Chapter 3 Juridical Persons Art. 44.

. The following are juridical persons: (1) The State and its political subdivisions; ( 2 ) Other corporations, institutions and entities for public interest or purpose, created by law; their personality begins as soon as the y have been constituted according to law; ( 3 ) Corporations, partnerships and associations for private interest or purpose to w hich the law grants a juridical personality, separate and distinct from that of each shareholder, partner or member. Juridical Person - a being of legal existence susceptible of rights and obligations, or of being the subject of juridical relations. State - a sovereign person with the people composing it viewed as an organized corporate society under a government with the legal competence to exact obedience of its commands. the political organization of a society legally supreme within and independent of legal control from without the state can enter into treaties and contracts. In default of persons entitled to succeed to the estate of a deceased person, the State shall inherit his whole estate (Article 1011 of the Civil Code) fundamental rule: the state cannot be sued without its consent (Article XVI, Section 2 of the 1987 Philippine Constitution). o Express consent may be embodied in a general law or a special law. o Implied consent - when the government enters into business contracts, thereby descending to the level of the other contracting party, and also when the State fi les a complaint, thus opening itself to a counterclaim. Suability depends on the consent of the state to be sued Liability depends on the applicable law and the established facts ** The circumstance that a state is suable does not necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first consent to be sued. Political subdivisions - are municipal corporations and, in the Philippines, consist of the provinces, cities and municipalities Municipal corporations suable because their charters grant them the competence to sue and be sued. generally not liable for torts committed by them in the discharge of governmental functions and can be held answerable only if it can be shown that they were acting in a proprietary capacity. exist in a dual capacity, and their functions are two-fold; should enjoy the sovereign immunity from suit 1. They exercise the right springing from sovereignty, and while in the performance of the duties pertaining thereto, their acts are political and governmental. o Their officers and agents in such capacity, though elected or appointed by them, are nevertheless public functionaries performing a public service, and as such they are officers, agents and servants of the state. 2. The municipalities exercise a private, proprietary or corporate right, arising from their existence as legal persons and not as public agencies. o Their officers and agents in the performance of such functions act in behalf of the municipalities in their corporate or individual capacity, and not for the state of sovereign power Corporation - an artificial being created by operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incident to its existence (Section 2, Batas Pambansa Blg. 68). Partnership - By the contract of partnership, two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. Two or more persons may also form a partnership for the exercise of a profession (Article 1767 of the Civil Code). Corporations, partnerships and associations for private interest and pur pose may be granted by law a juridical personality, separate and distinct from that of each shareholder, partner or member. Hence, the obligation of the corporation is not the obligation of the stock holders and vice versa. Classification of Juridical Persons (a) Public juridical persons 1 . P ublic cor pora tions like the pr o vince and the cit y - those formed or organized for the Government of a portion of the State 2. T h e s t a t e i t s e l f

(b)
1.

Private juridical persons Private corporations

2. 3.

- those formed for some private purpose, benefit, aim, or end, as distinguished from public corporations which have for their purpose the general good and welfare. Partnerships Foundations

When Personalit y of Pri vate Juridical Persons Begins from the moment a certificate of incorporation is granted certificate is issued upon filing the articles of incorporation with the Securities and Exchange Commission. a corporation cannot be regarded as possessed of a personality separate and distinct from its members - to allow it would be to sanction the use of the fiction of corporate identity as a shield to further an end subversive of justice. to organize a corporation or a partnership that could claim a juridical personality of its own and transact business as such is NOT a matter of absolute right but a PRIVILEGE which may be enjoyed only under such terms as the State may deem necessary to impose. a partnership, even if not registered is a juridical person, provided that it has been validly constituted. a limited partnership, to be valid as such, must be registered with the Securities and Exchange Commission. The Church The Roman Catholic Church in the Philippines is a person. It is an entity or person separate and distinct from the personality of the Pope or the Holy See. The Roman Catholic Church, or any of its corporation soles, duly incorporated in the Philippines, can therefore acquire lands in our country. The Roman Catholics of a parish are not a juridical person, there being no provision of law for their organization as one.

