BOD or trustees has all the powers to conduct business in behalf of the
corporation.

TRI-LEVEL EXISTENCE OF THE CORPORATION 2.business enterprise level-

1.Assets Only Level- 3. Juridical Entity level-

TRI-LEVEL RELATIONSHIP OF THE CORPORATION 2. Intra corporate level-
3. Extra- corporate level
1. Juridical Entity level-
THEORIES ON THE FORMATION OF CORPORATION

1. THEORY OF CONCESSION (theory of privilege)- the grant is only by virtue of a primary franchise given by the state and it is
within the power of the state to grant it or to deny such grant. The theory looks a corporation as simply as a creature of the
state and of limited powers and capabilities, completely within the control of the state.

TAYAG V. BENGUET- The refusal of a domestic corporation to comply with the order of the probate court is directly a violation
of the grant by the state of its existence. That a corporation is only an artificial being, created by fiction of law which owe its life
to the state, its being purely dependent on its will and thus it has no rights and privileges of a higher priority than of its creator.
It cannot legitimately refuse to yield obedience to acts of its state organs, certainly not excluding the judiciary when called upon
to do so.

ANG PUE & CO. V. SEC. OF COMMERCE AND INDUSTRY- Juridical personality is not a matter of absolute right but a privilege
which may be enjoyed only under such terms as the state may deem necessary to impose.

INT’L EXPRESS TRAVEL & TOURS SERVICES, INC, V, CA- President KHAN is liable for non-payments of tickets. A voluntary
unincorporated association, like defendant Federation has no power to enter into, or to ratify a contract. The contract entered
into by its officers or agents on behalf of such association is binding or, as enforceable against it. The officers or agents are
themselves personally liable. It is a basic postulate that before a corporation may acquire juridical personality, the State must
give its consent either in the form of a special law or a general enabling act. We cannot agree with the view of the appellate
court and the private respondent that the Philippine Football Federation came into existence upon the passage of these laws.

THEORY OF ENTERPRISE ENTITY-There can be no corporate existence without persons to compose it.; there can be no association
without associates.

PSE v. CA- A corpo is but an association of individuals, allowed to transact under an assumed corporate name, and with a distinct
legal personality, and that in organizing itself as a collective body it waives no constitutional immunities and prerequisites
appropriate to such a body.

The SEC although being entrusted to enforce all laws affecting corporations does not have an absolute control of the management
prerogatives of the BOD since PSE after all is a corpo authorized by its corporate franchise to engage in its proposed and duly
approved business. (such as policy-making, election contest for officers etc.) Ani nga kaso gipugos sa PUERTO AZUL and Securities
and Exchange Commission (SEC) to over rule the PSE kay daw under ni sa SEC’s power pero dili pwede as stated above.

TAN BOON BEE & CO. V. JARENCIO- In 1972, Anchor Supply Co. (ASC), through Tan Boon Bee, entered into a contract of sale with
Graphic Publishing Inc. (GPI) whereby ASC shall deliver paper products to GPI. GPI paid a down payment but defaulted in paying the
rest despite demand from ASC. To satisfy the indebtedness, the trial court, ordered that one of the printing machines of GPI be
auctioned. But before the auction can be had, Philippine American Drug Company (PADCO) notified the sheriff that PADCO is the
actual owner of said printing machine. Notwithstanding, the sheriff still went on with the auction sale where Tan Boon Bee was the
highest bidder. Tan Boon Bee averred that PADCO holds 50% of GPI; that the board of directors of PADCO and GPI is the same; that
the veil of corporate fiction should be pierced based on the premises. PADCO on the other hand asserts ownership over the said
printing machine; that it is merely leasing it to GPI.

ISSUE: Whether or not the veil of corporate fiction should be pierced.

HELD: Yes. PADCO, as its name suggests, is a drug company not engaged in the printing business. So it is dubious that it really owns
the said printing machine regardless of PADCO’s title over it. Further, the printing machine, as shown by evidence, has been in GPI’s
premises even before the date when PADCO alleged that it acquired ownership thereof. Premises considered, the veil of corporate
fiction should be pierced; PADCO and GPI should be considered as one. When a corporation is merely an adjunct, business conduit
or alter ego of another corporation the fiction of separate and distinct corporation entities should be disregarded.

ADVANTAGES AND DISADVANTAGES OF CORPORATE FORM;

1.STRONG JURIDICAL PERSONALITY-unaffected by death, incapacity, withdrawal, or insolvency of any stockholders or members.

REMO JR. V. IAC- The word “WE’ in the said promissory note must refer to the corporation which Coprada represented in the
execution of the note and not its stockholders or directors. Petitioner did not sign the said promissory note so he cannot be
personally bound thereby. REMO is not liable the contract was made by the corporation. Strong Juridical Personality entity separate
and distinct from its stockholders.

MANACOP V. EQUITABLE PCIBANK- Lastly, petitioners assert that Lavine’s financial distress is sufficient reason to order execution
pending appeal. In Borja v. CA, the prevailing party was a natural person who, at 76 years of age, may no longer enjoy the fruit of the
judgment before he finally passes away. Lavine, on the other hand, is a juridical entity whose existence cannot be likened to a
natural person. Its precarious financial condition is not by itself a compelling circumstance warranting immediate execution and does
not outweigh the long standing general policy of enforcing only final and executory judgments. Execution pending appeal maybe
allowed when "the prevailing party is already of advanced age and in danger of extinction" but NOT in this case where the winning
party is a corporation.

2.CENTRALIZED MANAGEMENT- B.O.D or Trustees are granted all corporate powers. Shareholders are not agents of corpo and is
bound by the management decisions and transactions of the BOD. (Sec. 23 Corpo Code)

FIRME V. BUKAL ENTERPRISES AND DEV. CORP- Teodoro Aviles was a broker but without boards authorization, resolution negotiate
to transact in behalf of the company by way of his friends request to purchase the land of the sps. Firme. The law states (sec. 23 of
corpo code) that the BOD has all the corporate powers to exercised and assumed business in behalf of the corporation or to its
authorized agent by way of authorization of which in this case is not present. (No authorization given).

GREAT ASIAN SALES CORP. V. CA- Corporation is liable there was resolution given therefore the act of the agent is binding to the
corporation.

3. LIMITED LIABILITY TO INVESTORS AND OFFICER- liability is only up to the amount of the investment. However if such is used for
fraud a doctrine of piercing the veil of corporate fiction can be use.

SAN JUAN STRUCTURAL AND STEEL FABRICATORS, INC. V. CA- The contract entered was not authorized by motorich despite it was
signed by its representative. A corpo is a juridical person separate and distinct from its stockholders and members. The property of
the corpo is not the property of its stockholders and may not be sold without corpo’s authorization by the BOD.

CONSOLIDATED BANK AND TRUST CORP V. CA- The failure to turn over the goods covered by the trust receipt or proceeds by sps.
Limon in behalf of their company for failure to pay their loan to Consolidated Bank is not a ground that the spouses should be liable
personally under the subject trust receipt. The transaction clearly was entered by Lim in his official capacity as executive VP of the
corporation. They cannot be held as one to be liable. Personality of corpo is separate and distinct.

MALAYANG SAMAHAN NG MGA MANGAGAWA SA M. GREEN FIELDS V. RAMOS- The officers/agents who dismissed the workers
are not liable being under acting as agent of the corporation unless acting in bad faith or were guilty of gross negligence in
terminating the services of petitioners as to warrant personal liability.

EVER ELECTRICAL MANUFACTURING INC. V. SAMAHANG MANGAGAWA NG EVER ELECTRICAL- The failure of operation of the
company which resulted to termination is not a bad faith on the part of the company (cessation of company are due to
mismanagement, lack of demand, negligence etc.) and thus he cannot be held jointly and solidarily liable with the company.

