Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________

A pleasant day to everyone thank you for watching this presentation on philippine is not land it is not territory because it's submerged at high tide but you can see it at
sovereign rights in the west philippine sea if you look at the screen you will see the low tide that's why
south china sea why is the south china sea important today the south china sea is one it's called the low tide rock it still has a value because it can extend your territorial sea
of the most important international waterways in the world about 5.3 trillion US dollars and the tribunal upheld us and that's why the tribunal said subi reef is part of the
in ship born goods diverse the south china sea every year four leading exporting territorial sea of pagasa because if you measure the 12 nautical mile territorial sea
countries use the south china sea for their maritime trade you have china you have from this rock subaru is part of the territorial sea if it's measured from the coastline
japan south korea and taiwan about 65 percent of the petroleum imports of south here of pagasa should be if it's outside our territorial sea but ankles allows that under
korea 60 of the petroleum imports of japan and taiwan passed through the narrow article 13 part of one we can use this as our baseline the low tide rock now china did
strait of malacca on the way to these countries and today 50 percent of the petroleum not
imports of china pass through the narrow state of malacca going to china but before participate in the proceedings of the hague but china submitted a position paper china
2015 eighty percent of the petroleum imports of china passed through the narrow strait said we're not participating but this is our position and this is in that position paper
of malacca and china was always worried that someone might block this narrow strait china said we own the south china sea because we owned it since 2000 years ago we
and the chinese economy will grind to a halt so china built two pipelines one for oil and were the first country to discover name explore and exploit the resources of the south
other for gas from the coast of myanmar to kunin in yunnan province and these sea island this is the historical narrative of china while they're claiming the south china
pipelines started operating in 2015. sea as theirs and this historical narrative has been taught to every chinese citizen from
grade school to college so every chinese general admiral politburo member diplomat
so today 30 percent of the petroleum imports of china pass through these two professor businessman bureaucrat they have been taught this historical narrative and
pipelines and only 50 percent pass through the nano strait of balaka about 12 of the they sincerely believe it they sincerely believe that they own the south china sea since
total annual fish catch of the world comes from the south china sea the south china 2000 years ago they were the first to discover name and exploit exploit this historical
sea is very rich in fishery it's a very small sea it con it comprises only about 2. 5 narrative is totally false i call this the fake news of the millennium the fake history of
percent of the ocean surface of the world but it accounts for 12 percent of the annual the millennium it's totally false and we will i will prove it here now in 2009 china
fish catch because of the spratlys the spratlys are an expensive collection of atoll atoll submitted this map to the united
rifts and the spratlys are where the fish spawn they lay their eggs there and the eggs nations this is called the nine dash line map of china and the note verbal that
and larvae of the fish that spawn here are carried by carrots to the coast of china accompanied the smap china said we own everything within the nine dash line and the
vietnam luzon palawan sulu si the coast of indonesia here in the natunas coast of tribunal that he said it is only from this date that the world was notified of china's claim
borneo vietnam and that's why we have a lot of fish in the south china sea if you although the nine dash line map was made by china in 1947 it was only uh distributed
remove the spratlys you will not get as much fish within china and it did not bind the world from 2009 when this was submitted to the u.
as you have now in the south china sea the south china sea is also rich in methane n that was the time when countries should object and we objected to this map we
hydrates what are methane hydrates there are lumps of minerals found in the bottom protested china does not own the waters within the nine dash line and indonesia
of the sea in the bottom of the sea where the temperature is very cold and the protested vietnam protested so many countries protested now in 2013 china published
pressure is very strong ice crystals form around natural gas so natural gas is a new map this is called the vertical map because the orientation is vertical and in this
encapsulated in ice crystals and there's now a technology to extract this natural gas map china added the 10th dash on the eastern side of taiwan so the nine dash lines
methane hydrates are estimated to be more abundant than oil and gas combined the are still growing up to today there are ten dashes now but i still call it the nine dash line
world reserves of methane hydrates and in this map if you look at the
are more than the combined reserves of oil and gas in the world and china has legend of the map this shading which means national boundary is the shading you find
estimated that the methane hydrates in the south china sea could power the chinese in the ten dashes the same shading on the continental land boundary of china so china
economy for a hundred years at least so china now is testing here in the coast of treats the waters within the ten dashes here in the same way it treats its territory here
guangdong a pilot area where they are extracting methane hydrates china is a it's land territory china treats the waters as its national territory and we protested also
technology to extract natural gas from methane hydrates uss the technology and this map now let's go back to a little bit of history what happened in the south china
canada has the technology and japan also has that technology so the south china sea sea from 1946 to 2017.
is now a very important international before world war ii the southernmost territory of china was heinen not a single chinese
waterway of the 5.3 trillion shipboard goods that pass through the south china sea sailor soldier was stationed in the south china sea not in the paracels none in the
every year about a trillion of that is u.s inbound and outbound trade and another trillion spread list not in scarborough shoal so throughout the chinese dynasties the
is uh european union inbound and outbound trade so these countries outside of the southernmost territory of china was hainan china never occupied any of the territory
region have an interest in maintaining peace and stability in the south china sea islands in the south china sea now when did china move out of the hainan before
because their exports and imports pass through the south china sea and the south world war ii just before world war ii the japanese seized the paracels from the french
china sea is also dotted with hundreds of small rocks above water high tide if the rock the french occupied the paracels at the time
is only an inch above water at high tide and japan also occupied ituaba the largest island in the spratleys and japan put up a
it's considered still land or territory entitled to a territorial sea of 12 nautical miles all submarine base in itu-aba that submarine base was used in the invasion of the
around what is the surface area of that that's about 155 000 hectares how large is 155 philippines with the defeat of the japanese forces so the japanese forces left the south
000 hectares that's more than twice the land area of metro manila more than twice the china sea china made its move in 1946 after the world war ii when the japanese forces
land area of singapore so if you own a tiny rock one inch of water at high tide in the left the south china sea china seized half of the paracels the other half of the paracels
south china sea you own everything within the territorial sea you own all the fish oil was recovered by the french and inherited by the south vietnamese government and
gas and mineral resources so a tiny rock in the middle of the south china sea is very also in 1946 china
valuable so that countries now fight over these small rocks and that's why we have the seized ituaba that submarine base of the japanese so china made a great leap in 1946
south china sea dispute because those rocks are very valuable even if you cannot from hainan to the paracels and to the spratlys in 1974 towards the dying days of the
grow a single tree in the truck it still has a 12 nautical mile territorial sea around that vietnam war china seized the other half of the paracels from the south vietnamese
and that's a huge area and also even if the rock is submerged at high tide it is still a government which was very weak at the time already there was a battle there the
value in the proceedings of the hague we showed the tribunal pagasa that's our largest battle of the paracels in 1987 china put up a radar weather station on fiery cross reef in
island in the spread list and we told the tribunal that pagasa being above water at high 1987 unesco was conducting a global oceanic survey and china volunteered china
tide it's said we will help unesco we will
about 45 hectares in area it has a territorial sea around it 12 nautical miles but in this put up raider weather station on fiery cross rift to help unesco and it was a very noble
area there is a low tide rack here and under ankles a low tide wrap can be used to act nobody objected everybody applauded china today fiery cross rift is an air naval
measure the 12 nautical miles so if you measure the 12 nautical mile from this rock base of china in 1988 china sees subi from the philippines we did not even notice it it
then we have an extended here our territorials is more than 12 nautical miles from the was not reported in the newspapers in manila we were not familiar then with the
coastline of pagasa because we're measuring it from this rock that is low tide that track antlers but china sees uh subreef and at the same time china sees johnson softly from
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
the vietnamese from the communist vietnamese and there was a skirmish in this show that is the message of president z but this narrative is totally false jenge never
johnson south reef between the visited the philippines that's uh the article of uh president z in philippine star that's in
vietnamese and the chinese and about 69 vietnamese sailors were killed in the manila bulletin now there is an international zhang society and they have a branch in
skirmish 1995 china seized mystery free from the philippines that was widely reported singapore these are composed of scholars and in 2005 the singapore zheng hai
widely reported in the papers in manila 2012 china seized scarborough shoal from the international
philippines widely reported also and 2013 china seized lucuna shoals from malaysia society published a book admiral jenga and southeast asia and one of the articles in
lucuna church is just 54 nautical miles from the coast of sabah 2015 2016 china that book was written by professor shu and his title of his article is did admiral zhang
started building air naval bases on its seven geologic features in the spratlys china have visited the philippines professor shu said zheng hai never visited the philippines
started reclaiming the word chanchang was actually a ming dynasty name for a malay state in indochina
those geological features creating artificial islands 2017 china's cease and decay from they thought that chan chang refers to luzon but professor hsu said chan cheng is a
the philippines china seized it by surrounding san diego by with its maritime militia ming dynasty name for a malay state in indo china was there a malay state state in
vessels the same way that it ceased scarborough from the philippines china china
surrounded it with their vessels their coast guard vessels and their maritime vessels yes the cham kingdom the champs were descended from the austronesians we
and that's how they seized sand decay from the philippines and decay is just two filipinos are descended from the austronations we speak a language tagalog is derived
nautical miles from pagasa our largest island in the spratlys but the duterte from the australian language and the language of the champs was also derived from
administration is still in denial the austronation language and the champs put up a powerful maritime kingdom in
the third administration does not does not accept that or does not tell the filipino central vietnam this was before the arrival of the europeans in the south china sea so
people that we have lost syndicate to the chinese so if you look at this uh this was before uh the 1400s before the 14th century uh the champs were so powerful
developments from 1946 to 2017 you will see a creeping expansion by china in the that the south china sea was called the
south china sea and that is exactly what happened from 1946 to 2017. in february champ c the first name ever given to the south china sea was the champ c because
2016 a few months before the tribunal issued its ruling in july 2016 the chinese foreign the champs were a maritime powerful maritime kingdom in central vietnam facing the
minister minister wang yi gave a talk in washington dc at the csis that's the leading champ c last december i visited the dhanang in central vietnam and there is indanang
think tank in washington d.c and before diplomats a cha museum and one of the books sold there is this book and the book says that the
from all over the world foreign minister wang said china and the philippines are very name changing comes from the term pura that means they're the town of champa and
close neighbors separated by just a narrow body of water china and the philippines are the inhabitants of the champa kingdom were champs and they were the champ
very close neighbors separated by a narrow body of water think of that how can we be language fell under the austronesian umbrella these
very close neighbors separated by just a narrow body of water this is it since the 9 the champs were our these are were distant cousins because they were austrian
dash line constitutes nash the national boundary of china china owns all of the waters nations just like us so jenga actually visited central vietnam and and chan chang is
to the west and we are left with this sliver of water as our territorial sea and exclusive center in central vietnam not in the philippines now there is a chinese scholar he works
economic zone so from in the people's republic of china the naval hydrographic institute he wrote an article in
balabak island our southernmost island facing the south china sea chinese territory is the international hydrographic review in 1988 and he he traced the root of the voyages
just 64 kilometers away from buli now in pangasinan chinese territory is just 70 of jenge from from china to central vietnam all the way to the strait of malacca here is
kilometers away from miami island our southernmost territory in the botanist chinese the philippines
territory china's boundary is just 44 kilometers away this is the historical narrative that's so zhang hai never even saw the coastlines of the philippines and this is from a
been taught to every chinese citizen so when president xi jinping came here last chinese scholar who works in the people's republic of china now in 2018 national
november 2018 before his actual arrival the ambassador of china ambassador zhao geographic magazine published an article on the seven voyages of jinger and that
wrote an opinion piece in philippine article contained a chart of the voyage of jenga the nautical root of jenga and it follows
star he wrote it it appeared in november 15 2018 and in that opinion piece his opening the same route from china he went to central vietnam through the narrow strait of
sentence said stated that being separated by only a narrow strip of water china and malacca the philippines is here so jenkins never visited the philippines in fact all the
the philippines have been close neighbors for centuries so this is the historical scholars all over the world are
narrative again this according to ambassador is the context of the visit of president xi unanimous jenge never visited the philippines now the largest island in the spratleys
jinping to manila since the philippines and china are very close neighbors president uh is itu-aba that's a picture of the spread list it's about 45 hectares compared to
zhao is visiting the philippines and this was officially published in the philippine star pagasa pagasa by the way is 36 hectares only so this is occupied now by taiwan the
and i asked the issue in the arbitration is is this island capable of human habitation of its own because
star editors who provided this picture and the editor said ambassador zhao so the if it's capable of human habitation of its own it is entitled to a 12 nautical mile territorial
subtle message of the chinese is that president duterte and the entire cabinet agree sea plus an extended continental shelf up to 200 nautical miles now if this island is not
that the philippines and china have been very close neighbors for centuries separated capable of
by only a narrow strip of water the dirty administration never contested this never human habitation of its own then none of the islands in the spratlys would also be
objected to this so um the presidency finally arrived in manila and he when he arrived capable of human habitation of its own and therefore all islands and spatles will be
he published an opinion piece front full page in manila bulletin and philippine star and entitled only to 12 nautical mile territorial sea china has declared that etuaba is
in that full page ad capable of generating 200 nautical mile eez so that that eez will overlap with the ease
was entitled open up new future together for philippines china philippines relations and of palawan and there will be an overlapping eez and therefore since china made a
in his opinion piece president xi said over 600 years ago chinese navigator jiang hai reservation in 2006 that in case of overlapping eez china will not be subjected will not
made multiple visits to manila visaya sulu on his seven overseas voyages so submit itself to
presidency was telling everybody in the philippines that the chinese were here in compulsory arbitration and therefore since this island has an easy the tribunal today
manila over 600 years ago why did presidency say this because last year 2019 the gets no jurisdiction over the case so the issue of whether abba is capable of human
spaniards celebrated the 500 year departure of magellan from spain to the philippines habitation of its own or not was crucial in the case because if it was capable of human
magellan left spain in 15 1519 habitation then its easy of 200 nautical miles would overlap with the easy of palawan
and two and a half years later he arrived in the philippines in 1521 so next year 2021 and therefore the tribunal has no jurisdiction because this island is just over 200
we will be celebrating the 500 year anniversary of magellan and the arrival of nautical miles from palawan now what is the ruling of what was the ruling of the
christianity but presidency is saying no we were ahead we were in the philippines 600 tribunal the tribunal said
years ago that the spaniards arrived 500 years ago only so president z is saying we to determine whether an island is capable of human habitation or not you must look at
were ahead of the spaniards by over a hundred years so the chinese are saying we its natural condition whether it can sustain a stable community of people and in itu
were the first to discover the philippines and the consequence of that is since we were abba people can live there because taiwan has put up two desalination plants people
the first to discover can gather as a there are vegetable gardens there there are fruit trees there because
the the islands in the philippines belong to us but they will say we are generous we will taiwan imported garden soil from taipei and placed it up in ituaba so you can plant fruit
not recover luzon visayas and mindanao but we will keep the spratly sense car bottle
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
trees there now in itu abba but the tribunal said that will not count because you must the spanish term for shoals the shoals of paraguay the shoals of paraguay are the
look at the spratleys and there is no older map from china from vietnam showing that the spratlys
natural condition and the tribunal said it is natural condition it's a borderline case belong to them we have the oldest map showing the
whether itu-abba can support a stable community of people there is water when there spratleys with a name this is the first time that the spratlists were given a name los
is rain but when there is no rain you don't find water in itu abba the top soil is very thin balos de paragua now this map was made by father pedro meruel velarde a jesuit
so it's a borderline case and in case of uh in in that case if it's a borderline case you priest he was probably the most brilliant spanish friar who was sent to the philippines
must look at the historical presence of people in it did people actually inhabit it in the during the spanish regime and the engraver of this map because this is engraved in
past there is no record whatsoever none so the tribune said since there has been no copper plates the engraving of this map is a filipino nicolas de la cruz and the one who
record of human the artist who drew this map is another filipino francisco suarez and why is this map
habitation into abba then it's probably because it is not capable of human habitation of important it is
its own so the ruling was etuaba the largest island in the spratleys is not capable of important because of this cartouche this cartouche is the royal coat of arms of the king
human habitation of its own and therefore it has no easy it is only a territorial sea and of spain which means this is an official map of the spanish kingdom showing philippine
that was the reason why the tribune said we have jurisdiction because there is no territory in 1734 that's the cartouche in 1732 king philip the fifth of spain instructed the
overlapping easy between palawan and any of the features in the spread list okay let's spanish governor general at the time general governor general tamon to make a map
go to scarborough shoal that's scarborough shoal just a piece of rock that's at the of philippine territory and governor altamonte commissioned father pedro milo velarde
high tide that's the only thing you can see so it's a high tide elevation it's above water the jesuit priest so this is an official map of the philippine territory during the
high tide so it's land it's territory china says it's capable of human habitation of its own spanish regime and this makes it very important because this map determines
and it's entitled to 200 nautical mile exclusive economic zone and we said of course philippine territory even up to today so remember that this map shows scarborough
not it's so obvious it's not capable of human habitation not a single blade of grass shoal with the name of panakot and the spread list with the name of los bas de
grows there you cannot squeeze a single drop of fresh water and so the tribunal paragua we will go back to this map later ancient maps of china now china published
agreed with us that scarborough show is just a rock it's entitled to 12 nautical mile the atlas of ancient maps in china three volumes different dates one in uh 1990 there
territorial sea but that's all it cannot generate an exclusive economic zone the the were 1994 the other one in 1997 and china cannot disown these maps because they
tribunal of course said that uh under unclass a coastal state can claim 12 nautical have published this atlas official publication of the people's
miles territorial sea and if there's space an additional 188 nautical miles or a total of republic of china so we go to this map this is a map of over a thousand years ago
200 nautical miles from the coastline and if there's space another 150 nautical miles so during the tang dynasty and it shows heinen as the southernmost territory of china this
the maximum that the state can claim under ankles is 350 nautical miles china is is map 97 of the atlas of ancient mobs of china so during the tang dynasty the
claiming more than 350 nautical miles china is claiming read bank which is about 800 southernmost territory of china was hainan the next map is the map that was made
nautical during the song dynasty 1136 and this shows heinen as the southernmost territory of
miles from hainan so the claim of china to waters within the nine dash line beyond 350 china there is just one copy of this map and that copy is still there in china because
nautical miles has no legal basis that's the ruling of the tribunal every state in the world this is a stone map in the 1900s early
every coastal state can claim only up to 350 nautical miles 12 nautical miles territorial c 1900s a frenchman put a paper over the stone map and rubbed it and this is the
nautical miles easy measured from the coastline and an additional 150 nautical miles rubbing this is now in the u.s library of congress where i downloaded a copy a high
measured from the edge of the eez that's all you cannot claim beyond that because resolution and that's it and this map is map number 60 of the atlas of ancient maps of
that's enclosed that's the law of the sea and so we were very confident that the tribunal china so china cannot disown this and you can even see the stone map today it's still
would uphold us there in the forest of stone steel's museum in zee and china there's only one copy of
in in our position that the nine dash line has no legal basis at all to claim waters this wrap it's still there so you have the song dynasty the next dynasty is the u1
beyond what is allowed under ankles but our problem was we knew that the problem dynasty the mongol dynasty
would be how to enforce the ruling because the chinese people have been taught and this is a yuan dynasty map and it shows heinen as a southernmost territory of
historical narrative that they own the south china sea and the chinese government will china this is map number 193 of the atlas of ancient months of china so during the
not comply with the ruling because the chinese people will say why are you giving yuan dynasty the mongol dynasty the southernmost territory of china was heinen so
away territory that has been handed down to us by ancestors these are sacred waters you have the song the of yuan and the next angus is the ming dynasty and this is a
sacred territory sacred islands ming dynasty map and it shows hainan as the southernmost territory of china and the
so the chinese government would not comply otherwise the chinese people might chinese are very this is one of their favorites uh favorite maps and they put this as
throw them out so we had to ask the tribunal kindly rule on whether that historical smart number one of
narrative of china is true or false whether there is there are factual there's factual basis the atlas of ancient maps of china there's only one copy of this map because this map
for that historical narrative thankfully the tribunal obliged so we raised this issue as a is painted on silk and the original copy is still there in the first historical archive of china
matter of fact did china have historic rights we're talking of history now not a legal in beijing so during the ming dynasty the southernmost territory of china was heinen
basis so we how did we convince the tribunal that china never had historic rights well and we go to the last dynasty of china the qing dynasty this is a map of the qing
we presented over 170 ancient maps dynasty it shows heinen the southernmost territory of china this is map 129 of the atlas
the most number of maps submitted in any international arbitration and represented of ancient months of china so during the qing dynasty was the southernmost territory
maps of the chinese dynasties which they cannot with china cannot disown we of china
presented philippine maps and maps of other southeast asian countries and so from the from the song to the qing almost a thousand years the southernmost
represented european maps of asia made by european cartographers and we territory of china was heinen the qing dynasty ended in 1912. so we presented this
presented official documents of china after the qing dynasty so let's go to the maps for before the tribunal we showed the map of asia and we superimposed all the maps of
the philippines i will present only one map the most important map of the philippines the chinese dynasties and it shows heinen it was the southernmost territory of china
this is the 1734 murillo velarde map and this map is the first map during the dynasties china never occupied the paracels never occupied the spread list
to give a name to scarborough and that name is spanakot this is the first map that never occupied scarborough now that is our submission to china we said in our
gave a name to scarborough and the name is a tagalog word panakot banakot means submission pleading to china
danger if you are the captain of a ship and you don't know where pinacot is your ship in the to the hague tribunal chinese territory extended no further south than hainan
could hit the rocks of panakot and your ship will run the ground and that is what now when did china moved out of hainan in 1932 the paracels were not occupied by
happened to a british tea clipper ship called scarborough it ran aground on panako any country and the french occupied the paracels in 1932. the french were then the
shore on the rocks of panakot and the european cartographers renamed the show colonial power in vietnam and china under the kumitang protested china sent a note
scarborough shoal but we were the first to give it a name verbal to the french government on september 29 1932 protesting that's the note
there is no older map from china or from vietnam or from any other country showing verbal and in that note verbal china said there are two groups in the parasites the
that scarborough show belongs to them or scarborough is their territory we have the amphitheate groups in the crescent
oldest map and this map also shows los bajos de paragua paraguay is the old spanish group they lie 145 nautical miles from hainan island and form the southernmost part of
name of palawan it was named palawan only during this american regime los balz is chinese territory the paracels formed the southernmost part of chinese territory china
