A.

General Principles
1. Nature and Attributes (Section 2)

What is a corporation?

 A 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
incident to its existence.

Attributes of a Corporation
i. Artificial Being A corporation is a legal or juridical person with a personality
separate and distinct from its individual stockholders or
members and from any other legal entity into which it may be
connected or related.
ii. Created by operation of A corporation is not created by mere agreement of the
law incorporators nor by their execution of the AOI. There ought
to be a law from which the corporation derives its legal
existence.
iii. Has successional rights A corporation has the power to exist continuously, either by
opting to have perpetual existence or to extend its corporate
life if a fixed term is specified in its AOI. Its capacity for
continued existence is not affected by any changes in the
composition of corporators.
iv. Has only the powers, a corporation can only exercise powers conferred upon it by
attributes, and properties law, its AOI, those implied from the conferred powers, or
authorized by law or incident incidental to its existence. Any act of the corporation contrary
to its existence to or outside these powers is ultra vires

2. Nationality of Corporations

 The nationality of corporations 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.

a. Control Test

 The nationality of the private corporation is determined by the citizenship of the

controlling stockholders. Some instances wherein the control test applies:

Nature Basis
i. Exploitation of natural Only Filipino citizens or corporations whose capital stock is at
resources (> 60%) least 60% owned by Filipinos can qualify to exploit natural
resources (Sec 2, Art XII, 1987 Constitution)

ii. Public Utilities (> 60%) No franchise, certificate or any other form of authorization for
the operation of a public utility shall be granted, except to
citizens of the Philippines or to corporations or associations
organized under the laws of the Philippines at least 60% of

iii. Mass Media (100%)
iv. Advertising Industry (> 70%)
whose capital is owned by such citizens (Sec 11, Art XII, 1987
Constitution)
Ownership of mass media shall be limited to the citizens of the
Philippines, or to corporations, cooperatives or associations,
wholly-owned and managed by such citizens (Sec 11, Art XVI,
1987 Constitution)
Only Filipino citizens or corporations or associations at least
70% of the capital of which is owned by such citizens shall be
allowed to engage in the advertising agency (Sec 11, Art XVI,
1987 Constitution).