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CORPORATION artificial being created by

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ATTRIBUTES
operation OF law having the right of, Artificial being legal entity ; has its
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own rights creates its own obligation ;

succession & the powers attributes and , ,

properties expressly authorized bylaw or separate personality

incidental to its existence . CSEC 2) GR : Doctrine of separate juridical
personality
CORPORATION v. PARTNERSHIP XPN : Doctrine of piercing the Corp veil
by operation of law ; by agreement of the separate corpisa shield against
the
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exist upon state 's CSEC) parties ; contractual the personal liability for acts which are
nissuanceofcert Of Incorporation

properly attributed to the Corporation

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approval undersea .su#ioiaiseai -

powers are limited

powers are found & only tothosestipulat the doctrine is applied when the legal
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mandated bylaws edinthe agreement personality is used to circumvent a law

its AIC '

controlled by its part

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or to perpetuate a fraud , defeat public

controlled padmini's nerssincetheyare convenience justify a wrong defend a
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teredbythe B0D& the agents & representatives crime ortheothercorpismerelyan alter

officers elected by the of the partnership ego , adjunct ,/ business conduit of the other
BOD '

norightofsux ; once company Thus , .

result the law may
as a

hdstherightofsux ; there is a change in the pierce the corp veil and hold the SH , officers
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10W , ifa SHIM dies , membership opthepart -

413017 personally liable .

withdraw or suffers nership the partnership

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SOHDBANK : Just because the Corp officers

incapacity , the Corp is dissolved & anew signed the loan agreement on behalf of the
will not be dissolved . one maybe created Corp .it does not make them personally .

Theheiroftheslt '

heirs can't inherit his liable as long as their acts are within the
becomes thenewslt interest ;ipa partner scope of their authority and in good faith .

ownership ofacorpis sells / transfers his inter .

This is also because of the Corp is vested
transferrable ; the heir est , the partnership bylaw w/ a separate personality
Ofthesltcan inherit is dissolved EXTREME CIRCUMSTANCES WHERE A
the shares
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considered a separate DIRECTOR / OFFICER CAN BEHELD LIABLE

LIMITED LIABILITY entity BUT theliabili (1) Whenheassentstoa patently unlawful
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bcofthe separate tycanbepassedon act (2) in bad faith / gross negligence in

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personality ofthecorp; to the partners even directing its affairs ; (3) conflict-of-interest
thesltcanonlybe w/ respect to their resulting in damages
held liable upto the private property once (4) consents to the issuance of watered
extent of their cont the partnership proper stockslissuedbelowtheparvalue ) or
ributiontothecorp rtiesare exhausted having knowledge thereof does not
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File for an objection ; you want topiercetheveilmustbe

(5) Agrees to hold himself personally and impleadedinthe case
solidarity liable → expressly provided SEC 3 , CLASSES OF CORPORATIONS
(6) Made
personally liable byaspeoiticprov (1) STOCK .
(1) capital stock is divided into

OF law shares :( 2) distributes the profits in the

HEIRSOFFETANUY : Under a variation form of dividends & it is based on the

of piercing the veil of corporate fiction , proportionate shareholding of each SH .

When 2 business enterprise are owned , (2) NON STOCK

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absent anyone OF the

conducted & controlled by the same parties elements mentioned above
both laws equity will when necessary to ,
PLACE OF INCORPORATION

protect the rights of third parties dis (1) DOMESTIC created & registered under
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regard the legal fiction that the two PHIAWSIRCCP )

Corp are distinct & treat them alone (2) FOREIGNincorporated under foreign laws
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and the same . BASED ON OWNERSHIP / NAT 't

ZAMBRANO : ALTER EGO THEORY -

regs 11> PH National Corporation -

FIA 01=1991 :

the concurrence 01=3 elements :( 1) control corp organized under the laws OFPHOFWIC
OF the Corporation byth.es/torparentat1east60l.opthecapita1stocKoutstan-
Corp -1123 fraud / fundamental unfairness ding and entitled to vote is owned and
imposed on the plaintiff ; (3) harm / damage held by PH citizens b. CONTROL TEST
caused to the plaintiff by the fraudulent Domestic corpthatis wholly owned by •

or unfair act . citizens of the PH

THREE TEST TO DETERMINE WHETHER •

Corp organized under the of.PH where laws

THE ALTER EGO THEORY APPLIES :

atleast 60%0 Fits capital stock outstand -

1. control / Instrumentality test ing AND entitled to vote

2. Fraund Test Corp that is organized abroad but 1001
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3. Harm Test Of its COS AND entitled to vote is wholly

FRANCISCO MOTORS : Doctrine ofpier-ownedbyoitizensofthe.PH .

cingthecorporateveildoesnotapply (2) FOREIGN-OWNED

in cases where it is the Corporation -

Domestic corp w/ more than 401 .

ownership
that is being made liable for the per ofthecosandentitiedtovote
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Sonal liability of directors officers , ,

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Corp organized abroad and NO -1100%0-5

and incorporators .
itslosandentitledtovoteiswhollyowned
HUMAN INTL The doctrine of piercing the byplt citizens
:

oorpveilisnotmeanttoacquirejurisdic TWOTESTTODETERMINENAT 't -

tionto impose liability 10W the Corps (1) CONTROL TEST .stC3 OF THE FOREIGN
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INVESTMENT ACT preferred shares are allowed to vote as

127 GRANDFATHER RULE -

even if the 60 -

provided under SEC 6 of the RCCP

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40 ratio is apparently met by the Corp ,

a result to this rule if doubt exists as to

the locus OF the beneficial ownership and
control / attendant circumstances
NARRA NICKEL When doubt exists I i. e.
:

"
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layering ) ; for instance :(1) foreign

investors
practically provide all the funds for
the investment ; (2) undertake to provide
practically technological
all of the
support
; While being the minority
I 3) sits
the all the
economic
manage company prepare &

viability studies Application of .

such rule , however, does not invalidate

the control test The .

primary test used

to determine the nationality of the
Corp is still the control test .

SUMMARY

does
Apply first
•

if the control test , it

not
pass national → NOT a PH
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If it passes and there is NO doubt

↳ PH National

If it passes and there is doubt →

apply
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the grandfather rule

GAMBOA ROY v. HER BOSA : Apply the rule
to the to the shares entitled to vote in the
election of directors This case is also the.

reason why M G. No 8- 2013 was

promulgated
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by SEO which requires it be applied to

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10W , the
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to each class of shares .
voting
shares and the total outstanding shares
whether or not entitled to vote TN : there .

is actually no non -

voting shares in the PH

since there are instances where even the
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