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
in 1932 in an official declaration to the world said our southernmost territory are the sea now in 1943 while the civil war in uh the mainland mainland china was going on
paracels they cannot back out from that and so we presented it again to the tribunal between the communists and the nationalists the kubintang was in control of the
chinese territory ended in the parcels never reached the spread list never reached government and the ministry of information of the republic of china at that time in 1943
scarborough we are already in 1932. published a handbook because the kumitang that was trying to introduce the republic
china became a republic after the end of the qing dynasty 1912 and as a republic you of china to the world so they published a handbook china handbook and of course if
must have a constitution and china had several constitutions their first constitution you introduce yourself to the world you have to state your territory what is your territory
provincial constitution in 1914 defined their territory because you must define your and in chapter one of the tan book china
territory in your constitution the territory of the republic of china continues to be the said our territory extended to the parcel group triton island is the southernmost territory
territory of the former empire the people's republic of china interpreted the former so in their 1943 handbook china never claimed the spratleys or scarborough they said
empire to refer to the qing dynasty territory china did that made that the declaration in our southernmost territory are the paracels their own document official document this
china number two history handbook was revised that's the copy of the handbook i was able to buy it in ebay
archive china international press that's in the 1980s because at that time china was difficult to look for this book now and this was revised in 1946 they published a revised
trying to prove to the world that tibet forms part of china and during the qing dynasty edition of the book and it is in this handbook the 1946 handbook which was actually
tibet was part of china so china according to the people's republic of china that published in 1947 but
published this the former empire refers to the qing dynasty because the qing dynasty it contains a supplement of 1946. it is in this handbook that china claims sovereignty
was the largest expansion of chinese territory in history that was the largest expansion over the spread list they call it the coral islands but at the same time china admitted
of chinese territory it included tibet it included zinyang and it but unfortunately for china that the coral islands are contested among china the commonwealth of the philippines
the children's territory of china during the qing dynasty was sainan so that is the and the french in indo-china so china did not claim indisputable sovereignty over this
constitution of china their territory is the territory of the qing the territory never went fatless this is 1946.
further south than hainan the next uh constitution of china the constitution of 1924 the china said yes we're claiming the spratlys but it's also claimed by the philippines by the
same the territory of china the republic of china continues to be the traditional territory french in vietnam so they never claimed indisputable sovereignty that's the handbook
which means the territory of the qing that territory ended in hainan as the 1940 it was released in 1947 but there is a 1946 supplement so you either call it 1946
southernmost territory of china 1937 constitution of china still the same territory of the or 1947. published in new york because of the ongoing civil war they didn't have a
republic good printing press in china now in 1947 china made this map this is the infamous
of china continues to be the territory only in the past and their largest expansion was nine dash line map and china circulated this internally among the chinese government
during the qing dynasty january 1 1947 the last constitution of china still the same the offices for validation and in
repub the territory of the republic of china are those encompassed with traditional february of 1948 china released this domestically in china and in this map the nine
boundaries so in their own constitutions china said our territory referred to the territory dash line map china now gave a name to all the features in the spread list but they just
of the kings the qing dynasty but that territory ended in hainan china suffered what copied the names in british charts they were they did not give original names and they
they called the century of natural humiliation because starting in the 1820s toward until included scarborough but they did not have a name for scarborough show we are now
the end of the 1800s in 1947 and china still didn't have a name for scarborough shoal so china probably
foreign powers from europe and even japan and russia occupied territories of china china used this uh china city directory published in 1906 by the uk and gave the same
you have the british you have the portuguese so the chinese suffered a lot of names lucuna shoulders
humiliation they were defeated in several wars with the european powers so their the british name transliterated the chinese lukanyan translate transliterated jangmu so
people drew maps they called this maps map of china's national humiliation their china just copied the british names they were not the first to give names to the spread
people said when china becomes strong again we will recover all the territories that we list and in of course in scarborough shelby gave it a name in 1734 panagot the
lost to the foreign powers and they drew lines around china that we will recover europeans renamed it scarborough shoal after the scarborough ship ran aground in
everything within the alliance and they included 1748 1947 china still had no name to scarborough now if you go to the spread list in
other territories that they never owned in the past so here you will see they will get the paracels you will see this sovereignty stone markers these are stone markers
even borneo part of borneo they will get cambodia vietnam so they they these were which says china
drawn by private citizens but it was circulated widely within china that's the map of was here in 1901 china was here in 1902 and the chinese point to these markers as
national humiliation of 1926 but you will see in this map china never included the evidence that they own these islands so they called it their sovereignty markers in the
spratlys or scarborough so in their wildest dreams of recovering perceived properties paracels in the spratlys these markers are totally fake and i will prove it in 1987 the
that they lost they never thought that they lost the spratlys or scarborough because province of guangdong published a book compilation of the names of all the islands in
they never nanai south sea explaining why they named these islands the way they named them
thought they owned the spratlys or scarborough but you will see here they included the and this book has very interesting a very interesting annex and editor's note part of the
sulu archipelago as part of the territory to be recovered why because in 1417 the book
sultan of sulu sultan paduka batara left sulu on a grand voyage to china he brought as a background in 1937 june china announced that the china was sending this guy
with them with him his wife his children his large entourage and they sailed to china wong chung to the paracels to check if the japanese have established bases in the
and brought gifts to the emperor it was like a grand tour and probably he brought south paracels and to assert chinese sovereignty over the paracels that was the
sea pearls and the chinese saw it and they said oh that sultan is now a vassal of the announcement but actually had this secret mission and he made a report of his secret
emperor because mission a confidential report of july 1 because he went there june so he wrote this
he was given a tribute he was giving a tribute to the emperor and so they included the report july the following month and in his report he said i placed these stone markers in
sulu archipelago as part of the territory of china to be recovered because sultan north island it says they're
paduka went there giving a gift but they interpreted it the chinese interpreted it as a commemorating the inspection of 1902 in in the other part of north island
tribute that it became a vassal so it's very dangerous to bring a gift to china to the commemorating the inspection of 1902 in woody island commemorating the inspection
chinese emperor or chinese leader because they will consider that as a tribute and you of 1911. so he was planting these stone markers anti-dated stone markers in 1937 and
become a vassal so when you give something you have to qualify and clarify that it's he placed these markers in about 20 24 places in the paracels he was there in 1937
just a gift it's not a tribute he was planting markers commemorating the inspection of 1901 so these are anti-
here is another map of natural humiliation the 1938 map thankfully they excluded the dated now when china published the book when the guangdong province published
sulu archipelago but still they never included the spratlys or scarborough shoal in their this book a lowly clerk saw this confidential
wildest dreams they never thought that spratlys or scarborough should belong to them report and decided to include it as a next to the book so the confidential report became
so they never included the spread list or scarborough in their maps of national part of the book by mistake and i was alerted by a friend of mine franco javier bonnet
humiliation this map was taught to elementary school children and that's why the who was written extensively on the south china sea he's a french scholar he said i saw
chinese really believed that they owned the south china sea because this includes the this book in a library in hong kong and look at he got the xerox copies of several pages
south china they said look at this all of these stone markers in the spratlys and in the paracels are
fake so i said i must have a copy of this book and so i as a friend of mine who
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
frequented frequented manila and beijing on business to look for a copy of this book in observatories that gusujin put up in mainland china one still exists today in hanan
secondhand bookstores in beijing and he was able to secure to buy one copy he province and this is it huge 12.6 meter high there's a sundial here massive bricks could
scoured all the bookstores in beijing and found one copy and i have that copy and this he have put it this observatory on the rocks of scarborough shoal now the rocks of
is a picture a photo of the of the of that book and i guess uh i suppose that after we scarborough are very small maybe three meters high above water at high tide maybe
published this the chinese government i understand recalled all copies of the book so at most 10 people can stand on it could he have put it here if you superimpose the
this is a very rare book now so the stone markers in the paracels are fake and they astronomical observation point in hennan it would look like that he could not have
cannot the chinese cannot deny placed it there
this because it's there in their own publication how about the stone markers in the impossible so legally china cannot now say that gusujin put it up they put up the
spratlys on page 291 of the same book there is an editor's note that the stone tablets observatory in scarborough because they used that argument against the vietnamese
on two islands west york island and spread the island in the spread list might have in 1980 physically it's also impossible they could not have put it up there so the tribunal
been erected by the taiwanese navy in 1956 not in 1946 as the stone tablets indicate said china never had historic rights in the south china sea they cannot identify the
so the stone tablets in works island says erected in december 1946 the stone tablet in tabula is unable to identify any evidence that would suggest that china historically
the spratly says erected in december 1946 where they really erected in 1946. regulated or controlled shipping fishing rather in the south china sea scarborough
in 1946 after the japanese forces left itu-aba the kumitang government sent a ship to shoal that's carbohydrate
the pa the the spatles the taiping it was a u.s ship actually donated to the kumitang satellite imagery huge 150 square kilometers in the area this is the entry exit point all
and they renamed it typing and the cupping of the ship went only to it and he planted the around here are the coral reefs now who owns carburetion we all know that in the
the marker there but he never went to west york island in 1946 he never went to the treaty of paris of 1898 spain ceded the philippines to the us for 20 million dollars the
spread the island so when he saw the book saying that there are stone markers there treaty of paris contained these lines the treaty lines of the city of paris and spain ceded
in the in spratly island and in west rock island planted in december 1946 he went to to the u.
the editors of the book the s everything within the lines for 20 million dollars unfortunately scarborough show is
editors of the book are professors in guangdong universities and he said i was the outside the line the spratlys are outside the lines big problem for us so chinese foreign
captain of the ship that went to itu-aba in 1946 in december we never put up any stone minister wang yi in his lecture at csis in washington in february of 2016 before
tablets in west york island or in spatial then we put up one only in the in itwa so the diplomats from all over the world said the philippine territory is regulated by three
editors said they placed a note those stone tablets might have been erected by the treaties the treaty of paris of 1898 the treaty of washington of 1900 and the treaty of
taiwanese navy in 1956 not in 1994 why 1956 because as i said after the defeat of the 1930 with the british and there is a line in those treaties everything to the east was
japanese forces in 1945 the kumitang took possession of itu abba in 1946 but they left seeded but to the west they were not seated
itu abba in and wangi said nancha the spratleys and huangyan scarborough are all in the west of
1949 1950 because the camkai czech forces the nationalists fled the mainland to 118 degrees they are outside the 3d lines so the philippines does not own these
taiwan and chai can kaikanshak recalled all the troops into about to help defend taiwan islands so how do we answer that we answer that by going to the second treaty of
against what they expected was a communist chinese invasion of taiwan so they left washington of 1900 when the americans after signing the treaty of paris the americans
and they returned only in 1956 as a taiwanese navy now that's why the editors put that came here and they found out there were many islands outside the treaty lines in the
editor's note and when they returned they probably erected those stone markers in batanas of scarborough in the sulu archipelago mapan island turtle island they were all
west york island and spratly island and put there the date december 1946 anti-dated outside the 3d lines so they went back to the
so it's very clear those spaniards they said hey let's clarify there are still many islands outside the treaty lines
stone markers are totally fake now before the just before the we filed our case with the can we clarify that these islands were also seeded to us and the spaniards said no we
against china with the uncle's tribunal at the hague i visited the chinese manila website will not sign and the americans said we will pay you an additional hundred thousand
the chinese embassy website in manila and i saw this in that website this is a cringe dollars and the spaniard said yes we will sign so the treaty of washington was signed
screenshot china said we were the first to discover one yen that's scarborough show and spain clarified that it had all solar relinquished to the us all title and claim of title
for them in 1279 because in 1279 gusujin put up an observatory in huangyan island which spain may have had at the time of the conclusion of the treaty of peace of paris
upon instruction of kublai khan now gusujin was the leonardo da vinci of china at the to any and all islands belonging to the philippine archipelago lying outside the lines
time any and all islands belonging to the philippine archipelago lying outside the lines are
he was a brilliant mathematician engineer he was an astronomer and he built canals also seeded to the us for an additional hundred thousand dollars so the treaty of
for china and kublai khan instructed him make an accurate calendar because we want washington is actually the more important treaty because it includes all islands
to know the when the four seasons will end and start when will summer come when belonging to the philippine archipelago within or outside the treaty lines but the treaty
will it end when will autumn come and will it end when will winter come and end when of washington is never taught to us that's why we have uh some uh professors even
will uh spring come and end because we want to know when to plant when to harvest law professors who
when to irrigate so gusujin put up observatories astronomical observatories 26 on have been saying let's not talk about scarborough and the spread list because they are
mainland china and one in outside the treaty lines they have forgotten about the treaty of washington so the
nanhai one in the south sea where in the south sea did he put up his observatory this question is what are the islands belonging to the philippine archipelago lying outside
screenshot says the chinese embassy in manila says he put it up in scarborough the lines what is our frame of reference in locating these islands it says any and all
hawai'ian island however in 1980 when vietnam and china were squarely over islands lying outside of the treaty lines belonging to the philippine archipelago what is
sovereignty of the paracels the vietnamese a very strong record story records that they our frame of reference the 1734 pedro murillo velarde map because this is the official
own the paracels china pulled out a rabbit out of its hat and said we have an older title philippine
to the paracels because in 1279 kublai khan ordered gusujin to put up an observatory territory under the spanish regime and this is what they have ceded to the americans
in the paracels under the treaty of washington and the treaty of paris and that includes of course
remember kublai khan put up 27 observatories 26 on mainland china and one in the scarborough shoal and the spratly so this map is still alive today this map determines
south china sea south sea where in 1980 the chinese were saying that was in seizure our territory territory that was ceded by spain to the us and which is now our territory
what is internationally called the parcels and they published this in beijing review in as uh the republic of the philippines so we have to go back to this map that's why
beijing review official publication of the ministry of foreign affairs of china the when this map was auctioned off because there's no copy of this map in our public
astronomical observation 0. libraries
9 high was in today's seizure islands that she shows that shija islands will be in the and when a copy of this map was being auctioned in sotheby's i asked the public
bounds of china at the time of the yuan dynasty so they said gusujin put up the libraries the national museums the private museums if they can bid for it and they were
observatory in the paracels today the chinese are saying gusujin put it up in not interested and the public government on museums they have the budget for it so i
scarborough shoal that's the beijing review where they published their article the ask a friend to bid for it and if he wins to sell it at cost to the government because i
paracels are here 380 nautical miles away from scarborough it's very far the brilliant want a copy of this map in the national library so that school children when they see
guy gusujin could not have made a mistake if he put it up there in paracels he could this map you don't have to explain to them scarborough is part of philippine territories
not have put it up in scarborough shoal now of the 26 in 1734
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
the strategies are part of philippine territory since 1734. so he bidded for the map and ground controller and in the u.s aircraft the ground controller the chinese gun controller
fortunately he won and he has donated it because uh the government offices uh the said leave immediately to avoid any misunderstanding the u.
national library national museum don't have this in their budget he just my friend just s aircraft said we are conducting lawful military activities beyond the national airspace
decided to donate it to the national library so it's been donated to the national library of any coastal state this is not a territorial airspace we can fly here because there's
now before the ruling came out china claimed this shaded area when the tribunal said freedom of over flight this is part of the east of the philippines so the americans were
the nine dash lines have no legal effect so immediately you have high seas in the enforcing the ruling for us not because they love us but because it's in their national
south china sea about 20 25 percent of the south china sea of isis and all around that interest to protect their sea lanes remember of the 5.
you have the exclusive economic zone of the philippines this could belong only to the 2 trillion new trade of shipboard goods that traverse the south china sea every year
philippines because it's only the philippines that is the adjacent coastal state and this is over a trillion of that is us train bound and outbound trade they have to maintain
the uh easy of malaysia in sabah isaiah of brunei is a of malaysia again in the other freedom of navigation and overflight the french they have two naval ships that
part of sabah the east of indonesia in the natunas the east of vietnam and the eez of continuously sail in the south china sea because they want to maintain a naval
china so automatically of high seas and exclusive economic zones around those sizes presence in all exclusive economic zones because in the exclusive economic zones
this area the shaded area in red is what we want how big is that that's as big as uh their freedom of navigation they have british they have two naval ships also sailing
larger than the philippine national territory the land territory these three deaths are still continuously in the south china sea because they want
disputed because they are rocks above water at high tide between the philippines and an unbroken presence in the south china sea because they want the rules to preserve
china that's still in dispute because the tribunal has no jurisdiction over territorial issues the integrity of the rules-based international system that's the code word for the ruling
on it is only jurisdiction over maritime issues so we won an area of 376 000 square they want to enforce the ruling without saying that we're enforcing the ruling there it's
kilometers in the south china sea free from any chinese claim this is larger than our euphemism for them integrity of the rules-based international system the japanese
total land area if you have two helicopter helicopter carriers every year they alternate in sailing in the south
put all our islands together you get only 300 000 square kilometers so we want an china sea this duck in subic the last time it was here i visited it and i asked the captain
area maritime space larger than our total land area and we own everything within this of the ship
huge maritime area all the fish oil gas and other mineral resources now there are many where in the south china sea did you sail and he answered in the west philippine sea
time zones under unclass assuming this is palawan you have a territorial sea of 12 that's so easy what did you do in the philippine ese he said we sent aloft this helicopter
nautical miles from the low water mark from the edge of the territorial sea you measure that's a military activity they were telling china this is an exclusive economic zone of a
188 nautical miles you have the eez exclusive economic zone and from here you have coastal state and we have freedom of navigation here the indonesians at the rather the
the high seas indians they have every year they send a naval task force in the south china sea to
this is our extended container shelf uh this is the area belonging to mankind but the assert freedom of navigation the canadians do the same every year to preserve to
point here is that from the edge of the territorial cc ward there is freedom of navigation assert freedom of
and overflight civilian aircraft military aircraft civilian vessel military vessel can sail and navigation so the all these naval powers actually enforce the ruling for us because
fly in this area without getting the consent of the coastal state because there's freedom they're showing to the chinese that these are exclusive economic zones or high seas
of navigation for all countries of the world so when the ruling came out the u. remember china refuses to accept that there are exclusive economic zones in the
s said we will sail and fly in the south china sea france said we will also sail and fly we south china sea within the nine dash line these naval patrols of the naval powers rebut
will ask our european neighbors to join us in a regular patrol in the south china sea the that forcefully all this freedom of navigation of flight operations are directed at china
british said we will do the same when our two aircraft carriers are finished we will sail this is not your waters these are high seas or exclusive economic zones of other
them in the south china sea australia said we will continue to sail and fly in the south coastal states
china sea now the tribunal made a specific finding on mischief reef the tribunals said and therefore we can sail here so what should we as filipinos do now we should
we find mischief reef is a low tide elevation it's submerged at high tide so it's low tide encourage all the navies of the world to sail in the south china sea and in particular in
you can the west philippine sea so that they will enforce the ruling also we should ask our
see it only at low tide and therefore mischief reef has no territorial sea and cannot be neighbors vietnam malaysia indonesia and brunei to help us explain to the chinese
owned because it's beyond the territory of any state and it forms part of the exclusive people that china never had historic rights in the south china sea it's totally false and
economic zone of the philippines so there is a clear categorical ruling by the tribunal all of us in a saiyan should educate the world that china never had historic rights in the
that mischief reef has no territorial sea not editorial airspace it's part of the exclusive south china sea
economic zone of the philippines and as part of the exclusive economic zone of the all these claims of china under the nine dash line is totally false we should continue
philippines it can only be exploited by the philippines only the philippines can put resorting to the rule of law because we have no other choice why don't we have a
up structures there if china is still there now china is there as a squatter now that's choice well our constitution says we renounce war as an instrument of national policy
mischief huge it's totally submerged at high tide in its natural state before the and we cannot enforce the ruling by going to war we have to use the rule of law and
reclamation by china today three kilometer military grade runway barracks for also the u.
thousands of marines you have radars structures there entry and exit for warships and n charter prohibits war as a means or use of force or threat of force as a means of
submarines that's the runway in mischief reef any jet fighter here can reach manila in settling territorial or maritime disputes war or use of force or threat of force has been
less than 20 minutes can reach part of princess in less than 10 minutes the radar here outlawed under the u.n charter and under our own constitution what is the power of the
can monitor any aircraft president can the president declare war no he cannot even declare war the power of
that lands or takes off in puerto princesa or in the entire palawan area so this one this the president is limited to calling the armed forces in case of invasion but he cannot
airbase and naval base this is both an air naval base the chinese call this their pearl direct an aggression against another state it's not one of his powers only if there is an
harbor in the south china sea this is a dagger pointed at us because this uh mischief invasion can we call
air naval base of china will be used by china to enforce the nine dash line as china's it the armed forces the power to declare war is lodged in congress congress by two
national boundary so when the ruling came out the americans decided to test because thirds vote of both houses in joint session assembled voting separately shall have the
the ruling said mischief refers no territorial see the u. sole power to declare the existence of a state of war that's our constitution so we must
s sailed this ship zigzag because if this were a territorial sea this ship should sail fight this battle with china we must preserve our sovereign rights in the west philippine
straight line continuous without stopping but to show to the chinese here in mischief sea through the rule of law with that i end my presentation thank you for your patience
reef that this is not a territorial sea because it's an artificial island they zigzag they and kind attention
conducted man overboard operations they sent a lot of their drones to proof so they
are they were actually enforcing the ruling for us and this uh ship uh the uss giffords
sailed there again in the sale there in november 16 recently 2019 the same way to How is the nationality of Corporations determined?
show to the chinese that - Place of Incorporation Test
this is not a territorial sea they were enforcing the ruling and this plane the u.s ● Under the Place of Incorporation Test, a corporation is a
poseidon which can detect submarines that are submerged and can drop torpedoes national of the country under whose laws it has been
from the air flew over mischief reef and this was the conversation between the chinese
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
organized and registered, regardless of the nationality of and preventing double taxation by ensuring that taxpayers do not suffer an
the majority of its stockholders undue burden when engaging in cross-border activities.

