As can be gleaned from Sec. 23 of Corporation Code “It is the board of directors or trustees which exercises almost all the corporate powers in a corporation.”
Firme v. Bukal Enterprises and Dev. Corp.
, 414 SCRA 190 (2003).The exercise of corporate powers of the corporation rest in the Board of Directors savein those instances where the Corporation Code requires stockholders’ approval for certainspecific acts.
Great Asian Sales Center Corp. v. Court of Appeals
, 381 SCRA 557 (2002).
One of the advantages of the corporation is the limitation of an investor’s liability to theamount of investment, which flows from the legal theory that a corporate entity is separateand distinct from its stockholders.
San Juan Structural and Steel Fabricators, Inc. v. Court of Appeals
, 296 SCRA 631 (1998).It is hornbook law that corporate personality is a shield against personal liability of itsofficers—a corporate officer and his spouse cannot be made personally liable under a trustreceipt where he entered into and signed the contract clearly in his official capacity.
Consolidated Bank and Trust Corp. v. Court of Appeals,
356 SCRA 671 (2001).Obligations incurred by the corporation acting through its directors, officers andemployees, are its sole liabilities.
Malayang Samahan ng mga Manggagawa sa M.Greenfield v. Ramos,
357 SCRA 77 (2001).
It is the inherent right of the stockholder to dispose of his shares of stock (which heowns as any other property of his) anytime he so desires.
Remo, Jr. v. IAC
, 172 SCRA405 (1989);
PNB v. Ritratto Group, Inc.
, 362 SCRA 216 (2001).Authority granted to corporations to regulate the transfer of its stock does not empower the corporation to restrict the right of a stockholder to transfer his shares, but merelyauthorizes the adoption of regulations as to the formalities and procedure to be followed ineffecting transfer.
Thomson v. Court of Appeals
, 298 SCRA 280 (1998).
(b) Disadvantages:(1) Abuse of corporate management(2) Abuse of limited liability feature(3) High cost of maintenance(4) Double taxation
Dividends received by individuals from domesticcorporations are subject to final 10% tax for income earned on or after 1 January 1998 (Sec.24(B)(2), 1997 NIRC)
Inter-corporate dividends between domesticcorporations, however, are not subject to any income tax (Sec. 27(D)(4), 1997 NIRC)
There is re-imposition of the 10% “improperlyaccumulated earnings tax” for holding companies (Sec. 29, 1997 NIRC)
(a) Sole Proprietorships
A sole proprietorship is not vested with juridical personality to file or defend an action.
xExcellent Quality Apparel, Inc. v. Win Multiple-Rich Builders, Inc.
, 578 SCRA 272 (2009).
(b) Partnerships and Other Associations
Arts. 1768 and 1775, Civil Code
Can a Defective Attempt to Form a Corporation Result at Least in a Partnership?
Pioneer Insurance v. Court of Appeals
, 175 SCRA 668 (1989);
Lim Tong Lim v. Philippine Fishing Gear Industries, Inc.
, 317 SCRA 728 (1999).(c) Joint Ventures
is an association of persons or companies jointly undertaking somecommercial enterprise; generally all contribute assets and share risks. It requires a communityof interest in the performance of the subject matter, a right to direct and govern the policy inconnection therewith, and duty, which may be altered by agreement to share both in profit andlosses.
Kilosbayan, Inc. v. Guingona, Jr.
, 232 SCRA 110 (1994).
(Art. 3, R.A. No. 6938)Cooperatives are established to provide a strong social and economic organization toensure that the tenant-farmers will enjoy on a lasting basis the benefits of agrarian reforms.
Corpuz v. Grospe,
333 SCRA 425 (2000).
(e) Business Trusts
(Article 1442, Civil Code)