FREE TRANSFERABILTY OF UNITS (SHARES) OF OWNERSHIP- shares of stock can be transferred without the consent of the other
stockholders

REMO JR. V. IAC-

PNB V. RITRATTO GROUP, INC.- PNB-IFL, a subsidiary company of PNB extended credit to Ritratto and secured by the real estate
mortgages on four parcels of land. Since there was default, PNB-IFL thru PNB, foreclosed the property and were subject to public
auction.

Issue: Is PNB privy to the loan contracts entered into by respondent & PNB-IFL being that PNB-IFL is owned by PNB?

Held: No, The contract questioned is one entered into between Ritratto and PNB-IFL. PNB was admittedly an agent of the latter who
acted as an agent with limited authority and specific duties under a special power of attorney incorporated in the real estate
mortgage. The mere fact that a corporation owns all of the stocks of another corporation, taken alone is not sufficient to justify their
being treated as one entity. If used to perform legitimate functions, a subsidiary’s separate existence may be respected, and the
liability of the parent corporation as well as the subsidiary will be confined to those arising in their respective business. The courts
may, in the exercise of judicial discretion, step in to prevent the abuses of separate entity privilege and pierce the veil of corporate
entity.
THOMSON V. CA- The proprietary share in manila polo club should be surrendered after one has been done as an officer of the
company being under the corporate membership of the polo club. The manila polo club however does not necessarily prohibit the
transfer of proprietary shares to its members but only restricts membership to deserving applicants in accordance with its rules. In
this case the petitioners employment with its company was over and thus his opportunity to use the MPC as an employee of his
company is over and he should surrender said share to company’s another nominee.

DIS-ADVANTAGES OF CORPORATE MEDIUM-

1. ABUSE OF CORPORATE MANAGEMENT-

2. ABUSE OF LIMITED LIABILITY FEATURE- REMEDY IS PIERCING THE VEIL OF CORPORATE FICTION
3. HIGH COST OF MAINTENANCE OF THE CORPORATE MEDIUM- COST OF FORMATION, OPERATION AND MAINTENANCE.
4. DOUBLE TAXATION-

COMPARED WITH THE OTHER MEDIA

1.SOLE PROPRIETORSHIP-1. It is not endowed with a separate juridical personality.2. The owner is in command of his own
business.3. He stands to lose of his business and the doctrine of limited liability does not apply and He is also personally liable for his
debts and that creditors can go after also to his personal properties/assets.

EXCELLENT QUALITY APPAREL INC. V. WIN MULTIPLE RICH BUILDERS INC.-

2.PARTNERSHIP AND OTHER ASSOCIATIONS.-It has a juridical personality separate and distinct from that of each partners. 1.The
death, withdrawal, incapacity or insolvency will result to dissolution of partnership.2. Partners are personally liable for partnership
debts even as to extent of their other properties in corpo the principle of limited liability is applicable.3. Every partners is an agent of
the partnership and by his sole act he can bind the partnership, in corpo the BOD or its agents can bind the corporation. 4.In
partnership the buyer or transferee does not assume transferor’s position as partner in corpo he can.

CAN A DEFECTIVE ATTEMPT TO FORM A CORPO RESULT AT LEAST IN PARTNERSHIP?

It depends upon the intent and participation of the individuals.

1. Parties who had intended to participate or actually participated in the business affairs of the intended corporation would be
considered as partners under a de facto partnership and liable as such in an action for settlement of partnership
obligations.
2. Parties who took no part except to subscribe to shares do not become partners with other subscribers and are not liable for
action for settlement of the alleged partnership contribution.

PIONEER INSURANCE V. CA- A defective attempt to form a corp. does not result in at least a partnership, absent intent to form one.

FACTS: Jacob S. Lim is an owner-operator of Southern Airlines (SAL), a single proprietorship: Japan Domestic Airlines (JDA) and Lim
entered into a sales contract regarding: Pioneer Insurance and Surety Corp. as surety executed its surety bond in favor of JDA on
behalf of its principal Lim Border Machinery and Heacy Equipment Co, Inc. Francisco and Modesto Cervantes and Constancio
Maglana contributed funds for the transaction based on the misrepresentation of Lim that they will form a new corp.. to expand his
business : Lim as SAL executed in favor of Pioneer a deed of chattel mortgage as security Restructuring of obligation to change the
maturity was done 2x w/o the knowledge of other defendants made the surety of JDA prescribed so not entitled to reimbursement
Upon default on the 2/8 payments, Pioneer paid for him and filed a petition for the foreclosure of chattel mortgage as security CA
affirmed Trial of Merits: Only Lim is liable to pay

ISSUE: W/N failure of respondents to incorporate = de facto partnership.

HELD: NO. Partnership inter se does NOT necessarily exist, for ordinarily CANNOT be made to assume the relation of partners as bet.
themselves, when their purpose is that no partnership shall exists Should be implied only when necessary to do justice bet. the
parties (i.e. only pretend to make others liable) Lim never intended to form a corp.

LIM TONG LIM V. PHIL FISHING GEAR INDUSTRIES INC.- Lim Tong Lim requested Peter Yao and Antonio Chuato engage in
commercial fishing with him. The three agreed to purchase two fishing boats but since they do not have the money they borrowed
from one Jesus Lim the brother of Lim Tong Lim. Yao and Chua represented themselves as acting in behalf of “Ocean Quest Fishing
Corporation” (OQFC) and they contracted with Philippine Fishing Gear Industries (PFGI) for the purchase of fishing nets amounting to
more than P500k. However, they were unable to pay PFGI and hence were sued in their own names as Ocean Quest Fishing
Corporation. Chua admitted his liability while Lim Tong Lim refused such liability alleging that Chua and Yao acted without his
knowledge and consent in representing themselves as a corporation. ISSUE: Whether Lim Tong Lim is liable as a partner

HELD: Yes. It is apparent from the factual milieu that the three decided to engage in a fishing business. Moreover, their Compromise
Agreement had revealed their intention to pay the loan with the proceeds of the sale and to divide equally among them the excess
or loss. The boats and equipment used for their business entails their common fund. The contribution to such fund need not be cash
or fixed assets; it could be an intangible like credit or industry. That the parties agreed that any loss or profit from the sale and
operation of the boats would be divided equally among them also shows that they had indeed formed a partnership. The principle of
corporation by estoppel cannot apply in the case as Lim Tong Lim also benefited from the use of the nets in the boat, which was an
asset of the partnership. Under the law on estoppel, those acting in behalf of a corporation and those benefited by it, knowing it to
be without valid existence are held liable as general partners. Hence, the question as to whether such was legally formed for
unknown reasons is immaterial to the case. Having reaped the benefits of the contract entered into by persons w/ whom he
previously had an existing rel., he is deemed to be part of said assoc. and covered by the doctrine of estoppel.

JOINT VENTURES- same concept with partnership and is governed by law on partnership.

Kilosbayan, Inc. v. Guingona- joint venture is an associations of persons or companies jointly undertaking some commercial
enterprise; generally all contribute assets and share risks.

Facts: In 1993, the Philippine Charity Sweepstakes Office decided to put up an on-line lottery system which will establish a national
network system that will in turn expand PCSO’s source of income. A bidding was made. Philippine Gaming Management Corporation
(PGMC) won it. A contract of lease was awarded in favor of PGMC. Kilosbayan opposed the said agreement between PCSO and
PGMC as it alleged that: PGMC does not meet the nationality requirement because it is 75% foreign owned (owned by a Malaysian
firm Berjaya Group Berhad); PCSO, under Section 1 of its charter (RA 1169), is prohibited from holding and conducting lotteries “in
collaboration, association or joint venture with any person, association, company or entity”;

ISSUE: Whether or not Kilosbayan is correct. HELD: Yes, but only on issues 2, 3, and 4.