Hypo Question: Chinese went into the PH and they want to establish a trading The principle of reciprocity is recognized and embedded in various
company - they registered their company in PH - Is it a PH company? aspects of Philippine tax law, particularly in its international tax treaties.
Philippine tax law operates under the basic constitutional principles of
How do you define a PH national? equality, uniformity, and equity in taxation, supporting the concept that
● PH Citizens natural persons and Juridical persons foreign nationals or entities should not be disadvantaged if their countries
● 60% owned by PH citizens provide equivalent benefits to Philippine nationals or entities. This
● "Philippine national" shall mean a citizen of the Philippines or a principle is embodied in key statutes and international agreements such
domestic partnership or association wholly owned by citizens of the as the Tax Code, various tax treaties, and administrative regulation
Philippines;
○ or a corporation organized under the laws of the Philippines 1. Income Taxation of Foreign Nationals and Foreign
of which at least sixty percent (60%) of the capital stock Corporations
outstanding and entitled to vote is owned and held by citizens 2. Estate and Donor’s Taxes (Inheritance and Gift Taxes)
of the Philippines; 3. Income Tax Exemptions for Certain Foreign Nationals
○ or a trustee of funds for pension or other employee retirement
○ or separation benefits, where the trustee is a Philippine
national and at least sixty (60%) of the fund will accrue to the Apply the test to determine the nationality of corporations
benefit of the Philippine nationals: 1. Place of Incorporation - Always look for the place of organization;
Provided, That where a corporation and its non-Filipino stockholders own Corporation is heavily dependent on the State because it is the law of that
stocks in a Securities and Exchange Commission (SEC) registered State that created it.
enterprise, at least sixty percent (60%) of the capital stocks outstanding ● Where you organized yourself
and entitled to vote of both corporations must be owned and held by 2. Control Test - determining who are the majority owners of the company;
citizens of the Philippines and at least sixty percent (60%) of the members check to whom equity is vested
of the Board of Directors of both corporations must be citizens of the ● Determining the nationality of the corporation based on
Philippines, in order that the corporations shall be considered a Philippine ownership of shares
national;

Register of Deeds v. Ung Sui Temple

But what about the chinese corporation registered in PH but owned by 100% The events leading to the case began on January 22, 1953, when Jesus Dy, a Filipino
chinese? citizen, executed a deed of donation conveying a parcel of residential land located in
Under place of incorporation test - nationality is Filipino; don't use term PH national as Caloocan, Rizal, specifically known as lot No. 2, block 48-D, PSD-4212, G.L.R.O.
it has different meaning, bar examiner might not give merit Record No. 11267, to the Ung Siu Si Temple, an unregistered religious
organization. The donation was accepted by Yu Juan, a Chinese national and the
Hypo Q: Experts gave advice that it is better to register your company in a tax saving founder and deaconess of the Temple, who acted on behalf of the organization and its
country so they registered their company in Delaware - Tax saving state in the US. trustees, all of whom were also of Chinese nationality. The Register of Deeds for Rizal
however all their business and transactions is done in PH. They invested in PH. What refused to accept the deed for registration, leading to an appeal to the IVth Branch of
is the nationality of Corpo? the Court of First Instance of Manila.
- It is a Foreign corporation
- Basis: application of Place of Incorporation Test On March 14, 1953, the Court upheld the Register's refusal, citing the provisions of the
1935 Constitution that restrict land ownership to Filipino citizens or corporations with at
least sixty percent Filipino ownership. The Court concluded that since the trustees
What is the definition of Foreign Corporation under Corpo Code? and administrators of the Ung Siu Si Temple were all Chinese citizens, the deed
Under the Revised Corporation Code (RCC), a foreign corporation is of donation could not be registered. Dissatisfied with this ruling, the counsel for the
defined as a corporation, partnership, or association organized under laws Ung Siu Si Temple appealed to the Supreme Court, arguing that the acquisition of
other than those of the Philippines and whose laws allow Filipino entities land for religious purposes was permitted under Act No. 271 and that the refusal
to establish operations in its home jurisdiction. This reciprocity ensures violated the freedom of religion clause in the Constitution.
that foreign entities are permitted to operate within the Philippines under
similar circumstances allowed for Filipino businesses abroad. 1. Is the acquisition of land by the Ung Siu Si Temple, a religious
organization with foreign trustees, permissible under Philippine law?
2 important concepts The Supreme Court ruled that the acquisition of land by the Ung Siu Si
1. Corporation formed, organized, established under the laws of any Temple is not permissible under Philippine law due to the restrictions
country other that PH; imposed by the Constitution.
2. Principle of Reciprocity - reciprocal obligations 2. Does the refusal of the Register of Deeds to register the deed of donation
● If allowed in foreign state, then it is also allowed in the violate the freedom of religion guaranteed by the Constitution?
Philippines. The Court held that the refusal of the Register of Deeds does not violate
● It must allow Filipinos to do business in their own countries. the freedom of religion clause of the Constitution
● For a corporation to be allowed to do business in the
Philippines. The Supreme Court's decision was grounded in the interpretation of the 1935
Constitution, specifically Article XIII, which restricts the acquisition of land to Filipino
The reciprocity principle in taxation law is a doctrine wherein a country citizens or corporations with a minimum of sixty percent Filipino ownership. The Court
grants tax privileges or exemptions to non-residents or foreign entities reasoned that the provisions of Act No. 271, which allowed religious associations to
based on the condition that the non-resident’s or foreign entity’s home hold land, were rendered ineffective by the constitutional limitations that were
country will reciprocate the same treatment to the citizens or entities of the enacted later. The Court emphasized that the Constitution does not provide
host country. It is a form of mutual agreement aimed at promoting fairness exceptions for religious organizations, and the fact that the Ung Siu Si Temple had no
capital stock did not exempt it from the constitutional requirement that the controlling
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
membership must consist of Filipino citizens. The Court further argued that allowing 1. Is the Roman Catholic Apostolic Administrator of Davao, Inc. qualified to
foreign-controlled religious organizations to acquire land would undermine the acquire private agricultural lands in the Philippines under the provisions
historical context of land ownership in the Philippines, which had been a significant of the Philippine Constitution?
issue leading to the revolution of 1896. Regarding the claim of a violation of the
freedom of religion, the Court found no evidence that land ownership was essential for 2. Does the citizenship of the incumbent of a corporation sole affect the
the free exercise of religious practices, thus affirming the lower court's ruling and corporation's ability to acquire and hold real property?
upholding the Register of Deeds' refusal to register the deed of donation. Ruling:The Supreme Court ruled in favor of the petitioner, reversing the resolution of
the Land Registration Commissioner. The Court held that the Roman Catholic
Notes: Apostolic Administrator of Davao, Inc. is qualified to acquire private agricultural
● If an org doesn't issue stock, the determining factor is the nationality of lands, and the citizenship of the incumbent does not disqualify the corporation
sole from holding real property.
owners/members
● Outstanding Capital Stock - owned and issued into the hands of
stockholders Ratio:The Court's decision was grounded in the interpretation of the provisions of the
● However, it is not applicable to Ung Sui temple as it is a non-stock corpo Philippine Constitution, particularly Sections 1 and 5 of Article XIII, which restrict the
● Ung sui is still disqualified to engaged in nationalized if the membership of acquisition of agricultural lands to individuals or corporations with at least 60% Filipino
ownership. The Court reasoned that a corporation sole, such as the Roman Catholic
non-stock org does not meet the standards of PH law. Apostolic Administrator of Davao, Inc., is a legal entity created to administer church
● Non-profit non-stock can still engage in business activities so long as their properties and does not possess a nationality. The Court emphasized that the
business is in line with their Articles of Incorporation and provided that it is properties held by the corporation sole are not owned by the incumbent but are
used for their purpose - charity/foundation administered for the benefit of the church and its members, the majority of whom are
● Supreme Court:: even if non-profit, not exempted to application of Control Filipino citizens.
Test - number of members The Court also noted that the framers of the Constitution likely did not intend to include
corporations sole in the restrictions on land ownership, as these entities serve a
public and religious purpose. Furthermore, the Court highlighted that the historical
When do you apply for the test? context and the nature of the corporation sole as an administrator of church properties
- Place of Incorporation Test - primary/main test - this is support the conclusion that it is qualified to acquire and register lands necessary for its
the test that should always be applied first functions, irrespective of the citizenship of its head. Thus, the Court ordered the
- Control Test - if after applying the POI there is still doubt - it Register of Deeds to register the deed of sale in favor of the Roman Catholic Apostolic
is used to determine if the corporation can be engaged in a nationalized Administrator of Davao, Inc.
activity - public utilities, media (100%), advertising (70% Filipino)
Notes: Corporation Sole - A Corporation registered under single owner; special form
● Only applicable to domestic corporation
of corporation associated with head clergy.
● Even if its is a non-stock corporation A corporation sole is a legal entity that consists of one person
who holds an office and is incorporated by law. It's often used
Non-profit/Non-stock corporation: to describe a religious corporation, such as a bishop or priest,
● Conduct activities that will benefit your primary who owns property for the organization.
purpose ● There are no members
● A Non-stock corporation is a type of corporation ● Non-Stock/Non-Profit: There are members and effective control
in the Philippines that is organized for charitable ● Members of the faithful cannot override the decisions in a corporation
purposes and does not distribute profits to its sole.
members. The Securities and Exchange ● Catholics do not have control over the affairs of the church
Commission (SEC) of the Philippines is ● It will not apply as per Atty. Aranas
responsible for registering non-stock corporations ● Catholic do not really do nationalized

Roman Catholic Davao v. LRC PURPOSE: The purpose is to exercise the functions of the church - only for church
The case involves the Roman Catholic Apostolic Administrator of Davao, Inc. ● It has no nationality but it is only applicable to ownership of lands
(petitioner) against the Land Registration Commission and the Register of Deeds of ● Pope Francis is the head of Catholic churches even in PH
Davao City (respondents). The events leading to the case began on October 4, 1954, ● If incorporation/control test is applied - it could mean the dismissal of
when Mateo L. Rodis, a Filipino citizen residing in Davao City, executed a deed of Roman Catholic
sale for a parcel of land covered by Transfer Certificate of Title No. 2263 in favor of ● Members have no control over the church, it is the Corporation Sole
the Roman Catholic Administrator of Davao, Inc., a corporation sole established that has authority
under Philippine law, with Msgr. Clovis Thibault, a Canadian citizen, as its
incumbent.
What are public utilities?
○ PUVs, water, ports, media
Upon presenting the deed of sale for registration, the Register of Deeds of Davao ○ Mass Media
raised concerns based on a prior resolution from the Court of First Instance of Manila,
○ Internet
which required that 60% of the members of a corporation must be Filipino citizens to
register land. The petitioner expressed willingness to submit an affidavit but argued Public utilities are services or facilities that provide essential goods and services to
that the cases were not comparable due to the different structures of the the public.
organizations involved. The Register of Deeds referred the matter to the Land Public Utility. - Public Utility refers to a public service that operates, manages or
Registration Commissioner, who, after a hearing, ruled on September 21, 1954, that controls for public use any of the following:
the petitioner was not qualified to acquire private lands without proof that at least 60% (1) Distribution of Electricity;
of its capital was owned or controlled by Filipino citizens, given that the incumbent was
(2) Transmission of Electricity;
a Canadian citizen. The petitioner then filed a petition for mandamus to reverse this
resolution, asserting that the deed of sale was for the Catholic Church, which is (3) Petroleum and Petroleum Products Pipeline Transmission Systems;
qualified to acquire private agricultural lands for worship purposes. The Supreme (4) Water Pipeline Distribution Systems and Wastewater Pipeline
Court, in its resolution dated November 15, 1954, allowed the petition to proceed. Systems, including sewerage pipeline systems;
(5) Seaports; and
(6) Public Utility Vehicles.

"All concessionaires, joint ventures and other similar entities that wholly operate,
manage or control for public use the sectors above are public utilities.
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
were sequestered by the PCGG, and later declared as part of the ill-gotten
"Nothing in this Act shall be interpreted as a requirement for legislative franchise wealth of former President Ferdinand Marcos.
where the law does not require any. No other person shall be deemed a public utility
unless otherwise subsequently provided by law. In 1999, First Pacific acquired the remaining 54% of PTIC's outstanding
capital stock. The government announced the sale of the 111,415 PTIC
Reason why Rappler and ABS-CBN had issue shares through a public bidding, which was initially set for December 4,
● The SEC alleged that Rappler’s parent company “intentionally created 2006, but was later rescheduled to December 8, 2006. Parallax Venture
Fund XXVII emerged as the highest bidder. However, First Pacific
an elaborate scheme” to cover an investment from a foreign source, and
exercised its right of first refusal and matched the bid. The sale was
that the organization is a “mass media entity that sold control to completed on February 28, 2007, resulting in First Pacific's ownership of
foreigners.” 37% of PLDT's common shares, which raised the foreign ownership in
● Constitutionally, mass media companies in the Philippines are blocked PLDT to approximately 81.47%, exceeding the 40% limit set by the 1987
from foreign ownership. Philippine Constitution.
● The investment in question came from the Omidyar Network, a investment
vehicle created by eBay founder and entrepreneur Pierre Omidyar, Gamboa, a stockholder of PLDT, filed a petition for prohibition, injunction,
Rappler said at the time. declaratory relief, and declaration of nullity of the sale, arguing that the
● Rappler denied foreign ownership, and said the Philippine Depositary sale violated the constitutional limit on foreign ownership of public utilities.
Receipt (PDR), a financial instrument that governs the Omidyar
investment, did not give the network any control over the company. It said 1. Does the consummation of the sale of 111,415 PTIC shares to First
the arrangement was accepted by the SEC in 2015. Pacific violate the constitutional limit on foreign ownership of a
● CNN has reached out to the Philippine SEC and the Philippine Embassy public utility?
in the United States but has not yet heard back. 2. Did the public respondents commit grave abuse of discretion in allowing
● In an order released on Wednesday, the Philippine SEC “affirmed and the sale of the 111,415 PTIC shares to First Pacific?
reiterated its earlier finding” from 2018 that Rappler is a “mass media 3. Does the sale of common shares to foreigners in excess of 40% of the
entity” and it had granted control to a foreign entity “through the Philippine entire subscribed common capital stock violate the constitutional limit
Depositary Receipt issued to Omidyar Network.” on foreign ownership of a public utility?

The Supreme Court partly granted the petition. It ruled that the term "capital" in Section
11, Article XII of the 1987 Constitution refers only to shares of stock entitled to vote in
the election of directors, which in this case means only the common shares, and not
READ: Foreign Investments Negative List (FINL)
the total outstanding capital stock comprising both common and non-voting preferred
● A "Foreign Investments Negative List (FINL)" refers to a list of economic shares. The Court directed the Chairperson of the Securities and Exchange
sectors within a country where foreign ownership is restricted or Commission (SEC) to apply this definition in determining the extent of allowable
prohibited, essentially outlining areas where foreign investors cannot fully foreign ownership in PLDT and to impose appropriate sanctions if there is a violation
participate due to limitations set by the government, often for reasons of the constitutional limit.
related to national security, public interest, or protection of local
The Court's decision was based on the interpretation of the term "capital" as used in
businesses; it specifies the maximum percentage of foreign equity allowed
the 1987 Constitution. It emphasized that the framers intended for the term to refer
in certain industries specifically to shares that confer voting rights, as these shares are crucial for
1. Common Stocks - no preference to the distribution of dividends but exercising control over a corporation. The Court noted that allowing a broad
entitled to vote interpretation of "capital" to include non-voting shares would undermine the
2. Preferred Stocks - can be voting or non-voting; constitutional intent to ensure that Filipinos maintain control over public utilities.