Art. 45. Juridical persons mentioned in Nos. 1 and 2 of the preceding article are governed by the la ws creating or recognizing them. Private corporations are regulated b y law s of general application on the subject. Partnerships and associations for private interest or purpose are governed by the provisions of this Code concerning partnerships. (36 and 37a) Determination of Nationalit y of Juridical Persons The nationality of a corporation is generally determined by the place of its incorporation. Two exceptions to this rule: 1. For the grant of the rights in the Constitution to the operation of public utilities, and for the acquisition of land and other natural resources, a corporation, even if incorporated here, cannot acquire said rights unless 60% of its capital be Philippine-owned. 2. During war, we may pierce the veil of corporate identity, and go to the very nationality of the controlling stockholders regardless of where the incorporation had been made. Thus a Germancontrolled corporation, even if incorporated in the Philippines, was considered an enemy corporation during the war for the purpose of freezing its assets. A contrary rule may endanger Philippine security. 3. Converse Rubber Corp. v. Universal Rubber Products, Inc. ( L-27906, Jan. 8, 1987) - Even if a foreign corporation is not doing business in the Philippines, and even if not licensed, it may sue here in our country. Georg Grotjahn GMBH & Co v. Hon. Lucia Violago Isnani, et al. ( GR 109272, Aug. 10, 1994 54 SCAD 289) - There is no general rule or governing principle as to what constitutes doing or engaging in or transacting business in the Philippines. A r t . 4 6 . J u r i d i c a l p e r s o n s m a y a c q u i r e a n d p o s s e s s propert y of all kinds, as well as incur obligations and bring civil or criminal actions, in conformit y w ith the law s and regulations of their organization. (38a) Rights of Juridical Persons ( a ) To acquire and possess property of all kinds. (b) T o i n c u r o b l i g a t i o n s . ( c ) To b r i n g c i vi l o r c r i m i n a l a c t i o n s . A corporation being a juridical person, by itself can be held liable without any personal liability on the part of the stockholders, still said stockholders may be held for obligations contracted by the corporation whenever circumstances have shown that the corporate entity is being used as an alter ego (other self) or business conduit for the sole benefit of the stockholders. A corporation is civilly liable in the manner as natural persons for torts committed by its of cers or agents. The fact that one or more corporations are owned and controlled by a single stockholder is NOT sufficient for disregarding separate corporate entities

Where a corporation is a dummy, is unreal, or a sham and serves no business purpose and is intended only as a blind, the corporate form may be ignored, for the law cannot countenance a form that is a mischievous fiction.

