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Corporation Law Series · Episode 1 · 3:18
Ano Ba Talaga ang Corporation?
A corporation goes under. Can its creditors take the owner’s house?
The first episode of the Corporation Law Series: what a corporation really is under the Revised Corporation Code, when it begins to exist, what corporation by estoppel means, what rights a corporation has, and how stock and nonstock corporations differ.
In short
- In the eyes of the law, a corporation is a separate person (Sec. 2). As a rule, the corporation’s debts are the corporation’s, not the owners’.
- Corporate existence begins on the day the SEC issues the certificate of incorporation (Sec. 18). Those who act as a corporation knowing it has no authority are liable as general partners (Sec. 20).
- A corporation has rights of its own, such as objecting to the seizure of its own papers (Stonehill vs. Diokno), and a good name (FBNI vs. AMEC-BCCM).
- In a nonstock corporation, no part of the income may be distributed as dividends to members, trustees or officers (Sec. 86).
The law
Revised Corporation Code (R.A. No. 11232, February 20, 2019)
“A corporation 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 incidental to its existence.”Sec. 2
“A private corporation organized under this Code commences its corporate existence and juridical personality from the date the Commission issues the certificate of incorporation under its official seal…”Sec. 18
“All persons who assume to act as a corporation knowing it to be without authority to do so shall be liable as general partners for all debts, liabilities and damages incurred or arising as a result thereof…”Sec. 20
“[Stock corporations] have capital stock divided into shares and are authorized to distribute to the holders of such shares, dividends… All other corporations are nonstock corporations.”Sec. 3
“[In a nonstock corporation,] no part of its income is distributable as dividends to its members, trustees, or officers”Sec. 86
Chapters
- 0:00What is a corporation? Sec. 2 and the corporation’s debts
- 0:50Unregistered, but acted as a corporation: Secs. 18 and 20, Macasaet vs. Co, Jr.
- 1:38Seized papers: Stonehill vs. Diokno and FBNI vs. AMEC-BCCM
- 2:22Stock or nonstock: Secs. 3 and 86, and a foundation’s income
- 3:04Reminder
Cases cited
Full text on LawPhil.
Heirs of Fe Tan Uy vs. International Exchange BankG.R. No. 166282 · February 13, 2013Halley vs. Printwell, Inc.G.R. No. 157549 · May 30, 2011Mangila vs. Court of AppealsG.R. No. 125027 · August 12, 2002Macasaet vs. Co, Jr.G.R. No. 156759 · June 5, 2013Stonehill vs. DioknoG.R. No. L-19550 · June 19, 1967 (En Banc)Filipinas Broadcasting Network, Inc. vs. AMEC-BCCMG.R. No. 141994 · January 17, 2005
Next episode
Next: when can the owners be made to pay a corporation’s debt?
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