Define Mass Media The ruling also highlighted the importance of the constitutional provision in promoting a
● “mass media” embraces means of communication that reach and self-reliant and independent national economy effectively controlled by Filipinos. The
influence large numbers of people including print media (especially Court pointed out that the SEC has the regulatory authority to enforce compliance with
newspapers, periodicals and popular magazines) radio, television, and the nationality requirement, and thus, it is essential for the SEC to apply the definition
movies, and involved the gathering, transmission and distribution of news, of "capital" as determined by the Court in future assessments of foreign ownership in
information, messages, signals and all forms of written, oral and visual public utilities.
communications
The decision underscored the need for clarity in the interpretation of constitutional
provisions to protect national interests and prevent foreign control over critical sectors
Gamboa v. Teves of the economy.
- Who owns PLDT?
The case involves Wilson P. Gamboa as the petitioner against several
respondents, including Finance Secretary Margarito B. Teves, Finance ● Non-voting shares may also vote under certain conditions, as per Corpo
Undersecretary John P. Sevilla, and Commissioner Ricardo Abcede of the Code.
Presidential Commission on Good Government (PCGG), among others. ● In applying control test, you apply it to ALL capital stock, regardless if
The case was decided by the Supreme Court on June 28, 2011. voting, non-voting etc. - determine it on the entire thing - look at FINL -
Pure voting percentage - 70% of Total Stock and 70% of Voting Stock
The controversy arose from the sale of 111,415 shares of stock of the
Philippine Telecommunications Investment Corporation (PTIC) by the Grandfather Rule
Philippine government to Metro Pacific Assets Holdings, Inc. (MPAH), an ● It determine the owners of parent company - the owners are technically
affiliate of First Pacific Company Limited. the grandfather
● Nationality is attributed to the percentage of equity in the corporation
The background of the case dates back to November 28, 1928, when the used in nationalized or partly nationalized area. As further defined by
Philippine Legislature enacted Act No. 3436, granting the Philippine Dean Cesar Villanueva, the Grandfather Rule is “the method by which
Long Distance Telephone Company (PLDT) a franchise to operate in the percentage of Filipino equity in a corporation engaged in nationalized
the telecommunications sector. In 1969, General Telephone and
and/or partly nationalized areas of activities, provided for under the
Electronics Corporation (GTE), a major stockholder of PLDT, sold 26%
of PLDT's outstanding common shares to PTIC. In 1986, the shares were Constitution and other nationalization laws, is computed, in cases where
held by Prime Holdings, Inc. (PHI), which owned 111,415 shares of PTIC, corporate shareholders are present, by attributing the nationality of the
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
second or even subsequent tier of ownership to determine the nationality judicial act that can be appealed to the CA, or a purely administrative act
of the corporate shareholder.” that is beyond the CA's jurisdiction.
● Said rule is applied specifically in cases where the corporation has
corporate stockholders with alien stockholdings, otherwise, if the rule is The Supreme Court ruled that the petition is meritorious and set aside the
not applied, the presence of such corporate stockholders could diminish CA's decision. The Court held that the CA improperly took cognizance of
the effective control of Filipinos. the case on appeal because the OP's cancellation and/or revocation of
the FTAA was not an exercise of its quasi-judicial authority, but rather an
administrative function. The Court declared the CA's decision null and
The Supreme Court ruled on the dispute by giving an answer to the question, “When
void due to lack of jurisdiction.
should the Grandfather Rule be applied?” It then provided that it should be applied
only when:
The Court explained that an FTAA is a government or public contract,
● the corporation’s Filipino equity falls below the constitutional threshold of
subject to the same laws and regulations that govern private contracts.
60 percent or; The OP's cancellation and/or revocation of the FTAA was an exercise of a
● there exists a “doubt” as to the Filipino to Foreign equity. contractual right that is purely administrative in nature, and not an
adjudication. The Court also held that the principle of mutuality of
How would we know that a corporation’s Filipino equity falls bellow the contracts would be violated if the OP, as a contracting party, were allowed
threshold of 60 percent or that there exists a “doubt” as to the Filipino to to adjudicate on the contract's own validity. Furthermore, the Court
Foreign equity? clarified that Redmont's participation in the proceedings did not make the
OP's cancellation/revocation quasi-judicial. The Court ultimately ruled that
the CA had no jurisdiction over the case, and the petition was granted.
We must first apply the third test which is the Control Test. As mentioned, Control Test
is determined by the nationality of the controlling stockholders. When after applying
the Control Test and there exists a “doubt” as to the Filipino – Foreign equity, Unchuan v. Lozada
meaning, even when the equity does not fall below the threshold but reasonable The case revolves around a dispute over the ownership of two lots in Cebu City,
specifically Lot Nos. 898-A-3 and 898-A-4, which are covered by Transfer Certificates
grounds to doubt the true ownership exists, Grandfather Rule butts in. Grandfather of Title (TCT) Nos. 53258 and 53257, respectively. The lots were initially owned by
Rule determines the actual Filipino ownership and control in a corporation by tracing sisters Anita Lozada Slaughter and Peregrina Lozada Saribay. In 1994, the sisters
both the direct and indirect shareholdings in the corporation. In essence, Grandfather sold the lots to their nephew, Antonio J.P. Lozada, through a Deed of Sale that was
Rule supplements the Control Test. notarized and authenticated at the Philippine Consul's Office. Meanwhile, petitioner
Marissa R. Unchuan claimed that Anita donated an undivided share in the lots to her
The “doubt” demanding the application of the Grandfather Rule is not confined or refer under an unregistered Deed of Donation in 1987. Marissa caused the annotation of an
adverse claim on the lots, which led to a case for quieting of title with an application for
to the fact that the apparent Filipino ownership of the corporation’s equity falls below
preliminary injunction and restraining order filed by Antonio and Anita against Marissa.
the 60% constitutional threshold. Rather, “doubt” refers to various indicia that the
“beneficial ownership” and “control” of the corporation do not in fact reside in
1. Did the Court of Appeals err in upholding the Decision of the Regional
Filipino shareholders but in foreign stakeholders which actually gave rise to the
Trial Court (RTC) which declared Antonio J.P. Lozada the absolute owner
legislation on the Anti-Dummy Law. of the questioned properties?
2. Did the Court of Appeals violate the petitioner's right to due process?
In the present case, the doubt exists as to the extent of control and beneficial
ownership of MBMI over the petitioners and their investing corporate stockholders. In
3. Is the petitioner's case barred by laches?
applying the Grandfather Rule, the Supreme Court looked into the actual ownership of 4. Is the Deed of Donation executed in favor of the petitioner void?
MBMI in each of the three corporations. It further checked the structure of the other 5. Is the videotaped statement of Anita hearsay evidence?
shareholder corporations of each company. Through the application of the
Grandfather Rule, the Supreme Court held that petitioners Narra Nickel, Tesoro and The Supreme Court denied the petition and affirmed the Decision dated February 23,
MacArthur Mining are not considered Philippine nationals since MBMI, a 100 percent 2006, and Resolution dated April 12, 2006 of the Court of Appeals in CA-G.R. CV. No.
73829 with modification. The awards of moral damages and exemplary damages in
Canadian corporation, owns 60 percent or more of their equity shares interests.
favor of respondents were deleted.
Hence, as non-Philippine nationals, they are disqualified to participate in the
exploitation, utilization and development of the Philippines’ natural resources The Supreme Court held that the Deed of Sale between the sisters Lozada and their
nephew Antonio is valid, and the Deed of Donation in favor of petitioner Marissa is
READ: Redmont v McArthur void. The court found that there was no violation of the public policy prohibiting aliens
- You apply the GF Rule if the 60/40 equity ownership is in doubt from owning lands in the Philippines, as the lots were not registered in Dr. Lozada's
- Check the entire foreign ownership entity name, and Antonio and Dr. Lozada were to hold 60% and 40% of the shares in
Damasa Corporation, respectively. The court also found that petitioner failed to
The case of Narra Nickel Mining and Development Corp. v. Redmont
present proof to believe Antonio's capacity to pay for the lots.
Consolidated Mines Corp. (G.R. No. 202877, December 9, 2015) involves
a dispute over the cancellation of a Financial or Technical
Assistance Agreement (FTAA) executed between the Republic of the SEC Memorandum Circular No. 08-2013
Philippines and three mining corporations: The Securities and Exchange Commission (SEC) Memorandum Circular (MC) No. 8,
1. Narra Nickel Mining and Development Corporation, 2013 is a set of guidelines for corporations that are involved in nationalized or partly
2. Tesoro Mining and Development, Inc., and nationalized activities. The circular is intended to help corporations comply with
3. McArthur Mining, Inc. Filipino-foreign ownership requirements.
Purpose
The FTAA was approved on April 5, 2010, and executed on April 12, ● To ensure compliance with constitutional and legal
2010. Redmont Consolidated Mines Corporation, which had applied for an requirements
Exploration Permit (EP) over the same mining areas, filed a petition with ● To clarify ownership structures in sectors reserved for
the Office of the President (OP) seeking the cancellation and/or revocation Philippine nationals
of the FTAA. The OP granted Redmont's petition, and the Court of
Appeals (CA) affirmed the OP's decision. ● To apply the required minimum percentage of Filipino
ownership
Scope
Whether the Court of Appeals correctly affirmed on appeal the Office
● Applies to corporations involved in nationalized or partly
of the President's cancellation and/or revocation of the Financial or
Technical Assistance Agreement (FTAA). Specifically, the issue is nationalized activities
whether the OP's cancellation and/or revocation of the FTAA is a quasi- ● Applies to amendments to existing laws and implementing
rules and regulations (IRRs)
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
○ Applies to both voting and non-voting shares of stock Grandfather Rule (Supplementary Test): The Grandfather Rule is a
Foreign Investment Act of 1991 more nuanced and detailed method of determining the true nationality of a
It is the policy of the State to attract, promote and welcome productive investments corporation, especially in cases where ownership involves multiple layers
from foreign individuals , partnerships, corporations, and governments, including their of corporations, some of which may have foreign shareholders.
political subdivisions, in activities which significantly contribute to national ● The rule "looks through" the corporate structure to determine
industrialization and socio-economic development to the extent that foreign investment the nationality of stockholders in each layer of ownership,
is allowed in such activity by the Constitution and relevant laws. Foreign investments ultimately determining how much of the corporation is truly
shall be encouraged in the enterprises that significantly expand livelihood and Filipino-owned.
employment opportunities for Filipinos; enhance economic value of farm products;
promote the welfare of Filipino consumers; expand the scope, quality and volume of
exports and their access to foreign markets; and/or transfer relevant technologies in III. When is the Grandfather Rule Applied?
agriculture, industry and support services. Foreign investments shall be welcome as a ● The Grandfather Rule is typically applied in the following cases:
supplement to Filipino capital and technology in those enterprises serving mainly the ● Where the 60-40 ownership split is met only nominally but the control of
domestic market. As a general rule, there are no restrictions on extent of foreign the corporation appears to be in the hands of foreign interests. This is
ownership of export enterprises. In domestic market enterprises, foreigners can invest often referred to as the "doubtful" or "circumventive" ownership situation.
as much as one hundred percent [100%] equity except in areas included in the ● When a corporation’s capital is divided among several tiers of corporate
negative list. Foreign-owned firms catering mainly to the domestic market shall be entities, some of which are foreign, making the application of the
encouraged to undertake measures that will gradually increase Filipino participation in straightforward Control Test insufficient or misleading.
their businesses by taking in Filipino partners, electing Filipinos to the board of
directors, implementing transfer of technology to Filipinos, generating more IV. Mechanics of the Grandfather Rule
employment for the economy and enhancing skills of Filipino workers. Tracing Ownership
● The Grandfather Rule works by tracing the ownership of each
DOJ Opinion No. 18 series of 1989 shareholder to determine the ultimate ownership of the
corporation.
● In cases where a corporation (Corporation A) owns shares in
Nationality of Corporations: The Grandfather Rule another corporation (Corporation B), the Grandfather Rule
looks at the shareholders of Corporation A to determine the
In the context of Philippine corporate law, determining the nationality of a corporation
true ownership of the shares held by Corporation A in
is critical in situations where the law imposes restrictions on foreign ownership, such
Corporation B.
as in land ownership, natural resources, public utilities, and certain industries like mass
media and advertising. The Grandfather Rule is one of the methods used to determine
Example:
the "true" nationality of a corporation, particularly in cases where ownership structures
● Corporation A owns 60% of Corporation B, and
are complex and involve multiple layers of corporate entities.
Corporation A has a Filipino shareholder owning
50% of its stock and a foreign shareholder
I. Relevant Legal Provisions
owning the remaining 50%.
1987 Philippine Constitution
● Under the Grandfather Rule, only 30% of
Corporation B would be considered Filipino-
The Constitution provides specific limitations on foreign ownership in
owned (i.e., 60% * 50% = 30%).
certain areas, such as:
Land ownership: Only Filipino citizens or corporations with at least 60%
Layered Ownership
Filipino ownership may own land (Art. XII, Sec. 7).
● If there are multiple layers of ownership, the Grandfather Rule is applied
Operation of public utilities: Only corporations that are at least 60%
recursively, meaning that each layer of ownership is examined until the
Filipino-owned may operate public utilities (Art. XII, Sec. 11).
nationality of the ultimate beneficial owners is ascertained.
● Exploration, development, and utilization of natural resources:
● This tracing ensures that the constitutional or statutory ownership
Limited to Filipino citizens or corporations with at least 60%
requirements are not circumvented by layering corporations to conceal
Filipino equity (Art. XII, Sec. 2).
foreign control.
● Foreign Investments Act of 1991 (RA 7042, as amended by
RA 8179)
V. Jurisprudence on the Grandfather Rule
SEC Opinions and Rulings
● This law reiterates the restrictions on foreign ownership of
● The Securities and Exchange Commission (SEC) has issued
certain industries and provides guidelines for determining
several opinions clarifying the application of the Grandfather
corporate nationality.
Rule.
● Implementing Rules and Regulations (IRR) of the Foreign
● In some cases, the SEC applies the Grandfather Rule
Investments Act
directly, while in others, it has opted for the Control Test as
the default rule, reserving the Grandfather Rule for situations
The IRR provides further details on how the nationality of a corporation
where foreign control is suspected.
should be determined, particularly through the application of the Control
● Land Bank of the Philippines v. CA (G.R. No. 127181,
Test and the Grandfather Rule.
October 6, 2000)
II. Control Test vs. Grandfather Rule
In this case, the Supreme Court ruled that when determining corporate
nationality, the Control Test should be the primary method, and the
Control Test (Primary Rule): Under the Control Test, a corporation is
Grandfather Rule should be applied only as a supplementary rule.
considered a Filipino corporation if at least 60% of its outstanding capital
The Court emphasized that the Grandfather Rule should be used when
stock is owned by Filipino citizens. This is a straightforward test of equity
there is a need to "pierce the veil of corporate fiction" to reveal the true
ownership, and it is generally the rule used in most cases.
nationality of the controlling stockholders.

SEC Opinions on Tiered Ownership

Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
b) Non-Share (Non-stock) Corporation - is a private corporation
● In SEC rulings where multi-tiered corporate ownership is organized "not If by incident it generates profits, such profit should
present, the Grandfather Rule has been applied to prevent be spent to continue attaining the objectives of its creation.
foreigners from indirectly gaining control over corporations ● Examples are civic and religious. social, charitable
that are constitutionally reserved for Filipino citizens or institutions, etc.
corporations.
What is a De Jure Corporation?
VI. Application of the Grandfather Rule: Key Considerations ● A De Jure Corporation is one that has been properly formed in
Purpose of the Grandfather Rule accordance with the law. In the Philippines, this means that the
● The Grandfather Rule is used to prevent foreign nationals corporation has complied with all the requirements set forth by the
from circumventing the Constitution and other laws restricting Corporation Code, such as filing the articles of incorporation, having the
foreign ownership in certain industries. It ensures that minimum number of incorporators, and paying the necessary fees. A De
ownership and control rest truly with Filipino citizens, even if Jure Corporation has the full legal backing of the law and enjoys all the
the corporate structure appears to comply nominally with the rights and privileges granted to corporations.
60-40 rule.
Interpretation by Regulatory Bodies What is a De Facto Corporation?
● The application of the Grandfather Rule depends largely on ● A De Facto Corporation is one that operates like a corporation but has not
the discretion of regulatory bodies like the SEC. If there is a complied fully with the legal requirements for its formation. In other words,
reasonable suspicion that the foreign equity exceeds the it exists in fact but not in law. While it may lack some legal formalities, it is
allowable limit, the SEC may invoke the Grandfather Rule to often treated as a corporation for most practical purposes, including
determine the actual ownership. entering into contracts and owning property.

Incorporation of the Grandfather Rule in the SEC Rules Key Differences

● The SEC has adopted the Grandfather Rule in cases where ● Legal Standing: A De Jure Corporation has complete legal standing,
the Control Test alone may lead to an incorrect determination while a De Facto Corporation’s legal standing may be questioned.
of nationality, particularly in the context of land ownership, ●
public utilities, and other areas with strict foreign ownership ● Rights and Privileges: A De Jure Corporation enjoys all the rights and
limits. privileges accorded by law. In contrast, a De Facto Corporation may have
limitations in asserting certain rights.
VII. Conclusion ●
● The Grandfather Rule serves as an important safeguard in determining ● Liability: Directors and officers of a De Facto Corporation may be
the nationality of corporations in the Philippines, particularly in areas personally liable for actions taken on behalf of the corporation, unlike in a
where the Constitution and laws restrict foreign ownership. While the De Jure Corporation where the corporate veil usually provides protection.
Control Test is the primary method for determining corporate nationality, ●
the Grandfather Rule acts as a supplementary rule, ensuring that ● Existence: A De Jure Corporation’s existence cannot be easily
ownership and control truly reflect the intent of the law. The rule prevents challenged, while a De Facto Corporation’s existence can be questioned if
foreign nationals from using layered corporate structures to circumvent it is found to lack any of the essential legal requirements for formation.
restrictions on foreign participation in key industries, thereby protecting the
interests of Filipino citizens and upholding the country's constitutional Legal Implications
mandates. ● Understanding whether a corporation is De Jure or De Facto is crucial in
● The Grandfather Rule's application requires careful scrutiny of corporate various legal scenarios, including litigation and contractual relationships.
structures and ownership, and regulatory bodies such as the SEC are For example, a De Facto Corporation may face challenges in enforcing
entrusted with the task of applying the rule when necessary to ensure contracts if its legal standing is questioned. Conversely, a De Jure
compliance with the law. Corporation generally enjoys full legal protection, including the benefits of
limited liability.
CLASSIFICATION OF CORPORATIONS Conclusion
● While both De Jure and De Facto Corporations may operate in similar
AS TO THE PURPOSE manners, their legal standings differ significantly. It is essential for
a) Public Corporation - is one that is formed or organized to business owners, stakeholders, and legal practitioners to recognize these
govern a portion of the state. differences to navigate the complexities of corporate law effectively.
● Examples are barangays, municipalities, cities, and
provinces.
b) Private Corporation - one that is formed for some private
purpose, benefit, aim, or end.
c) Quasi-Public Corporation - a private corporation that is given a
franchise to perform public duties but is organized for profits like buses
and airlines, light and power, telephone companies, etc.
AS TO THE LAW OF CREATION
a) Domestic Corporation - one that is organized under Philippine laws,
b) Foreign Corporation - one that is organized under any law other
than the Philippines.

