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A. CorporationAn artificial being, created by operation

of law, having the capacity of succession and thepowers, attributes and properties expresslyauthorized by law or incident to its existence (Sec.2, CC).

B. Attributes of Corporation1. Artificial being

It has a juridical personality existsindependently from stockholders,members or its officersa. Doctrine of Corporate Entity A

corporation comes into existenceupon the issuance of the certificate ofincorporation (Sec 19, CC). Then andonly then will it acquire a juridicalpersonality to sue and be sued, enter

into contracts, hold or conveyproperty or perform any legal act, inits own name.i) Residence and nationality

the Code does not providefor any citizenshiprequirement but onlyresidency requirement for thequalification of incorporators

ii) Constitutional rights (a)Due process (Albert v.University Publishing, Inc.(13 SCRA 84 [1965]); (b)

Equal protection of law(Smith Bell and Co. v.Natividad, 40 Phil. 136[1919]); (c) Protection againstunreasonable search andseizure (Stonehill v. Diokno,20 SCRA 383 [1967].

iii) Criminal liability Since acorporation is a mere legalfiction, it cannot be heldliable for a crime committedby its officers. It does not

have the essential element ofmalice.

iv) Right to recover moraldamages. A corporation isnot entitled to moraldamages because it has nofeeling, no emotions, nosenses (ABS CBN v. CA,

GR No. 128690, Jan 21,1999).

However a corporationis entitled for moral damagesin cases of libel, slander, orany form of defamation. Art.

2219(7) of the Civil Codedoes qualify whether theplaintiff is a natural orjuridical person (FilipinasBroadcasting Network. v.Ago Medical andEducational Center-Bicol, et.al, GR No. 141954, Jan. 17,2005)

b. Doctrine of piercing the veil ofcorporate entitythe doctrine that acorporation is distinct from the

person composing it is a theoryintroduced for purposes ofconvenience and to serve the ends ofjustice. But when the veil ofcorporate fiction is used as a shield todefeat public convenience, justifywrong, protect fraud or defend acrime, this fictin shall be disregardedand the individuals composing it willbe treated identically (Cruz v. Dalisay,152 SCRA 487 [1987]).

It means that while thecorporation cannot be generally held

liable for act or liabilities of itsstockholders or members, and viceversa because a corporation has apersonality separate and distinct fromits members or stockholders,however the corporate existence isdisregarded under this doctrine whenthe corporation is formed or used forillegitimate purposes, particularly, as ashield to perpetuate fraud, defeatpublic convenience, justify wrong,evade a just and valid obligation or

defend a crime.The doctrine requires the court

to see through the protective shroudwhich exempts its stockholders fromliabilities that they are ordinarilywould be subject to, or distinguishesa corporation from a seeminglyseparate one, were it not for the

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existing corporate fiction (Lim v. CA323 SCRA 102).

The doctrine aims to protect theinterest of innocent third persondealing with the corporation.i) Alter ego principle or

instrumentality rule Whenone corporation is soorganized and controlled andits affairs are conducted sothat it is in fact a mereinstrumentality or adjunct ofthe other, the fiction of thecorporate entity to theinstrumentality may bedisregarded (ConceptBuilders, Inc. v. NLRC, 257SCRA 149 [1996].

TEST: (1) Control, notmere majority or completestock control, but completedominion, not only offinances but of policy andbusiness in respect to thetransaction attacked so thatthe corporate entity as to thistransaction had at the timeno separate mind, will orexistence of its own; (2) Suchconcept must have been usedby the defendant to commit

fraud or wrong incontravention of plaintiffslegal right; and (3) theaforesaid control and breachof duty must proximatelycause the injury or unjustloss complained of (ConceptBuilders, Inc. v. NLRC, 257SCRA 149 [1996].

ii) Probative factors of identity:(1) Stock ownership by oneor common ownership of

both corporations; (2)Identity of directors andofficers; (3) The manner ofkeeping corporate books andrecords; and (4) Methods ofconducting the business(Concept Builders, Inc. v.NLRC, 257 SCRA 149[1996].

2. Creature of lawCorporation cannot come into

existence by mere agreement of theparties as in the case of businesspartnership. It requires special grant from

State exercised by the legislature eitherthrough special incorporation law orcharter or general corporation law.i) Constitutional limitations.

Congress shall not, except bygeneral law, provide for theformation, organization, orregulation of privatecorporations. Government-owned or controlled corporationmay be created or established byspecial charters in the interest of

the common good and subject tothe test of economic viability(Art. 12, Sec. 16, 1987Constitution)

3. Right of successionIt is the capacity to have

continuity of existence despite thechanges of the persons who compose it.Thus, the personality continues despitethe changes of stockholders, members,board members or officers.

Unlike in partnership, the death,

incapacity or civil interdiction of one ormore of its stockholders does not resultin its dissolution. It persists to existindependently of the individuals orpersons composing it.

Continuity of existence: Therights and obligations of the a corporationare not affected by the death, incapacityor replacement of the individualmembers, but the corporate businesscontinues uninterrupted and unaffected aslong as the corporate entity continues.

4. Creature of enumerated powers, attributesand properties

As it is a mere creature of thelaw, it can exercise only such powers asthe law may choose to grant it, eitherexpressly or impliedly

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a. Doctrine of limited capacities ascompared to the doctrine of generalcapacitiesDoctrine of limited capacity nocorporation under the Code shallposses or exercise any corporate

power, except those contracted bylaw, its Articles of Incorporation,those implied from express powersand those as are necessary orincidental to the exercise of thepowers so conferred (Sec. 45, CC).The corporation capacity is limited tosuch express, implied or incidentalpowers.

b. Ultra vires doctrineif the act of thecorporation is not one of thoseexpress, implied or incidental powers,

the act is ultra vires.

Classification of Corporations