person who may which to become a stockholder or member thereto
8. As to their relation to another corporation
a. Parent or Holding‐ one which is related to another corporation that it has the power either, directly or indirectly to, elect the majority of the director of such other corporation
b. Subsidiary‐ one which is so related to another corporation that the majority of its directors can be elected either, directly or indirectly, by such other corporation
9. As to whether they are corporations in a true sense or only in a limited sense: a. True‐ one which exists by statutory
authority
b. Quasi‐ one which exist without formal legislative grant.
i. Corporation by prescription‐ one which has exercised corporate powers for an indefinite period without interference on the part of the sovereign power and which by fiction of law, is given the status of a corporation;
ii. Corporation by estoppel‐ one which in reality is not a corporation, either de jure or de facto, because it is so defectively formed, but is considered a corporations in relation to those only who, by reason of theirs acts or admissions, are precluded from asserting that it is not a corporation.
10. As to whether they are for public (government) or private purpose:
a. Public‐ one formed or organized for the government or a portion of the State
b. one formed for some provate purpose, benefit or end
Q: What are the requisites of a de facto corporation?
A:
1. Organized under a valid law.
2. Attempt in good faith to form a corporation according to the requirements of the law.
Note: The Supreme Court requires that Articles of Incorporation have already been filed with the SEC and the corresponding certificate of incorporation is obtained.
3. Use of corporate powers.
Note: The corporation must have performed the acts which are peculiar to a corporation like entering into a subscription agreement, adopting by‐laws, and electing directors.
Q: How is the status of a de facto corporation attacked?
A: The existence of a de facto corporation shall
not be inquired into collaterally in any private suit to which such corporation may be a party. Such inquiry may be made by the Solicitor General in a
quo warranto proceeding. (Sec. 20)
Note: However, as long as it exists, a de facto corporation enjoys all attributes of a corporation until the State questions its existence.
In comparison with a corporation by estoppel where the stockholders are liable as general partners, stockholders in a de facto corporation are liable as a de jure corporation. Hence, up to the extent of their share holdings.
Q: Distinguish de facto corporation from corporation by estoppel. A: DE FACTO CORPORATION CORPORATION BY ESTOPPEL There is existence in law There is no existence in law The dealings among the parties on a corporate basis is not required The dealings among the parties on a corporate basis is required When requisites are lacking, it can be corporation by estoppel It will be considered a corporation in any shape or form
C. NATIONALITY OF CORPORATIONS
Q: What are the tests in determining the nationality of corporations?
A:
1. Incorporation test – Determined by the state of incorporation, regardless of the nationality of the stockholders.
2. Domiciliary test – Determined by the principal place of business of the corporation.
3. Control test – Determined by the nationality of the controlling stockholders or members. This test is applied in times of war.
4. Grandfather rule – Nationality is attributed to the percentage of equity in the corporation used in nationalized or partly nationalized area. Q: What are the requisites of the control test? A: 1. 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 such that the corporate entity as to this transaction had at that time no separate mind, will or existence of its own
2. 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 or unjust act in contravention of plaintiffs legal right; and
3. The control and breach of duty must proximately cause the injury or unjust loss complained of. (Velarde v. Lopez,
Inc., G.R. No. 153886, Jan. 14, 2004; Heirs of Ramon Durano, Sr. v. Uy, G.R. No. 136456, Oct. 24, 2000)
Q: Who are considered “Philippine Nationals” under Foreign Investment Act of 1991 (R.A. No. 7042)?
A:
1. Corporations organized under Philippine laws of which 60% of the capital stock outstanding and entitled to
vote is owned and held by Filipino citizens
2. Corporations organized abroad and registered as doing business in the Philippines under the Corporation Code of which 100% of the capital stock entitled to vote belong to Filipinos.
Note: However, it provides that where a corporation and its non‐Filipino stockholders own stocks in a SEC‐registered enterprise, at least 60% of the capital stock outstanding and entitled to vote of both corporations and at least 60% of the members of the board of directors of both corporations must be Filipino citizens (DOUBLE 60% RULE).
Q: What is the nationality of a corporation organized and incorporated under the laws of a foreign country, but owned 100% by Filipinos?
A: Under the control test of corporate
nationality, this foreign corporation is of Filipino nationality. Where there are grounds for piercing the veil of corporate entity, that is, disregarding the fiction, the corporation will follow the nationality of the controlling members or stockholders, since the corporation will then be considered as one and the same. (1998 Bar
Question)
D. CORPORATE JURIDICAL PERSONALITY
Q: What is the doctrine of separate (legal) personality?
A: It is a well‐settled doctrine that a corporation
has a personality distinct and separate from its individual stockholders or members (Cruz vs.
Dalisay, A.M. No. R‐181‐P, July 31, 1987).
Q: What are the significances of the doctrine of separate personality?
A:
1. Liability for acts or contracts – the acts of the stockholders do not bind the corporation unless they are properly authorized. The obligations incurred by a corporation, acting through its authorized agents are its sole liabilities. The obligations of the corporation are not the obligations of its shareholders and members and vice‐versa. (Cease v.
CA,G.R. No. L‐33172, Oct. 18, 1979)
2. Right to bring actions – may bring civil and criminal actions in its own name in