AS TO MEMBERSHIP HOLDINGS
a) Share (Stock) Corporation - a private corporation organized for profit.
capital is divided into shares of stock and is authorized to distribute
corporate profits on the basis of shares held.
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________

Liability of Persons Limited in some cases Personal liability for all

Involved actions

Right to Sue or Be May be allowed (De Cannot sue or be sued as a

Sued Facto/Estoppel) corporation

CORPORATION BY ESTOPPEL – those which are so

defectively formed as not to be either de jure or de facto
corporations but which are considered as corporations in relation
only to those who cannot deny their corporate existence due
to their agreement, admission, or conduct.
SEC. 20. Corporation by Estoppel. – All persons who assume
to act as a corporation knowing it to be without authority to do so
j. Formation and Organization shall be liable as general partners for all debts, liabilities and
damages incurred or arising as a result thereof: Provided,
i. Promoters Contracts however, That when any such ostensible corporation is sued on
A promoter's contract is a contract made before a company is incorporated, any transaction entered by it as a corporation or on any tort
on behalf of the company by a person who is forming the company. This type committed by it as such, it shall not be allowed to use its lack of
of contract is called a pre-incorporation contract. corporate personality as a defense. Anyone who assumes an
obligation to an ostensible corporation as such cannot resist
These contracts are entered into in the name of the intended corporation by performance thereof on the ground that there was in fact no
the "promoters" or organizers of the corporation to establish the corporate corporation
business enterprise. Contracts of this nature are known as promoter's 1. Hall vs. Piccio / 86 Phil 603
contracts or pre-incorporation contracts which are governed by the Law 2. Vda. De Salavatierra vs. Garlitos / 103 Phil 757
on Agency. 3. Int’l Express Travel vs. CA / 343 SCRA 674

Applying the pertinent provisions of agency in the Civil Code of the iii. Ultra Vires Doctrine
Philippines, Article 1897 of the law explicitly provides that: The ultra vires doctrine limits a corporation to activities explicitly or
"An agent who acts as such is not personally liable to the party implicitly authorized in its purpose clause in the Articles of Incorporation and
with whom he contracts, unless he expressly binds himself or those granted by law.
exceeds the limits of his authority without giving such party ● Ultra vires, meaning "beyond powers," refers to acts by the
sufficient notice of his powers." corporation that exceed its lawful authority. The doctrine
prevents corporate assets from being used for purposes not
1. Section 3.10, Securities Regulation Code intended by shareholders or corporate founders, ensuring that
"Promoter" is a person who, acting alone or with others, takes corporations remain within the scope defined by law and their own
initiative in founding and organizing the business or enterprise of governing documents.
the issuer and receives consideration therefor.
Types of Ultra Vires Acts
2. Caram Jr. vs. CA / 151 SCRA 372 1. Acts Beyond the Corporate Charter or Articles of
Incorporation - These are acts explicitly outside the
ii. Defectively Formed and Non Existent Corporations corporation’s purpose or powers as stated in its
Under Philippine law, a "defectively formed corporation" refers governing documents. For example, if a corporation
to a company that attempted to incorporate but failed to comply established to engage in manufacturing begins to
with all necessary legal requirements, potentially creating a "de operate in the retail sector without amending its
facto corporation" with limited legal protection, while a "non- Articles of Incorporation, this activity may be ultra
existent corporation" is considered to have never been legally vires.
formed at all, meaning its actions have no corporate standing and 2. Acts Outside Statutory Law - These involve activities
individuals involved may be held personally liable; both concepts beyond those allowed under the Revised Corporation
are governed by the Revised Corporation Code of the Philippines Code or other governing statutes. An example would
(RA 11232). be declaring dividends from a corporation’s capital
when the RCC mandates that dividends must be
Feature Defectively Formed Non-Existent Corporation
declared from surplus profits.
Corporation 3. Acts Beyond the Board of Directors' Authority - In
some cases, actions taken by a corporation’s board
Legal Personality May exist (De Facto or Estoppel) Does not exist may also be ultra vires if they exceed the board’s
granted powers. The board is bound by the limits of
Recognition by Law May be recognized under certain Never recognized
conditions authority established in the corporation's governing
documents, by-laws, and applicable statutes.
Compliance with SEC Attempted but incomplete or No attempt or rejected by Exceptions and Evolution of the Ultra Vires Doctrine
defective SEC
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
While traditionally strict, the application of the ultra procedures in the registration of corporate, one person corporate and
vires doctrine has become less rigid over time. Modern partnership names.
jurisprudence tends to limit the doctrine’s application to
cases where corporate action directly harms This is in conformity with the release of Republic Act No. 11232, otherwise
shareholder or public interests. Courts often known as the “Revised Corporation Code of the Philippines”, which
distinguish between acts that are merely unauthorized provides a simpler way to register a corporation with the SEC and which now
versus those that are expressly prohibited. even permits the registration of one-person corporations or corporations with
a single stockholder.
Doctrine of Ratification - Acts beyond the
corporation's power may be ratified by shareholders, Some of the relevant items under the SEC Memorandum Circular include
provided they do not violate the RCC or contravene provisions which provide the words which should or may be added to the
public policy. corporate name when forming the same, such as:
Protection of Third Parties - Under the RCC, third
parties acting in good faith with the corporation are 1. If a corporation, the corporate name must contain either of the
generally protected from the voiding of ultra vires acts, following words: “Corporation,” “Incorporated,” “Corp.,” or “Inc.”;
as long as there was no knowledge of the corporate
limitations. This provision seeks to promote fair dealing 2. If a One Person Corporation, the corporate name must contain the word
and confidence in business transactions. “OPC” either below or at the end of its corporate name;
3. If a partnership, the partnership name must contain the word “Company”
or “Co.”;
1. Twin Towers Condominium Corp. v. CA / 398 SCRA
4. If a limited partnership, the partnership name must contain the word
203
“Limited” or “Ltd.”;
5. If a professional partnership, the partnership name may bear either of the
iv. Articles of Incorporation following words: “Company,” “Associates,” or “Partners,” or other similar
It refers to a legal document filed with the Securities and Exchange descriptions;
Commission (SEC) that outlines the essential details of a newly formed 6. If a foundation, the corporate name must use the word “Foundation”;
corporation, including its name, purpose, location of the principal office, 7. If a non-stock, non-profit corporation, including non-governmental
incorporators, capital stock, and the duration of its existence, essentially organizations and foundations engaged in microfinance activities, the
acting as the foundational document for establishing a company within the corporate name must use the word “Microfinance” or “Microfinancing”;
provided, that said corporations shall state in the purpose clause of their
Philippines.
Articles of Incorporation that they shall conduct microfinance operations
● The Articles of Incorporation must include the corporation's name,
pursuant to Republic Act No. 8425 or the Social Reform and Poverty
primary purpose(s), principal office address, names and Alleviation Act;
addresses of the incorporators, details about the capital stock 8. If an entity engaged in the financing or investment house business, the
(including par value and number of shares), and the intended corporate name can contain the following words: “Finance Company,”
duration of the corporation. “Financing Company,” “Finance and Leasing Company,” and “Leasing
● The provisions regarding Articles of Incorporation are primarily Company,” “Investment Company,” “Investment House”;
governed by the Revised Corporation Code of the Philippines 9. If a lending company, the corporate name can contain either “Lending
Company” or “Lending Investor;
(Republic Act No. 11232.
10. If an entity authorized to operate pawnshop, the corporate name can
make use of “Pawnshop”;
1. Lanuza vs. CA / 454 SCRA 54 11. If an entity engaged in the banking or trust business, the corporate name
can bear any of the following words: “Bank,” “Banking,” “Banker,” “Savings
2. Corporate Name and Loan Association”, “Trust Corporation,” “Trust Company” or words of
similar meaning;
1. Corporate Name as a Legal Identifier 12. If the United Nations and its attached agencies, the words which can be
● The corporate name is the legal identifier of the used are “United Nations”, or “UN”;
13. If entity with licensed warehouse, the corporate name can bear the word
corporation.
“Bonded”;
● It must reflect the nature of the corporation and must 14. If corporations authorized to act as special purpose vehicle, the corporate
comply with SEC rules on corporate naming. name can make use of “SPV-AMC”;
2. Relevant Provisions 15. The name of an international governmental organization, such as
● Section 14 of the Revised Corporation Code “International Criminal Police Organization” (INTERPOL), “International
outlines requirements for the Articles of Incorporation, Monetary Fund” (IMF), and “International Labour Organization” (ILO) may
including the corporate name. not be used as part of a corporate or partnership name unless when duly
● SEC Memorandum Circulars provide detailed authorized or allowed by the Commission”; and,
16. ASEAN (protected under Article 6ter of the Paris Convention for the
guidelines and naming conventions, prohibitions, and
Protection of Industrial Property, adopted in 1883 and revised in
procedures for name reservations. Stockholm in 1976).

a. SEC Guidelines on the Use of Corporate Names Moreover, as provided for in the Memorandum, the proposed name must be
distinguishable from other corporate or partnership names such that in
The Securities and Exchange Commission has issued on 21 June 2019 SEC cases where there is similarity in the name applied for, the applicant must
Memorandum Circular No. 13 Series of 2019 providing for the guidelines and add one or more distinctive words to differentiate it from the one already
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
existing. Punctuation marks, spaces, signs, symbols and other similar 4. Principal Place of Business
characters shall not be acceptable as distinguishing words if only to
differentiate a proposed name from a registered name. Section 13 of the Revised Corporation Code of the Philippines provides
that:
During application, treservation or notice of availability of name does not
constitute an approval of the use of such namehe or an application for a Section 13. Contents of the Articles of Incorporation. – All
change of name. There must be no erasures, changes, modifications or corporations shall file with the Commission articles of
alteration on a name reservation form. The approval of corporate and incorporation in any of the official languages, duly signed and
partnership names of new companies may be appealed or opposed, which acknowledged or authenticated, in such form and manner as may
shall be resolved by the Company Registration and Monitoring Department be allowed by the Commission, containing substantially the
(CRMD). The CMRD is also in-charge of resolving complaints against following matters, except as otherwise prescribed by this Code or
proposed new names of existing companies or partnerships. The decisions by special law:
of the CMRD may be appealed to the Commission En Banc through the
Office of the General Counsel. xxx

If a notice is received from the Commission for any of the following (c) The place where the principal office of the corporation is to be
cases: located, which must be within the Philippines;

● (1) that another corporation, partnership or person has acquired xxx”

prior right to the use of such name;
● (2) that the name has been declared not distinguishable from a Rules of the Securities and Exchange Commission require the
name already registered or reserved for the use of another location of the principal office be specifically identified. SEC
corporation; or Memorandum Circular No. 6, Series of 2016 provides that:
● (3) that it is contrary to law, public morals, good customs or public
policy, then the corporation or partnership, at the time of its Section 1. All corporations and partnerships applying for registration with the
registration, must submit an affidavit containing an unqualified SEC should state in their Articles of Incorporation or Articles of Partnership
undertaking to change its name. the following:
○ Said affidavit shall be signed by at least two (2)
incorporators or partners in the form prescribed by ● (i) specific address of their principal office, which shall include, if
the Commission, unless the affidavit is no longer feasible, the street number, street name, barangay, city or
required if the undertaking is already included as one municipality, and if applicable, the name of the building, number
of the provisions of the Articles of Incorporation or of the building, and the name and number of the room or unit; and
Partnership of the registrant. ● (ii) specific residence address of each incorporator, stockholder,
director, trustee or partner.
The Memorandum Circular shall amend all the issuances, orders, rules and
regulations of the Commission which may be inconsistent with it and shall Section 2. All foreign corporations applying for license to do business in the
take effect immediately after its issuance. country should indicate in their applications the following:

b. Lyceum of the Philippines vs. CA / 219 SCRA 610 ● (i) specific address of the principal office of the address of the
corporation in the country or state of incorporation;
3. Purpose Clause ● (ii) specific address of the resident agent;
● (iii) specific location where the corporation shall hold office and
● Express powers are those conferred by law and stated in a place in the Philippines where the corporation intends to operate;
company’s Articles of Incorporation (AoI), particularly in the and
“purpose clause.” ● (iv) specific addresses of present officers of the corporation.
● The purpose clause generally limits what a corporation can do.
Exceptions are implied and incidental powers which can be Section 3. All corporations are required to state in their GIS the specific
inferred, necessary, or consequential to the exercise of the principal office address and the specific residence address of each
express powers. stockholder, officer, director, or trustee.”

Ideally, a corporation should operate within the limits of its corporate Any filing that does not comply with the above-stated
purpose. Otherwise, acts that go beyond its powers (“ultra vires”), depending requirements is deemed non-compliant and is to be considered as
on the nature of act, are either void (if illegal), or voidable unless ratified by not filed.
the stockholders. In exercising its regulatory powers, the Securities and
Exchange Commission (SEC) may also impose sanctions such as fines SEC-OGC Opinion No. 14-23 dated August 26, 2014, in justifying the
against the corporation for ultra vires acts that affect the public. need for such specific requirements stated that:

a. Gala vs. Ellice Agro-Industrial Corp. / 418 SCRA 431 “Show cause letters and the like issued by the Commission have to be
addressed to the specific place where the principal office of the
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
corporation is to be found so that these can be suitably received by the or municipality within the prescribed period shall constitute a
parties. Furthermore, facilitation of the addressee’s receipt of any and all violation of Section 16 (now Section 15 of the RCCP) of the
communications, as well as the proper service of the court and other Corporation Code of the Philippines and shall subject the
processes, are sought. In addition, other government agencies, as well as corporation to imposition of penalty in accordance with the
the public, rly on the Commission to provide accurate and up-to-date existing scale of fines. (Section 8, par. d of SEC MC No. 06,
information regarding corporations registered with it, It is in this light that the Series of 2016)
Memorandum was issued by the Commission.”
5. Corporate Term
A corporation has no residence in the same sense in which this term is Under the old Code, corporations carried a maximum term of 50 years from
applied to a natural person. But for practical purposes, a corporation is in a the approval of the Securities and Exchange Commission (SEC). This
metaphysical sense a resident of the place where its principal office is happens when the SEC issues the Certificate of Incorporation. If the
located as stated in the articles of incorporation. corporation wanted to extend its term, it would have to file an application
for amendment of the Articles of Incorporation within 5 years prior to the
The Corporation Code precisely requires each corporation to specify in its original expiry date, unless the SEC grants a request for an earlier extension.
articles of incorporation the “place where the principal office of the This so-called renewal of corporate term was limitless. The corporation
corporation is to be located which must be within the Philippines”. The could extend its term for as long as it was existing and operational and for
purpose of this requirement is to fix the residence of a corporation in a periods not exceeding 50 years at any one time.
definite place, instead of allowing it to be ambulatory. (Davao Light & Power
Co., Inc. v. Court of Appeals, G.R. No. 111685, August 20, 2001) However, under the new Code, corporations now have perpetual term of
existence. This update was in response to the Government’s Ease of Doing
The fact that it maintains branch offices in some parts of the country does not Business initiative where corporations did not have to keep extending their
mean that it can be sued in any of these places. To allow an action to be corporate existence prior to its expiry.
instituted in any place where a corporate entity has its branch offices would
create confusion and work untold inconvenience to the corporation. Corporations existing prior to the new Code shall automatically have a
(Clavecilla Radio System v. Antillon, G.R. No. L-22238, Feburary 18, 1967) perpetual term, on the condition that they continue to exist at the time the
new Code had taken effect. Nevertheless, the stockholders still have the
Since the principal place of business of a corporation determines its option to retain their specific term provided they notify the SEC that they
residence or domicile, then the place indicated in petitioner’s articles of elect to retain the same. They can then extend the term, this time within 3
incorporation becomes controlling in determining the venue for this case. years prior to the original expiry date, again, unless the SEC allows for an
(Hyatt Elevators and Escalators Corp. v. Goldstar Elevators, Phils. Inc., G.R. earlier application for extension. An application for extension can include
No. 161026, October 24, 2005) adoption of a perpetual term subsequently.

Should a corporation with a complete and specific address amend its Revival of corporate term
Articles of Incorporation if it wishes to move to another location within The new Code also benefited corporations whose terms have
the same city or municipality? already expired. All the corporation needed to do was file an
In the event that a corporation whose principal office address as application for revival of corporate term with the SEC.
indicated in its Articles is already specific and complete, has Upon approval, their corporate term will, by default, be
moved or moves to another location within the same city or considered perpetual, unless they request for a specific term. This
municipality, the corporation is not required to filed and benefit, however, was not applicable to corporations whose
Amended Articles of Incorporation. However, it is encouraged dissolution was declared by the SEC or by the courts. An
to declare its new and current specific address in its GIS. application for revival was also not applicable to corporations
“Metro Manila” shall not be considered a city or municipality for whose assets have already been liquidated and distributed to its
this purpose. (Section 8, par. a of SEC MC No. 06, Series of shareholders.
2016) ● In Memorandum Circular No. 23, Series of 2019, the
SEC provided the guidelines for the revival of term of
Notwithstanding the above provision, a corporation is not expired corporations. Under these guidelines, the
following corporations are not allowed to file a Petition
precluded from filing an Amended Articles of Incorporation to
for Revival:
indicate its new location within the dame city or Municipality of its
former address. (Section 8, par. b of SEC MC No. 06, Series of 1. An expired corporation which has
2016) completed the liquidation of its assets;
2. A corporation whose Certificate of
What if the corporation wishes to move to another city or municipality? Incorporation has been revoked for reasons
In all other cases, the corporation must file an Amended Articles other than non-filing of reports
of Incorporation to indicate its new location in another city or
A corporation dissolved by virtue of Sections 6(c) and 6(d) of
municipality within fifteen (15) days from transfer to said location.
Presidential Decree No. 902-A, as amended by Presidential Decree No.
(Section 8, par. c of SEC MC No. 06, Series of 2016)
1799; or
Failure on the part of the corporation to file an Amended
1. An expired corporation which has already availed of re-
Articles of Incorporation for change of Address to another city
registration in accordance with SEC Memorandum Circular No.
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
13, Series of 2019, or the Amended Guidelines and Procedures Paid-up capital stock is the actual amount of money received by the
on the Use of Corporate and Partnership Names, or other corporation from the initial subscription of shares. This reflects the
memorandum circulars issued by the Commission pertaining to corporation’s real cash or asset inflow and represents the shareholders’
re-registration, except: actual contribution to the company’s finances.
2. The re-registered corporation has given its consent to the
Petitioner to use its corporate name, and has undertaken to Paid-Up Capital in Practice: It must be in the form of cash or tangible
undergo voluntary dissolution immediately after the issuance of assets. Other forms of payment, such as labor or future services, are not
the Petitioner’s Certificate of Revival; or accepted for incorporation under Philippine law.
3. The re-registered corporation has given its consent to the
Petitioner to use its corporate name, and has undertaken to Foreign Equity Restrictions: For corporations with foreign ownership, paid-
change its corporate name immediately after the issuance of the up capital requirements may vary according to industry. For example, certain
Petitioner’s Certificate of Revival. industries require a minimum paid-up capital of USD 200,000 for foreign
entities, subject to adjustments based on the nature of the business.
6. Capital Structure
The capitalization of corporations under Philippine law is a foundational 7. Grounds for Disapproval
aspect of corporate formation and structure, directly influencing the Sec. 17. Grounds when articles of incorporation or amendment may be
company's financial capacity, regulatory obligations, and shareholder
rejected or disapproved. - The Securities and Exchange Commission may
relationships. In the Philippines, the framework governing corporate
capitalization is primarily outlined in the Revised Corporation Code of the reject the articles of incorporation or disapprove any amendment thereto if
Philippines (Republic Act No. 11232) and related issuances from the the same is not in compliance with the requirements of this Code: Provided,
Securities and Exchange Commission (SEC). Below is a detailed and That the Commission shall give the incorporators a reasonable time within
meticulous breakdown of all aspects related to corporate capitalization under which to correct or modify the objectionable portions of the articles or
Philippine mercantile and taxation laws, particularly focusing on the amendment.
requirements, regulatory frameworks, and practical considerations.
The following are grounds for such rejection or disapproval:
Authorized capital stock is the maximum amount of capital that a corporation
is legally allowed to raise by issuing shares. This amount is specified in the
1. That the articles of incorporation or any amendment thereto is not
Articles of Incorporation and may be adjusted later with SEC approval. The
substantially in accordance with the form prescribed herein;
authorized capital stock is divided into shares with specified par values, or, if
2. That the purpose or purposes of the corporation are patently
the shares are no-par, they are issued at a value decided by the board within
unconstitutional, illegal, immoral, or contrary to government rules
legal limits.
and regulations;
3. That the Treasurer's Affidavit concerning the amount of capital
Minimum Authorized Capital: Under the Revised Corporation Code, a
stock subscribed and/or paid if false;
corporation is no longer mandated to have a minimum authorized capital
4. That the percentage of ownership of the capital stock to be owned
stock unless otherwise required by special laws (e.g., for banks and other
by citizens of the Philippines has not been complied with as
financial institutions).
required by existing laws or the Constitution.
● No articles of incorporation or amendment to articles of
Non-Stock Corporations: Non-stock corporations, by their nature, do not
incorporation of banks, banking and quasi-banking
have capital stock and therefore do not require authorized capital stock.
institutions, building and loan associations, trust
companies and other financial intermediaries,
Important Note: The authorized capital stock represents the
insurance companies, public utilities, educational
ceiling on the amount of capital a corporation can raise without
institutions, and other corporations governed by
having to amend its Articles of Incorporation.
special laws shall be accepted or approved by the
Commission unless accompanied by a favorable
Subscribed capital stock refers to the portion of the authorized capital
recommendation of the appropriate government
stock that has been subscribed to by investors, meaning that shareholders
agency to the effect that such articles or amendment is
have committed to buy shares even if they have not yet paid the full amount.
in accordance with law.
This subscription provides an obligation to the corporation and is a metric of
shareholder interest in the company.
8. Amendments to the Articles of Incorporation

● Subscription Requirements: For incorporation, at least 25% of

According to Philippine laws, amendments to the Articles of Incorporation
the authorized capital stock must be subscribed, with a minimum
can be made by a corporation through a process that requires a board
of 25% of the subscribed capital paid at the time of incorporation.
resolution approving the changes, followed by stockholder approval, and
● Minimum Paid-Up Capital: While the minimum paid-up capital
finally filing the amended articles with the Securities and Exchange
required to form a corporation was previously set by law, the
Commission (SEC) - essentially allowing modifications to key details like the
Revised Corporation Code has removed this restriction for most
company's purpose, capital structure, or directors, as outlined in the original
corporations. Paid-up capital is only required if specified by other
Articles of Incorporation; this process is governed by the Revised
regulatory bodies or special laws, such as for foreign-owned
Corporation Code of the Philippines, specifically regarding matters that
corporations or companies in specific industries.
require shareholder votes like increasing or decreasing capital stock,
mergers, or major changes to the corporation's operations.
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
Section 15. Amendment of Articles of Incorporation. - Unless otherwise By-laws serve as the internal rulebook of a corporation in the
prescribed by this Code or by special law, and for legitimate purposes, any Philippines. They are a set of guidelines created by the corporation’s board
provision or matter stated in the articles of incorporation may be amended by of directors after the corporation has been registered. Understanding the role
a majority vote of the board of directors or trustees and the vote or written and contents of by-laws is crucial for every corporation to ensure lawful and
assent of the stockholders representing at least two-thirds (2/3) of the smooth operations.
outstanding capital stock, without prejudice to the appraisal right of
dissenting stockholders in accordance with the provisions of this Code. The Valid by-laws for a corporation in the Philippines must meet certain
articles of incorporation of a nonstock corporation may be amended by the requirements, including compliance with the Corporation Code, SEC
vote or written assent of majority of the trustees and at least two-thirds (2/3) regulations, and other laws. They must also be consistent with the articles of
of the members. incorporation.

