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Notes (Bus. Org. II, 15 Nov.

2010 Lecture Transcript and Notes)


Instances when the veil of corporate fiction is pierced: 1. When the veil of corporate fiction is used as a shield to defeat public convenience 2. To justify a wrong 3. To promote fraud 4. To defend a crime 5. To evade an obligation 6. To confuse legitimate rules 7. The corporation is just an adjunct, conduit or alter ego of another Classification of Powers of a corporation: 1. Express- powers expressly authorized by law 2. Implied- incidental to its existence which must be in furtherance of the main purpose of the corporation TESTS to determine WON a corporation can exercise incidental powers: 1. If it is used in furtherance of the business 2. If it is reasonably necessary to promote its business In furtherance of the main purpose, ILLUSTRATIONS: 1. A corporation engaged in forwarding, it has the implied power to use the road to promote its business. 2. Corporation engaged in railroad business can expropriate lands for its business. Expropriation of a private property is not a usual business of a corporation but if you are a railroad company and you expropriate private property it can still be considered as for public purpose even if it is in furtherance of the main purpose because it will be for public service/utility. 3. A corporation engaged in making shoes, slippers and sandals can buy used shoes, slippers and sandals and recycle them to make new products for sale. Reasonably necessary, ILLUSTRATIONS: 1. A cement factory requires much power to operate its machines. The corporation has the power to buy its own generator sets when it is intended to be used within the company premises to provide the electric supply needed to do its business. For as long as it will use the power only within the company premises it cannot be prevented from buying or operating one. The power plant/generator set is reasonably necessary especially when the local electric company cannot supply its electrical needs. 2. Bus companies (Ceres, for example) have repair/machine shops to make the repairs and check-ups of its buses. Instead of going to vulcanizing shops whenever there blown tires, you just repair it in your own repair shop.

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Notes (Bus. Org. II, 15 Nov. 2010 Lecture Transcript and Notes)
3. Shipping companies have improved the services by adopting the concept of a floating hotel. They provide canteens and restaurants on board to cater the food and refreshments needs of the passengers. It is also reasonably necessary not only for the convenience but also for the health of the passengers while on travel for several hours. Partnership vs. Corporation Partnership Corporation Mere agreement of the Created by law parties Manner of creation At least 5 persons Number of incorporators At least 2 persons Commencement of From the moment of the From the date of the juridical personality execution of the issuance of the partnership contract certificate of incorporation by the SEC Powers Any power authorized Can exercise powers by the partners as long expressly authorized by as it is not contrary to law or incidental to its law, morals, good existence customs, public order and public policy Management When mgt. is not BOD or BOT agreed upon, every partner is an agent Effects of Partner can sue co- The suit against the mismanagement partner who member or BOD must mismanages be in the name of the corp. Rights of succession none It has rd Extent of liability to 3 Partners (except SH/members are liable persons limited) are personally only up to the extent of and subsidiarily liable their corporate with their personal contribution property Transferability of rights Cannot transfer his Can transfer his rights rights so as to make the even without the transferee a partner consent of the other SH without the consent of the other partners Term of existence Any period of time 50 years, extendible for another 50 years Firm name Any but limited Any, provided that it is partnership should not similar or include the term Ltd. deceptively similar to another or contrary to law. Dissolution Can be dissolved at any Can be dissolved only time at the will of the with the consent of the partners State Governing law Civil Code Corporation Code Classifications of Corporations 1. Stock or non- stock

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Notes (Bus. Org. II, 15 Nov. 2010 Lecture Transcript and Notes)
2. Public or private 3. Religious or non religious 4. Open or close

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