On issues 2, 3, and 4, Section 1 of R.A. No. 1169, as amended by B.P. Blg. 42, prohibits the PCSO from holding and conducting
lotteries “in collaboration, association or joint venture with any person, association, company or entity, whether domestic or
foreign.” There is undoubtedly a collaboration between PCSO and PGMC and not merely a contract of lease. The relations between
PCSO and PGMC cannot be defined simply by the designation they used, i.e., a contract of lease. Pursuant to the wordings of their
agreement, PGMC at its own expense shall build, operate, and manage the network system including its facilities needed to operate
a nationwide online lottery system. PCSO bears no risk and all it does is to provide its franchise – in violation of its charter.
Necessarily, the use of such franchise by PGMC is a violation of Act No. 3846.

Assoc. of persons or companies jointly undertaking some commercial enterprise generally all contribute assets and share risks
requires community of interest in the performance of the subject matter, a right to direct and govern the policy in connection
therewith, and duty which may be altered by agreement to share both in profit and losses

COOPERATIVES-It’s like an ordinary corporation, has a juridical personality separate and distinct from its members and has limited
liability feature.1. It is governed by principles of democratic control wherein one members is one vote. 2.Its objective is self-help not
like corpo which is for profit. Governed by SEC.

CORPUZ V. GROSPE- established to provide a strong social and economic organization to ensure that the tenant-farmers will enjoy a
lasting basis that benefits agrarian reforms.

BUSINESS TRUST-1.it is created under the terms of a deed of trust which is easier and less expensive. 2.It does not have separate
juridical personality and is mainly governed by contractual doctrines and common law principles on trust.

SOCIEDAD ANONIMAS- commercial partnership where upon the existence of the public instrument in w/c its articles of agreement
appear (NOT necessary to make it a judicial person but only to show that it partook of a form of corp.), and the contribution of funds
and personal property, becomes a judicial person - artificial being, invisible, intangible and existing only in contemplation of law -
with power to hold, buy and sell property and to sue and be sued - a corp. - not a gen. nor a limited co-partnership .

MEAD V. MCCULLOUGH- A majority of the directors, even against the protest of the minority, have the power to transfer or sell
corporate properties especially when the business is a failure and the best interest of the corporation and all the stockholders
require it. Also, there is no reason why a director, by authority of the majority of its stockholders or the board, may not deal with the
corporation, loan it money, or buy property from it in like manner as a stranger. Especially when such director acts in good faith and
pays adequate consideration. (Mead here ang contribution niya kay furnitures ra ani adto china kay ni trabaho.)

BENGUET C MINING V. PINEDA- Benguet wants to continue as Sociedad anonimas under the old law. Their registration was denied.

HELD: No. Benguet Mining has no vested right to extend its life. It is a well settled rule that no person has a vested interest in any
rule of law entitling him to insist that it shall remain unchanged for his benefit. Had Benguet Mining agreed to extend its life prior to
the passage of the Corporation Code of 1906 such right would have vested. But when the law was passed in 1906, Benguet Mining
was already deprived of such right.

To allow Benguet Mining to extend its life will be inimical to the purpose of the law which sought to render obsolete sociedades
anonimas. If this is allowed, Benguet Mining will unfairly do something which new corporations organized under the new
Corporation Law can’t do – that is, exist beyond 50 years. Plus, it would have reaped the benefits of being a sociedad anonima and
later on of being a corporation. Further, under the Corporation Code of 1906, existing sociedades anonimas during the enactment of
the law must choose whether to continue as such or be organized as a corporation under the new law. Once a sociedad anonima
chooses one of these, it is already proscribed from choosing the other. Evidently, Benguet Mining chose to exist as a sociedad
anonima hence it can no longer elect to become a corporation when its life is near its end.

PHIL. PRODUCT V. PRIMATERIA SOCIETE ANONYME- COPRAS BUSINESS

ISSUE:1.Whether defendant Primateria Zurich may be considered a foreign corporation within the meaning of Sections 68 and 69 of
the Corporation Law. If so, whether its agents may be held personally liable on contracts made in the name of the entity with third
persons in the Philippines.

RULING:1.No. SC agreed with the lower court finding that Primateria Zurich was not duly proven to be a foreign corporation; nor
that a societe anonyme ("sociedad anomima") is a corporation; hence, such societe cannot be deemed to fall within the prescription
of Section 68 of the Corporation Law. 2.No. SC does not see how the plaintiff could recover from both the principal (Primateria
Zurich) and its agents. Because contrary to Petitioner’s invocation of Art. 1897 of the Civil Code, there is no proof that the defendant
officers, as agents, exceeded the limits of their authority.

CUENTAS EN PARTICIPACION- Accidental partnership its existence is known only to those who had interest in it there being no
mutual agreement between the partners, and without a corporate name. Those who contract with the persons whose name the
business of such cunetas en particiapcion only had a right of action against such person and not against the other person interested
in the venture.

BOURNE V. CARMAN- An action to recover the sum of $437.50 balance due on a contract for the sawing of lumber yard of Lo-Chim-
Lim was filed by Bourns. The contract was entered into by LoChim-Lim, acting as in his own name with the plaintiff, and it appears
that Lo-Chim-Lim personally agreed to pay for the work himself. The plaintiff brought the action against LoChim-Lim and his co-
defendants jointly, alleging that at the time the contract was made, they were the joint proprietors and operators of the said lumber
yard engaged in the purchase and sale of lumber under the name and style of Lo-Chim-Lim, hence were partners. The lower court
dismissed the action on the ground that defendants D.M. Carman, Fulgencio and Tan-Tongco, except Vicente Palance and Go-Tauco
were not the partners of Lo-Chim-Lim.

ISSUE: Whether appellants are deemed partners of Lo-Chim-Lim and hence are liable to Bourns

HELD: No. The alleged partnership between Lo-Chim-Lim and the appellants was formed by verbal agreement only. There is no
evidence tending to show that the said agreement was reduced to writing, or that it was ever recorded in a public instrument.
Moreover, the partnership had no corporate name. The partnership was engaged in business under the name and style of Lo-Chim-
Lim only. Moreover, it does not appear that there was any mutual agreement between the parties and if there were any, it has not
been shown what the agreement was. The contracts made with the plaintiff were made by Lo-Chim-Lim individually in his own
name, and there is no evidence that the partnership over contracted in any form. Hence, the partnership is one of cuentasen
participacion. It is but a simple business conducted by Lo-Chim-Lim exclusively in his own name. A partnership constituted in such a
manner, the existence of which was only known to those who had an interest in the same, being no mutual agreements between
the partners and without a corporate name indicating to the public in some way that there were other people besides the one who
ostensibly managed and conducted the business, is exactly the accidental partnership of cuentas en participacion defined in Art. 239
of the Code of Commerce.

- Those who contract with the person under whose name the business of such partnership of cuentas en participacion is conducted,
shall have only a right of action against such person and not against the other persons interested, and the latter, on the other hand,
shall have no right of action against the third person who contracted with the manager unless such manager formally transfers his
right to them. Those who contracted w/ person under whose name the business of such partnership of cuentas en participation is
conducted, shall have only a right of action against such person and not against the other persons interested, and the latter, on the
other hand, shall have no right of action against 3rd person who contracted w/ the manager UNLESS such manager formally
transfers his right to them (Bourns v. Carman (1906))

III. NATURE AND ATTRIBUTES OF A CORPORATION

NATURE OF POWER TO CREATE A CORPORATION

ART 12 SEC. 16 Constitution- The formation, organization or regulation of private corporation is by way of general law (corporation
code) while GOCC is established by special charters and subject to test of viability.