The original and amended articles together shall contain all provisions
required by law to be set out in the articles of incorporation. Amendments to
the articles shall be indicated by underscoring the change or changes made, Requirements of Valid By-laws
and a copy thereof duly certified under oath by the corporate secretary and a
majority of the directors or trustees, with a statement that the amendments 1. Compliance: By-laws must comply with the Corporation Code,
have been duly approved by the required vote of the stockholders or SEC regulations, and other laws.
members, shall be submitted to the Commission. 2. Consistency: By-laws must not contradict the articles of
incorporation.
The amendments shall take effect upon their approval by the Commission or 3. General application: By-laws must be general in application and
from the date of filing with the said Commission if not acted upon within six not directed against particular individuals.
(6) months from the date of filing for a cause not attributable to the 4. Public policy: By-laws must not be inconsistent with public policy.
corporation. 5. Contracts: By-laws must not impair obligations and contracts.
6. Trade: By-laws must not be in restraint of trade.
v. By-laws
4. Procedure for Adoption of By-laws
By-laws serve as the internal rulebook of a corporation in the Philippines.
They are a set of guidelines created by the corporation's board of directors Sec. 46. Adoption of by-laws. - Every corporation formed under this Code
after the corporation has been registered. Understanding the role and must, within one (1) month after receipt of official notice of the issuance of its
contents of by-laws is crucial for every corporation to ensure lawful and certificate of incorporation by the Securities and Exchange Commission,
smooth operations. adopt a code of by-laws for its government not inconsistent with this Code.
For the adoption of by-laws by the corporation the affirmative vote of the
By-laws define the corporation’s operational structure, including the duties stockholders representing at least a majority of the outstanding capital stock,
and responsibilities of officers, the process for handling corporate shares, or of at least a majority of the members in case of non-stock corporations,
and protocols for meetings and corporate decision-making. They provide the shall be necessary. The by-laws shall be signed by the stockholders or
framework within which the directors, officers, and shareholders must members voting for them and shall be kept in the principal office of the
operate, offering clarity and stability to corporate activities. corporation, subject to the inspection of the stockholders or members during
office hours. A copy thereof, duly certified to by a majority of the directors or
Key Elements of Corporate By-Laws trustees countersigned by the secretary of the corporation, shall be filed with
the Securities and Exchange Commission which shall be attached to the
● Shareholder Meetings: Procedures for calling meetings, voting original articles of incorporation.
rights, and proxy rules.
● Board of Directors: How they are elected, term lengths, meeting Notwithstanding the provisions of the preceding paragraph, by-laws may be
schedules, and quorum requirements. adopted and filed prior to incorporation; in such case, such by-laws shall be
● Corporate Officers: Roles of the president, secretary, treasurer, approved and signed by all the incorporators and submitted to the Securities
and any other officers, including their powers and term limits. and Exchange Commission, together with the articles of incorporation.
● Stock Issuance and Transfers: Rules governing the issuance and
transfer of stock, including restrictions if any. In all cases, by-laws shall be effective only upon the issuance by the
● Record Keeping: Guidelines for recording minutes of meetings Securities and Exchange Commission of a certification that the by-laws are
and maintaining corporate records. not inconsistent with this Code.
● Fiscal Year: Defining the fiscal year for the corporation.
● Amendments: Procedures for amending the by-laws. The Securities and Exchange Commission shall not accept for filing the by-
laws or any amendment thereto of any bank, banking institution, building and
1. Gokongwei Jr. v. SEC / 86 SCRA 336 loan association, trust company, insurance company, public utility,
educational institution or other special corporations governed by special
2. San Miguel Corp. vs. Mandaue Packing Products Plant laws, unless accompanied by a certificate of the appropriate government
Union / 467 SCRA 107 agency to the effect that such by-laws or amendments are in accordance
with law. (20a)
3. Requisites of Valid By-laws
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
a. Loyola Grand Villas Homeowners vs. CA / 276 SCRA 681 ● Approval must be by at least two-thirds (2/3) of the members
with voting rights.
5. Contents of By-laws
3. SEC Filing Requirements
The corporation must submit the following to the SEC:
Sec. 47. Contents of by-laws. - Subject to the provisions of the ● Notarized Certificate of Amendment of By-laws
Constitution, this Code, other special laws, and the articles of ● Board Resolution approving the amendments
incorporation, a private corporation may provide in its by-laws for: ● Secretary’s Certificate certifying the stockholders’ approval
● Updated By-laws reflecting the amendments
1. The time, place and manner of calling and conducting regular ● Other documentary requirements as required by SEC
or special meetings of the directors or trustees;
2. The time and manner of calling and conducting regular or 4. Effectivity of Amendments
special meetings of the stockholders or members; ● The amendments take effect only upon approval by the SEC
3. The required quorum in meetings of stockholders or members unless a later date is specified.
and the manner of voting therein;
4. The form for proxies of stockholders and members and the 5. When Can Amendments Be Made?
manner of voting them; ● At any time after incorporation.
5. The qualifications, duties and compensation of directors or ● As needed to align with new laws or business needs.
trustees, officers and employees; a. Salafranca vs. Philamlife (Pamplona) Village Homeowners /
6. The time for holding the annual election of directors of trustees 300 SCRA 469
and the mode or manner of giving notice thereof;
7. The manner of election or appointment and the term of office of vi. Corporate Powers
all officers other than directors or trustees;
8. The penalties for violation of the by-laws; Under Philippine law, the powers of corporations, particularly their incidental
9. In the case of stock corporations, the manner of issuing stock powers and the concept of ultra vires, are governed by the Revised
certificates; and
Corporation Code (RCC) of the Philippines, Republic Act No. 11232,
10. Such other matters as may be necessary for the proper or
convenient transaction of its corporate business and affairs. (21a) which became effective in 2019. This framework outlines the express powers
corporations hold, incidental powers that are reasonably necessary to carry
a. Grace Christian High School vs. CA / 281 SCRA 133 out corporate purposes, and limitations established by the ultra vires
doctrine. Here is an exhaustive examination of the topic.
6. Amendments and Revisions of the By-laws
In the Philippines, the amendments and revisions of the by-laws of a 1. Powers of Corporations Under the Revised Corporation Code
corporation are governed by the Revised Corporation Code of the
Philippines (Republic Act No. 11232). ● A corporation is empowered to exercise any act which is in direct
and immediate furtherance of its business.
Below are the key rules and procedures:
● No corporation shall possess or exercise corporate powers other
1. Authority to Amend or Revise the By-laws than those conferred by the Revised Corporation Code of the
● The Board of Directors (BOD) and the Stockholders (or Members Philippines or its Articles of Incorporation.
in a non-stock corporation) have the power to amend or revise the ● A corporation can perform acts as long as it is not prohibited by
by-laws. general law and not contrary to morals and public policy.
● The amendment must not be inconsistent with the Revised
Corporation Code or the Articles of Incorporation.
The powers of corporations in the Philippines are defined both by statute
2. Procedure for Amending the By-laws and by their Articles of Incorporation. Under Section 35 of the RCC,
corporations have several specific powers, including the authority to sue and
be sued, to have a perpetual existence unless otherwise specified, to issue
For Stock Corporations:
1. Board Approval or reacquire stocks, and to exercise all other powers necessary or incidental
○ The amendment or revision must be approved by a to their corporate purpose. These powers fall into express and implied (or
majority vote of the Board of Directors. incidental) categories, with their exercise bounded by the ultra vires doctrine.

2. Stockholders’ Approval Section 35. Corporate Powers and Capacity. - Every corporation
○ The amendment must be ratified by at least two-
incorporated under this Code has the power and capacity:
thirds (2/3) of the outstanding capital stock during a
(a) To sue and be sued in its corporate name;
stockholders’ meeting.
(b) To have perpetual existence unless the certificate of incorporation
provides otherwise;
3. Submission to the Securities and Exchange Commission
(c) To adopt and use a corporate seal;
(SEC)
(d) To amend its articles of incorporation in accordance with the provisions
○ The approved amendments must be filed with the SEC
for approval. of this Code;
○ The amendments will take effect only upon SEC (e) To adopt bylaws, not contrary to law, morals or public policy, and to
approval. amend or repeal the same in accordance with this Code;
(f) In case of stock corporations, to issue or sell stocks to subscribers and
For Non-Stock Corporations: to sell treasury stocks in accordance with the provisions of this Code; and
● The procedure is the same, except that the approval of the to admit members to the corporation if it be a nonstock corporation;
members (instead of stockholders) is required.
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
(g) To purchase, receive, take or grant, hold, convey, sell, lease, pledge, Requisites:
mortgage, and otherwise deal with such real and personal property,
including securities and bonds of other corporations, as the transaction of 1. Resolution by a majority of the BOD/T;
the lawful business of the corporation may reasonably and necessarily 2. Authorization from the stockholders representing at least 2/3 of
require, subject to the limitations prescribed by law and the constitution; the outstanding capital stock or 2/3 of the members;
(h) To enter into a partnership, joint venture, merger, consolidation, or any 3. The ratification of the stockholders or member must be made at a
other commercial agreement with natural and juridical persons; meeting duly called for that purpose;
(i) To make reasonable donations, including those for the public welfare or 4. Prior written notice of the proposed action and of the time and
for hospital, charitable, cultural, scientific, civic, or similar purposes: place of meeting must be made addressed to all stockholders of
Provided, That no foreign corporation shall give donations in aid of any record;
political party or candidate or for purpose s of partisan political activity; 5. The sale of the assets shall be subject to the provisions of
(j) To establish pension, retirement, and other plans for the benefit of its existing laws on illegal combinations and monopolies; and
directors, trustees, officers, and employees; and 6. Any dissenting stockholder shall have the option to exercise his
(k) To exercise such other powers as may be essential or necessary to appraisal
carry out its purpose or purposes as stated in the articles of incorporation.
When not needed:
Implied or Incidental Powers 1. the same is necessary in the usual and regular course of
business of the corporation or
Implied powers are those not explicitly stated but which are reasonably
2. if the proceeds of the sale or other disposition of such property
necessary to carry out the corporation’s express powers and purpose. The
and assets shall be appropriated for the conduct of its remaining
law recognizes that corporations must have flexibility in operations to adapt
business
to real-world requirements and opportunities, as long as these incidental
actions are in line with their principal business.
3. Incidental Powers v. Implied or Necessary Powers

For instance, if a corporation's express purpose involves manufacturing

Feature Incidental Powers Implied or Necessary Powers
goods, it has the implied power to engage in advertising, enter into supply
contracts, or establish warehouses, as these are incidental to manufacturing
and selling products. Source Expressly granted by law (Sec. 35, Derived from the need to carry out express
RCC) powers

Explicitly Stated? Yes, in the Corporation Code No, but necessary for corporate function

General Powers
Examples Suing, issuing shares, making by- Hiring employees, opening bank accounts
1.To sue and be sued in its corporate name laws
2.Succession
3.Adopt or use corporate seal - Scope Clearly defined Flexible, depending on corporate needs
4.Amend the Articles of Incorporation
5.Adopt, amend, or repeal By-Laws
6.Power to issue or sell stocks and to admit members
7.Power to acquire or alienate real or personal property
8.Enter into merger or consolidation 4. Ultra Vires Acts: The ultra vires doctrine limits a corporation to activities
9.To make reasonable donations for public welfare, hospital, charitable, explicitly or implicitly authorized in its purpose clause in the Articles of
cultural, scientific, civil or similar purposes. Incorporation and those granted by law. Ultra vires, meaning "beyond
10.To establish pension, retirement and other plans for the benefit of powers," refers to acts by the corporation that exceed its lawful authority.
directors, trustees, officers and employees The doctrine prevents corporate assets from being used for purposes not
11.Other powers essential or necessary to carry out its purposes. intended by shareholders or corporate founders, ensuring that corporations
remain within the scope defined by law and their own governing documents.
Specific Powers
1.Power to extend or shorten corporate term a. Montelibano v. Bacolod-Murcia Milling Co. Inc. / 5 SCRA
2.Increase or decrease corporate stock
b. Carlos v. Mindoro Sugar Co. / 57 Phil 343
3.Incur or create bonded indebtedness
4.Deny pre-emptive right
5.Sell, dispose, lease, encumber all or substantially all of corporate assets 5. Power to Extend or Shorten Corporate Term
6.Purchase or acquire own shares
7.Invest in another corporation, business other than the primary purpose Requisites:
8.Declare dividends
9.Enter into management contract 1. Approval by the majority vote of the BOD/T;
10.Amend the articles of incorporation 2. Ratification by the stockholders representing at least 2/3 of the
outstanding capital stock (including non-voting shares) or 2/3 of the
1. Power to sue and be sued: A corporation has the legal capacity to bring members in case of non-stock corporations;
or defend itself in any suit, necessary for protecting its rights or enforcing 3. The ratification must be made at a meeting duly called for that purpose;
contracts. 4. Written notice of the proposed action and the time and place of the
meeting shall be sent to the stockholders or members
5. In case of extension of corporate term, a dissenting stockholder may
a. BS Savings Bank vs. Sia / GR No. 131214 exercise the right of appraisal under the conditions provided in this Code.
Any dissenting stockholder may exercise his appraisal right;
2. Power to sell, lease, dispose and encumber assets: 6. Submission of the amended articles with the SEC; and
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
7. Approval thereof by the SEC (as required under Sec. 37 for extension, ● c. Pena v. CA / 193 SCRA 717
and Sec. 120 for shortening the term with the effect of dissolution ● d. Caltex (Phils) Inc. v. PNOC Shipping and Transport Corp. /498 SCRA 400

6. Power to Increase/Decrease Capital Stock 9. Power to purchase own shares

A stock corporation shall have the power to purchase or acquire its own
1. Approval by the majority vote of the BOD/T; shares for a legitimate corporate purpose or purposes, including but not
2. Ratification by the stockholders representing at least 2/3 of the limited to the following cases:
outstanding capital stock (including non-voting shares) or 2/3 of the 1.To eliminate fractional shares arising out of stock dividends;
members in case of non-stock corporations at a meeting duly called for 2.To collect or compromise an indebtedness to the corporation, arising out of unpaid
that purpose; subscription, in a delinquency sale, and to purchase delinquent shares sold during
3. Prior written notice of the proposal to extend or shorten the corporate term said sale; and
must be made stating the time and place of meeting addressed to each 3.To pay dissenting or withdrawing stockholders entitled to payment for their shares
stockholder or member at his place of residence, either by mail or under the provisions of this Code.
personal service;
4. A certificate must be signed by a majority of the directors of the Requisite:The corporation has unrestricted retained earnings in its books to
corporation, countersigned by the chairperson and the secretary of the cover the shares to be purchased or acquired:
stockholders meeting, setting forth the matters contained in subsection 1
Exception:
to 7 of Sec. 37;
1.Redemption of redeemable shares;
5. In case of increase in capital stock, 25% of such increased capital must be 2.Exercise of stockholders right to compel a close corporation to purchase
subscribed and that at least 25% of the amount subscribed must be paid his shares for any reason when the corporation has sufficient assets in its
either in cash or property; book to cover its debts and liabilities exclusive of capital stock;
6. In case of decrease of capital stock, the same must not prejudice the right 3.In case of deadlocks in Close Corporations.
of the creditors;
7. Filing of the certificate of increase and amended AOI with the SEC; and 8. NOTE: Once purchased, the shares are considered as treasury shares and
Approval thereof by the SEC. while they remain so, they have no voting rights and dividend rights

a. Central Textile Mills Inc. v. NWPC / 260 SCRA 368 10. Power to invest corporate funds in another corporation
Power to Invest in another corporation, business other than the primary
purpose
7. Power to Incur, Create or Increase Bonded Indebtedness
Requisites:
1.Approval by the majority vote of the BOD/T; 1.Resolution by a majority of the BOD/T;
2.Ratification by the stockholders representing at least 2/3 of the 2.Ratification by the stockholders representing 2/3 of the outstanding
outstanding capital stock (including non-voting shares) or 2/3 of the capital stock (or 2/3 of members);
members in case of non-stock corporations at a meeting duly called for 3.The ratification must be made at a meeting duly called for that purpose;
that purpose; 4.Prior written notice of the proposed investment and the time and place
of the meeting shall be made, addressed to each stockholder or member;
3.Prior written notice of the proposal to extend or shorten the corporate
and
term must be made stating the time and place of meeting addressed to 5.Any dissenting stockholder shall have the option to exercise his
each stockholder or member at his place of residence, either by mail or appraisal right.
personal service;
4.A certificate must be signed by a majority of the directors of the 11. Power to declare dividends
corporation, countersigned by the chairperson and the secretary of the
stockholders meeting, setting forth the matters contained in subsection 1
Dividends- the amount of cash, property or the corporation's own shares
to 7 of Sec. 37;
5.In case of increase in capital stock, 25% of such increased capital must
given to outstanding shareholders in proportion to their percentage share in
be subscribed and that at least 25% of the amount subscribed must be the ownership participation in the corporation; represents the distribution of
paid either in cash or property; earnings to the stockholders; sourced from retained earnings
6.In case of decrease of capital stock, the same must not prejudice the
right of the creditors; Who has the power to declare dividends?
7.Filing of the certificate of increase and amended AOI with the SEC; and
8. Approval thereof by the SEC If cash or property dividend - BOD; or If stock dividend - BOD + approval of
the shareholders owning not less than 2/3 of the outstanding capital stock
8. Power to Sell, Dispose, Lease, or Encumber Assets
1.Resolution by a majority of the BOD/T;
2.Authorization from the stockholders representing at least 2/3 of the Who are entitled to dividends? Stockholders of record at the time of the
outstanding capital stock or 2/3 of the members; declaration of the dividends by the BOD. The stockholders' right to the
3.The ratification of the stockholders or member must be made at a dividends accrue as soon as the declaration is made by the BOD and the
meeting duly called for that purpose; stockholders can demand payment thereof.
4.Prior written notice of the proposed action and of the time and place of
meeting must be made addressed to all stockholders of record; Are unpaid subscribers entitled to dividends? YES.
5.The sale of the assets shall be subject to the provisions of existing laws
on illegal combinations and monopolies; and
General Rule: Stock corporations are prohibited from retaining surplus profits
6.Any dissenting stockholder shall have the option to exercise his
appraisal in excess of 100% of the paid in capital.

