May not, generally be made to answer
for acts of its stockholders/members/legal
entities to which it may be connected.
o  Suit against certain SH’s cannot
ipso facto be a suit against the
unpleaded corporation.
claims of discharged employees unless he acted
with evident BF and malice in terminating their
employment. ( Business Day v. NLRC, 1993)
  All contracts entered into in its name by
its regular appointed officers/agents are
contracts of corporation and not the SH’s or
members.
indebtedness of a SH even if he should be its
president.
cannot be made liable in their individual capacity
for contracts entered into in their official
capacity.
scope of authority in terminating
employees cannot be held liable for
damages
o  
directors and officers are solidarily liable
with the corporation. Veil may be
pierced.
of the stockholders and may not be sold by them
w/o express authorization of BOD or trustees.
2. Liability when exceptional circumstances warrant:
o  When D/T/O acted maliciously,
in BF, or with gross negligence;
o  Agreed to personal liability;
o  Specific provision of the law;
o  Used fiction of separate
personality to defraud 3 rd
 persons
  May incur obligations and bring civil and
criminal actions. ( Art. 46, NCC)
  Cannot perform certain actions that can
only be done by natural persons ( practice of
law/ medicine)
in behalf of its SH/ members to recover property
belonging to said SH/members in their personal
capacity
whose good reputation has been besmirched
may have ground for moral damages. (2217,
NCC)
  May acquire & possess all kinds of
property. (46, NCC)
members and vice-versa.
is owned by the corporation as a distinct
person. (Traders Royal Bank v. CA, 1989)
  Shares of stock represent a
proportionate interest in the property of the
corporation; does not vest the owner thereof
with any legal right/title to any of the
properties of the corporation owned by the
latter as a distinct juridical person. ( Saw v. CA,
1991)
intervene in a litigation involving corporate
property.
 
2005)
  Participation by GM of corporation in an
action involving the corporation cannot equate
to participation by another corporation in the
same proceedings, merely because said GM is
also the Chairman of the second corporation. (
Padilla v. CA, 2001)
  Corporation’ identity remains unchanged
membership.
ENTITY:
a.  Where the fiction of corporate entity is being
used to cloak or cover for fraud/ illegality, or to “
defeat public convenience, justify wrong, protect
fraud or defend crime” (Yutivo v. CTA, 1961) 
b.  Requires the court to see through the protective
shroud which exempts its SH from liabilities that
ordinarily they could be subject to, or
distinguishes one corporation from a separate
one, were it not for the existing corporate
fiction. ( Lim v. CA, 2000) ( Marubeni v. Lirag,
2001) 
the wrongdoing must be clearly and convincingly
established; it cannot be presumed. ( Del
Rosario v. NLRC, 1990) 
a.  Corporation will be treated merely as an
association of persons and the SH/ members will
be considered as the corporation. Liability
attaches personally or directly to them.
b.  Where there are 2 corporations, they will be
merged into one. The other merely regarded as
the instrumentality, agency, or conduit of the
other. (Cease v. CA, 1979) 
c.  Transactions of the real parties shall be dealt
with as if no corporation had been formed.
(Republic v. Sandiganbayan, 1997) 
legitimate objectives. ( Pamplona Plantation v.
Tingkil, 2005) 
a.  Defeat of public convenience; when used as
vehicle to evade an existing obligation; 
b.  Fraud cases; when used to justify a wrong,
protect fraud or defend a crime; 
c.  Alter Ego cases: 
  where a corporation is merely a farce since
it is a mere alter ego or business conduit of a
person; 
merely an instrumentality, agency, conduit
or adjunct of another corporation. 
4.  Test of Applicability of Doctrine: 
a.  Control or complete dominion not only of
finances but of policy and business in respect to
the transaction attacked so that the corporate
entity at the time had no separate mind, will or
existence of its own; 
fraud or wrong; and 
 proximately cause  the injury or unjust loss
complained of.
PNB v. Andrada, 2002: The rule is that the veil of
corporate fiction may be pierced when made as a shield
to perpetrate fraud and/or confuse legitimate issues
(Jacinto vs. CA, 198 SCRA 211). The theory of corporate
entity was not meant to promote unfair objectives or
otherwise, to shield them (Villanueva vs. Adre, 172 SCRA
876). Likewise, where it appears that two business
enterprises are owned, conducted, and controlled by the
same parties, both law and equity will, when necessary
to protect the rights of third persons, disregard the legal
fiction that two corporations are distinct entities, and
treat them as identical (Phil. Veterans Investment
Development Corp. vs. CA, 181 SCRA 669).
 
