BLR title 1

• REPUBLIC ACT NO. 11232
• THE REVISED CORPORATION CODE OF THE PHILIPPINES
• This Code shall be known as the "Revised Corporation Code of the Philippines"
• The present Revised Corporation Code (R.A. No. 11232) took effect

  February 23, 2019
• Corporation Defined


  An artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law, incidental to its existence
• Corporation

  • It is an artificial being
  • Created by operation of law
  • It has the right of succession
  • It has the powers, attributes, and properties expressly authorized by law, incidental to its existence
• Corporation


  A juridical entity vested with a legal personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it
• A corporation has a personality separate and distinct from the officers or members who compose it
• Not every stockholder or officer can bind the corporation considering the existence of a corporate entity separate from those who compose it
• The corporate mask may be removed or the corporate veil pierced when the corporation is just an alter ego of a person or of another corporation
• The corporate veil will justifiably be impaled only when it becomes a shield for fraud, illegality or inequity committed against third persons
• The Boy Scouts of the Philippines (BSP), although a non-stock, non-profit corporation, is subject to the Revised Corporation Code
• The ownership or control of the BSP by the government does not make it a government-owned or controlled corporation (GOCC)
• A corporation must have at least five (5) incorporators before one can be organized as a corporation
• If one or more of the incorporators is a juridical entity, it must meet the requirements for the organization of a corporation
• Private corporation


  • Has the right of succession
  • Has the powers, attributes, and properties expressly authorized by law or incidental to its existence
• Boy Scouts of the Philippines (BSP) is a public corporation, not a private corporation
• Government-owned or controlled corporation (GOCC)


  Any agency organized as a stock or non-stock corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the Government directly or through its instrumentalities either wholly, or, where applicable as in the case of stock corporations, to the extent of at least fifty-one (51) percent of its capital stock
• For an entity to be considered as a GOCC, it must either be organized as a stock or non-stock corporation, and the government must own at least 51% of the capital stock
• The Boy Scouts of the Philippines (BSP) is a public corporation, not a private corporation, and is not subject to the test of government ownership or control and economic viability
• The BSP is an instrumentality of the national government, created by law for a public purpose, and attached to the DECS pursuant to its Charter and the Administrative Code of 1987
• The ownership and control test is irrelevant for a public corporation like the BSP
• The CHF companies are private corporations, not within the scope of the Ombudsman's jurisdiction, as the government's total share in the capital stock of the companies is less than 51%
• Piercing the Veil of Corporate Fiction or Alter Ego doctrine

  A corporation is a juridical entity vested with a legal personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it. The corporate veil should not and cannot be pierced unless it is clearly established that the corporation is a mere alter ego or business conduit of a person, or that the corporation is being used as a shield to perpetrate fraud or an injustice, or to confuse legitimate issues
• For the doctrine of piercing the corporate veil to apply, the following elements must be present: 1) Control of the finances, policies, and business practices of the corporation by the person or entity to be held liable; 2) Such control must have been used to commit a fraud or a wrong against the person seeking to pierce the veil; and 3) The said control and breach of duty must have proximately caused the injury or unjust loss complained of
• Piercing the veil of corporate fiction

  Allowing the court to disregard the separate legal personality of a corporation and hold the shareholders or the parent corporation liable for the obligations of the subsidiary or the corporation
• Elements for piercing the corporate veil

  • Control - not mere stock control, but complete domination of finances, policy and business practice
  • Control used to commit fraud or wrong, perpetuate violation of legal duty, or commit dishonest and unjust act
  • Control and breach of duty must proximately cause the injury or unjust loss
• The doctrine of piercing the corporate veil should be applied with caution
• Instances where the Supreme Court has pierced the corporate veil

  • To ward off a judgment creditor
  • To avoid inclusion of corporate assets as part of the estate of the deceased
  • To escape liability arising from a debt
  • To perpetuate fraud and/or confuse legitimate issues
  • To promote or to shield unfair objectives
  • To cover up an otherwise blatant violation of the prohibition against forum-shopping
• The wrongdoing must be clearly and convincingly established to pierce the corporate veil, it cannot be presumed
• In the given problem, there was no sufficient justification to hold the officer U liable for the unpaid loan of H Corp, as the basis was a forged document
• In the given problem, G Corp cannot be held liable for the obligation of H Corp for being a mere alter ego, as it was only a third-party mortgagor and a separate and distinct corporation
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