BUSINESS ORGANIZATION

From the lectures of Atty. Fabian (2023-2024)

Ex. ABC corporation vs Juan Dela Cruz for Qualified Theft.

What is the purpose of passing the Revised Corporation Code of the

Philippines? d. It can sue and it can also be sued over civil or criminal
liability.
1. Enhance the ease the doing of the business so that the Philippines
can compete with other countries in terms of corporations and its A corporation can be made to pay sums of money. However,
structures. with criminal liability, there are provisions under the RPC
that is not applicable to a corporation because it is an
artificial being. There are only provisions under the RCCP,
2. Prioritize corporate and stockholder protection. that imposes criminal liability upon corporations.

There are provisions created to pertaining to Emergency boards.
3. Instill corporate and civic responsibilities.
In the RCCP, there are more penalties than the previous one.
4. Adopt the best practices on good corporate governance.
5. Strengthen the powers of SEC to exercise regulatory authority over
the corporation.
e. Criminal liabilities can be imposed through payment of fines.
f. A corporation has a residence of its own which is where the
principal place of business in its Articles of Incorporation.
The service of pleadings, file a complaint you serve it to the
principal place of business under its Articles of
Incorporation.

Under the RCCP, the SEC already has the regulatory powers in
certain cases that falls within the RCCP. Pwede na sila mo receive g. It can be covered by specific tax exemptions.
og complaints because they now have quasi-adjudicatory powers
over administrative cases. We know that the taxes imposed upon corporations are
different from individuals.

What is a Corporation? Definition is found under Sec. 2 of the Revised h. The corporation enjoys constitutional rights and the same
Corporation Code. protection the law grants to an individual.

SEC. 2. Corporation Defined. – A corporation is an artificial being created EX. Right to Due Process.
by operation of law, having the right of succession and the powers,
attributes, and properties expressly authorized by law or incidental to its
existence.

Based on this definition you will find the 4 attributes of a corporation.

1. It is an artificial being.
You cannot touch or feel it but it is given a personality and
recognized as a juridical entity by the law.
Is the corporation entitled to Moral Damages? What concept of Moral
A corporation is a legal or juridical person with a personality Damages is usually used?
separate and acquired from its individual stockholder or person. It General Rule: Corporation is not entitled to Moral Damages.
is not in reality a person but the law treats it as a person.
Exception: Provisions under the Civil Code that grants moral damages on the
Consequences of being an artificial being: basis of libel, slander and other forms of defamation.
a. Can only act through natural persons.
If the corporation is able to prove that is acquired good will and reputation
Ex. Who will sign the documents? It would be the Board
that is besmirched to the libelous statement made by the person. Other form
members, trustees or officers etc. Somebody else has to act
of damages must be proven.
in behalf of them.
Cases: Filipinas and ABS
How do you know if the corporation is acting? It is through
the issuance of board resolutions
2. A corporation is created BY OPERATION OF LAW.
b. Acquires and possess properties.

Although, a corporation by itself can acquire properties, it A CORPORATION A CORPORATION

does not mean that the shareholders can lay a claim over the CREATED BY LAW CREATED BY
properties owned by a corporation. Even if he or she is a OPERATION OF LAW
majority shareholder. This refers to a government The legislative passed a
corporation. general law for the creation of
a corporation. Ex. RCCP
A corporation only for the
c. Can bring civil or criminal actions in its name. purpose coming from SEC. Recap: If a corporation is

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Transcribed by : Gayle Lagmay and Rikka Reyes

 BUSINESS ORGANIZATION
From the lectures of Atty. Fabian (2023-2024)

created by a general law

which is under the RCCP it is
governed by the Labor code. SIMILARITIES between a PARTNERSHIP and CORPORATION
If it is created by a special or
1. Both partnership or corporation can act only through agents
chartered law it is governed
(partners for the former, board of directors for the latter)
by the Civil Service
Commission. 2. Both are composed of an aggregate of individuals.’
Generally: Laws cannot pass THEORY OF 3. Both are similarly taxed.
or create private corporations. CONCESSION:
ADVANTAGES AND DISADVANTAGES OF A CORPORATION
Exception: Laws (Special or Corporation cannot exist 1. Limited liability of the 1.Complicated to form
chartered laws) can establish without the consent or the investors. and costly
corporations only those which grant of the sovereign. The
are public in nature. corporation cannot come into Because all of the If the structure of the
existence by mere agreement liabilities are limited only corporation is complicated
of the parties. (compare this to the capital on relations. where it has different
to a partnership) ventures you have to file
An individual shareholder before the SEC and acquire
3. Right of Succession can no longer be sued of the registration needed.
their personal properties.
This means that the existence of your corporation, is not affected 2. Continuity of Existence 2.Greater degree of
by whatever happens to the shareholder (death, insolvency, etc.) Government restrictions
the shares will only be inherited by the heirs of the stockholder in or control
case of death.
The government can require
many submissions to the
Unlike a partnership, you cannot inherit the shares or business of SEC. An outside audit is
your parents etc. because a partner must consent to you of also required unlike in a
becoming a partner. sole-proprietorship where
they can audit among
4. Corporation only has the powers, attributes, and properties themselves.
expressly authorized by law or incidental to its existence.
Ex. Regular submissions of
Under the Doctrine of Limited Powers a corporation has no power financial statements etc.
except those expressly conferred to it by the Corporation Code or 3. There is a pool of 3.Tendancy for abuse by
investors, there is bigger Management
those that is implied or incidental to its existence.
capital.
If a corporation exercises a power that is not granted to it becomes Because you do not have any
an ultra vires act . More shares to sell the “say” they can just do anything.
more capital to get
4. Centralized 4.Subject to Double
management Taxation
DISTINCTIONS between a PARTNERSHIP and CORPORATION
If you are holder of a A corporation is taxed by its
PARTNERSHIP CORPORATION small share, you get to income and when you divide it
Governed by the Civil Code Governed be the Corporation Code expect those who are part or share it as dividends , the latter
Created by a mere agreement Created by operation of law. of the board will manage will also be taxed.
between parties. and build the stipulated
Composed of at least 2 parties Composed of 1 but not more than dividends. (Wala sa
15 imong utok mag
Commencement of juridical Commencement rom the date of participate paka because
personality is from the moment issuance of certificate of somebody is doing that
of the parties agree to form a incorporation by SEC. job for you)
partnership. 5. Transferability of Stocks

Registration with the SEC is Because there is a

only for convenience (e.g
licenses and permits)
Term of existence is any period of
time stipulated by the
partners.
The partners can exercise the
powers provided it is not
contrary to law, morals, good
customs, public order, and
public policy.
centralized management it
can be in personal in
Existence is perpetual unless its nature .
AOI provides a definite or
specific period for its Kung gamay ra imong
existence. shares wala pud kay say
Powers can only be exercised sa corporation. Or if
through the Board of Directors. somebody else is
managing your shares for
you and na-lugi , damay
ka.

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Transcribed by : Gayle Lagmay and Rikka Reyes

BUSINESS ORGANIZATION
From the lectures of Atty. Fabian (2023-2024)

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Transcribed by : Gayle Lagmay and Rikka Reyes