BLAW FINALS  or legal entity that may be 

  connected therewith 
CORPORATION   
- An artificial being created by  A. CONSEQUENCES 
operation of law that enjoys the  - It may bring a right of action in its 
right to succession and its powers,  own name​ as a natural person 
attributes, and properties are  - A corporation is ​not​ made to answer 
authorized by law and incident to its  for the liabilities of its stockholders 
existence  and vice versa 
  - The properties acquired by the 
HISTORICAL BACKGROUND  corporation are the properties of the 
- Batas Pambansa Blg. 68 t​ ook effect  corporation and N ​ OT​ of its 
on May 1, 1980  stockholders or members 
- Was C ​ abinet Bill No. 3​, this bill is  - Court jurisdiction may be made by 
intended to replace Act No. 1459  president, general manager, 
- Replaces ​Act No. 1459​ or  corporate secretary, treasurer on 
Corporation Law​, enacted on March  in-house counsel 
1, 1906 by the Philippine  - The changes in membership d ​ oes 
Commission and took effect on April  not a​ ffect the corporation 
1, 1906  - Constitutional rights: Due process, 
- Seeks to establish a new concept of  equal protection, protection against 
business corporations, n ​ ot merely  unreasonable searches and seizures, 
as entities for private gain but  right against self-incrimination 
effective partners of the National  *A natural person is a legal entity by birth while 
Gov’t​ in spreading the benefits of  an artificial person becomes a legal entity once it 
Capitalism*  is incorporated. 
*Capitalism is an economic system in which the   
country’s trade and industry are owned by  - Not entitled to moral damages 
private persons  because it has no feelings, senses, 
  and emotions 
ATTRIBUTES  - Liable for torts when committed by 
- An artificial being  an officer or agent consented by its 
- Created by operation of law  stockholders or members as the 
- Enjoys the right to succession  body and directors are the 
- Its powers, attributes, and  governing body 
properties expressly authorized by  *torts are wrongful acts resulting to civil legal 
law or incident to its existence  liability 
 
 
- Cannot be liable for crimes unless by 
ARTIFICIAL BEING WITH SEPARATE 
express provision of law. The 
PERSONALITY 
responsible officers will be criminally 
- Is a juridical person apart from its 
liable 
individual stockholders or members 
 
PIERCING THE CORPORATE VEIL  b. Private - profit-making functions 
- A lawful legal entity   
- When used for fraud and other  As to governing law 
unlawful acts, its corporate veil or  a. Public - Special Laws or Local 
fiction will be ​disregarded​ and its  Government Code 
individuals will be treated the same  b. Private - Law on Private 
- Power of the court  Corporations 
- Liability will be a ​ ttached​ to its  As to legal status 
stockholders or members  a. De jure - complied with the 
- Aims to protect innocent third  requirements 
person dealing with the  b. De facto - did not comply 
corporation  c. Corporation by estoppel - group of 
- In cases where officers fail to fulfill  persons that assumes to act as a 
personal obligations, they could be  corporation knowing it to be without 
liable for such by piercing the  authority and enters into a 
corporate veil  transaction with a third person on 
  the strength of its appearance. 
LIMITED CAPACITY  Cannot deny its existence. 
- No corporation shall exercise any  d. Corporation by prescription - 
corporation power unless it has  without inference of the sovereign 
Articles of Incorporation, implied by  i.e. Roman Catholic Church 
express powers and is incidental to  As to the existence of stocks 
the exercise of such powers,  a. Stock corp - capital stock divided 
conferred by law  into shares and is authorized to 
  distribute to holders 
INSTRUMENTALITY OR ALTER EGO  *not a stock corp if there is no division of 
RULE  retained earnings 
- When a corporation was made as  b. Non-stock - does not issue stock 
an instrument of another, its  As to the laws of incorporation 
corporate fiction m ​ ay​ be  a. Domestic - created under the 
disregarded  Philippine laws 
- Control complete dominion so that  b. Foreign - created under any other 
the corporate entity has no will  laws and allows Filipinos to do 
- Such control is used for fraud  business in its country 
- The control causes injury  As to whether they are open to the public or 
  not 
KINDS OR CLASSIFICATIONS  a. Open - open to whoever may wish 
As to organizers  to be a stockholder or member 
a. Public - by State only  b. Close - private; limited no. of 
b. Private - by private persons  persons 
As to functions  As to relationship of management and 
a. Public - government of a portion of  control 
the State 
 a. Holding - controls another as a  d. Issuance by SEC 
subsidiary and holds its stocks for  3. Formal organization and 
the purpose of control  commencement of the transaction of 
b. Subsidiary - under the holding or  business 
parent corporation  a. Adoption of By-Laws and 
c. Affiliate - owning or being owned by  filing of the same with SEC 
common management  b. Election of BOD 
d. Parent and subsidiary - controlling  c. Establishment of principal 
financial interest, parent corp holds  office 
and others as subsidiary  d. Providing for subscription 
As to number of persons who composes  and payment of capital stock 
them   
a. Aggregate - one or more   
b. Corporation sole - one   
As to whether they are for religious   
purposes or not   
a. Ecclesiastical   
b. Lay 
As to whether they are for charitable 
purposes or not 
a. Eleemosynary 
b. Civil - for profit 
 
CORPORATION BY ESTOPPEL 
- Estopped from denying what was 
stated as true 
- Has ​no real existence​ in law 
- Responsible persons shall be liable 
as ​general partners 
- A third party knowing of 
non-authority may be prohibited to 
deny its existence 
 
FORMATION OF PRIVATE 
CORPORATIONS 
1. Promotion - promoter takes initiative 
in founding the business 
2. Incorporation 
a. Drafting of the Articles of 
Incorporation 
b. Filing with the Securities and 
Exchange Commission 
c. Payment of filing