Arcilla v. CA, 1992: By its clear and unequivocal
language, it is the petitioner who was declared liable
therefor and consequently made to pay. That he was
ordered to do so as President would not free him from
the responsibility of paying the due amount simply
because according to him, he had ceased to be corporate
president. Such conclusion stems from the fact that the
public respondent, in resolving his motion for
clarificatory judgment, pierced the veil of corporate
fictional and cast aside the contention that both he and
the corporation have separate and distinct personalities.
In short, even if We are to assume arguendo that the
obligation was incurred in the name of the corporation,
the petitioner would still be personally liable therefor
because for all legal intents and purposes, he and the
corporation are one and the same. Csar Marine
Resources, Inc. is nothing more than his business conduit
and alter ego.
Company, Inc. as registered owner asserted ownership
of the assets and properties involved in the litigation,
which theory must necessarily be based on the
assumption that said assets and properties of Tiaong
Milling and Plantation Company, Inc. now appearing
under the name of F. L. Cease Plantation Company as
Trustee are distinct and separate from the estate of
Forrest L. Cease to which petitioners and respondents as
legal heirs of said Forrest L. Cease are equally entitled
share and share alike, then that legal fiction of separate
corporate personality shall have been used to delay and
ultimately deprive and defraud the respondents of their
successional rights to the estate of their deceased father.
Villanueva v. Adre, 1989: Accordingly, Velayo cannot be
excused from payment of SCIPSI's liability by mere
reason of SCIPSI's separate corporate existence. The
theory of corporate entity, in the first place, was not
meant to promote unfair objectives or otherwise, to
shield them. This Court has not hesitated in penetrating
the veil of corporate fiction when it would defeat the
ends envisaged by law, not to mention the clear decree
of the Labor Code.
1.  Promoter: a person who, acting alone or with others,
takes initiative in founding and organizing the
business or enterprise of the issuer and receives
consideration therefor.(Sec. 3.10, Securities
Regulation Code [R.A. 8799])
a.  Liability of Promoter
corporation when it comes into existence and to
the subscribers prior to its organization, as long
as they are acting as promoters
b.  Liability of Corporation for Promoter’s
Contracts
promoter unless contract is
since promoter contract was not made by
corporation itself; may ratify it. 
Pioneer Surety v. CA, 1989: No de facto partnership was
created among the parties which would entitle Lim to a
reimbursement of the supposed losses of the proposed
corporation. The record shows that the petitioner was
acting on his own and not in behalf of his other would-be
incorporators in transacting the sale of the airplanes and
spare parts.
a.  Not less than 5, not more than 15;
b.  Natural persons ;all of legal age;
c.  Residency Requirement: Majority are residents
of the Philippines;
d.  Each must subscribe to at least one share of the
capital stock
directors of the corporation.
Hyatt Elevators v. Goldstar,2005: For practical purposes,
a corporation is in a metaphysical sense a resident of the
place where its principal office is located as stated in the
articles of incorporation. Even before this ruling, it has
already been established that the residence of a
 
