CORPORATION
▶An artificial being created by operation of law having the right of succession, and the
powers, attributes and Properties expressly authorized by law and incident to its
existence.
CORPORATION CODE/ LAW
▶A part of commercial law/ mercantile law
▶Effectivity date: May 1, 1980
ATTRIBUTES OF A CORPORATION
1. It is an artificial being with separate and distinct personality.
2. It is created by operation of law.
3. It has the right of succession.
4. It has the powers, attributes and properties expressly authorized by law or incident
to its existence.
ARTIFICIAL BEING WITH SEPARATE PERSONALITY
DOCTRINE OF SEPARATE PERSONALITY
▶Or Doctrine of Corporate Entity
▶Or Doctrine of Corporate Fiction
A corporation is a legal or juridical person with a personality separate and
apart from its individual stockholders or members
DOCTRINE OF PIERCING THE VEIL OF CORPORATE ENTITY
▶Or disregarding the fiction of corporate entity
The doctrine that a corporation is a legal entity distinct from the persons purposes of
convenience and to serve the ends of justice. But when the veil of corporate fiction is
used for wrong this fiction shall be disregarded and the individuals composing it will be
treated identically.
▶4 Instances to disregard separate personality:
If the corporation is created to:
1) Protect fraud
2) Justify wrong
3) Defeat public comvenience
4) Defend a crime
CREATED BY OPERATION OF LAW
▶Birthday of Corporation=
upon the issuance of the certificate of incorporation
▶Corporations cannot come into existence by mere agreement of the parties as in the
case of business
partnerships.
RIGHT OF SUCCESSION
▶It is the capacity to have continuity of existence despite the changes on the persons
who compose it.
▶continuous existence irrespective of the death, withdrawal ,insolvency or incapacity of
the individual members or stockholders and regardless of the transfer of their shares
of stock
POWERS, ATTRIBUTES AND PROPERTIES
▶A corporation being a mere creation of law, may exercise only such powers as are
granted by the law of its creation.
Similarities between a partnership and a corporation
1. Juridical personality separate and
distinct from the individuals composing
it.
2. Act only through its agents.
3. Composed of an aggregate of
individuals.
4. Distribute profits to those who
contribute to capital.
5. May be organized only when there is a law authorizing it.
6. Subject to income tax.
Distinctions between a partnership and a corporation
1) Manner of Creation
◐Partnership- By mere agreement of the parties
◑Corporation- By operation of law
2) Number of incorporators
◐Partnership- Minimum of 2 persons
◑Corporation- at least 5 incorporators
3) Commencement of juridical personality / Birthday
◐Partnership- from the moment of execution of contract
◑Corporation- from the issuance of the certificate of incorporation
4) Powers
◐Partnership- May exercise powers
authorized by partners provided the same are not contrary to law, morals, good
customs, public policy or public
order.
◑Corporation- Can exercise only the
powers expressly granted by law or incident to its existence.
5) Management
◐Partnership- When it is not agreed upon, each partner is an agent of the partnership
◑Corporation- It is vested in the board of directors or trustees
6) Right of succession
◐Partnership- No right of succession
◑Corporation- Has right of succession
7) Extent of liability to 3rd person
◐Partnership -Partners (except limited
partners) are liable personally and
subsidiarily for partnership debts to
third persons.
◑Corporation- Stockholders are liable only to the extent of their investments
as represented by the shares subscribed by them.
8) Transferability of interest
◐Partnership- A partner cannot transfer
interest so as to make a partner without the consent of all other existing partners.
◑Corporation- A stockholder
has the right to transfer his shares
without the prior consent of the other
stockholders.
9) Term of existence
◐Partnership- May be established
for any period of time stipulated
by the partners.
◑Corporation- May not be formed for a
term in excess of 50 years extendible to
not more than 50 years.
10) Firm name
◐Partnership- A limited partnership is required to add the word ‘Ltd.’ to its name.
◑Corporation- A corporation may adopt a firm name provided it is not identical
or deceptively similar to any registered
firm name or contrary to existing laws.
11) Dissolution
◐Partnership- May be dissolved at any time by the will of any or all partners.
◑Corporation- May only be dissolved with the consent of the state.
12) Laws which govern
◐Partnership- Civil Code
◑Corporation- Corporation code