FELICIANO V. COA- Leyte Water Dist. was assessed by COA. LWD claimed it is a private corp (under P.D No. 198) and not covered by
COA. Court said LWD is a GOCC with an original charter, hence subject to COA. They are not created by the corpo code, not
registered to SEC, no articles of incorporation, no incorporators and no stockholders. The BOD are govt employees subject to civil
service. (COA IS MANDATED TO AUDIT GOCC with original charter)

VETERANS FEDERATION OF THE PHILIPPINES V. REYES- WON Veterans created by law is a public office subject to audit of DND.
Court said, YES- VFP is a public corpo. In once case decided by the SC PUBLIC OFFICE is defined as the right authority and duty,
created and conferred by law, by which for a given period is invested with some portion of the sovereign functions of the govt, to be
exercised for the benefit of the public. VFP was created for the interest of war veterans which promotes social justice an reward
patriotism- certainly fall within the category of sovereign functions.

LIBAN V. GORD0N- Red cross is a private organization performing public functions. Its is autonomous and cannot be controlled or
owned by the govt and is not a GOCC. Although the PNRC is created by a special charter, it cannot be considered a GOCC in the
absence of essential elements of ownership and control by the govt. It is a one of a kind (SUI GENERIS) for the congress was creating
a private corporation and it was void for being unconstitutional.

CORPORATION AS A PERSON-

ENTITLED TO DUE PROCESS AND EQUAL PROTECTION- PROTECTED

SMITH BELL & CO. V. NATIVIDAD- The 14th amendment (old case) guaranteed all ‘”PERSONS” within the territorial jurisdiction,
without regard to race, color, or nationality. Person includes aliens and “private corporations”. (The case is all about reserving
registration of vessels owned by foreign)

UNREASONBLE SEARCHES AND SEIZURES-PROTECTED

STONEHILL V. DIOKNO- However court ruled that officers of a corporation from which documents papers and things were seized
have no cause of action to assail the legality of the seizures, regardless of the amount of shares of stock. The legality can be
contested only by the party whose rights have been impaired thereby.

BACHE & CO. INC. V. RUIZ- The legality of a seizure can be contested only by the party whose rights have been impaired thereby,
and that the objection to an unlawful search and seizure is purely personal and cannot be availed of by third parties. In Stonehill, et
al. vs. Diokno, et al. (GR L-19550, 19 June 1967; 20 SCRA 383) the Supreme Court impliedly recognized the right of a corporation to
object against unreasonable searches and seizures; holding that the corporations have their respective personalities, separate and
distinct from the personality of the corporate officers, regardless of the amount of shares of stock or the interest of each of them in
said corporations, whatever, the offices they hold therein may be; and that the corporate officers therefore may not validly object to
the use in evidence against them of the documents, papers and things seized from the offices and premises of the corporations,
since the right to object to the admission of said papers in evidence belongs exclusively to the corporations, to whom the seized
effects belong, and may not be invoked by the corporate officers in proceedings against them in their individual capacity.

The distinction between the Stonehill case and the present case is that: in the former case, only the officers of the various
corporations in whose offices documents, papers and effects were searched and seized were the petitioners; while in the latter, the
corporation to whom the seized documents belong, and whose rights have thereby been impaired, is itself a petitioner. On that
score, the corporation herein stands on a different footing from the corporations in Stonehill. Moreover, herein, the search warrant
was void inasmuch as First, there was no personal examination conducted by the Judge of the complainant (De Leon) and his witness
(Logronio).
A corporation is an association of individuals under am assumed name and with distinct legal entity. It organizing itself as a collective
body, it waives no constitutional immunities appropriate for such body. Its property cannot be taken without compensation.

NOT ENTITLED TO PRIVILEGE OF SELF INCRIMNATION- It’s a personal one, applying only to natural individuals and a corporation
may be compelled to submit to the visitorial powers of the states even if this result in disclosure of criminal acts of corporation.

BATAAN SHIPYARD & ENGINEERING V. PCGG- No Violation of Right against Self-Incrimination and Unreasonable Searches and
Seizures – It is elementary that the right against self-incrimination has no application to juridical persons. While an individual may
lawfully refuse to answer incriminating questions unless protected by an immunity statute, it does not follow that a corporation,
vested with special privileges and franchises, may refuse to show its hand when charged with an abuse of such privileges * *

PRACTICE OF PROFESSION

ULEP V. THE LEGAL CLINIC-The advertisement done by the corpo to support legal services (posting its expertise and fees in public) is
covered in the practice of law (cayetano v. monsod) hence the corporation is practicing the legal profession which is champertous,
illegal and unethical. CORPO CANNOT PRACTICE LAW DUE TO LACK OF COMPETENCE.

SAMAHAN NG OPTOMETRISTS V. ACEBEDO INT’L CORP.- A corpo engaged in the selling of eyeglasses that hires optometrists is not
engaged in the practice of optometry. Acebedo is merely in the business of selling optical products, not in the practice of optometry,
whether directly or indirectly, through its hired optometrists. While the optometrists are employees of Acebedo, their practice of
optometry is separate and distinct from the business of Acebedo of selling optical products.They are personally liable for acts done
in the course of their practice. Only natural persons and not juridical can practice optometry.

R.A NO.9266- ARCHITECTURAL FIRMS ARE EXCEPTIONS

LIABILITY FOR TORTS-

PNB v. CA-The court found the banks directors or officers liable for tort under art. 19 of CC for their untimely refusal to approve the
lease of sugar quota allocation mortgaged with the bank causing its borrower to lose the lease income. Corpo are civilly liable in the
same manner as natural persons. The tortous act commited by an officer or agent under express direction or authority from the
stockholders or members acting as a body or generally from the directors as governing body is the basis.

SERGIO F. NAGUIAT V. NLRC-The failure of the corporate employer engaged in the management or operation of the business to
grant separation pay to its employees in case of closure not due to serious business losses or financial reverses is liable for tort.
(Case was all about cessation of taxi business to due closure of US military bases)

PROFESSIONAL SERVICES INC. V. CA-Hospitals are liable under the principle of apparent authority or doctrine of ostensible agency
or agency by estoppel on the actions of the employer in misleading the public into believing that the relationship or authority exists.
The principal are bound by the acts of its agents with the apparent authority which he knowingly permits the agent to assume or
which he holds the agent out to the public as possessing. (RELATIONSHIP BETWEEN HOSPITAL AND PATIENT)

CORPORATE CRIMINAL LIABILITY

Art. 102 RPC- Innkeepers, tavern keepers and proprietors of establishment are civilly liable on crimes committed on their estab.

ART. 103 RPC-It also apply to employers, teachers, persons and corporations engaged in any kind of industry for felonies of their
servants, employees, pupils etc.

WEST COAST LIFE INS. V. HURD- No law or provision of law where corpo may be brought to court to be proceeded against
criminally.

SIA V. CA-If the law provides, officers can he held liable.

Ong v. CA- The court acknowledged that the trust receipt law recognizes the impossibility of imposing the penalty of imprisonment
on a corpo. Hence, if the entrustee is a corporation, the law makes the officers or employees or other persons responsible for the
offense liable to suffer the [penalty of imprisonment.

TIMES, INC. V. REYES- The case is all about a suit against time magazine with the address at New York for an alleged libellous writing.
The court said that it is a fundamental rule of international jurisdiction that no state can by its laws, and no court which is only a
creature of the state can by its judgments or decrees, directly bind or affect property or persons beyond the limits of the state. If the
accused is corpo, no criminal action can lie against it. Also, the court states the a foreign corpo by writ of prohibition, seek relief
against the wrongful assumption of jurisdiction and a foreign corpo seeking a writ of prohibition against further maintenance of a
suit on the ground of want of jurisdiction in which jurisdiction Is not bound by the ruling of the court in which the suit was brought
on a motion to quash service of summons, that it has jurisdiction. The case was dismissed.

