GENERAL PROVISIONS 2.
Where a corporation serves as a mere
INCOPORATION AND alter ego or conduit of a person or an
instrumentality, agency or adjunct of
ORGANIZATION OF PRIVATE another corporation; or
CORPORATIONS 3. Where the corporate fiction is used to
evade contracts and obligations; or
What is a corporation? 4. Confuse legitimate legal or judicial
issues.
A corporation is an artificial being created by
operation of law, having the right of succession When is piercing not justified?
and the powers, attributes, and properties
expressly authorized by law or incidental to its 1. The corporation was not used for the
existence. above purposes;
2. The control was not used to perpetuate
What are the attributes of a corporation? fraud or there is no fraudulent or illegal
purpose behind the control;
1. Artificial being; 3. The corporation was not impleaded; and
2. Created by operation of law; 4. There is no claim being enforced against
3. Has right of succession; and the stockholders or officers.
4. With powers, attributes, and properties
expressly authorized by law or What are the classes of corporation?
incident/al to its existence.
● In general: stock and non-stock
Artificial being. A corporation has a corporation
personality distinct and separate from the
persons composing it. ● As to the state of country under whose
law it was created: domestic and foreign
Created by operation of law. The State’s corporation
consent is needed in order for it to exist, after
complying with the requirements imposed. ● As to number of persons composing
them: corporation aggregate and one
Right of succession. It continues to exist as person corporation
such despite the change in the members thereof,
be it death, retirement, etc. In general: stock and non-stock corporation
Powers, attributes, and properties ● Stock corporations are those which
expressly authorized by law or incident to have capital stock divided into shares
its existence. Corporations can only exercise and are authorized to distribute to the
or acquire such of the above in accordance to holders of such shares, dividends, or
what the State has granted to it. allotments of the surplus profits on the
basis of the shares held.
What is the Doctrine of Piercing the Veil of
Corporate Identity? ● Nonstock corporations is one where
no part of its income is distributable as
This is the doctrine to the effect that the separate dividends to its members, trustees, or
personality of a corporation will be disregarded if officers: provided, that any profit which
such entity is used to: a nonstock corporation may obtain
1. Defeat public convenience, justify a incidental to its operations shall,
wrong, protect fraud or defend crime; or whenever necessary or proper, be used
for the furtherance of the purpose of What are the components of a
purposes for which the corporation was corporation?
organized, subject to the provisions of
this Title. ● Corporators
● Stockholders
As to the state of country under whose law it was ● Members
created: domestic and foreign corporation ● Incorporators
● Domestic Corporation is one Corporators are those who compose a
incorporated under Philippines laws. corporation, whether as stockholders or
members.
● Foreign corporation is one formed,
organized or existing under laws other Stockholders are the corporators of a stock
than those of the Philippines' and whose corporation.
laws allow Filipino citizens and
corporations to do business in its own Members are corporators of a non-stock
country or State. It shall have the right corporation.
to transact business in the Philippines
after obtaining a license for that purpose Incorporators are those stockholders or
in accordance with this Code and members mentioned in the Articles of
certificate of authority from the Incorporation as originally forming and
appropriate government agency. composing the corporation and are signatories
of such document.
What are the tests to determine the
nationality of corporations? Memorize or know by heart each term.
● Incorporation Test *For the remaining topics, please refer to the
● Control Test lecture material.
● Business Domiciliary Test
Salient articles/sections
Incorporation test means that nationality of
the corporation follows that of the county under TITLE I
whose laws it was incorporated. GENERAL PROVISIONS
DEFINITIONS AND CLASSIFICATIONS
In control test, the nationality of a corpation ● Section 2
follows that of the stockholders owning the ● Section 3
controlling interest. ● Section 5
● Section 6
In the business domicillary test, the ● Section 7
nationality of a corporation is that of the country
where its principal business is conducted. TITLE II
INCORPORATION AND ORGANIZATION
*For the remaining classes of corporation, OF PRIVATE CORPORATIONS
kindly check the pages 16-22 of the lecture ● Section 10
material* ● Section 11
● Section 13
● Section 17
● Section 18
● Section 19
● Section 20
● Section 21
TITLE III
BOARD OF DIRECTORS/TRUSTEE AND
OFFICERS
● Section 22
● Section 23
● Section 24
● Section 26
● Section 29
