CESAR L. VILLANUEVA
TERESA V. TIANSAY
1. Philippine Corporate Law:
A-sort-of codification of American Corporate Law
When attention was drawn to the fact that there was no entity in Spanish law corresponding to the notion of the American “corporation”, the Philippine Commission enacted the Corporation Law (Act No. 1459), to introduce the American corporation in the Philippines as the standard commercial entity and to hasten the day when the
of the Spanish law would be obsolete. The statute is a sort of codification of American Corporate Law.
Harden v. Benguet Consolidated Mining
, 58 Phil. 141 (1933).
2. The Corporation Law (Act No. 1459)
The first corporate statute, the Corporation Law became effective on 01 April 1906. It had piece-meal amendments during its 74-year history, but became antiquated and not adapted to the changing times.
3. The Corporation Code (Batas Pambansa Bilang 68)
The current Corporation Code of the Philippines took effect on 01 May 1980, adopting various corporate doctrines enunciated by the Supreme Court under the old Corporation Law; clarified the obligations of corporate directors and officers; expressed in statutory language established principles and doctrines; and provided for a chapter on close corporations.
4. Proper Treatment of Philippine Corporate Law
Although we have a Corporation Code that provides for statutory principles, since Philippine Corporate Law comes from the U.S. common law system, Philippine Corporate Law is essentially, and continues to be, a common law system and subject to developments in commercial developments, much of which can be expected to happen in the world of commerce, and some expressed jurisprudential rules that try to apply and adopt corporate principles into the changing concepts and mechanism of the commercial world.
Articles 44(3), 45, 46, and 1775, Civil Code
) A corporation is an artificial being created by operation of law, invested by law upon coming into existence with a personality separate and distinct from the persons composing it, and from any other legal entity to which it may be related.
PNB v. Andrada Electric & Engineering Co.
, 381 SCRA 244 (2002).
An Artificial Being:
It has juridical capacity to contract and enter into legal relationships
Creature of the Law:
It is created by operation of law and not by mere agreement.
Strong Juridical Personality:
It has a right of succession.
Creature of Limited Powers:
It has only such powers, attributes and properties as are expressly authorized by law or incident to its existence.
” A corporation has no powers except for those which are expressly conferred on it by the Corporation Code, found in its charter, and those that are implied by or are incidental to its existence. It exercises its powers through its Board of Directors and/or its duly authorized officers and agents.
Pascual and Sant
s, Inc. v. The Members of the Tramo Wakas Neighborhood Assn. Inc.
, 442 SCRA 438 (2004).
The corporation is an aggregation of Assets and Resources”
Business Enterprise” Level:
“The corporation’s primary purpose is to pursue business.”
Juridical Entity” Level:
The corporation is a
of pursuing a business enterprise.”
, which treats of the aspects of the State-corporation relationship.
, which considers that the corporate setting is at once a contractual relationship on four (4) levels:
Between the corporation and its agents/representatives to act in the real world, i.e., directors and officers, which is governed also by the Law on Agency
Between the corporation and its shareholders or members
Between the shareholders and the corporate directors, trustees and officers
Between and among the shareholders in a common venture
Unless otherwise indicated, all references to sections pertain to the Corporation Code of the Philippines.
The whole body of statutory and jurisprudential rules pertaining to corporations is referred to as "Corporate Law" to differentiate it from the old statute known as "The Corporation Law," or Act No. 1459.
Corporation Code applies even to corporations organized under the old Corporation Law.
Castillo v. Balinghasay
, 440 SCRA 442 (2004).
Construction & Dev. Corp. of the Phils. v. Cuenca
, 466 SCRA 714 (2005);
EDSA Shangri-La Hotel and Resorts, Inc. v. BF Corp.
, 556 SCRA 25 (2008).
De Liano v. Court of Appeals
, 370 SCRA 349 (2001);
Monfort Hermanos Agricultural Dev. Corp. v. Monfort III
, 434 SCRA 27 (2004);
United Paragon Mining Corp. v. Court of Appeals
, 497 SCRA 638 (2006);
Cebu Bionic Builders Supply, Inc. v. DBP
, 635 SCRA 13 (2010).