COMETA V. CA- In this case Guevara is the president of Honeycomb Builders and chairman as well of Guevant Industrial dev. They
acquired a loan from state investment trust. When honeycomb failed to pay, gueavant industrial wanted to buy the mortgage
property. State investment filed a case on the other hand after the case was dismissed, honeycomb filed a case against state
investment for malicious prosecution it included Honeycomb as a co-plaintiff. The court said a corpo can be a real party in interest
for the purpose of bringing a civil action for malicious prosecution.

PEOPLE V. CONCEPCION-The case is all about the loan extended by the president of the bank to a bank who happen to be he also a
co-partner. Under the law it was prohibited. The court said that when a criminal statute forbids the corpo itself from doing an act,
the prohibition extends to the board of directors and to each director separately and individually.

PEOPLE V. TAN BOON KONG-The agents/officers is liable criminally for transactions done in behalf of the corpo. Under the doctrine
of veil of corporate fiction for false return of report of its gross sales to BIR for purposes of taxation.

CHING V. SEC. OF JUSTICE-A corporation may be charged and prosecuted for a crime if the impossible penalty is fine.

CRUZVALE, INC. V. EDUQUE- Only corporate officers show to have participated in the alleged anomalous acts may be held criminally
liable.

RECOVERY OF MORAL AND OTHER DAMAGES

MAMBULAO LUMBER CO. V. PNB- Cannot recover moral damages because a corpo cannot experience physical sufferings, mental
anguish, fright, serious anxiety, wounded feelings, moral shock or social humiliation.

OBITER DICTUM- If corpo has a good reputation which, if besmirched may also be a ground for moral damages.

ABS-CBN v. CA-Cannot recover damages

FILIPINAS BROADCASTING NETWORK V. AGO MEDICAL AND EDUCATIONAL CENTER- Rima & Alegre were host of FBNI radio
program “Expose”. Respondent Ago was the owner of the Medical & Educational center, subject of the radio program “Expose”.
AMEC claimed that the broadcasts were defamatory and owner Ago and school AMEC claimed for damages. The complaint further
alleged that AMEC is a reputable learning institution. With the supposed expose, FBNI, Rima and Alegre “transmitted malicious
imputations and as such, destroyed plaintiff’s reputation. FBNI was included as defendant for allegedly failing to exercise due
diligence in the selection and supervision of its employees. The trial court found Rima’s statements to be within the bounds of
freedom of speech and ruled that the broadcast was libelous. It ordered the defendants Alegre and FBNI to pay AMEC 300k for
moral damages.”

ISSUE: Whether or not AMEC is entitled to moral damages.

RULING: YES. A juridical person is generally not entitled to moral damages because, unlike a natural person, it cannot experience
physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock. Nevertheless, AMEC’s
claim, or moral damages fall under item 7 of Art – 2219 of the NCC. This provision expressly authorizes the recovery of moral
damages in cases of libel, slander or any other form of defamation. Art 2219 (7) does not qualify whether the plaintiff is a natural or
juridical person. Therefore, a juridical person such as a corporation can validly complain for libel or any other form of defamation
and claim for moral damages. Moreover, where the broadcast is libelous per se, the law implied damages. In such a case, evidence
of an honest mistake or the want of character or reputation of the party libeled goes only in mitigation of damages. In this case, the
broadcasts are libelous per se. thus, AMEC is entitled to moral damages.

PRIME WHITE CEMENT CORP. v. IAC-CANNOT CLAIM

LBC EXPRESS V. CA-cannot claim

ACME SHOE, RUBBER & PLASTIC CORP V. CA- Cannot claim

CORPORATE NATIONALITY; UNDER WHOSE LAWS INCORPORATED; EXCEPTION; TEST OF CONTROLLING OWNERSHIP.

HAW PIA V. CHINA BANK- (MILITARY OCCPATION WW2) The jap has the power to sequestrate and impound the assets or funds of
china bank and for that purpose to liquidate it by collecting debts and paying its creditors and appoint the bank of taiwan as
liquidator. It follows the payments by the debtors of the bank of Taiwan of their debts to china banking corp. have extinguished their
obligation to the latter. Under Art. 1162 of CC a natural person is not only authorized to receive payments but also includes and
assignee or liquidator of a partnership or corporation as well as other authorized by law.

GAMBOA V. TEVES- The issue here is all about the indirect sale of PLDT to foreign company. WON it violates 60/40 shares and what
is capital by definition under the Constitution.

The court said “capital” means shares of stock entitled with voting rights in the election of directors and thus in the present case
only to common shares and not the total outstanding capital stock comprising both common and on voting preferred shares.

It must be stressed, and respondents do not dispute, that foreigners hold a majority of the common shares of PLDT. . In other words,
foreigners hold 64.27% of the total number of PLDT’s common shares, while Filipinos hold only 35.73%. Since holding a majority of
the common shares equates to control, it is clear that foreigners exercise control over PLDT. Such amount of control unmistakably
exceeds the allowable 40 percent limit on foreign ownership of public utilities expressly mandated in Section 11, Article XII of the
Constitution.

In short, Filipinos hold less than 60 percent of the voting stock, and earn less than 60 percent of the dividends, of PLDT. This directly
contravenes the express command in Section 11, Article XII of the Constitution that “[n]o franchise, certificate, or any other form of
authorization for the operation of a public utility shall be granted except to x x x corporations x x x organized under the laws of the
Philippines, at least sixty per centum of whose capital is owned by such citizens x x x.” Yes it violates the constitution because
preferred shares are majority owned by Filipinos but it has no right to vote the common shares who has the right to vote is owned
by foreigners . It violates the 60/40 provided by the constitution on ownership.

NARRA NICKEL V. REDMONT- Issue: Whether or not the petitioner corporations are Filipino and can validly be issued MPSA and EP.

Held: No. The SEC Rules provide for the manner of calculating the Filipino interest in a corporation for purposes, among others, of
determining compliance with nationality requirements (the ‘Investee Corporation’). Under the SEC Rules, there are two cases in
determining the nationality of the Investee Corporation. The first case is the ‘liberal rule’, later coined by the SEC as the Control Test
in its 30 May 1990 Opinion, and pertains to the portion in said Paragraph 7 of the 1967 SEC Rules which states, ‘(s)hares belonging to
corporations or partnerships at least 60% of the capital of which is owned by Filipino citizens shall be considered as of Philippine
nationality.’ Under the liberal Control Test, there is no need to further trace the ownership of the 60% (or more) Filipino
stockholdings of the Investing Corporation since a corporation which is at least 60% Filipino-owned is considered as Filipino. The
second case is the Strict Rule or the Grandfather Rule Proper and pertains to the portion in said Paragraph 7 of the 1967 SEC Rules
which states, “but if the percentage of Filipino ownership in the corporation or partnership is less than 60%, only the number of
shares corresponding to such percentage shall be counted as of Philippine nationality.” Under the Strict Rule or Grandfather Rule
Proper, the combined totals in the Investing Corporation and the Investee Corporation must be traced (i.e., “grandfathered”) to
determine the total percentage of Filipino ownership. Moreover, the ultimate Filipino ownership of the shares must first be traced
to the level of the Investing Corporation and added to the shares directly owned in the Investee Corporation. In other words, based
on the said SEC Rule and DOJ Opinion, the Grandfather Rule or the second part of the SEC Rule applies only when the 60-40 Filipino-
foreign equity ownership is in doubt (i.e., in cases where the joint venture corporation with Filipino and foreign stockholders with
less than 60% Filipino stockholdings [or 59%] invests in other joint venture corporation which is either 60-40% Filipino-alien or the
59% less Filipino). Stated differently, where the 60-40 Filipino- foreign equity ownership is not in doubt, the Grandfather Rule will
not apply.

