CORPORATION
- Artificial being created by operation of law,
having the right of succession and the
powers, attributes, and properties expressly
authorized by law.
ATTRIBUTES:
1. Artificial being with a personality separate and
apart from its individual
shareholders/members.
*Natural Persons
*Artificial Persons – establishments treated by law as
a person because first; they can sue and be sued, and
second; they can own properties and empowered by
law to.
A. CONSEQUENCES OF BEING A - The corp is being used as a shield for
SEPARATE PERSONALITY
 Property. Entitled to own properties on its
own name but its properties are not properties
of stockholders/members.
- Stockholders are not owners of corp (maski
part owner hindi din)
- The assets of corp are not the assets of
stockholders, may indirect interest lang si
stockholders sa asset ng corp kase pag na
bankrupt si corp, ibebenta ang asset
pambayad then ang surplus ibibigay sa
stockholders.
 Obligations. It can incur obligations but its
obligations are not the obligations of its
stockholders/members.
- The debts by corps are not a debt of
stockholders, vice versa.
 Income. Income of corp is NOT the income of
shareholder, vice versa.
- Kapag nag earn income ang corp, papasok
sa retained earnings tas madecide sa
dividends.
- Pagdeclare ng dividends = income ng
stockholders; share sa income ng company
-subject sa taxes
 Tort. It is liable for tort when the act
committed by the officer/agent under express
authority from stockholders/members acting as
the governing body.
*TORT - any instance of harmful behavior, such
as physical attack on one’s person or interference
with one’s possessions or with the use and
enjoyment of one’s land, economic interests
(under certain conditions), honor, reputation, and
privacy.
B. DOCTRINE OF PIERCING THE VEIL OF
CORPORATE
fraud/illegal or “defeat of public
convenience”, “justify wrong”, “protect
fraud or defend crime”
- The liability will attach personally or
directly to the officers and stockholders.
An actions brought against corp is not an action
against stockholder.
Except: Doctrine of Piercing
*Application of Doctrine in 3 areas:*
a. Defeat of Public Convenience
- as when the corporate fiction is used as a
vehicle for the evasion of an existing
obligation.
b. Fraud Cases
- when a corporate entity is used to justify a
wrong, protect fraud, or defend a crime.
c. Alter ego Cases
- where the corp is so organized & controlled
and its affairs are so conducted as to make it
merely an instrumentality, agency, conduit
or adjunct of another corporation
- ELEMENTS OF ALTER EGO CASES
o Control over corp
o Engage in fraudulent acts
o Resulted in damages
2. Created by operation of law
- Corp cannot come into existence by mere
agreement for it require special authority
from its state, either by a special
incorporation law or general incorporation
law.
3. Enjoys right of succession
- Corp have a perpetual existence irrespective
of the death, withdrawal,
insolvency/incapacity of the individual
stockholder/member and regardless of the
transfer of interest /share of stock.
4. Powers, attributes, and properties of corp
- Corp may exercise only the powers
expressly granted by law, or implied from
those granted or incident to its existence.
SIMILARITIES B/W PART. & CORP.
 Have juridical personality
 Can act only thru agents
 An org composed of aggregate individuals
 Distributes the profits to those who
contribute capital (onerous)
 taxable
PARTNERSHIP VS CORPORATION

Commencement Extent of
Manner of Number of of Right of Liability to Transferability Term of Governing
Powers Mgmt. Firm name Dissolution
Creation Parties Juridical succession Third of interest existence Laws
Personality Persons
May
exercise
May be
powers
If not established
authorized
agreed for any
by partners limited
Generally upon, period of at
mere provided the cannot easily partnership
from the every time any time by
agreement 2 or more same are not No right of Pro-rata and transfer is required
PART. moment of partner is stipulated the will of Civil code
of the persons contrary to succession subsidiary interest to to add the
execution of an agent; by the any or all
parties law, morals, third person word ‘Ltd.’
the contract or the partners partners
good to its name
managing
customs,
partner Par @ will
public policy
= fixed
or public
order
may adopt a
firm name
at From the date
provided it
least five (5) of the
Can exercise is not
incorporator issuance of
only the Can transfer identical only be
s the certificate only
powers shares or dissolved
law or of Board of Possesses to the extent 50 years
expressly without the deceptively with Corporation
CORP. operation of incorporation directors or right of of the
granted by prior consent similar to the consent code
law a person can of the trustees. succession stockholders’ Perpetual
law or of the other any of
establish Securities and investments
incident to stockholders. registered the state.
corp = one Exchange
its existence. firm name
man Commission
or contrary
corporation (SEC)
to existing
laws
CLASSIFICATION OF CORPORATION