established.
a.  A corporation may change its name by the
amendment of its articles of incorporation, but
the same is not effective until approved by the
SEC.( Philippine First Insurance Co. v. Hartigan,
34 SCRA 252 (1970)) 
b.  A change in the corporate name does not make a
new corporation, and whether affected by
special act or under a general law, has no effect
on the identity of the corporation, or on its
property, rights, or liabilities. (Republic Planters
Bank v. CA, 216 SCRA 738, 1992). 
c.  Similarity in corporate names between two
corporations would cause confusion to the public
especially when the purposes stated in their
charter are also the same type of business.
(Universal Mills Corp. v. Universal Textile Mills
Inc., 78 SCRA 62, 1977). 
d.  A corporation has not right to intervene in a suit
using a name other than its registered name; if a
corporation legally and truly wants to intervene,
it should have used its corporate name as the
law requires and not another name which it had
not registered. (Laureano Investment and
Development Corporation v. CA, 1997). 
e.  There would be no denial of due process when a
corporation is sued and judgment is rendered
against it under its unregistered trade name,
holding that a corporation may be sued under
the name by which it makes itself known to its
workers. (Pison-Arceo Agricultural Development
4.  Corporate Term (Sec.11) 
years, unless sooner dissolved or revoked
upon any grounds provided by law;
  Amendment to extend is effected before
expiration of existence;
there are justifiable reasons as determined
by the SEC.
Alhambra Cigar v. CA, 1989: The steps necessary to
effect the extension must be taken during the life of the
corporation, and before the expiration of the term of
existence as original fixed by its charter or the general
law, since, as a rule, the corporation is ipso facto
dissolved as soon as that time expires.
NHA v. CA, 2005: The law clearly limits any usufruct
constituted in favor of a corporation or association to 50
years. A usufruct is meant only as a lifetime grant. Unlike
a natural person, a corporation or association’s lifetime
may be extended indefinitely.
Requirements (Sec.12):
authorized capital stock requirement except
as otherwise provided by special law as long
as the paid up capital as required by Sec. 13
is not less than P5,000.
  Special laws may require a higher paid-up
capital, as in the case of commercial banks,
insurance companies and investment
PLDT v. NTC, 2007:  The capital subscribed is the total
amount of the capital that persons (subscribers or
shareholders) have agreed to take and pay for, which
need not necessarily by, and can be more than, the par
value of the shares. In fine, it is the amount that the
corporation receives, inclusive of the premiums if any, in
consideration of the original issuance of the shares. In
the case of stock dividends, it is the amount that the
corporation transfers from its surplus profit account to
its capital account.
Lanuza v. CA, 2005: Thus, quorum is based on the
totality of the shares which have been subscribed and
issued, whether it be the founders’ shares or common
shares. In the instant case, two figures are being pitted
against each other—  those contained in the articles of
incorporation, and those listed in the stock and transfer
book.
  One that defines the charter of the
corporation and the contractual
  Copy of AOI returned with the certificate of
incorporation becomes its corporate charter
enabling the corporation to exist and
function as such.
AOI.
 
secondary purpose;
(4)  Term of existence;
the incorporators;
(7)  Names, nationalities & residences of
acting D/T until the first regular D/T are
elected
(c)  
(ii)  Names, nationalities & residence
each on his subscription
such fact must be stated.
(9)  If non-stock:
the contributors
(10) Such other matters not inconsistent
with the law.
least 25% of the ACS has been subscribed,
and at least 25% of the total subscription has
been fully paid to him in actual cash or
property
P5000.
corporate charter 
in Sec.145 of Code, subject to limitation
provided with respect to vested rights
that have accrued, and prohibition
against impairment of obligation of
contracts.
(1)  Expressly conferred by:
(b)  Sec.37- Extension/Shortening of
d.  Non-Amendable Items 
the 1 st
 set of director/trustees
the corporation elected by the subscribers
and the witnesses
Incorporation 
b.  Requisite of Valid By-laws 
c.  Binding Effects 
indispensable to corporations in this jurisdiction. These
may not be essential to corporate birth but certainly,
these are required by law for an orderly governance and
management of corporations. Nonetheless, failure to file
them within the period required by law by no means
tolls the automatic dissolution of a corporation.
CBC v. CA, 1997: The general rule really is that third
persons are not bound by the by-laws of a corporation
since they are not privy thereto (Fleischer v. Botica
Nolasco, 47 Phil. 584). The exception to this is when third
persons have actual or constructive knowledge of the
same. In the case at bar, petitioner had actual knowledge
of the by-laws of private respondent when petitioner
foreclosed the pledge made by Calapatia and when
petitioner purchased the share foreclosed on September
17, 1985. This is proven by the fact that prior thereto,
i.e., on May 14, 1985 petitioner even quoted a portion of
private respondent's by-laws which is material to the
issue herein in a letter it wrote to private respondent.
Because of this actual knowledge of such by-laws then
the same bound the petitioner as of the time when
petitioner purchased the share.
Montelibano v. Bacolod Murcia, 1962:
  Power to Extend/ Shorten Corporate Term
 
Indebtedness