OWNERSHIP OF PRIVATE LAND- 60/40 Sec 7 Art. 12 of 1987 Consti,- save in cases of hereditary succession, no private lands shall
be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public
domain.

STRATEGIC ALLIANCE DEV. CORP. V. RADSTOCK SECURITIES LTD- The court said the assignment of marubeni corpo to Radstock
company (foreign comp.) is void because foreign corpo cannot acquire and own a land in the Philippines and much it cannot transfer
the rights to ownership because it cannot own the land itself. A foreign corpo with unknown owners whose nationalities are also
unknown is not qualified to own a land, then any contractual stipulation that authorizes it to sell or assign rights to ownership of
lands in the Philippines would be void. Clearly it is a circumvention of the law that marubeni assign it to Radstock.

ROD OF RIZAL V. UNG SUI SI TEMPLE- A non-incorporated religious organization, whose trustees and members were Chinese
nationals is disqualified from acquiring by donation a piece of land.
ROMAN CATHOLIC APOSTOLIC ADMINISTRATOR OF DAVAO V. LRC AND ROD OF DAVAO- A corporation sole has no nationality and
therefore it is allowed to acquire land. A corporation sole is a special form of corporation usually associated with the clergy designed
to facilitate the exercise of the functions of ownership. The nationality of its constituents of the diocese and not the nationality of
the incumbent of the parish should be taken into consideration.. Corpo sole ordinarily holds the property in trust for the benefit of
the catholic faithful diocese.

J.G SUMMIT HOLDINGS, INC. V. CA- Case is about joint venture by Kawasaki(FOREIGN CORPO) and NIDC on shipyard building of
which Kawasaki was given the right to top 5% the highest bid. The court said Kawasaki is bound by its contractual obligation under
JVA that limits its right of first refusal to 40% of the total capitalization of PHILSECO. It cannot purchase beyond 40% of the
capitalization on account of both constitutional and contractual proscription.

Art. 12 Sec. 11 Constitution-No franchise, certificate or any other form of authorization for the operation of a public utility shall
be granted except to citizens of the Phils. or to corporations or associations organized under the laws of the Philippines at least
60% of whose capital is owned by such citizens, nor such franchise, certificate or authorization be exclusive in character or for a
longer period of 50 years.

PEOPLE V. QUASHA- Case is about a lawyer committed a falsification on making documents of which the true owner of the
subscribed stock is a foreigner and is beyond the 60/40 in operating a public utility in the country. The court said for a corpo to be
entitled to operate utility it is not necessary that it be organized with 60% of its capital owned by Filipinos from the start. A corpo
form with capital that is entirely alien may subsequently change the nationality of its capital through transfer of shares to Filipino
citizens. The constitution does not prohibit the mere formation of a public utility corpo without the required formation of filipino
capital. What it does prohibit is the granting of a franchise or other form of authorization for the operation of a public utility to a
corpo already in existence but without the requisite proportion of filipino capital.

TATAD V. GARCIA-The ownership of rail tracks, rolling stocks, rail stations, terminals does not constitute public utility. What
constitute a public utility is not their ownership but their use to serve the public. The constitution does not require a franchise
before one can own the facilities needed to operate a public utility so long as it does not operate them to serve the public.

MASS MEDIA-Ownership of mass media shall be limited to citizens of the Philippines or to corporations, cooperatives or
associations, wholly owned and managed by such citizens it includes radio, tv, printed media, it does not include commercial
telecommunications, which are considered public utility nor advertising industry. 100%

ADVERTISING BUSINESS- 70/30

Sec. 11 Art. XVI of the Consti.- The advertising industry is impressed with public interest and shall be regulated by law for the
protection of consumers and the promotion of the general welfare. Only Filipino citizens or corpo or assoc. at least 70%.

INVESTMENT ACT R.A. 7042- The term Philippine national shall mean a citizen of the Phils, or a domestic partnership or assoc.
wholly owned by citizens of the Phils, or a corpo organized under the laws of the Philippines of which at least 60% of the capital
stock outstanding and entitled to vote is owned and held by citizens of the phils.

UNCHUAN V. LOZADA- Anita Lozada Slaughter and Peregrina Lozada Saribay were the registered co-owners of parcels of lots
covered by TCT Nos. 53258 and 53257 in Cebu City. They were both based in the US. They sold the lots to Antonio J.P. Lozada under
a Deed of Sale. Testimony of Dr. Lozada that he agreed to advance payment for Antonio in preparation for their plan to form a
corporation, Damasa Corp., where he and Antonio have 40 and 60 stake. A Corporation may acquire disposable land. RE Public
policy: Even as Dr. Lozada advanced the money for the payment of Antonio’s share, at no point were the lots registered in Dr.
Lozada’s name. Nor was it contemplated that the lots be under his control for they are actually to be included as capital of Damasa
Corporation. According to their agreement, Antonio and Dr. Lozada are to hold 60% and 40% of the shares in said corporation,
respectively. This is well within the Constitution.

○ Moreover, the corporation may acquire disposable lands in the Philippines.

GRANDFATHER RULE- Where various nationality shall first be applied on the shareholders of the holding companies to determine
the nationality of the equity in the target corporation and thereby arrive at the nationality of such target corporation. Meaning the
combined totals in the investing corpo and the investee corpo must be traced to determine the total percentage of Filipino
ownership. Grandfather rule applies when there is in doubt with the 60-40 Filipino-foreign equity ownership.

3level relationship- .1 target company is the grandson 2.holding company is the father 3. Holding shares in the holding company is
the grandfather.
PALTING V. SAN JOSE PETROLEUM-The application of the grandfather rule to determine the nationality of the ultimate controller of
a subject corpo cannot go beyond the level of what is reasonable. Therefore it is within the jurisdiction of the court as to it
determination.

NARRA NICKEL V. REDMONT-Two acknowledgment test in determining the nationality of a corpo; the control test and the
grandfather.

The second case is the Strict Rule or the Grandfather Rule Proper and pertains to the portion in said Paragraph 7 of the 1967 SEC
Rules which states, “but if the percentage of Filipino ownership in the corporation or partnership is less than 60%, only the number
of shares corresponding to such percentage shall be counted as of Philippine nationality.” Under the Strict Rule or Grandfather Rule
Proper, the combined totals in the Investing Corporation and the Investee Corporation must be traced (i.e., “grandfathered”) to
determine the total percentage of Filipino ownership. Moreover, the ultimate Filipino ownership of the shares must first be traced
to the level of the Investing Corporation and added to the shares directly owned in the Investee Corporation.

In other words, based on the said SEC Rule and DOJ Opinion, the Grandfather Rule or the second part of the SEC Rule applies only
when the 60-40 Filipino-foreign equity ownership is in doubt (i.e., in cases where the joint venture corporation with Filipino and
foreign stockholders with less than 60% Filipino stockholdings [or 59%] invests in other joint venture corporation which is either 60-
40% Filipino-alien or the 59% less Filipino). Stated differently, where the 60-40 Filipino- foreign equity ownership is not in doubt, the
Grandfather Rule will not apply.

CLASSIFICATIONS OF CORPORATIONS

IN RELATION TO STATE

Public corporation-those created for political purposes connected with the public good in the administration of the civil
government. Such as the Brgy., city, municipality and provinces.

Distinction between public and private- If owned by govt it is public. If it is created by charter it is public, if general incorporation law
then it is private.

Quasi public- a cross between public and private corpo. Like water districts and school districts.

