I.

1. Instances when the veil of corporate fiction can be pierced

a) when the separate and distinct corporate personality defeats public convenience, as
when the corporate fiction is used as a vehicle for the evasion of an existing obligation
b) in fraud cases, or when the corporate entity is used to justify a wrong, protect a
fraud, or defend a crime; or
c) is used in alter ego cases, i.e., where a corporation is essentially a farce, since it is a
mere alter ego or business conduit of a person, or where the corporation is so
organized and controlled and its affairs so conducted as to make it merely an
instrumentality, agency, conduit or adjunct of another corporation.
In the absence of malice, bad faith, or a specific provision of law making a corporate
officer liable, such corporate officer cannot be made personally liable for corporate
liabilities.
(PALAY VS. CLAVE)
2. Similarities/Distinctions between De Jure and a De Facto Corporation
DE JURE
A de jure corporation is one that is lawfully
chartered by a state government, and is
recognized as a corporation for all
purposes.

DE FACTO
A de facto corporation is a
defectively
organized
corporation, which has all the
powers and liabilities of a de
jure corporation and, except
as to the State, has a juridical
personality
distinct
and
separate
from
its
shareholders.
REQUISITES:
(1) That there is an
apparently valid statute
under
which
the
corporation with its
purposes
may
be
formed;
(2)

That there has been

colorable compliance
with
the
legal
requirements in good
faith; and,

(3)

That there has been

use
of
corporate
powers,
i.e.,
the
transaction of business
in some way as if it
were a corporation.

3. Define:
a. Foreign Corporation ( Sec.123 Corpo Code )
One formed, organized or existing under any laws other than those of the Philippines
and whose law allows Filipino citizens and corporations to do business in its own
country and state.
Requisites:
1. Must be formed abroad
2. Reciprocity

b. Close Corporation (Sec 96)

is one whose articles of incorporation provide that:
1) not more than 20 members
2) stocks are subject to more specified restrictions on transfer permitted
3) the corporation shall not list in any stock exchange or make any public offering of
any of its stock of any class.
4. Discuss the liability of a corporation in a pre-incorporation contract entered
into by a promoter in its behalf
GR: Corporation is not liable in contracts entered into by the promoters prior to
organization
Except: If the corporation ratified it after organization (Doctrine of Ratification, Mcarthur
vs Times Printing)

Exception to the Exception: but the code may decline to extend the doctrine of
ratification which would result in the commission of injustice or fraud to the candid and
unwary. (Cagayan Fishing vs Sandiko)
5. What are the corporate votes/approvals required in the following :
a. Amendment of AOI of regular corporation (Section 16)
Unless otherwise prescribed by this Code or by special law, and for legitimate purposes,
any provision or matter stated in the articles of incorporation may be amended by a
majority vote of the board of directors or trustees and the vote or written assent of the
stockholders representing at least two-thirds (2/3) of the outstanding capital stock,
without prejudice to the appraisal right of dissenting stockholders in accordance with the
provisions of this Code, or the vote or written assent of at least two-thirds (2/3) of the
members if it be a non-stock corporation.
b. Amendment of by-law provisions
Section 48. The board of directors or trustees, by a majority vote thereof, and the
owners of at least a majority of the outstanding capital stock, or at least a majority of the
members of a non-stock corporation, at a regular or special meeting duly called for the
purpose, may amend or repeal any by-laws or adopt new by-laws.
The owners of two-thirds (2/3) of the outstanding capital stock or two-thirds (2/3) of the
members in a non-stock corporation may delegate to the board of directors or trustees
the power to amend or repeal any by-laws or adopt new by-laws: Provided, That any
power delegated to the board of directors or trustees to amend or repeal any by-laws or
adopt new by-laws shall be considered as revoked whenever stockholders owning or
representing a majority of the outstanding capital stock or a majority of the members in
non-stock corporations, shall so vote at a regular or special meeting.
c. Amendment of AOI of a corporation sole
True, the Corporation Code provides no specific mechanism for amending the articles of
incorporation of a corporation sole. But, as the RTC correctly held, Section 109 of the
Corporation Code allows the application to religious corporations of the general
provisions governing non-stock corporations.
For non-stock corporations, the power to amend its articles of incorporation lies in its
members. The code requires two-thirds of their votes for the approval of such an
amendment. So how will this requirement apply to a corporation sole that has
technically but one member (the head of the religious organization) who holds in his
hands its broad corporate powers over the properties, rights, and interests of his
religious organization?

