The Law on Private Corporations

1st topic
I. History of Philippine Corporate Law
a. Act No. 1459, or the Corporation Law
b. Batas Pambansa Blg. 68, or the Corporation Code of the Philippines (CCP)
i. Section 146 of the CCP
c. Republic Act No. 11232, or the Revised Corporation Code of the Philippines
(RCCP)
i. Repealing clause - Section 187 of the RCCP
ii. Effect of repeal – Sections 145 and 184 of the RCCP
II. Effectivity
a. Section 188 of the RCCP – February 23, 2019
III. Legislative History
a. Senate Bill 1228, December 13, 2016
b. House Bill No 8374, November 12, 2018
IV. Special Laws on Corporation (title and covered corporations)
a. RA 8799
b. PD 902-A
c. RA 7041
d. CA No. 108
e. RA 10173
f. RA 8293
g. RA 10667
V. Advantage and disadvantages of corporation
a. Advantages
i. Strong juridical personality (Sec. 2; Arts. 44[3], 45 and 46, Civil Code)
ii. Centralized management (Sec. 22)
iii. Free-transferability of shares (Sec. 62)
iv. Owners have limited Liability.
v. It can exist in perpetuity.
vi. It attracts more investors.
b. Disadvantages
i. Double taxation
ii. Incorporation is costly
iii. Corporations are highly regulated.
iv. Limited liability may discourage creditors.
v. It is not easy to dissolve.
VI. Corporation Defined
a. Section 2 of the RCCP
b. Types of Corporation
i. Private Corporations (Sec. 3, Act 1459)
ii. Public Corporations or Local Government Units (LGUs) (Sec. 3, Act No.
1459)
iii. Quasi-public corporations; and
1. Local water districts created under P.D. 198
iv. Government-owned-or-controlled corporations (GOCCs) – R.A. No.
10149;
VII. Attributes of Corporation
a. It is an artificial being;
i. Juridical Personality, Art. 44, New Civil Code
 ii. Doctrine of Separate Personality
1.
iii. Concession Theory
1. Fletcher in Testate estate of idonah slade perkins, deceased.
Renato d. Tayag, vs. Benguet consolidated, inc.1
b. It is created by operation of law;
c. It has the right of succession; and
i. Perpetual Succession2
d. It has the powers, attributes and properties expressly authorized by law or
incident to its existence.
VIII. Attribute as separate juridical entity
a. Doctrine of Corporate entity
i. Sec. 2 of RCCP and Art 44, Civil Code
ii. Cases:
1. Situs Development Corporation vs Asiatrust Bank, G.R. No.
180036, July 25, 2012
a. Issue: Whether the parcels of land mortgaged to Asia trust
bank considered as part of the corporate assets and be
included in the inventory of assets of Situs Dev Corp?
b. Doctrine of Piercing the Veil of Corporate Fiction
i. Classification of piercing cases
1. Fraud Piercing - when the corporate entity is used to justify
wrong, protect fraud, or defend a crime
2. Alter-Ego Piercing - where the corporation is merely a farce since
it is a mere alter ego or business conduit of a person, or where the
corporation is so organized and controlled and its affairs are so
conducted as to make it merely an instrumentality, agency,
conduit or adjunct of another corporation
3. Defeat of Public Convenience Piercing - when the corporation is
used as vehicle for the evasion of existing obligation;
ii. Case: Palacio vs Fely Transportation company, G.R. No. L15121, August
31, 19623
1. Definition: Piercing the veil of corporate fiction and Alter ego
cases
IX. Classes of Corporation
a. As to Legal Status
i. De Jure Corporation
ii. De Facto Corporation (Sec. 19)
iii. Corporation by Estoppel (Sec. 20)
b. As to existence of shares
i. Stock Corporation (Sec. 3)
ii. Nonstock Corporation (Secs. 3, 86 and 87)
c. As to purpose of incorporation
i. Business (for-Profit) Corporations
ii. Nonstock and Non-profit Corporations: Charitable, Scientific or
Vocational Corporations
iii. Educational Corporations (Secs. 105; Sec. 25, B.P. Blg. 232)
iv. Religious Corporation (Sec. 107)
1
https://lawphil.net/judjuris/juri1968/nov1968/gr_l-23145_1968.html
2
https://blacks_law.en-academic.com/37435/perpetual_succession
3
https://lawphil.net/judjuris/juri1962/aug1962/gr_l-15121_1962.html
 v. Other Special Corporations (Sec. 4)
d. As to number of Corporators
i. Aggregate Corporation—no limit of shareholders or members
ii. Close Corporation—not more than 20 shareholders of records (Sec. 95)
iii. One Person Corporation—available only for stock corporations (Sec. 115)
iv. Corporation Sole—religious corporation (Secs. 108)
e. As to place of incorporation
i. Domestic Corporation
ii. Foreign Corporation (Sec. 140)