Marilao water consumers assoc. v. IAC-

Private corporation- classified as stock and non stock. Stock means corpo which have a capital stock divided into shares and are
authorized to distribute to the holders of such shares dividends or allotments of the surplus profit on the basis of the shares held.
Non stock is the opposite.

NATIONAL COAL CO, V. COLLECTOR OF INTERNAL REV.-The court held that the national coal co. is a private corpo. The mere fact
that the govt happens to be a majority stockholder does not make a corpo a public corpo. The court took into consideration on the
law creating it which is under the corporation law.

CERVANTES V. AUDITOR GENERAL- NAFCO is a private corpo because it was expressly made subject to the provisions of the corpo
law. Despite its controlling stock owned by the govt and the power of appointing directors is given to the pres. Of the pHils and was
created under commonwealth act no. 332.

PNOC-ENERGY DEV. CORP V. NLRC-The test in determining whether a govt owned or contolled corpo is subject to the civil service
law is the manner of its creation, such that govt corpo created by special charter are subject to its provisions while those
incorporated under the general corp law are not within the coverage and therefore are governed by the labor code.

BENGUET ELECTRIC COOP V. NLRC- Corpo code may be apply as suppletory.

CAMPAREDONIO V. NLRC-

FELCIANO V. COA-local water districts can validly exists as corporate entities under P.D. 198 and thereby are GOCCs whose board of
directors and other personnel are govt employees subject to civil service laws and anti-graft laws.

MANILA INTL AIRPORT AUTHORITY V. CA- MIA is not a GOCC because it is not constituted of capital divided into shares of stock,
and neither is it a non-stock corpo because it has no members. MIAA is a govt instrumentality vested with corporate powers to
perform efficiently its governmental functions.
LIBAN V. GORDON- a private corp performing public functions Privately owned, funded and privately run.

AS TO PLACE OF INCORPORATION

Domestic corpo- created under the laws of the phils.

Foreign corpo- may be licensed by the SEC to do business in the Phils. Only under the principle of reciprocity.

AS TO PURPOSE OF INCORPORATION

Municipal corpo Educational corpo

Religious corpo Charitable, scientific or vocational corpo

LONG V. BSA- Business corpo

AS TO NUMBER OF MEMBERS

Aggregate corpo- not less than 5 not more than 15 Director of Land v. IAC

Corporation sole- 1 only Republic v. Iglesia

Roman catholic v. LRC

AS TO LEGAL STATUS

Dejure corpo- there is full or substantial compliance with the requirements of an existing law permitting organization of such corpo
as by proper articles of incorporation duly executed and filed. Its juridical personality is not subject to attack in the courts from any
source and cannot be attacked by a quo warranto proceeding.

Defacto corpo- has de facto existence where there is a bona fide attempt to incorporate, colourable compliance with the statute
and user of corporate powers.

Corpo by estoppel- meaning no corpo at all. These are individuals performing functions as corpo and assume to do business and
may not deny its corporate existence.

AS TO EXISTENCE OF SHARES

Stock corpo-have capital stock divided into shares and are authorized to distribute to the holders dividends.

Non-stock corpo- one where no part of its income is distributable as dividends to its members, trustees or officers subject to the
provisions on dissolution provided that any profit which a non stock corpo may obtain as an incident to its operations shall
whenever necessary or proper be used for the furtherance of the purpose for which the corpo was organized.

SEPARATE JURIDICAL PERSONALITY

IMPORTANCE OF MAIN DOCTRINE

GENERAL CREDIT CORP. V. ALSONS DEV. INVESTMENT CORP-

MCLEOD V. NLRC-

SUNIO V NLRC (1984)

EM RAMOS & CO., INC (EMRACO) AND CABUGAO ICE PLANT, INC. (CIPI), sister corporations, sold an ice plant to Rizal Development
and Finance, Corp. (RDFC). To secure RDFC’s payment of the purchase price, the ice plant was mortga When RDFC redeemend the
ice plant, private respondents were again dismissed. Thus, the latter filed complaints against the petitioner corporation, and its
President and General manager, Alberto Sunio, for illegal dismissal. ged to EMRACO-CIPI. Because of the sale, EMRACO-CIPI
terminated all of theire employees, including private respondents. RATIO: A corporation is invested by law with a personaloty
separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related.
Mere ownership by a single stockholder or by anotehr coporation of all or nearly all of the capital stock of a corporation is not tiself
sufficient ground for disregarding the separate corporate personality. Therefore, Sunio should not have been made personally liable
for the payment of backwages to private respondents.
MEL V. VELARDE v. LOPEZ, INC.

Lopez Inc., granted a loan to Mel V. Velarde (Mel), the General Manager of Sky Vision which is a subsidiary company owned by Lopez
Inc. However, Mel was not able to pay the loan and Lopez Inc. proposed that he may use his retirement benefits to partially settle
his loan, but because of disagreement on the amount of his retirement benefits, Mel refused the proposal which led Lopez Inc. to
file a complaint for the claim of the payment with interest. On his answer, Mel claims that the loan was only a •”cover document”
and that it was really a reward for his loyalty and excellent performance in the company and counterclaimed that he was entitled to
a much larger amount of retirement benefits than what Lopez Inc., was alleging. With regards to Mel Velarde‘s claim for unpaid
salaries, unpaid share in net income, reasonable return on the stock ownership plan and other benefits for services rendered to Sky
Vision, jurisdiction thereon pertains to the Securities and Exchange Commission even if the complaint by a corporate officer includes
money claims since such claims are actually part of the prerequisite of his position and, therefore interlinked with his relations with
the corporation. The question of remunerations involving a person who is not a mere employee but a stockholder and officer of the
corporation is not a simple labor problem but a matter that comes within the area of corporate affairs and management as is in fact
a corporate controversy in contemplation of the Corporation Code.

Mel Velarde argues nevertheless that jurisdiction over the subsidiary is justified by piercing the veil of corporate fiction. Piercing the
veil of corporate fiction is warranted, however, only in cases when the separate legal entity is used to defeat public convenience,
justify wrong, protect fraud, or defend crime, such that in the case of two corporations, the law will regard the corporations as
merged into one.

SECOSA V. FANCISCO- Bangga-an ang bata sakyanan. Issue: WON Sy can be held solidarily liable without violating the veil of
corporation fiction.Held: Negative.1. Sy cannot be held liable with co-petitioners. A corporation is invested by law with a personality
separate from thatof its stockholders or members. Mere ownership by a single stockholder or by another corpo of all or nearly all
ofthe capital stock of a corpo is not in itself sufficient ground for disregarding corporate personality. A corporation’sauthority to act
& its liability for its actions are separate and apart from the individuals who own it.2. The corporate entity may be disregarded in the
interest of justice in such cases as fraud that may work inequitiesamong members of the corporation internally, involving no rights
of the public or third persons. In both instances,there must have been fraud and proof of it. For the separate juridical personality of
a corporation to bedisregarded, the wrongdoing must be clearly and convincingly established. It cannot be presumed. 3. The Isuzu
truck was registered in the name of Dassad and not in the name of Sy. Secosa is an employer ofDassad not of Sy. All these things
when taken collectively, clears Sy of liability for damages arising from the deathof Francisco.Note: Of course, Secosa and Dassad are
both liable. Dassad as employer must not merely present testimonial evidenceto prove that he observe diligence of a good father of
a family in the selection and supervision of his employees, it mustbe supported by concrete or documentary evidence.