Although a non-stock corporation has a personality that is distinct from those of its
members who established it, its articles of incorporation cannot be amended solely
through the action of its board of trustees. The amendment needs the concurrence of at
least two-thirds of its membership. If such approval mechanism is made to operate in a
corporation sole, its one member in whom all the powers of the corporation technically
belongs, needs to get the concurrence of two-thirds of its membership. The one
member, here the General Superintendent, is but a trustee, according to Section 110 of
the Corporation Code, of its membership. ( Iglesia Evangelica vs Lazaro)
(

II.
1. A corporation cannot be held criminally liable
False
Ching vs Secretary of Justice
If the crime is committed by a corporation or other juridical entity, the directors,
officers, employees or other officers thereof responsible for the offense shall be
charged and penalized for the crime, precisely because of the nature of the crime
and the penalty therefor. A corporation cannot be arrested and imprisoned; hence,
cannot be penalized for a crime punishable by imprisonment. 49 However, a
corporation may be charged and prosecuted for a crime if the imposable penalty is
fine. Even if the statute prescribes both fine and imprisonment as penalty, a
corporation may be prosecuted and, if found guilty, may be fined.

2. A corporation can be awarded moral damages

GR: A juridical person is generally not entitled to moral damages because, unlike
a natural person, it cannot experience physical suffering or such sentiments as
wounded feelings, serious anxiety, mental anguish or moral shock
Except:
The statement in People v. Manero and Mambulao Lumber Co. v. PNB, that a
corporation may recover moral damages if it has a good reputation that is
debased, resulting in social humiliation is an obiter dictum. Recovery of a
corporation would be under Articles 19, 20 and 21 of the Civil Code, but which
requires a clear proof of malice or bad faith. ABS-CBN Broadcasting Corp. v. Court
of Appeals, 301 SCRA 589 (1999).
Likewise, an educational corporations claim for moral damages arising from
libel falls under Article 2219(7) of the Civil Code, which expressly authorizes the
recovery of moral damages in cases of libel, slander or any other form of

defamation, and does not qualify whether the plaintiff is a natural or juridical person.
Therefore, a juridical person can validly complain for libel or any other form of
defamation and claim for moral damages. Filipinas Broadcasting Network v. Ago
Medical and Educational Center, 448 SCRA 413 (2005).
3. The Juridical personality of a partnership begins upon SEC registration
while that of a sole proprietorship begins upon registration with the DTI
False, a partnership becomes a juridical person from the time the contract begins
while a sole proprietorship has no juridical personality.
4. In personal actions, the residence of a corporation for venue purposes is
the place where the principal office or any of its branch offices is located.
Although the Rules of Court do not provide that when the plaintiff is a
corporation, the complaint should be filed in the location of its principal office as
indicated in its articles of incorporation, jurisprudence has, however, settled that
the place where the principal office of a corporation is located, as stated in the
articles, indeed establishes its residence. This ruling is important in determining
the venue of an action by or against a corporation, as in the present case. Hyatt
Elevators and Escalators Corp. v. Goldstar Elevators, Phils., Inc., 473 SCRA 705
(2005), citing VILLANUEVA, PHILIPPINE CORPORATE LAW (1998)
5. Extending or shortening the term of a stock corporation requires the
majority vote of its directors and the vote or written assent of its
stockholders representing at least 2/3 of its outstanding capital stock.
False, the amendment under section 37 must be taken at a meeting of
stockholders or members upon a VOTE. Mere written assent would not be
sufficient.
III.Essay
1. XYZ Corporation changed its name to ABC Corporation by publishing the name
change on a newspaper of general circulation. Thereafter, creditors of XYZ Corporation
started filing cases against ABC Corporation. The latter maintains that ABC Corporation
is separate and distinct from XYZ Corporation so that the creditors of XYZ Corporation
cannot go after ABC Corporation. Is this contention tenable? Explain

NO. In the case of Republic Planters bank, the court held that change in the corporate
name does not make a new corporation, and whether effected by special act or under a
general law, has no effect on the identity of the corporation, or on its property, rights, or
liabilities.