Corp.pdf - Regulatory Framework for Business Transactions Corporation Law also known as B.P Blg 68 Corporation Code of the Philippines I Attributes of

Corp.pdf - Regulatory Framework for Business Transactions...

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Page 1 of 23 Regulatory Framework for Business Transactions Corporation Law also known as B.P. Blg. 68: Corporation Code of the Philippines I. Attributes of Corporation Definition of Corporation – It is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence. a. It is an artificial being. i. Implications of corporation for being artificial being 1. The corporation cannot be held criminally liable particularly the penalty of imprisonment but it may be held liable for fines for corporate crimes. The corporate officers who approve the particular corporate crime will be the ones to be held criminally liable. 2. As a general rule, a corporation is not entitled to moral damages because, not being a natural person, it cannot experience physical suffering or sentiments like wounded feelings, serious anxiety, mental anguish and moral shock except when a corporation has a reputation that is debased, resulting in its humiliation in the business realm such in the case of civil action for damages on the ground of libel or defamation. 3. The corporation is not entitled to constitutional right against self-incrimination. ii. Doctrine of separate personality means that a corporation has a personality separate and distinct from the stockholders and affiliated companies. iii. Limited liability rule means that the stockholders are liable only up to the extent of their capital contribution when it comes to corporation’s liabilities. iv. Trust fund doctrine means that assets of the corporations are considered trust fund reserved for payment of liabilities to creditors of the corporation. v. Doctrine of Piercing the veil of corporate fiction as an exception to doctrine of separate personality a. Fraud cases – When corporate fiction is used to commit fraud. b. Alter ego cases – When the corporation is a mere instrumentality or alter ego of the stockholders or owners. c. Defeat public convenience cases – When the corporate fiction is used to commit tax evasion or to justify a wrong or to defend a crime. d. Equity cases – In case of labor cases in order to promote social justice. b. It is created: (1) by operation of law in case of private corporation or (2) by enactment of special law in case of public corporation. i. The 1987 Constitution provides that only public corporations may be created by special law while all private corporations must be created by operation of general corporation law which is the Corporation Code of the Philippines a.ka. BP Blg. 68 through filing articles of incorporation to SEC and waiting for the latter's issuance of certificate of registration. ii. Concession theory means that a corporation owes its existence to the law and the state and the extent of its existence, powers and liberties is fixed by its charter. Thus, it only possesses properties, attributes, rights and powers provided by law or incident to its existence.
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