● a. Lopez Realty v. Fontecha / 247 SCRA 183 Exceptions:

● b. Bulk Sales Law & Philippine Competition Act
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
1.Justified by a definite corporate expansion/projects/programs approved by ● (i) To make reasonable donations, including those for the
the Board; public welfare or for hospital, charitable, cultural, scientific,
civic, or similar purposes: Provided, That no foreign
2.The corporation is prohibited under a loan agreement to declare dividends corporation shall give donations in aid of any political party or
without the creditor's consent and such consent has not yet been secured; candidate or for purposes of partisan political activity;
3.It can be clearly shown that such retention is necessary under special ● (j) To establish pension, retirement, and other plans for the
benefit of its directors, trustees, officers, and employees; and
circumstances obtaining in the corporation. ● (k) To exercise such other powers as may be essential or
necessary to carry out its purpose or purposes as stated in
the articles of incorporation.
Can dividends be sourced from the corporation's outstanding capital?
Or from paid-up capital? The Theory of General Capacity provides that a corporation can perform
NO. The Trust Fund Doctrine will be violated if dividends are declared out of such acts as long as it is not prohibited by general law and not contrary to
capital, except only in two instances: morals and public policy. A corporation is empowered to exercise any act
1. -Liquidating dividend; or which is in direct and immediate furtherance of its business, fairly incidental
2. -Dividends from investments in wasting assets corporations such to the express powers, and reasonably necessary to their exercise, even if
as mines, oil, well, etc. said power is not expressly granted in the Corporation Code.
● a. Nielson & Co. Inc. v. Lepanto Consolidated Mining Co. /26
SCRA 540

What are the kinds of corporate powers? What are specific powers of a corporation?
The Corporate powers are of the following kinds: first, express powers, these The specific powers of a corporation, also called Theory of Specific Capacity,
powers are those expressly authorized by the Corporation Code, applicable are the following: power to extend or shorten corporate term; power to
to special laws, administrative regulations, and the articles of incorporation. increase or decrease corporate stock; power to incur, create, or increase
Second, implied powers, these powers are those essential and necessary to bonded indebtedness; power to deny pre-emptive right; power to sell,
carry out its purpose/s as stated in the articles of incorporation. And third, dispose, lease, encumber all or substantially all of corporate assets; power to
incidental powers, those are powers that are deemed conferred on the purchase or acquire shares; power to invest corporate funds in another
corporation because they are incidental to its existence. corporation or business for other purpose other than primary purpose; power
The Corporation Code of the Philippines vests in the board of directors the to declare dividends out of unrestricted retained earnings; power to enter into
exercise of the corporate powers of a stock corporation, save in those management contract with another corporation whereby one corporation
instances where the Code requires stockholders’ approval for certain specific undertakes to manage all or substantially all of the business of the other
acts. corporation for a period not longer than five (5) years for any one term, and
power to amend Articles of Incorporation.
Jurisprudence says:
There are three levels of control in the corporate hierarchy. First is the board Under the Theory of Specific Capacity, no corporation shall possess or
of directors who are responsible for corporate policies and the general exercise corporate powers other than those conferred by this Code or by its
management of the business affairs of the corporation. Second are the articles of incorporation except as necessary or incidental to the exercise of
officers of the corporation who execute the policies laid down by the board, the powers conferred.
but in practice often have a wide latitude in determining the course of
business operations. And third, the stockholders who have residual power What are the implied powers of a corporation?
over fundamental corporate changes, like amendments of the articles of Jurisprudence says:
A corporation is not restricted to the exercise of powers expressly conferred
incorporation. (City Bank NA v. Chua, G.R. No. 102300, March 17, 1993)
upon it by its charter but has the power to do what is reasonably necessary
or proper to promote the interest or welfare of the corporation. (NAPOCOR v.
What are the general powers of the corporation? The law says: Vera, G.R. No. 83558, February 27, 1989)

SEC. 35. Corporate Powers and Capacity. – Every corporation

incorporated under this Code has the power and capacity:
(a) To sue and be sued in its corporate name;
(b) To have perpetual existence unless the certificate of incorporation
provides otherwise;
(c) To adopt and use a corporate seal;
(d) To amend its articles of incorporation in accordance with the provisions
of this Code;
(e) To adopt bylaws, not contrary to law, morals or public policy, and to
amend or repeal the same in accordance with this Code;
(f) In case of stock corporations, to issue or sell stocks to subscribers and
to sell treasury stocks in accordance with the provisions of this Code; and
to admit members to the corporation if it be a nonstock corporation;
(g) To purchase, receive, take or grant, hold, convey, sell, lease, pledge,
mortgage, and otherwise deal with such real and personal property,
including securities and bonds of other corporations, as the transaction of
the lawful business of the corporation may reasonably and necessarily
require, subject to the limitations prescribed by law and the Constitution;
● (h) To enter into a partnership, joint venture, merger,
consolidation, or any other commercial agreement with
natural and juridical persons;
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________

i. Public, Private and Quasi Public Corporations

AS TO THE PURPOSE
a) Public Corporation - is one that is formed or organized to govern a portion of the state.
● Examples are barangays, municipalities, cities, and provinces.
● Local Government Code governs the public corporations.
b) Private Corporation - one that is formed for some private purpose, benefit, aim, or end.
● Revised Corporation Code governs the Private Coporation.
1. Passage of general law as per the Constitution.
2. Special laws

Private Corporation can be organized through the ff:

1. General law (Revised Corporation Code)

2. Under Corporation Code, GOCC
a. To relieve the purpose of the government
b. GOCC under general laws but is wholly or partially owned by government
3. Special laws
a. GOCC with special charters

c) Quasi-Public Corporation - a private corporation that is given a franchise to perform public duties but is organized for profits like buses and airlines, light and
power, telephone companies, etc.

Stock Corporation
● There are shares of stock
● There is a distribution of dividends
● All other or residual are non-stock corporation
● PURPOSE: it is for profit, income generation, to maximize profit.
● Elimissionery?

Non-stock corporation
● It can engage in for profit activities to be used for the purpose for which they are established

National Coal Co. vs. CIR / 46 Phil 583

Facts: "The plaintiff corporation was created on the 10th day of March, 1917, by Act No. 2705, for the purpose of developing the coal industry in the Philippine Island, in harmony with the
general plan of the Government to encourage the development of the natural resources of the country, and to provided facilities therefor. The company was granted the general powers of
a corporation ""and such other powers as may be necessary to enable it to prosecute the business of developing coal deposits in the Philippine Island and of mining, extracting,
transporting and selling the coal contained in said deposits."" (Sec. 2, Act No. 2705.) By the same law (Act No. 2705) the Government of the Philippine Islands is made the majority
stockholder, evidently in order to insure proper government supervision and control, and thus to place the Government in a position to render all possible encouragement, assistance and
help in the prosecution and furtherance of the company's business.

It claimed exemption from taxes under the provision of sections 14 and 15 of Act No. 2719, and prayed for a judgment ordering the defendant to refund to the plaintiff said sum of
P12,044.68, with legal interest from the date of the presentation of the complaint, and costs against the defendant."

Whether or not plaintiff is a private corporation?

Yes.. The mere fact that the Government happens to the majority stockholder does not make it a public corporation. Act No. 2705, as amended by Act No. 2822, makes it subject to all of
the provisions of the Corporation Law, in so far as they are not inconsistent with said Act (No. 2705). No provisions of Act No. 2705 are found to be inconsistent with the provisions of the
Corporation Law. As a private corporation, it has no greater rights, powers or privileges than any other corporation which might be organized for the same purpose under the Corporation
Law, and certainly it was not the intention of the Legislature to give it a preference or right or privilege over other legitimate private corporations in the mining of coal. While it is true that
said proclamation No. 39 withdrew ""from settlement, entry, sale, or other disposition of coal-bearing public lands within the Province of Zamboanga . . . and the Island of Polillo,"" it made
no provision for the occupation and operation by the plaintiff, to the exclusion of other persons or corporations who might, under proper permission, enter upon the operate coal mines.

● The test is not who owns: Mere ownership of government does not equate to being a public corporation.
● If a corporation is governed under general law, it is a private corporation
● Law on NCC: That it will be governed by corporation code
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________

MIAA v. CA / 495 SCRA 591

The Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport (NAIA) Complex in Parañaque City under Executive Order No. 903, also known as the
Revised Charter of the Manila International Airport Authority. The MIAA Charter transferred approximately 600 hectares of land, including the runways and buildings, to MIAA. The City of
Parañaque issued notices of levy and warrants of levy on the Airport Lands and Buildings due to MIAA's real estate tax delinquency. MIAA filed a petition for prohibition and injunction
with the Court of Appeals to restrain the City of Parañaque from imposing real estate tax on, levying against, and auctioning for public sale the Airport Lands and Buildings.

Whether MIAA, as an instrumentality of the National Government, is exempt from local taxation, and whether the Airport Lands and Buildings of MIAA are properties of
public dominion and thus owned by the Republic of the Philippines.

MIAA is not a government-owned or controlled corporation but an instrumentality of the National Government, and thus exempt from local taxation. The Court also ruled that the real
properties of MIAA are owned by the Republic of the Philippines and thus exempt from real estate tax.

The Airport Lands and Buildings of MIAA are exempt from real estate tax imposed by local governments.

The Court's ruling is based on the following grounds: First, MIAA is not a government-owned or controlled corporation but an instrumentality of the National Government. The Court
explained that a government-owned or controlled corporation must be organized as a stock or non-stock corporation, which MIAA is not. MIAA has no capital stock divided into shares
and no stockholders or voting shares. Instead, MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental functions. Second, the Airport
Lands and Buildings of MIAA are properties of public dominion and thus owned by the State or the Republic of the Philippines. The Court cited Article 420 of the Civil Code, which defines
property of public dominion as those intended for public use, such as roads, canals, rivers, torrents, ports, and bridges constructed by the State.

NOTES:
● Differentiate Corporation: Public v. Private
● Police powers of the state (Revisit the definition of Police Power)
○ Government instrumentality
● GOCC only subject to SEC regulation when states in their charter.

ii. Domestic and Foreign Corporations

AS TO THE LAW OF CREATION

a) Domestic Corporation - one that is organized under Philippine laws.

● Passes the test of incorporation
● Nationality is organized under the laws of the PH.
b) Foreign Corporation - one that is organized under any law other than the Philippines.
● Organized, formed, or established under laws other than PH laws.
● Reciprocity Rule: Recognized in the RCC
● State will recognize the existence

RCC: Reciprocity rule is applied for fairness

● Corporations: creature of a state, needs the acknowledgement of existence in the Philippines
● Equality
● To be under the jurisdiction of the SEC
● Protection of the Philippine Citizens

iii. De Jure, De Facto, Corporation by Estoppel, Corporation by Prescription

What is a De Jure Corporation?

● A De Jure Corporation is one that has been properly formed in accordance with the law. In the Philippines, this means that the corporation has complied with all the
requirements set forth by the Corporation Code, such as filing the articles of incorporation, having the minimum number of incorporators, and paying the necessary fees. A De
Jure Corporation has the full legal backing of the law and enjoys all the rights and privileges granted to corporations.
● Substantially complied with the law

What is a De Facto Corporation?

● A De Facto Corporation is one that operates like a corporation but has not complied fully with the legal requirements for its formation. In other words, it exists in fact but not in
law. While it may lack some legal formalities, it is often treated as a corporation for most practical purposes, including entering into contracts and owning property.
● There is a bonafide attempt to incorporate
● In good faith, colorable compliance
● If not in good faith, it will be a fraud
● Use of corporatepowers and operated
● IMPORTANT:If you have not secured tho SEC Certificate
○ You cannot have the status of de facto corporation
○ The state is never bound by the errors of its officers.

HOW TO ATTACK THE PERSONALITY?

● You cannot attack it collaterally but throughquo warrant proceeding for its dissolution.
● Legal personality to it can be attacked DIRECTLY.

Corporation by Estoppel
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
● All persons who assume to act as a corporation knowing it to be without authority to do so shall be liable as general partners for all debts, liabilities and damages incurred or
arising as a result thereof.
● Where a group of persons misrepresent themselves as a corporation, they are subsequently stopped from claiming lack of corporate life in order to avoid liability.
● On the other hand, one who assumes an obligation to an ostensible corporation as such, cannot resist performance thereof on the ground that there was in fact no
corporation.
● There is no certificate of incorporation
● EQUITABLE PRINCIPLE: Only elected by courts of law for fairness and equity
○ Ex. Misrepresentation as corporation and cannot deny their personality.
○ You cannot move the grounds that there is no corporation.

Theory of enterprise entity: can erect a corporation

Persons who assume a corporation when there is NONE, liable as GENERAL PARTNERS.

● Lack of legal personality: Not a defense

● All will be held liable

Corporation by Estoppel
● In Philippine law, a "corporation by prescription" is not explicitly recognized, meaning a corporation cannot legally come into existence solely through prolonged, uninterrupted
exercise of corporate powers without formal registration; to be considered a legal entity, a corporation must be properly incorporated under the Revised Corporation Code,
which requires filing articles of incorporation with the Securities and Exchange Commission (SEC).

Barlin v. Ramirez / 7 Phil 41

The case of Barlin v. Ramirez involves a dispute over the ownership and possession of a church building, convent, and cemetery in Lagonoy, Ambos Camarines. The plaintiff, Rev. Jorge
Barlin, is the apostolic administrator of the vacant bishopric and legal representative of the Roman Catholic Apostolic Church in the diocese of Nueva Caceres. The defendants are P.
Vicente Ramirez, the ex-rector of the Roman Catholic Apostolic Parochial Church of Lagonoy, and the Municipality of Lagonoy. The church and convent were built between 1870 and
1873, with the labor and materials provided by the people of the pueblo and the provincial governor. In 1902, Ramirez was appointed as the parish priest of Lagonoy, but he later joined
the Independent Filipino Church and refused to turn over the church property to the plaintiff.

Whether the Roman Catholic Church has the exclusive right to possess and control the church building, convent, and cemetery in Lagonoy,

"The Supreme Court ruled in favor of the plaintiff, Rev. Jorge Barlin, and held that the Roman Catholic Church has the exclusive right to possess and control the church building, convent,
and cemetery in Lagonoy

The ruling reinforced the notion that the church's properties were dedicated to the service of God and could not be owned by any individual or entity, thus affirming the church's rights over
the property in question.

"the court held that Ramirez, as the servant or agent of the plaintiff, was estopped from denying the plaintiff's title to the property. This principle is rooted in the legal doctrine that a tenant
cannot deny their landlord's title.

_________________

The court's decision was grounded in several legal principles. First, it established that Ramirez, having taken possession of the church as an agent of the plaintiff, could not deny the
plaintiff's ownership when demanded to return the property. This principle is rooted in the legal doctrine that a tenant cannot deny their landlord's title. The court also noted that the
Municipality of Lagonoy failed to provide evidence of ownership or possession of the property, as their claim was based on a resolution that did not transfer ownership. The court
emphasized that the Roman Catholic Church had maintained peaceful possession of the church for over thirty years, and any claim by the defendants to a better right of possession was
unsubstantiated. Furthermore, the court referenced historical laws indicating that churches in the Philippines were constructed under the authority of the Spanish government, which did
not grant ownership to the state but rather established the church's right to possess and administer the property for religious purposes. The ruling reinforced the notion that the church's
properties were dedicated to the service of God and could not be owned by any individual or entity, thus affirming the church's rights over the property in question.

Holding Company, Affiliate Company, Parent and Subsidiary Company

1. Holding Company
● A company established for the sole purpose of a control
● a legal entity primarily established to own shares in other companies, essentially acting as a parent company that controls and manages the assets of its
subsidiaries, regulated under the Revised Corporation Code of the Philippines (Republic Act No. 11232) and recognized by the Securities and Exchange
Commission (SEC).
● CONTROLLING: Financial interest
● CONTROL: Direct or indirect
a. Direct Control: Management and policies of subsidiary.
i. Voting shares ownership, elect directors, members of the board.
b. Indirect Control Control through contract or intermediaries
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
i. Ex. A, a subsidiary, owned by B, a parent corporation of A, has an indirect, C wholly owned B.
ii. C has an indirect control to A.

2. Affiliate Company
● an affiliated company is a company that is directly or indirectly controlled by another company. This can be through ownership of voting shares or other
contractual agreements.
● Based on level of control
○ 20%-50%- Affiliate
○ More then 50% of the outstanding capital stock:
■ Voting stock- Subsidiary
○ Below 20%- Related Company
3. Parent Company
● Directly controls and operates its subsidiaries, whereas a holding company primarily holds ownership stakes in other companies, often without direct involvement
in their day-to-day operations. A subsidiary can be partially or wholly-owned.
● A parent corporation, also known as a holding company, is a company that owns a controlling interest in other companies. The companies it owns are called
subsidiaries.
4. Subsidiary Company
● A subsidiary company is a company owned by another company, which is referred to as the parent company or holding company. The parent company directly
controls and operates its subsidiaries, whereas a holding company primarily holds ownership stakes in other companies, often without direct involvement in their
day-to-day operations.
● A subsidiary can be partially or wholly-owned. If it’s partially-owned, then the parent or holding company owns more than 50% of the subsidiary’s stocks, giving
them the controlling interest. If it’s wholly-owned, then the parent company owns and controls 100% of the stocks, which also means they have no responsibility
for the minor stockholders.

h. Doctrine of Corporate Juridical Personality

● An artificial corporation created by law with personality separate and distinct from the corporations.
● Obligations of corporations are of the corporations only.
● Acts of directors: Binds the corporation and protects the corporation

Stockholders of F. Guanzon & Sons Inc. v. RD Manila / 6 SCRA 373

○ If you are a shareholder, it does not mean that you own the assets of the corporation, the corporation owns it.
○ Shares of stock ownership is only an interest upon liquidation
○ Shares of stock: Is a personal property of shareholders, an interest
○ You have rights to vote, etc. but you do not own the asset.

General Rule: A stockholder cannot sue

● Who can do that? Board of directors

Derivative suit: It can only be done when the board of director is a defendant

○ is a lawsuit filed by a shareholder on behalf of a corporation. It's used to enforce the corporation's rights when the corporation's management refuses to act.
○ A derivative suit is an action filed by stockholders to enforce a corporate action.
○ A stockholder may bring an action in the name of a corporation or association as the case may be.
○ In derivative suits, the real party in interest is the corporation, and the suing stockholder is a mere nominal party.

Inter-related Corporation: An inter-related corporation is a company that is related to another company. This could be because they are part of the same group, or because one
company controls the other.

Saw v. CA / 195 SCRA 740

The interest of shareholders in a corporate entity is purely inchoate; and this purely inchoate interest will not entitle them to intervene in a litigation involving corporate property.

The case of Saw v. Court of Appeals revolves around a collection suit filed by Equitable Banking Corporation against Freeman, Inc. and Saw Chiao Lian, its President and General
Manager. The petitioners, consisting of Ruben Saw, Dionisio Saw, Lina S. Chua, Lucila S. Ruste, and Evelyn Saw, moved to intervene in the case, alleging that the loan transactions
between Saw Chiao Lian and Equitable Banking Corp. were not approved by the stockholders representing at least 2/3 of corporate capital. They further claimed that there was collusion
between the officials of Freeman, Inc. and Equitable Banking Corp. in securing the loans. The motion to intervene was denied, prompting the petitioners to appeal to the Court of Appeals.

Do the petitioners, as stockholders of Freeman, Inc., have the legal standing to intervene in the collection suit filed by Equitable Banking Corporation against Freeman, Inc.
and its President and General Manager?
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
The Court of Appeals sustained the denial of the petitioners' motion for intervention, holding that their rights as stockholders of Freeman, Inc. are merely inchoate and not actual, material,
direct, and immediate prior to the dissolution of the corporation. The Supreme Court affirmed the decision of the Court of Appeals, ruling that the petitioners do not have a legal interest in
the matter in litigation, and that their interest is indirect, contingent, remote, conjectural, consequential, and collateral.

The Court's decision is based on the principle that to allow intervention, a movant must show that they have a legal interest in the matter in litigation, or otherwise qualified, and that
consideration must be given as to whether the adjudication of the rights of the original parties may be delayed or prejudiced, or whether the intervenor's rights may be protected in a
separate proceeding or not.

Sesbreno v. CA / 222 SCRA 466

The case of Sesbreño v. Court of Appeals involves a money market transaction between petitioner Raul Sesbreño and Philippine Underwriters Finance Corporation (Philfinance). On
February 9, 1981, Sesbreño made a money market placement with Philfinance in the amount of P300,000.00, with a term of 32 days. Philfinance issued a Certificate of Confirmation of
Sale, a Certificate of Securities Delivery Receipt, and post-dated checks payable on March 13, 1981. However, when Sesbreño tried to encash the checks, they were dishonored for
insufficient funds. Philfinance then delivered to Sesbreño a Denominated Custodian Receipt (DCR) issued by Pilipinas Bank, which confirmed that the bank had in its custody a Delta
Motors Corporation Promissory Note (DMC PN) with a face value of P2,300,833.33. Sesbreño demanded physical delivery of the promissory note, but Pilipinas Bank did not comply.
Sesbreño then filed an action for damages against Delta Motors Corporation and Pilipinas Bank.

Should the veil of corporate entity be pierced between Philfinance, Delta Motors Corporation, and Pilipinas Bank, considering that they belong to the "Silverio Group of
Companies?

The Supreme Court ruled in favor of Sesbreño, affirming his right to collect the assigned portion of the promissory note and holding Pilipinas Bank liable for breaching its duty as a
custodian bank. However, the Court also held that Sesbreño's failure to notify Delta Motors Corporation of the assignment until after the maturity date of the promissory note prevented
him from collecting from Delta. The Court further held that Pilipinas Bank did not assume any obligation to pay Sesbreño the amount of P307,933.33, and its liability was limited to
effecting physical delivery of the promissory note.