MARUBENI CORPORATION v. FELIX LIRAG, GR No. 130998, 2001-08-10

Facts: Petitioner Marubeni... is a foreign corporation organized and existing under the laws of Japan. It was doing business in the
Philippines through its duly licensed, wholly owned subsidiary, Marubeni Philippines Corporation. Petitioners Ryoichi Tanaka, Ryohei
Kimura and Shoichi One were officers of Marubeni assigned to its Philippine branch.On January 27, 1989, respondent Lirag filed with
the Regional Trial Court... a complaint... for specific performance and damages claiming that petitioners owed him the sum of
P6,000,000.00 representing commission pursuant to an oral consultancy... agreement with Marubeni. Assuming for the sake of
argument that an oral consultancy agreement has been perfected between the parties, respondent Lirag could not still claim fees on
the project that has not been awarded to Marubeni. Respondent tried to justify his commission of roughly about P6,000,000.00 in
the guise that Marubeni and Sanritsu are sister corporations, thereby implying the need to pierce the veil of corporate fiction.
Respondent claimed that Marubeni as the supplier and real contractor of... the project hired and sub-contracted the project to
Sanritsu. To disregard the separate juridical personality of a corporation, the wrongdoing must be clearly and convincingly
established. It cannot be presumed. The separate personality of the corporation may be disregarded only when the corporation is
used as a cloak or cover for fraud or... illegality, or to work injustice, or where necessary for the protection of creditors. Any
agreement entered into because of the actual or supposed influence which the party has, engaging him to influence executive
officials in the discharge of their duties, which contemplates the use of personal influence and solicitation rather than an appeal to
the judgment of... the official on the merits of the object sought is contrary to public policy. Consequently, the agreement, assuming
that the parties agreed to the consultancy, is null and void as against public policy.

DBP V. CA- Directors of insolvent corporation, who are creditors of the company, can not secure to themselves any preference or
advantage over other creditors in the payment of their claims. The governing body of officers thereof are charged with the duty of
conducting its affairs strictly in the interest of its existing creditors, and it would be a breach of such trust for them to undertake to
give any one of its members any advantage over any other creditors in securing the payment of his debts in preference to all others.
The legal principle prevents directors of an insolvent corporation from giving themselves a preference over outside creditors.
ILDEFONSO S. CRISOLOGO, Petitioner, vs.PEOPLE OF THE PHILIPPINES and CHINA BANKING CORPORATION,

FACTS: Petitioner is the President of Novachemical Industries, Inc. (Novachem). He applied for commercial letters of credit from
private respondent China Banking Corporation (Chinabank) to finance the purchase of amoxicillin trihydrate micronized from
Hyundai Chemical Company based in Seoul, South Korea and glass containers from San Miguel Corporation (SMC). Subsequently,
Chinabank issued Letters of Credit. After petitioner received the goods, he executed for and in behalf of Novachem the
corresponding trust receipt agreements dated May 24, 1989 and August 31, 1989 in favor of Chinabank.

Chinabank, through its Staff Assistant, Ms. Maria Rosario De Mesa (Ms. De Mesa), filed before the City Prosecutor's Office of Manila
a Complaint-Affidavit charging petitioner for violation of P.D. No. 115 in relation to Article 315 1(b) of the RPC for his purported
failure to turn-over the goods or the proceeds from the sale, despite repeated demands. It averred that the latter, with intent to
defraud, and with unfaithfulness and abuse of confidence, misapplied, misappropriated and converted the goods subject of the trust
agreements, to its damage and prejudice.

The RTC Decision acquitted petitioner Ildefonso S. Crisologo (petitioner) of the charges for violation of Presidential Decree (P.D.) No.
115 (Trust Receipts Law) in relation to Article 315 1(b) of the Revised Penal Code (RPC), but adjudged him civilly liable under the
subject letters of credit. The Court of Appeals (CA) in affirmed the Decision of the Regional Trial Court. Hence this petition for Review
on Certiorari.

ISSUE:Whether or not Crisologo is civilly liable under the Trust Receipts Law.

RULING:The Supreme Court PARTLY GRANTED the petition.Section 13 of the Trust Receipts Law explicitly provides that if the
violation or offense is committed by a corporation, as in this case, the penalty provided for under the law shall be imposed upon the
directors, officers, employees or other officials or person responsible for the offense, without prejudice to the civil liabilities arising
from the criminal offense.

In this case, petitioner was acquitted of the charge for violation of the Trust Receipts Law in relation to Article 315 1(b) of the RPC.
As such, he is relieved of the corporate criminal liability as well as the corresponding civil liability arising therefrom. However, as
correctly found by the RTC and the CA, he may still be held liable for the trust receipts and L/C transactions he had entered into in
behalf of Novachem.

Crisologo is only liable for only one trust receipt that he signed his personal capacity in as much as the guarantee clauses therein is
concerned.

SULO NG BAYAN VS. ARANETA Facts: On 26 April 1966, Sulo ng Bayan, Inc. filed an accion de revindicacion with the Court of First
Instance of Bulacan, Fifth Judicial District, Valenzuela, Bulacan, against Gregorio Araneta Inc. (GAI), Paradise Farms Inc., National
Waterworks & Sewerage Authority (NAWASA), Hacienda Caretas Inc., and the Register of Deeds of Bulacan to recover the ownership
and possession of a large tract of land in San Jose del Monte, Bulacan, containing an area of 27,982,250 sq. ms., more or less,
registered under the Torrens System in the name of GAI, et. al.'s predecessors-in-interest (who are members of the corporation). On
2 September 1966, GAI filed a motion to dismiss the amended complaint on the grounds that (1) the complaint states no cause of
action; and (2) the cause of action, if any, is barred by prescription and laches. Paradise Farms, Inc. and Hacienda Caretas, Inc. filed
motions to dismiss based on the same grounds. NAWASA did not file any motion to dismiss. However, it pleaded in its answer as
special and affirmative defenses lack of cause of action by Sulo ng Bayan Inc. and the barring of such action by prescription and
laches. On 24 January 1967, the trial court issued an Order dismissing the (amended) complaint. On 14 February 1967, Sulo ng Bayan
filed a motion to reconsider the Order of dismissal, arguing among others that the complaint states a sufficient cause of action
because the subject matter of the controversy in one of common interest to the members of the corporation who are so numerous
that the present complaint should be treated as a class suit. The motion was denied by the trial court in its Order dated 22 February
1967.

Issue: Whether the corporation (non-stock) may institute an action in behalf of its individual members for the recovery of certain
parcels of land allegedly owned by said members, among others.

Held:1. It is a doctrine well-established and obtains both at law and in equity that a corporation is a distinct legal entity to be
considered as separate and apart from the individual stockholders or members who compose it, and is not affected by the personal
rights, obligations and transactions of its stockholders or members. The property of the corporation is its property and not that of
the stockholders, as owners, although they have equities in it. Properties registered in the name of the corporation are owned by it
as an entity separate and distinct from its members. Conversely, a corporation ordinarily has no interest in the individual property of
its stockholders unless transferred to the corporation, "even in the case of a one-man corporation." The mere fact that one is
president of a corporation does not render the property which he owns or possesses the property of the corporation, since the
president, as individual, and the corporation are separate similarities. Similarly, stockholders in a corporation engaged in buying and
dealing in real estate whose certificates of stock entitled the holder thereof to an allotment in the distribution of the land of the
corporation upon surrender of their stock certificates were considered not to have such legal or equitable title or interest in the
land, as would support a suit for title, especially against parties other than the corporation. It must be noted, however, that the
juridical personality of the corporation, as separate and distinct from the persons composing it, is but a legal fiction introduced for
the purpose of convenience and to subserve the ends of justice. This separate personality of the corporation may be disregarded, or
the veil of corporate fiction pierced, in cases where it is used as a cloak or cover for fraud or illegality, or to work -an injustice, or
where necessary to achieve equity. It has not been claimed that the members have assigned or transferred whatever rights they
may have on the land in question to the corporation. Absent any showing of interest, therefore, a corporation, has no personality to
bring an action for and in behalf of its stockholders or members for the purpose of recovering property which belongs to said
stockholders or members in their personal capacities.