CIVIL LAW > II. PERSONS > A. Juridical Capacity > 1. Acquisition of Personality > b. Juridical Persons

In Philippine law, a juridical person refers to an entity recognized by law as having legal rights and obligations, distinct from the individuals comprising it. This concept is essential in understanding how non-human entities like corporations, associations, and certain organizations can participate in legal relations independently. The framework governing juridical persons in Philippine civil law can be derived mainly from the Civil Code of the Philippines (Republic Act No. 386), specifically Book I, Title II, and various special laws and rules.

I. Definition and Characteristics of Juridical Persons

According to Article 44 of the Civil Code, juridical persons are entities other than human beings to which the law grants a separate legal personality. This separate personality allows them to hold assets, enter into contracts, sue and be sued, and perform acts in their name. The recognition of juridical persons is based on the legal principle that such entities can exist independently of the individual members or shareholders.

The characteristics of a juridical person include:

Separate Legal Personality - Juridical persons have a legal identity distinct from the individuals comprising them.
Perpetual or Limited Existence - Some juridical persons, like corporations, may exist indefinitely or until dissolved, while others may have a predetermined lifespan.
Capacity to Act - Juridical persons can enter into contracts, own property, incur obligations, and exercise rights as provided by law.
Limited Liability - For certain juridical persons, particularly corporations, liability may be limited to the assets of the juridical person itself rather than extending to the personal assets of its members.

II. Types of Juridical Persons

The Civil Code (Article 44) recognizes two primary types of juridical persons in Philippine law:

The State and Its Political Subdivisions - This category includes the national government, local government units (LGUs), and other entities created by law, which serve public purposes and are vested with public powers.
Corporations, Associations, and Institutions for Private Interest or Purpose - This broad category includes private corporations, partnerships, foundations, and non-profit organizations. The existence, powers, and obligations of these entities are often governed by both the Civil Code and specific laws, such as the Corporation Code, Revised Corporation Code, and other related regulations.

III. Requirements for Acquisition of Juridical Personality

The acquisition of juridical personality involves compliance with several requirements, including the following:

Legal Authorization - Juridical personality is not inherent and must be explicitly granted by law or through compliance with legal requirements. For example:
- Corporations acquire personality through registration with the Securities and Exchange Commission (SEC), as provided by the Revised Corporation Code (Republic Act No. 11232).
- Partnerships acquire juridical personality upon the execution of a partnership agreement, provided they do not exceed the capital threshold set by the Civil Code (otherwise, they must register with the SEC).
- Associations and Non-Profit Organizations must also comply with relevant regulations to be granted juridical personality.
Articles of Incorporation or Association - These foundational documents outline the entity's purpose, nature of activities, governance, powers, and scope. For corporations, the articles of incorporation and bylaws must be filed with the SEC. These documents help define the rights and obligations of the juridical person, providing the legal basis for its separate existence.
Compliance with Governmental Requirements - After incorporation, juridical persons must comply with regulatory requirements such as annual reporting, tax registration, and other governmental regulations, depending on their type and purpose.

IV. Rights and Obligations of Juridical Persons

Once juridical personality is acquired, juridical persons are endowed with specific rights and obligations similar to those of natural persons, including:

Capacity to Act - Juridical persons can enter into contracts, acquire property, incur obligations, and engage in various legal acts within the scope of their purpose as stated in their incorporation documents.
Right to Own Property - Juridical persons can own and manage property, provided it serves their lawful purpose. Corporate property is separate from that of individual members or shareholders.
Right to Sue and Be Sued - They have standing to initiate legal action and are likewise subject to litigation. Legal actions against juridical persons are generally limited to their assets, except in cases of liability exceptions, such as fraud or where the corporate veil is pierced.
Limitations on Rights and Obligations - The powers of juridical persons are limited by their purpose as stated in their constitutive documents, any laws governing them, and their nature. For instance, non-profit organizations are typically restricted from engaging in profit-making activities, except as incidental to their purpose.

V. The Doctrine of Piercing the Corporate Veil

An essential concept in Philippine law is the doctrine of piercing the corporate veil, which allows courts to hold shareholders, members, or officers personally liable in cases where the juridical personality of an entity is used to perpetuate fraud, circumvent the law, or evade contractual obligations. This doctrine is applied sparingly and only when there is clear evidence that the separate personality of the juridical person is being abused.

VI. Dissolution and Termination of Juridical Personality

The termination of a juridical person’s legal existence can occur through:

Voluntary Dissolution - A juridical person, such as a corporation, may voluntarily dissolve by the decision of its members or shareholders and the approval of regulatory bodies, following legal procedures.
Involuntary Dissolution - The SEC may initiate dissolution if a corporation fails to comply with reporting obligations or is found to have violated laws.
Expiration of Term - Some entities are formed with a limited duration, and their juridical personality ceases upon the expiration of this term unless renewed.
Liquidation - After dissolution, the entity must liquidate its assets, settle liabilities, and distribute remaining assets to the members or shareholders as allowed by law.

VII. Juridical Persons in Relation to Public Policy and Welfare

Juridical persons are expected to operate within the bounds of public policy, and their activities must align with the general welfare. This is particularly true for entities serving public interests or receiving tax benefits, as these benefits imply a certain obligation to the public.

Conclusion

In Philippine civil law, juridical persons are essential actors that facilitate both public and private interests. The recognition and governance of juridical persons ensure that entities can perform various economic, social, and governmental functions while being accountable under the law. The framework provided by the Civil Code, the Revised Corporation Code, and other statutes establishes juridical persons’ role, rights, obligations, and limitations, ultimately supporting the orderly conduct of both public and private affairs within the Philippines.