Corp Reviewer
Corp Reviewer
Corp Reviewer
The definition and characteristics refer to private Factors of Identity which could justify the
corporation application of the Doctrine of Piercing the
Corporate Veil:
Government - owned or controlled corporation
refers to any agency organized as a stock or 1) Stock ownership by one or common
non-stock corporation, vested with functions ownership of both corporations
relating to public needs whether governmental or 2) Identity of directors and officers
proprietary in nature, and owned by the
3) The manner of keeping corporate books Factors of identity that will justify the
and records; and application of the Dcotrine:
4) Methods of conducting the business 1) Stock ownership by one or common
ownership of both corporations
Elements of Piercing the Veil of Corporate 2) Identity of directors and officers
Fiction: 3) The manner of keeping corporate books
1) Control and records
● Not mere stock control, but 4) Methods of conducting the business
complete domination Succession (Artificial Succession)
● Not only of finances, but of policy - The continuation of a corporation’s legal
and business practice in respect to status despite changes in ownership or
the transaction attacked management.
● Corporate entity as to this
transaction had at the time no ➢ A corporation has no power except those
separate mind, will or existence of expressly conferred on it by the
its own. Corporation Code (or special laws)
2) Commit a Fraud or a wrong ➢ Those implied or incidental to its existence
● Used by the defendant to commit a ➢ Corporation exercises powers through its
fraud or a wrong board of directors and/or its duly authorized
● To perpetuate the violation of a officers and agents.
statutory or other positive legal ➢ Property acquired by a corporation is the
duty. property of a corporation and not the
● Dishonest and an unjust act in property of stockholders or members.
contravention of plaintiff’s legal
right. SEC. 3. Classes of Corporation - Corporations
3) Proximately caused injury or unjust loss formed or organized under this code may be
complained due to control and breach of stock or nonstock corporations.
duty. Stock corporations are those which
have capital stock divided into shares and are
The Supreme Court emphasized that the piercing authorized to distribute to the holders of such
of the veil of corporate fiction is only done if it has shares, dividends, or allotments of the surplus
been clearly established that the separate and profits on the basis of the shares held.
distinct personality of the corporation is used to All other corporations are nonstock
justify a wrong, protect fraud, or perpetuate a corporations.
deception. Courts are concerned with reality, not
for, and with how the corporation operated and the Nonstock corporation
individual defendant’s relationship to the operation.
- is one where no part of its income is the right of which to exist as a
distribtable as dividends to its members, trustees, corporation cannot be successfully
or officers attacked; or questioned by any
- any profit which a non-stock corporation party.
may obtain as an incidental to its operations shall ➢ De Facto Corporation
be used for the furtherance of the purpose or ● Due incorporation of any
purposes for which the corporation was organized. corporation claiming in good faith to
OTHER CLASSES OF CORPORATION be a corporation under this Code
● Its right to exercise corporate
As to Purpose
powers shall not be inquired into
➢ Public corporation
collaterally in any private suit to
A corporation organized for the
which such corporation may be a
government of a portion of the State for the
party.
general good and welfare.
● Inquiry may be made by the
➢ Private Corporation Solicitor General in a quo
A corporation formed for some warranto proceeding.
private purposes, benefit or end.
➢ Corporation by Estoppel
➢ Government-owned or controlled All persons who assume to act as a
corporation corporation knowing it to be without
A corporation owned by the authority to do so shall be liable as
Government directly or through its general partners for all debts, liabilities,
instrumentalities either wholly or in the and damages incurred.
case of stock corporations, to the extent of
at least 51% of its capital stock. ➢ Corporation by Prescription
➢ Quasi - public corporation Exercised corporate powers for an
A private corporation which has indefinite period without interference on the
accepted from the state the grant of part of the government.
franchise or contract involving the
As to Laws of Incorporation
performance of public duties but organized
for profit.
➢ Domestic Corporation
A corporation incorporated under
As to Legal Right to Corporate Existence
the laws of the Philippines.
➢ De jure corporation
➢ Foreign Corporation
A corporation created in
● Formed, organized or existing
● strict or substantial conformity with
under any laws other than those of
the mandatory statutory
the Philippines.
requirements for incorporation and
● Whose laws allow Filipino citizens As to the Number of Persons who compose
and corporations to do business in
them
its own country of State.
➢ Corporation Aggregate
As to whether they are Open to the Public
A corporation consisting of more
or Not than one member.
Treasury Shares
Are shares of stock which have been
issued and fully paid for, but subsequently
reacquired by the issuing corporation by purchase,
redemption, donation or through some other lawful
means.
Rights that are Denied to the Treasury Shares
1. Voting Rights
2. Right to Dividends