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Natural Persons: US! As long as we are breathing, we are natural person. Civil
personality may be extinguished by death
TITLE I
GENERAL PROVISIONS
SECTION I. Title of the Code. – This Code shall be known as the “Revised
Corporation Code of the Philippines.”
SEC. 187. Repealing Clause. – Batas Pambansa Blg. 68, otherwise known as
“the Corporation Code of the Philippines”, is hereby repealed. Any law,
presidential decree or issuance, executive order, letter of instruction,
administrative order, rule or regulation contrary to or inconsistent with any
provision of this Act is hereby repealed or modified accordingly.
SEC. 188. Effectivity. – This Act shall take effect upon completion of its
publication in the Official Gazette or in at least two (2) newspapers of general
circulation.
Notice On Effectivity
To : ALL CONCERNED
X………………………………………………………………X
Please be informed that Republic Act. No. 11232 otherwise known as the
Revised Corporation Code of the Philippines took effect on February 23, 2019,
upon completion of its publication in Manila Bulletin and the Business Mirror,
on Saturday, February 23, 2019.
i.e.
xxx
i.e.
TITLE I
GENERAL PROVISIONS
SECTION I. Title of the Code. – This Code shall be known as the “Revised
Corporation Code of the Philippines”.
Corporation Defined
QUESTIONS:
A. It is an artificial being
Answer: the fact that a corporation does not have physical existence - its
existence is artificial. Hencce, the rights of corporations cannot be exactly the
same as the rights of natural persons. There are facets of law where the
juridical entity’s existence cannot be likened to a natural person precisely
because a corporation exists only by fiction of law… the juridical existence of a
corporation cannot be compared to a natural person.
Answer: The corporation owes its life to the State because it is a creation of
statute that defines its powers and prescribes rules for the regulation of its
internal and outside affairs. In other words, corporation is an artificial being
created by law for certain specific purposes.
5. Explain the attribute that it has the powers , attributes and properties
expressly authorized by law or incidental to its existence.
- If the act of the corporation is not one of those express, implied or incidental
powers, the act is ULTRA VIRES (beyond the power)
Explanation:
Rights can be enforced for and against the corporation and the filing of a
complaint against the stockholder is not ipso facto a complaint against the
corporation.
Corporate debt or credit is not the debt or credit of the stockholder nor is
the stockholder’s debt or credit that of the corporation. Traders Royal Bank
v. Court of Appeals, 177 SCRA 789 (1989).
Under the “Doctrine of Piercing the Corporate Veil” of corporate entity, the
principle on separate identity of a corporation from its stockholders may be
disregarded when it is used to defeat public convenience, justify wrong, protect
or cover fraud or defend crime or work an injustice. If used in those situations,
the corporation and the stockholders composing it should be treated as one
and the same. Consequently, the stockholders can be held personally liable to
corporate debts. However, application of said doctrine is for the proper court to
decide. The proper court will not hesitate to pierce the corporate veil or
corporate fiction when it would defeat the ends envisaged by law, as the theory
of corporate entity was not meant to promote unfair objectives.
Where the capital stock is owned by one person and it functions only for the
benefit of such individual owner [rather than the business interest for which
the corporation was formed], the corporation and the individual should be
deemed the same. Arnold v. Willets and Patterson, Ltd., 44 Phil. 634 (1923).
Unlike in fraud piercing, alter ego piercing does not require establishing fraud
or wrongdoing, but only that the corporate personality has been used as an
instrumentality for the personal agenda of its controlling stockholder. Lipat v.
Pacific Banking Corp., 402 SCRA 339 (2003).
In this case, a lawyer-lessee failed to pay his rentals. The lessor filed a
complaint for unlawful detainer and secured a favorable judgment.
Judgment was not immediately executed but it was eventually revived.
The sheriff levied a piece of real property in the name of International
Academy of Management and Economics Incorporated (I/AME), a
nonstock corporation, in order to execute the judgment against the
lessee, who is a member of I/AME. The Supreme Court agreed with the
Court of Appeals and sustained the levy, ruling that the corporation is
an alter ego of the lessee and the lessee – the natural person is the alter
ego of the corporation. The lessee falsely represented himself as
president of the corporation in the Deed of Sale when he bought the
property at a time when the corporation had not yet existed.
Uncontroverted facts also revealed that the lessee and the corporation
are one and the same person . The lessee is the conceptualizer and
implementor of the corporation and the majority contributor of the
corporation. I?AME is basically the corporate entity used by the lessee
as his alter ego for the purpose of shielding his assets from the reach of
the dreditors.
Under the doctrine of piercing the veil of corporate fiction, when the notion of
legal entity is used to defeat public convenience, justify wrong, protect fraud, or
defend a crime, the law will regard the corporation as an association of
persons. Also, the corporate entity may be disregarded in the interest of justice
in such cases as fraud may work inequities among members of the corporation
internally, involving no rights of the public or third persons. In both instances,
there must have been fraud and proof of it. For the separate juridical
personality of a corporation to be disregarded, the wrongdoing must be clearly
and convincingly established. It cannot be presumed.
