You are on page 1of 3

July 16, 2013

BM 162

HISTORY

Corporate Form of BO:

• Used in Greece and Rome


• Developed in England and transplanted in America
• In the Philippines, there was no business entity in Spanish law corresponding to a corporation in
English and MERICAN LAW
• In Spanish law, there was the B.O known as sociedad anomina
• American period
◦ Organic Acts, Philippine Bill of July 1,1902
◦ Philippine Commission entered upon the enactment of a general law authorizing the
creation of Batas Pambansa Bilang 68 – or THE CORPORATION CODE OF THE
PHILIPPINES (May 1, 1980)
▪ Seek to publish new concept of business corporation so that they are not merely entities
established for private gain
▪ Granted ample powers to SEC (register articles of incorporation) in the supervision over
the operations and activities of private corporations

ATTRIBUTES
• ARTIFICIAL BEING:

◦ fictitious
◦ given by law with rights, powers and liabilities usually accorded a natural person
◦ it can act only through directors (legislative body) who are chosen by stockholders; the
directors elect their officers (e.g. president, CEO, COO, VPs; executive body) and make
policies
◦ the officers select other agents and employees

▪ LEGAL OR JURIDICAL PERSON:

1. Takes and holds property and conveys the same


2. It contracts obligation
3. It sues and is sued in its corporate name
4. The members or stockholders of the corporation are not regarded in their
individual capacity. They merely compose the corporation but they are not the
corporation.

• CREATED BY OPERATION OF LAW

◦ its existence is by authority of the state


◦ cannot arise by voluntary agreement of the partners like in a partnership
• HAS THE RIGHT OF SUCCESSION (May continue its existence, regardless of:)

◦ Death, insolvency, incapacity of any of its directors, officers or employees


◦ Transfer of shares from one stockholder to another
◦ Term but not beyond 50 years

• HAS THE POWERS, ATTRIBUTES AND PROPERTIES AUTHORIZED BY LAW OR


INCIDENT TO ITS EXISTENCE

◦ either authorized by law (expressly granted)


◦ incident to its existence (impliedly allowed by law or its charter)

CORPORATE NATIONALITY

(1) Incorporation rule: a recognized doctrine of corporate law that a private corporation is a
national citizen, resident or inhabitant of the country under whose laws it was created or
organized

(2) Control test: the citizenship or nationality of a corporation is determined by the citizenship of
its controlling stockholders

DOCTRINE OF PIERCING THE VEIL OF CORPORATE FICTION

General Rule:

A corporation is considered as a legal entity until sufficient reason to the contrary appears.

Exceptions:

A corporation is regarded merely as an association of persons, when the notion of legal entity is
used to:

1. defeat public convenience


2. justify wrong
3. protect fraud
4. defend crime

MERE OWNERSHIP BY SINGLE STOCKHOLDERS IS NOT GROUND TO DISREGARD


CORPORATE PERSONALITY

IDENTICAL FEATURES OF PARTNERSHIPS AND CORPORATIONS

1. organizations composed of an aggregate of individuals


2. have juridical personalities distinct from their component members
3. can act only through their agents

(refer to excel for DISTINCTION BETWEEN A CORPORATION AND A PARTNERSHIP, ADVATAGES


AND DISADVANTAGES)