Corpo Week2 Notes

CORPORATION LAW ATRTRIBUTES OF CORPORATION
An analysis of the statutory definition of a

Revised Corporation Code of the PH corporation reveals the following
Republic Act 11232, or the Act Providing attributes:
for the Revised Corporation Code of the 1. A corporation is an artificial being
Philippines, was signed into law by Article 44(3) of the Civil Code
President Rodrigo R. Duterte on 21 provides that, just like a partnership,
February 2019. It amends a 38-year-old corporation has a legal personality
Corporation Code in an effort to improve distinct and separate from the
the ease of doing business in the persons and entities owning it. And as
Philippines. such – it may acquire or dispose
properties, it may acquire or dispose
SIGNIFICANT CHANGES: properties, incur or pay obligations,
 Removal of the minimum number of sue and be sued.
incorporators.
 Removal of the fifty (50)-year 2. Created by operation of law
corporate term. This means that unless A It means that private corporations
there is a provision in the Articles of can only exist if the government,
Incorporation with regard to the term through the Securities and Exchange
of corporate existence, the corporation Commission, subject to clearances by
will exist perpetually unless sooner appropriate government agencies,
dissolved. will approve its formation. Thus, its
existence cannot and will never be
 Empowering the Securities and
dependent on the consent or
Exchange Commission (SEC) to remove
agreement of its incorporators.
disqualified members of the Board of
Directors or Trustees. 3. With right of succession
It means that corporations will exist
CORPORATION, defined for a period provided in its articles
A corporation is an artificial being created and shall continue until its term
by operation of law, having the right of expres or dissolves earlier for some
succession and the powers, attributes and causes or even extended in
properties expressly authorized by law or accordance with the law. Hence, its
incident to its existence. (Section 2 of RA capacity of continuous existence
11232, otherwise known as the Revised cannot be dissolved by the death,
Corporation Code of the Philippines) incapacity, or insolvency of a member
or shareholder.
4. Only has powers, attributes, and DOCTRINE OF PIERCING THE VEIL OF
properties expressly authorized by CORRATE FICTION
law or incident to its existence Doctrine of piercing the veil of corporate
It means that a corporation has no fiction states that while a corporation may
powers except for those which are exist for any lawful purpose, the law will
expressly conferred on it by the regard it as a mere collection of
Corporation Code, found in its individuals or, in case of two corporations,
charter, and those that are implied by merge them into one, when the separate
or are incidental to its existence. It corporate personality is used as a mere
exercises its powers through its Board cloak for fraud or illegality. The doctrine
of Directors and/or its duly applies only when such corporate
authorized officers and agents personality is used to defeat public
convenience, justify wrong, protect fraud,
ULTRA VIRES DOCTRINE or defend crime.
Even if the act is lawful, moral and Effect: When corporate veil is pierced, the
not even contrary to public order or separate legal personality of a corporation
policy, but such act is not within the may be disregarded. The corporation and
express, implied and incidental persons who are normally treated as
powers of the corporations – such act distinct from the corporation are treated
shall be void for being ultra vires. as one person.
CONCEPT OF SEPARATE PERSONALITY THREE CASES OF PIERCING THE VEIL:

The corporation’s obligations, incurred 1. Fraud Cases – when a corporation is
through official acts of its representatives, used as a cloak to cover fraud, or to do
are its own. Therefore, a stockholder, wrong;
director, or representative does not 2. Alter Ego Cases – when the corporate
become a party to a contract just because entity is merely a farce since the
a corporation executed a contract through corporation is an alter ego, business
that stockholder, director or conduit or instrumentality of a person
representative. Hence, a corporation’s or another corporation;
representatives are generally not bound
by the terms of the contract executed by 3. Equity cases – when piercing the
the corporation. They are not personally corporate fiction is necessary to
liable for corporate obligations and achieve justice or equity
liabilities.
REQUISITES POWER TO CREATE A CORPORATION IS
Piercing the veil of corporate fiction may LEGISLATIVE IN CHARACTER
be allowed only if the following elements It must be remembered that to organize a
concur: corporation that could claim a juridical
(1) control — not mere stock control, but personality of its own, is not a matter of
complete domination — not only of absolute right but a privilege which may
finances, but of policy and business be enjoyed only under such terms as the
practice in respect to the transaction State may deemed necessary to impose.
attacked, must have been such that
In order words, before a corporation may
the corporate entity as to this acquire juridical personality, the State must
transaction had at the time no give its consent either in the form of a special
separate mind, will or existence of its law or a general enabling act, and the
own; procedure and conditions provided under the
(2) such control must have been used by law for the acquisition of such juridical
the defendant to commit a fraud or a personality must be complied with.
wrong to perpetuate the violation of
a statutory or other positive legal CONSEQUENCES OF SEPARATE
duty, or a dishonest and an unjust act PERSONALITY
in contravention of plaintiff's legal
right; and Entitled to Due Process and Equal
(3) the said control and breach of duty Protection
must have proximately caused the The 14 amendment and so of the first
th
injury or unjust loss complained of. paragraph of theour Bill of Rights, are
universal in their application to all person
within the territorial jurisdiction, w/o
Article XII Section 16 of the 1987 regard to any differences of race, color, or
Constitution provides that the nationality. And certainly, the word
Congress shall not, except by general “persons” includes aliens and that private
law, provide for the formation, corporations, likewise, are “persons”
organization, or regulation of private within the scope of these guaranties. It
corporations. Government-owned or was further discussed that classifications
controlled corporations may be with the end view of providing diversity of
created or established by special treatment may be made among
charters in the interest of the corporations, however – it must be based
common good and subject to the test on reasonable ground. (Smith v.
of economic viability. Natividad)
Entitled to Unreasonable Searches and NOT ENTITLED to privilege against self
Seizures incrimination
Corporations are protected by the
constitutional guarantee against
unreasonable searches and seizures, but
that the officers of a corporation from OTHER CONSEQUENCES
which documents, papers and things were
seized have no cause of action to assail  The penalty of imprisonment cannot
the legality of the seizures, regardless of be imposed. However, the
the amount of shares of stock or of the corporation may be dissolved for
interest of each of them in said violation of the provisions of the
corporation, and whatever the offices they Corporation Code.
hold therein may be, because the  It can incur obligations and its
corporation has a personality distinct and obligations are not the obligations of
separate from those of said officers. The its stockholders, directors and
legality of a seizure can be contested only officers.
by the party whose rights have been  It is liable for tort. It is liable when the
impaired thereby; and the objection to an act was committed by the officer or
unlawful search is purely personal and agent under express direction or
cannot be availed of by such officers of authority from the stockholders or
the corporation who interpose it for their members acting as a body or
personal interests. (Stonehill v. Diokno) generally from the directors as the
governing body
A corporation is but an association of  It can claim for moral damages that
individuals under an assumed name and falls under item 7 of Article 2219 of
with a distinct legal entity. In organizing the Civil Code. This provision
itself as a collective body it waives no expressly authorizes the recovery of
constitutional immunities appropriate for moral damages in cases of libel,
such body. Its property cannot be taken slander or any other form of
without compensation; can only be defamation.
proceeded against by due process of law;
and is protected against unlawful
discrimination. (Bache & Co.)
PRACTICE OF PROFESSION
ARCHITECTURAL PROFESSIONAL
CORPORATION (RA9266)
Sec. 37. Limitation to the Registration of a
Firm, Company, Partnership, Corporation
or Association.
The practice of architecture is a
professional service, admission to which
shall be determined upon the basis of
individual personal qualifications.
However, a firm, company, partnership,
corporation or association may be
registered or licensed as such for the
practice of architecture under the
following conditions:
 Only Filipino citizens properly
registered and licensed as architects
under this Act may, among themselves,
or together with allied technical
professionals, form and obtain
registration as a firm, company,
partnership, association or corporation
for the practice of architecture;
 Registered and licensed architects shall
compose at least seventy-five percent
(75%) of the owners, shareholders,
members incorporators, directors,
executive officers, as the case may be;
 Individual members of such firm,
partnership association or corporation
shall be responsible for their individual
and collective acts as an entity and as
provided by law;
 Such firm, partnership, association or
corporation shall be registered with the
Securities and Exchange Commission
and Board
LIABILITY FOR TORTS No Criminal Suit can Lie Against a
A corporation is civilly liable in the same Corporation
manner as natural persons for torts, There is no provision in the law relating to
because generally speaking, the rules practice and procedure in criminal actions
governing the liability of a principal for a whereby a corporation, as such, may be
tort committed by an agent are the same proceeded against criminally and brought
whether the principal be a natural person into court. (West Coast v. Hurd)
or a corporation, and whether the servant
or agent be a natural or artificial person.
Following this, a corporation is liable
whenever a tortious act is committed by
an officer or agent under express
direction or authority from the
stockholders or members acting as a
body, or, generally, from the directors as
the governing body. (PNB v. CA)
CORPORATE CRIMINAL LIABILITY
Article 102. Subsidiary civil liability of
innkeepers, tavernkeepers and
proprietors of establishments. - In
default of the persons criminally liable
and any other persons or corporations
shall be civilly liable for crimes
committed in their establishments, in
all cases where a violation of
municipal ordinances or some general
or special police regulation shall have
been committed by them or their
employees.
Article 103. The subsidiary liability

established applies to employers,
teachers, persons, and corporations
engaged in any kind of industry for
felonies committed by their servants,
pupils, workmen, apprentices, or
employees in the discharge of their
duties.

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CORPORATION LAW ATRTRIBUTES OF CORPORATION

An analysis of the statutory definition of a

CONCEPT OF SEPARATE PERSONALITY THREE CASES OF PIERCING THE VEIL:

Article 103. The subsidiary liability

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