CORPORATION

LAW
 NATIONALITY OF
CORPORATIONS
Nationality serves as the legal basis for
subjecting the enterprise or its activities
to the laws, the economic and fiscal
powers, and the various social and
financial policies of the state to which it is
supposed to belong
 TESTS TO DETERMINE
NATIONALITY

1) place of incorporation test

2) control test
3) grandfather rule

Gamboa vs. Teves

G.R. No. 176579, June 28, 2011
 PLACE OF INCORPORATION TEST

- a corporation is a national of a
country under whose laws it has been
organized and registered.
 CONTROL TEST

- the nationality of a corporation is

determined by the nationality of the
majority of the stockholders on whom
equity control is vested
 GRANDFATHER RULE

- the various nationality tests shall

first be applied on the shareholders of
the holding company to determine the
nationality of the equity in the target
corporation, and thereby arrive at the
nationality of such target corporation
NATIONALIZED CORPORATIONS

1)100% Filipino owned

- retail trade corporations
- rural banks
- mass media ownership and
operation
- rice and corn industry
NATIONALIZED CORPORATIONS

2) 75% Filipino owned

-Awardees of government supplies
purchases
-Contract awardees for repair of public
works and national defense projects
-Coastwide trade
NATIONALIZED CORPORATIONS

3) 70% Filipino owned

- domestic banks except rural banks
- awardees of government public works
contracts
NATIONALIZED CORPORATIONS
4) 60% Filipino owned
- public utility corporations
- corporations to utilize, develop or exploit
natural resources
- fishing licenses
- geothermal energy permits
- beneficiaries of Philippine Overseas
Shipping, domestic air commerce, financing
companies, awardees of supplies contracts
for GOCCs
- educational institutions
NATIONALIZED CORPORATIONS

5) Majority owned by Filipinos

- investment houses
GRANDFATHER RULE THREE
LEVEL RELATIONSHIP TEST
TARGET COMPANY- grandson

HOLDING COMPANY father

PERSON OR ENTITY HOLDING SHARES IN THE

HOLDING COMPANY - grandfather
 CORPORATIONS CREATED
BY SPECIAL LAWS
Sec. 4. Corporations created by
special laws or charters. - Corporations
created by special laws or charters shall be
governed primarily by the provisions of the
special law or charter creating them or
applicable to them, supplemented by the
provisions of this Code, insofar as they are
applicable.
 CORPORATORS, INCORPORATORS,
STOCKHOLDERS AND MEMBERS
Sec. 5. Corporators and incorporators,
stockholders and members. - Corporators are
those who compose a corporation, whether as
stockholders or as members. Incorporators are
those stockholders or members mentioned in the
articles of incorporation as originally forming and
composing the corporation and who are signatories
thereof.

Corporators in a stock corporation are called

stockholders or shareholders. Corporators in a non-
stock corporation are called members.
 CORPORATE JURIDICAL
PERSONALITY

1)Doctrine of Separate Juridical Personality

2)Doctrine of Piercing the Veil of Corporate Entity
APPLICATION OF THE MAIN DOCTRINE

1)Such corporation may not be held liable for the

obligations of the persons composing it or that of
its officers;
2)Neither can its stockholders be held liable for
the obligations of such corporation;
3)Officers of a corporation are not personally
liable for their acts as such officers, unless it is
shown that they have exceeded their authority;
4)The property of the corporation is not the
property of its stockholders or members;
APPLICATION OF THE MAIN DOCTRINE

5) A suit against the corporation cannot be

considered as a suit against its stockholders,
and vice versa;

6) A mother or holding corporation has no

proprietary interest in the property, rights and
interest of the subsidiary or affiliate corporation.
 APPLICATION OF THE DOCTRINE
OF PIERCING THE VEIL
1)When corporate personality is used as
enabling tool
2)To benefit either those within and those outside
the intra-corporate relations
3)To prevent fraud or wrong and not available for
other purposes
4)Must be shown to be necessary and with
factual basis
5)Essentially a judicial prerogative
6)Has res judicata effect
 TEST IN DETERMINING
THE APPLICABILITY

1)Control not mere majority of stock

control but complete domination
2)Control used to commit fraud
3)Control and breach of duty must
proximately cause the injury or unjust
loss complained of
 CLASSIFICATIONS
OF THE PIERCING CASES

1)FRAUD CASES
2)ALTER EGO CASES
3)DEFEAT PUBLIC CONVENIENCE
CASES
4)EQUITY CASES
 ENTITLEMENT TO
CONSTITUTIONAL RIGHTS

1) Due Process
2) Equal Protection of the Law
3) Against Unreasonable
Searches and Seizures
4) Against Self-Incrimination
 ENTITLEMENT TO
MORAL DAMAGES
1) ABS-CBN Broadcasting Corp. vs Court
of Appeals (1999) not entitled to moral
damages
2) Filipinas Broadcasting Network vs. Ago
Medical and Educational Center (2005)
may claim moral damages arising
from libel
3) Crystal vs. BPI, 572 SCRA 697 (2008)
while the Court may allow the grant of
damages, it is not automatically granted
 LIABILITY FOR TORTS

PNB vs. Court of Appeals, 83 SCRA 237

 DOCTRINE OF CORPORATE
NEGLIGENCE
- Doctrine of Corporate Responsibility

Professional Services, Inc. versus CA,

611 SCRA 282 (2010)

a) Hospital and doctor

b) Doctor and patient
c) Hospital and patient
 LIABILITY FOR CRIME

Philippine laws:

1)Only individuals can be criminally

liable;
2)Only individuals can be imprisoned.

Anti-Money Laundering Act of 2001

corporation is an offender (Section 14)