Philips Expa B.V. v. CA (GR 96161, Feb. 21, 1992) - The general rule is that a corporation is entitled to use a name, but not in violation of the rights of others. A Corporation may not form a partnership due to the (1) absence of mutual trust and confidence , and (2) if the corporation can be a partner, any other partner may bind it, and this is contrary to the Corporation Law (now Corporation Code), which says that a corporation can be bound only by the act of its Board of Directors. It may enter into joint venture with another corporation where the nature of venture is in line with the business authorized by its charter. Capacity to Acquire Lands A religious corporation not controlled by Filipinos cannot acquire lands, otherwise alien religious landholdings in this country would be revived. Roman Catholic Church in the Philippines can acquire lands. An American citizen, under the Parity Amendment, can acquire lands in the Philippines, exploit our natural resources, and operate public utilities, only if in his particular state in the United States, Filipinos are granted RECIPROCAL parity rights. Capacity to Engage in Retail Trade RA 1180 - persons not citizens of the Philippines; and associations, partnerships, or corporations the capital of which is not owned wholly by citizens of the Philippines, are prohibited from engaging in the retail trade directly or indirectly. This is in view of the exercise of police power. There is no class legislation here - all those in the same category are equally affected. A Non-Existent Corporation Cannot Sue The mere grouping together do not give corporate life to the group formed. It cannot act as a corporation. Neither can it create agents or exercise by itself authority in its behalf. A Non-Existent Partnership Cannot Sue If a partnership does not lawfully exist, it cannot sue, but it may be sued, otherwise third persons may be prejudiced. Where two persons represented themselves as co-managers of an alleged partnership, they cannot later on impugn a chattel mortgage on two vehicles executed by them in behalf of the firm, by stating or proving that in truth there was NO partnership between them, but a mere co-ownership. An Unregistered Labor Organization Cannot Sue The cancellation of a labor unions registration certificate (for failure to comply with important requirements would not entail a dissolution of said association or its suspension. The EXISTENCE of the organization would not be affected by said cancellation, although its juridical personality and its statutory rights and privileges as distinguished from those conferred by the Constitution would be suspended thereby. Estoppel A person who contracts with a corporation cannot later deny its personality. The person who represents himself as the agent of a non-existing corporation cannot prevent the person who has been misled from suing the agent personally, since a non-registered corporation does not have a juridical personality. A Dissolved Corporation Even if a corporation has been dissolved, it can still continue prosecuting (as plaintiff) or defending (as a defendant) for the next three years, thru its legal counsel, who may be considered a trustee for this purpose. Art. 47. Upon the dissolution of corporations, institutions and other entities for public interest or purpose mentioned in No. 2 of Article 44, their propert y and other assets shall be disposed of in pursuance of law or the charter creating them. If nothing has been sp ecified on this point, the prop erty and other assets shall be applied to similar purposes for the benefit of the region, province, city or municipality which during the existence of the institution derived the principal ben efits from the same. (39a) (1) Rule If Public Juridical Persons Are Dissolved (a) This Article refers to public corporations or associations. (b) H o w a s s e t s a r e t o b e d i s t r i b u t e d : 1) First apply the provisions of the law or charter creating them. 2) If there is no such provision, the assets will be for the benefit of the place which was already receiving the principal benefits during the existence of the corporation or association. Laws or charters governing the dissolutions of the following corporations: Private corporations - Title IV of the Corporation Code.

Corporations for public interest or purposes created by a charter - in accordance with the provisions of their respective charters and in the absence of any such provision, by the provision of the Corporation Code. Partnership - Title IX, Chapter 3 of the Civil Code

(2) How a Corporation Can Exercise Its Powers and Trans act Business Only thru its board of directors, officers, and agents when authorized by a board resolution or its by-laws. (3) Effect When a Corporation Is a Mere Alter Ego or Busi ness Conduit of a Person Separate Personality of the Corporation May be Pierced to warrant resort to the extraordinary remedy of piercing the veil of corporate fiction, there must be proof that the corporation is being used as a cloak or cover for fraud or illegality, or to work injustice. books and rewards of the corporation are, ordinarily, the best evidence of corporate acts and proceedings. Close corporation - organized for the purpose of running a family business or managing family property; has formed the backbone of Philippine Commerce and Industry. It should serve as a rallying point for family unity and prosperity not as a flashpoint for familial strife concept of social contract - decision on the direction of the course of the corporate business is vested in the board and not with courts ( 4 ) Signatory of the Certification of Non-Forum Shopping for Corporations Certication of non-forum shopping should be executed and signed by the plaintiff or the principal counsel cannot sign said certication unless clothed with special authority to do so. For corporations, the physical act of signing may be performed, on behalf of the corporate entity, only by specically-authorized individuals for the simple reasons that corporations, as artificial persons, cannot personally do the task themselves. Powers of corporations are exercised thru their board of directors and/or duly-authorized officers and agents, physical acts, like the signing of documents, can be performed only by NATURAL persons duly-authorized for the purpose by a corporate by-laws or by specific acts of the board of directors.