CORPORATION

- Presupposes that an inclusion of other people is included

- Before the revised corp code, corporation needs to be atleast 5 persons
- But now a one-man corp is possible

PARTNERSHIP VS CORPORATION
A. Distinction in Existence:
1. Partnership – clear consent – exist legally as another juridical
person
a. Ex. A formed partnership with B, their partnership is a
different person. If A owned land and B owned trucks and
gave it to the partnership, it now belongs to the
partnership, not to A and B.
b. If AB partnership borrowed money and unable to pay, can
bank go after the partners? Yes, because in general
partnership, in general rule, they do not have limited
liabilities
c. Transferability of shares – ex. If A wants to sell his shares to
D, as a general rule he can, but he needs the consent of the
other partners
d. Ability to Bind – A transacts with a grocery (ill supply bread
to you, utang). Then other partners complain why is it
utang our capital cant handle that. But a signed contract is
present. Is it binding? Yes, each partner is an agent of a
partnership (in the ordinary course of business)
e. Mismanagement – one partner can sue another partner
f. Registration – U are already a partnership by the time you
have made the contract, not by the issuing of the cert of
partnership
g. Taxation – taxed at 30%: not double taxation: partners are
taxed, partnership is taxed, as a general rule
h. Dissolution – death of any partner or resigned/retired,
dissolved ang partnership
2. Corporation – issuance of cert of incorporation - – exist legally as
another personality
a. If XYZ corp borrowed money and unable to pay, can bank
go after X,Y,Z? No, because generally speaking, they are
separate juridical persons. And covered by limited liability.
b. Creditor as a general rule after the shareholder, their
liabilities will only go as far as their subscription
c. Transferability of shares – ex. Y,Z hates X? X wants to sell
his shares to 1, as a general rule he can without the consent
of the others. Articles of incorporation can provide
restrictions, but it has to be there as an exception to the
general rule. (free transferability of shares – shares in the
corp can be shared to anyone)
d. Ability to bind – the shareholder will not bind the
corporation in a stock corporation. Who will bind the corp?
the directors. The management of corporation is lodged to
The Board of Directors, not Members of the Board. This
means you deal with them as a group.
e. In a corporation there are the policy making body and the
Officer, which will represent the corporation. As a general
rule, all decisions must be made by the board of directors
and approved. Therefore, the officer cannot act. However,
in ordinary course of business, the officer has the authority
to act.
f. Primary body to make decisions – The Board
g. They will constitute the officer as Agent – the board has the
power to give power to the officer to transact; this is how it
should be
h. Now if the board does not grant agent power, he does not
have power. Whatever he does, does not bind the
corporation
i. There is a general rule as principle of apparent authority
j. Ex. Board gives President the power to give 50% discount,
but then the President gives 60% discount. Will this bind
the corporation? Yes. Unless the customer knows that the
 President is only given by the board to give 50% discount,
he has the apparent authority to give it.
k. Officers – President, VP, Corporate Secretary – keeps the
record of the board and certify whatever is resolved there,
Treasurer – who keeps the money, etc. they are the agents
of the corporations
l. Mismanagement – Board and Officers mismanaged. As a
member, can you sue them? as a general rule, no. If Officer
mismanages, who is injured? The corporation, and it is a
different person as well. And his actions is authorized by
the Board. But members can sue by way of derivative suit.
m. As a stockholder, you don’t own the property of the
corporation. You only own your shares of stocks.
n. Registration – not a corporation yet even though they have
made the contract
o. Taxed – same as partnership
p. Dissolution – if one shareholder dies/retires/resigns, it will
only be transferred to the successor (or anak) and the corp
will continue to exist – under the revised corp code, the
corp will live forever unless dissolved by the board or the
officers