(Suldao vs. CIMECH System Construction, Inc., G.R. No. 171392, October 30,
2006.)
A corporation is civilly liable for torts in the same manner as natural persons,
because the rules governing the liability of a principal for a tort committed by
an agent are the same whether the principal be a natural person or a
corporation, and whether the agent be a natural or artificial person. Philippine
National Bank (PNB) v. Court of Appeals, 83 SCRA 237 (1978).
Classes of Corporations
Nonstock Corporations
SEC. 86. Definition. – For purposes of this Code and subject to its provisions
on dissolution, a nonstock corporation is one where no part of its income is
distributable as dividends to its members, trustees, or officers: Provided, that
any profit which a nonstock corporation may obtain incidental to its operations
shall, whenever necessary or proper, be used for the furtherance of the purpose
or purposes for which the corporation was organized, subject to the provisions
of this Title.
Purposes of Nonstock
SEC. 87. Purposes. – Nonstock corporations may be formed or organized for
charitable, religious, educational, professional, cultural, fraternal, literary,
scientific, social, civic service, or similar purposes, like trade, industry,
agricultural and like chambers, or any combination thereof, subject to the
special provisions of this Title governing particular classes of nonstock
corporations.
Questions:
A.
Question:
The law creating the Bases Conversion and Development Authority (“BCDA”)
provides that it has an authorized capital stock of One Hundred Billion Pesos
(P100,000,000,000.00) which may be subscribed by the Republic of the
Philippines and shall either be paid up from the proceeds of the sales of its
land assets.
1. Classification of Shares
SEC. 6. Classification of Shares. – The classification of shares, their
corresponding rights, privileges, or restrictions, and their stated par value, if
any, must be indicated in the articles of incorporation. Each share shall be
equal in all respects to every other share, except as otherwise provided in the
articles of incorporation and in the certificate of stock.
The shares or series of shares may or may not have a par value:
Provided, That banks, trust, insurance, and preneed companies, public
utilities, building and loan associations, and other corporations authorized to
obtain or access funds from the public, whether publicly listed or not, shall not
be permitted to issue no-par value shares of stock.
Shares of capital stock issued without par value shall be deemed fully
paid and nonassessable and the holder of such shares shall not be liable to the
corporation or to its creditors in respect thereto: Provided, That no-par value
shares must be issued for a consideration of at least Five pesos (P5.00) per
share: Provided, further, That the entire consideration received by the
corporation for its no-par value shares shall be treated as capital and shall not
be available for distribution as dividends.
A corporation may further classify its shares for the purpose of ensuring
compliance with constitutional or legal requirements.
*Concept of Shares
The doctrine of equality of shares means that all stocks issued b the
corporation are presumed equal, with the same privileges and liabilities ,
provided that the articles of incorporation is silent on such differences.
(Commissioner if Internal Revenue v. Court of Appeals, G.R. No. 108576,
January 20, 1999). Stated otherwise, each share shall be equal in all respects
to every other share, except as otherwise provided in the articles of
incorporation and the certificate of stock (Section 6 of RCC). Thus, all shares
have the same rights and privileges unless classified differently in the articles
of incorporation, and such classification is not contrary to law. Preferred
shares, therefore. Have the same voting rights similar to common shares
unless the preferred shares are denied such right in the articles of
incorporation.
Founders’ Shares
SEC. 7. Founders’ Shares. – Founders’ shares may be given certain rights and
privileges not enjoyed by the owners of other stocks. Where the exclusive right
to vote and be voted for in the election of directors is granted, it must be for a
limited period not to exceed five (5) years from the date of incorporation:
Provided, That such exclusive right shall not be allowed if its exercise will
violate Commonwealth Act No. 108, otherwise known as the “Anti-Dummy
Law”; Republic Act No. 7042, otherwise known as the “Foreign Investments Act
of 1991”, and other pertinent laws.
Redeemable Shares
Treasury Shares
SEC. 9. – Treasury Shares. – Treasury shares are shares of stock which have
been issued and fully paid for, but subsequently reacquired by the issuing
corporation through purchase, redemption, donation, or some other lawful
means. Such shares may again be disposed of for a reasonable price fixed by
the board of directors.
(SALIDO, JR. V. ARAMAYWAN METALS, G.R. NO. 233857, MARCH 18, 2021)
The law sets out the parameters when a corporation may reacquire its shares
and convert them into treasury shares. According to Section 9 of the
Corporation Code, “treasury shares are shares of stock which have been issued
and fully paid for, but subsequently reacquired by the issuing corporation by
purchase, redemption, donation or through some other lawful means.” Apart
from reacquiring the shares through some lawful means, the Corporation Code
is also explicit that while a corporation has the power to purchase or acquire
its own shares, the corporation must have unrestricted retained earnings in its
books to cover the shares to be purchased or acquired. In addition, in cases
where the reason for reacquiring the shares is because of the unpaid
subscription, the Corporation Code is likewise explicit that the corporation
must purchase the same during a delinquency sale and not to direct the
reduction on the number of shares subscribed to what has been paid.
This ruling still holds under the RCC, given that there is no change in the
concept of treasury shares and available remedy to the corporation in case of
delinquent shares.