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GENERAL PROVISION
WHAT IS A
CORPORATION
A corporation is 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 68)
TEST TO DETERMINE THE
NATIONALITY OF CORPORATION
1. Incorporation test –
Determined by the state
of incorporation,
regardless of the
nationality of the
stockholders.
TEST TO DETERMINE THE
NATIONALITY OF CORPORATION
2. Domiciliary test –
Determined by the
principal place of
business of the
corporation.
TEST TO DETERMINE THE
NATIONALITY OF CORPORATION
1. Extent of Liability
Corporation - No effect
4. Transfer of interest
5. How created
Corporation – by law
Partnership - by agreement
DIFFERENCE BETWEEN
CORPORATION AND PARTNERSHIP
6. Powers
7. How managed
Corporation – Through the board
of directors.
3. Rights of succession
ATTRIBUTES OF A CORPORATION
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ARTIFICIAL BEING WITH
SEPARATE PERSONALITY
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DOCTRINE OF SEPARATE
PERSONALITY
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CONSEQUENCES
SEPARATE PERSONALITY
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a. Liability for acts or contracts
The general rule is that obligations
incurred by a corporation, acting
through its authorized agents are its
sole liabilities. Similarly, a corporation
may not generally, be made to answer
for acts or liabilities of its stockholders
or members or those of the legal
entities to which it may be connected
and vice versa (Creese vs. CA, 93
SCRA 483).
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b. Right to bring actions
It may bring civil and criminal
actions in its own name in the
same manner as natural
persons (Art. 46, NCC).
Ex. Pepsi cola can file a case
against sarsi.
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c. Right to acquire and possess
property
Property conveyed to or
acquired by the corporation is
in law the property of the
corporation itself as a distinct
legal entity and not that of the
stockholders or members (Art.
44(3), NCC).
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d. Acquisition of court of
jurisdiction
Service of summons may be
made on the president,
general manager, corporate
secretary, treasurer or in-
house counsel (Sec. 11,
Rule 14, Rules of Court).
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e. Changes in individual
membership
Corporation remains
unchanged and unaffected in
its identity by changes in its
individual membership (The
Corporation Code of the
Philippines Annotated, Hector
de Leon, 2002 ed.).
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f. Entitlement to
constitutional guaranties
Corporations are entitled to
certain constitutional rights:
a. Due process (Albert v.
University Publishing, Inc. 13
SCRA 84 [1965])
b. Equal Protection of the law
(Smith, Bell & Co. v. Natividad, 40
Phil. 136 [1919])
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f. Entitlement to
constitutional guaranties
c. Protection against
unreasonable
searches and seizures
(Stonehill v. Diokno, 20
SCRA 383 [1967])
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g. Entitlement to constitutional
guaranties
However, it is not entitled to certain
constitutional rights such as political rights
or purely personal rights not only because it
is an artificial being but also because it is a
mere creature of law (Reviewer in
Commercial Law, Jose R. Sundiang &
Timoteo Aquino, 2005 ed.)
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j. Liability for Crimes
Since a corporation is a mere legal
fiction, it cannot be held liable for a
crime committed by its officers since it
does not have the essential element of
malice, except if by express provision
of law, the corporation is held
criminally liable. In such case the
responsible officers would be
criminally liable (People vs. Tan Boon
Kong, 54 Phil. 607 [1930]).
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2. CREATED BY OPERATION OF LAW
1. Stock Corporation
2. Non-stock Corporation
1. STOCK CORPORATION
Stock Corporations – are
corporations which have capital
stock divided into shares and
are authorized to distribute to
the holders of such shares
dividends or allotments of the
surplus profits on the basis of
the shares held.
STOCK CORPORATION
ARE DIVIDED INTO
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REASON FOR PRICE FLUCTUATIONS OF
STOCK PRICES IN THE MARKET
3.Ecclesiastical or EXAMPLE OF
religious corporations– ECCLESIASTICAL
those composed
CORPORATION
exclusively of
ecclesiastics organized
for spiritual purposes Roman Catholic
or for administering Churches
properties held for
religious ones. They
are further classified as
religious societies or
corporation sole.
OTHER CLASSES OF CORPORATION
4. Eleemosynary
Lay corporations– corporations are
created for
those established charitable and
for the purposes benevolent
other purposes.
than religion. Civil corporations
are organized not
for the purpose of
They are further public charity but
for the benefit,
classified as pecuniary or
eleemosynary or otherwise, of its
civil. members.
OTHER CLASSES OF CORPORATION
5. Aggregate corporation–
those composed of
a number of individuals
vested with corporate
powers.
OTHER CLASSES OF CORPORATION
6. EXAMPLE OF
Corporations sole– CORPORATION
those that consist of
one person or SOLE
individual only and
who are made as
bodies corporate Bishops (for and in
and politic in order behalf of the church
to give them some represented by him)
legal capacity and
advantage which,
as natural persons,
they cannot have.
OTHER CLASSES OF CORPORATION
EXAMPLE
11.Holding corpo
JGS(JG Summit) of the
rations– Gokingwei’s,
corporations AC(Ayala Corp.) of the Ayala’s,
SM(SM Investments) of
that confine their the Sy’s,
activities to LPZ(Lopez Group) of the
Lopez’s, and
owning stock in, MPI(Metro Pacific
and supervising Investments) of Manny V.
Pangilinan of First Pacific
management of are the known holding firms
other companies. in the Philippines.
OTHER CLASSES OF CORPORATION
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