The Court's decision was based on the following legal principles: A non-negotiable instrument may still be assigned or transferred, and the assignee takes subject to the equities between
the original parties.

Padilla v. CA / 320 SCRA 208

This case involves petitioners Luisito Padilla and Phoenix-Omega Development against respondents The Honorable Court of Appeals and Susana Realty, Inc. The dispute began when
Susana Realty sold land to the Light Rail Transit Authority (LRTA) in 1983, including a right of first refusal for Susana Realty. In 1986, LRTA's contract with Phoenix-Omega for
commercial stalls was opposed by Susana Realty, leading to a tripartite agreement for leasing adjacent property. In 1988, Phoenix-Omega assigned its rights to PKA Development. After
PKA's building permit was revoked and construction halted, they sued Susana Realty for rescinding the lease contract, claiming financial losses. The Regional Trial Court ruled in favor of
Susana Realty in 1991, with the Court of Appeals modifying the decision. Subsequent legal actions continued until the petitioners sought a Supreme Court review in 1995.

Was the piercing of the corporate veil justified in this case?

NO. The Court also addressed the argument of piercing the corporate veil, stating that such action is only warranted when a corporation's separate personality is used to perpetrate fraud
or injustice. In this instance, the Court found no evidence that the separate corporate identities of PKA and Phoenix-Omega were being misused. Thus, the execution against the
petitioners' properties was deemed a violation of their right to due process, as they were not given an opportunity to defend themselves in the original case.

Piercing the corporate veil refers to disregarding the separate legal personality of a corporation to hold its shareholders or related entities liable for the corporation's actions.

PNB vs. Aznar / GR No. 171805 30 May 2011

"In 1958, RISCO ceased operation due to business reverses. In plaintiffs’ desire to rehabilitate RISCO, they contributed a total amount of 212,720.00 which was used in the purchase of
the three (3) parcels of land. After the purchase of the above lots, titles were issued in the name of RISCO. The amount contributed by plaintiffs constituted as liens and encumbrances on
the aforementioned properties as annotated in the titles of said lots.

Thereafter, various subsequent annotations were made on the same titles, including the Notice of Attachment and Writ of Execution both dated August 3, 1962 in favor of herein
defendant PNB. As a result, a Certificate of Sale was issued in favor of Philippine National Bank.

This prompted plaintiffs-appellees to file the instant complaint seeking the quieting of their supposed title to the subject properties, declaratory relief, cancellation of TCT and
reconveyance with temporary restraining order and preliminary injunction.

Whether or not contributions made by the stockholders of Risco were merely a loan secured by their lien over the properties, subject to reimbursement or refund, rather
than an express trust.(Loan)
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
"Aznar, et al., who are stockholders of RISCO, cannot claim ownership over the properties at issue in this case on the strength of the Minutes which, at most, is merely evidence of a loan
agreement between them and the company. There is no indication or even a suggestion that the ownership of said properties were transferred to them which would require no less that
the said properties be registered under their names. For this reason, the complaint should be dismissed since Aznar, et al., have no cause to seek a quieting of title over the subject
properties.

At most, what Aznar, et al., had was merely a right to be repaid the amount loaned to RISCO. Unfortunately, the right to seek repayment or reimbursement of their contributions used to
purchase the subject properties is already barred by prescription.

Slain Enterprises Inc. vs. Cupertino Realty Corp. / 590 SCRA 435

The case involves a loan agreement between Siain Enterprises, Inc. (petitioner) and Cupertino Realty Corporation (respondent). On April 10, 1995, petitioner obtained a loan of
P37,000,000.00 from respondent, covered by a promissory note and secured by a real estate mortgage over two parcels of land and other immovables. Two days later, the parties
executed an amendment to the promissory note, providing for a 17% interest per annum on the loan. On August 16, 1995, the parties executed another promissory note for
P160,000,000.00, with a compounding interest rate of 30% per annum. Petitioner's president, Cua Le Leng, signed the promissory notes on behalf of petitioner and also in her personal
capacity as co-maker. The loan documents were later amended to reflect the increased loan obligation of P197,000,000.00. Despite the loan agreements, petitioner claimed that it did not
receive the proceeds of the P160,000,000.00 loan increase and demanded the release of the same from respondent. Respondent, on the other hand, insisted that petitioner had already
received the loan proceeds and refused to pay its obligation. The dispute led to extrajudicial foreclosure proceedings, which petitioner sought to enjoin.

Whether the doctrine of "piercing the veil of corporate fiction" should be applied in this case.

The Supreme Court upheld the decision of the Court of Appeals, which affirmed the ruling of the Regional Trial Court, dismissing petitioner's complaint and ordering it to pay respondent
P100,000.00 each for actual and exemplary damages, and P500,000.00 as attorney's fees.

__________________________________________________________________

i. Piercing the Veil of Corporate Fiction

General Rule: A corporation will be look

● The fact that related corporations may be engaged in the same business but itself does not warrant piercing the veil of corporate fiction.
● The fact that related corporations share the same address or have interlocking incorporators, director and officers, in the absence of fraud or other public policy consideration,
which must be clearly proven, does not warrant piercinged upon as a legal entity, unless and until sufficient reason to the contrary appears.
● The doctrine of piercing the corporate veil of corporate fiction is an equitable doctrine developed to address situations where the separate corporate personality of a
corporation is abused or used for wrongful purposes. PNB v. Ritratto Group, Inc., 362 SCRA 216 (2001)
● Consequently, piercing the veil of corporate fiction is remedy of last resort and is not available when the corporation employed fraud in the foreclosure proceedings, and other
remedies are still available, such as in this case the remedy of annulment based on vice of consent. Umali v. CA, 189 SCRA 529 (1990).
● To disregard the said separate juridical personality of a corporation, the wrongdoing must be proven clearly and convincingly. Martinez v. Court of Appeals, 438 SCRA 130
(2004).[26]
● It cannot just be alleged nor be presumed. Secosa v. Heirs of Erwin Suarez Fancisco, 433 SCRA 273 (2004);Solidbank Corp. v. Mindanao Ferroalloy Corp., 464 SCRA 409
(2005).
● And the burden is on the party who seeks its application. PNB v. Andrada Electric & Engineering Co., 381 SCRA 244 (2002).[27]

Piercing No Available to Establish a Right for the First Time or to Support a Legal Theory: Piercing the veil of corporate fiction is allowed to remedy a wrong done by virtue of the
use of the corporate fiction; consequently, it cannot be allowed when there is no wrong committed, such as in the case to justify a theory of co-ownership to allow the stockholder the
continued use and possession of corporate properties. Boyer-Roxas v. CA, 211 SCRA 470 (1992).

1. A corporation will be looked upon as a legal entity, unless and until sufficient reason to the contrary appears
2. The doctrine of piercing the corporate veil of corporate fiction is an equitable doctrine developed to address situations where the separate corporate personality of a
corporation is abused or used for wrongful purposes.
3. The doctrine can be applied only if it can be shown that the veil of corporate fiction was the very tool used to commit fraud or to do wrong, or the very means to avoid the
consequences of one's wrongdoing or to evade one's liabilities
4. Piercing No Available to Establish a Right for the First Time or to Support a Legal Theory: Piercing the veil of corporate fiction is allowed to remedy a wrong done by virtue of
the use of the corporate fiction; consequently, it cannot be allowed when there is no wrong committed, such as in the case to justify a theory of co-ownership to allow the
stockholder the continued use and possession of corporate properties.
5. Piercing the veil cannot be employed to allow fraud.
6. Piercing the veil cannot be availed of by one who is not a "victim" of a fraud or wrong:
7. Piercing is a power belonging to the court and cannot be assumed improvidently by a sheriff.

Applicability: The test in determining the applicability of the doctrine of piercing the veil of corporate fiction are as follows:

● (a) Control, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect to the transaction
attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own;
● (b) Such control must have been used by the defendant to commit fraud or wrong, to perpetuate the violation of a statutory or other positive legal duty, or dishonest and
unjust acts in contravention of plaintiff's legal rights; and
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
● (c) The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.

Effects of the Application of the Piercing Doctrine: The application of the piercing doctrine would make the corporate actors liable for fraud or the commission of corporate wrong
personally liable for the resulting corporate liability.

Francisco vs. Mejia / 362 SCRA 738

Jardine Davies Inc. v. JRB Realty / 463 SCRA 555
San Juan Structural & Steel Fabricators Inc. v. CA / 296 SCRA 631
Gochan v. Young / 354 SCRA 207
Union Bank v. CA / 290 SCRA 198
Cruz v. Dalisay / 152 SCRA 482
Umali v. CA / 189 SCRA 529
Koppel (Phil) Inc. v. Yatco / 77 Phil 496
Concept Builders Inc. v. NLRC / 257 SCRA 149
Gregorio Araneta Inc. v. Tuason de Paterno / 91 Phil 786
Arnold v. Willets & Patterson Ltd. / 44 Phil 634
Gabionza vs. CA / 565 SCRA 38
Mc Connel v. CA / 1 SCRA 722
Marubeni Corp. v. Linag / 362 SCRA 620

j. Formation and Organization

i. Promoters Contracts

Section 3.10, Securities Regulation Code

Caram Jr. vs. CA / 151 SCRA 372

ii. Defectively Formed and Non Existent Corporations

Hall vs. Piccio / 86 Phil 603

Vda. De Salavatierra vs. Garlitos / 103 Phil 757

Int’l Express Travel vs. CA / 343 SCRA 674

iii. Ultra Vires Doctrine

Twin Towers Condominium Corp. v. CA / 398 SCRA 203

iv. Articles of Incorporation

Lanuza vs. CA / 454 SCRA 54

2. Corporate Name

SEC Guidelines on the Use of Corporate Names

Lyceum of the Philippines vs. CA / 219 SCRA 610

3. Purpose Clause

Gala vs. Ellice Agro-Industrial Corp. / 418 SCRA 431

4. Principal Place of Business

5. Corporate Term

6. Capital Structure

7. Grounds for Disapproval

8. Amendments to the Articles of Incorporation

Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________

RULE 59 Section 3. Denial of application or discharge of receiver. — The

application may be denied, or the receiver discharged, when the
Receivership adverse party files a bond executed to the applicant, in an amount to
be fixed by the court, to the effect that such party will pay the applicant
Section 1. Appointment of receiver. — Upon a verified application, all damages he may suffer by reason of the acts, omissions, or other
one or more receivers of the property subject of the action or matters specified in the application as ground for such appointment.
proceeding may be appointed by the court where the action is pending The receiver may also be discharged if it is shown that his appointment
or by the Court of Appeals or by the Supreme Court, or a member was obtained without sufficient cause. (4a)
thereof, in the following cases:
Section 4. Oath and bond of receiver. — Before entering upon his
(a) When it appears from the verified application, and such other proof duties, the receiver shall be sworn to perform them faithfully, and shall
as the court may require, that the party applying for the appointment of file a bond, executed to such person and in such sum as the court may
a receiver has an interest in the property or fund which is the subject of direct, to the effect that he will faithfully discharge his duties in the
the action or proceeding, and that such property or fund is in danger of action or proceeding and obey the orders of the court. (5a)
being lost, removed, or materially injured unless a receiver be
appointed to administer and preserve it; Section 5. Service of copies of bonds; effect of disapproval of
same. — The person filing a bond in accordance with the provisions of
(b) When it appears in an action by the mortgagee for the foreclosure this Rule shall forthwith serve a copy thereof on each interested party,
of a mortgage that the property is in danger of being wasted or who may except to its sufficiency or of the surety or sureties thereon. If
dissipated or materially injured, and that its value is probably either the applicant's or the receiver's bond is found to be insufficient in
insufficient to discharge the mortgage debt, or that the parties have so amount, or if the surety or sureties thereon fail to justify, and a bond
stipulated in the contract of mortgage; sufficient in amount with sufficient sureties approved after justification
is not filed forthwith, the application shall be denied or the receiver
(c) After judgment, to preserve the property during the pendency of an discharged, as the case may be. If the bond of the adverse party is
appeal, or to dispose of it according to the judgment, or to aid found to be insufficient in amount or the surety or sureties thereon fail
execution when the execution has been returned unsatisfied or the to justify, and a bond sufficient in amount with sufficient sureties
judgment obligor refuses to apply his property in satisfaction of the approved after justification is not filed forthwith, the receiver shall be
judgment, or otherwise to carry the judgment into effect; appointed or re-appointed, as the case may be. (6a)

(d) Whenever in other cases it appears that the appointment of a Section 6. General powers of receiver. — Subject to the control of
receiver is the most convenient and feasible means of preserving, the court in which the action or proceeding is pending a receiver shall
administering, or disposing of the property in litigation. have the power to bring and defend, in such capacity, actions in his
own name; to take and keep possession of the property in controversy;
During the pendency of an appeal, the appellate court may allow an to receive rents; to collect debts due to himself as receiver or to the
application for the appointment of a receiver to be filed in and decided fund, property, estate, person, or corporation of which he is the
by the court of origin and the receiver appointed to be subject to the receiver; to compound for and compromise the same; to make
control of said court. (1a) transfers; to pay outstanding debts; to divide the money and other
property that shall remain among the persons legally entitled to receive
Section 2. Bond on appointment of receiver. — Before issuing the the same; and generally to do such acts respecting the property as the
order appointing a receiver the court shall require the applicant to file a court may authorize. However, funds in the hands of a receiver may be
bond executed to the party against whom the application is presented, invested only by order of the court upon the written consent of all the
in an amount to be fixed by the court, to the effect that the applicant parties to the action. (7a)
will pay such party all damages he may sustain by reason of the
appointment of such receiver in case the applicant shall have procured No action may be filed by or against a receiver without leave of the
such appointment without sufficient cause; and the court may, in its court which appointed him. (n)
discretion, at any time after the appointment, require an additional
bond as further security for such damages. (3a) Section 7. Liability for refusal or neglect to deliver property to
receiver. — A person who refuses or neglects, upon reasonable
demand, to deliver to the receiver all the property, money, books,
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________
deeds, notes, bills, documents and papers within his power or control,
subject of or involved in the action or proceeding, or in case of Section 3. Order. — Upon the filing of such affidavit and approval of
disagreement, as determined and ordered by the court, may be the bond, the court shall issue an order and the corresponding writ of
punished for contempt and shall be liable to the receiver for the money replevin, describing the personal property alleged to be wrongfully
or the value of the property and other things so refused or neglected to detained and requiring the sheriff forthwith to take such property into
be surrendered, together with all damages that may have been his custody. (3a)
sustained by the party or parties entitled thereto as a consequence of
such refusal or neglect. (n) Section 4. Duty of the sheriff. — Upon receiving such order, the
sheriff must serve a copy thereof on the adverse party, together with a
Section 8. Termination of receivership; compensation of receiver. copy of the application, affidavit and bond, and must forthwith take the
— Whenever the court, motu proprio or on motion of either party, shall property, if it be in the possession of the adverse party, or his agent,
determine that the necessity for a receiver no longer exists, it shall, and retain it in his custody. If the property or any part thereof be
after due notice to all interested parties and hearing, settle the concealed in a building or enclosure, the sheriff must demand its
accounts of the receiver, direct the delivery of the funds and other delivery, and if it be not delivered, he must cause the building or
property in his possession to the person adjudged to be entitled to enclosure to be broken open and take the property into his possession.
receive them and order the discharge of the receiver from further duty After the sheriff has take possession of the property as herein
as such. The court shall allow the receiver such reasonable provided, he must keep it in a secure place and shall be responsible
compensation as the circumstances of the case warrant, to be taxed for its delivery to the party entitled thereto upon receiving his fees and
as costs against the defeated party, or apportioned, as justice requires. necessary expenses for taking and keeping the same. (4a)
(8a)
Section 5. Return of property. — If the adverse party objects to the
Section 9. Judgment to include recovery against sureties. — The sufficiency of the applicant's bond, or of the surety or sureties thereon,
amount, if any, to be awarded to any party upon any bond filed in he cannot immediately require the return of the property, but if he does
accordance with the provisions of this Rule, shall be claimed, not so object, he may, at any time before the delivery of the property to
ascertained, and granted under the same procedure prescribed in the applicant, require the return thereof, by filing with the court where
section 20 of Rule 57. (9a) the action is pending a bond executed to the applicant, in double the
value of the property as stated in the applicant's affidavit for the
delivery thereof to the applicant, if such delivery be adjudged, and for
the payment of such sum, to him as may be recovered against the
adverse party, and by serving a copy of such bond on the applicant.
(5a)

Section 6. Disposition of property by sheriff. — If within five (5) days

after the taking of the property by the sheriff, the adverse party does
RULE 60 not object to the sufficiency of the bond, or of the surety or sureties
thereon; or if the adverse party so objects and the court affirms its
Replevin approval of the applicant's bond or approves a new bond, or if the
adverse party requires the return of the property but his bond is
Section 1. Application. — A party praying for the recovery of objected to and found insufficient and he does not forthwith file an
possession of personal property may, at the commencement of the approved bond, the property shall be delivered to the applicant. If for
action or at any time before answer, apply for an order for the delivery any reason the property is not delivered to the applicant, the sheriff
of such property to him, in the manner hereinafter provided. (1a) must return it to the adverse party. (6a)

Section 2. Affidavit and bond. — The applicant must show by his Section 7. Proceedings where property claimed by third person. — If
own affidavit or that of some other person who personally knows the the property taken is claimed by any person other than the party
facts: against whom the writ of replevin had been issued or his agent, and
such person makes an affidavit of his title thereto, or right to the
(a) That the applicant is the owner of the property claimed, particularly possession thereof, stating the grounds therefor, and serves such
describing it, or is entitled to the possession thereof; affidavit upon the sheriff while the latter has possession of the property
and a copy thereof upon the applicant, the sheriff shall not be bound to
(b) That the property is wrongfully detained by the adverse party, keep the property under replevin or deliver it to the applicant unless the
alleging the cause of detention thereof according to the best of his applicant or his agent, on demand of said sheriff, shall file a bond
knowledge, information, and belief ; approved by the court to indemnify the third-party claimant in a sum
not less than the value of the property under replevin as provided in
(c) That the property has not been distrained or taken for a tax section 2 hereof. In case of disagreement as to such value, the court
assessment or a fine pursuant to law, or seized under a writ of shall determine the same. No claim for damages for the taking or
execution or preliminary attachment, or otherwise placed under keeping, of the property may be enforced against the bond unless the
custodia legis, or if so seized, that it is exempt from such seizure or action therefor is filed within one hundred twenty (120) days from the
custody; and date of the filing of the bond.

(d) The actual market value of the property. The sheriff shall not be liable for damages, for the taking or keeping of
such property, to any such third-party claimant if such bond shall be
The applicant must also give a bond, executed to the adverse party in filed. Nothing herein contained shall prevent such claimant or any third
double the value of the property as stated in the affidavit person from vindicating his claim to the property, or prevent the
aforementioned, for the return of the property to the adverse party if applicant from claiming damages against a third-party claimant who
such return be adjudged, and for the payment to the adverse party of filed a frivolous or plainly spurious claim, in the same or a separate
such sum as he may recover from the applicant in the action. (2a) action.
Notes ni Pau sa Corpo_________________________________________________________________________________________________________________________________

When the writ of replevin is issued in favor of the Republic of the

Philippines, or any officer duly representing it, the filing of such bond
shall not be required, and in case the sheriff is sued for damages as a
result of the replevin, he shall be represented by the Solicitor General,
and if held liable therefor, the actual damages adjudged by the court
shall be paid by the National Treasurer out of the funds to be
appropriated for the purpose. (7a)

Section 8. Return of papers. — The sheriff must file the order, with
his proceedings indorsed, thereon, with the court within ten (10) days
after taking the property mentioned therein. (8a)

Section 9. Judgment. — After trial of the issues the court shall

determine who has the right of possession to and the value of the
property and shall render judgment in the alternative for the delivery
thereof to the party entitled to the same, or for its value in case delivery
cannot be made, and also for such damages as either party may
prove, with costs. (9a)

Section 10. Judgment to include recovery against sureties. — The

amount, if any, to be awarded to any party upon any bond filed in
accordance with the provisions of this Rule, shall be claimed,
ascertained, and granted under the same procedure as prescribed in
section 20 of Rule 57. (10a)