MOZZARELLA NOTES – CORPORATION LAW
TITLE I – GENERAL PROVISIONS - Corporation remains unchanged and unaffected in its
SECTION 1 – TITLE OF THE CODE
SECTION 2 – CORPORATION DEFINED
 ATTRIBUTES:
 Artificial being
 Created by operation of law
 Has the right of succession
 Has only the powers, attributes, and properties
expressly authorized by law or incident to its
existence
 Corporation is a legal or judicial person with a personality
separate and apart from its individual members or
stockholders who are merged in the corporate body.
 CORPORATION AS AN ARTIFICIAL BEING
- Corporation is not liable for the debts of its
stockholders and they are not individually liable for
the corporation’s debts.
- Corporation can acquire and possess property of all
kinds, as well as incur obligations and bring civil and
criminal actions in its own name as the natural person
does.
- Property conveyed or acquired by the corporation is,
by law, the corporation’s property itself per se.
- All contracts entered into in its name by appointed
officers or agents are contracts of the corporation.
- Tax exemption granted to a corporation cannot be
extended to include the dividends paid by such
corporation to its stockholders.
- Corporation has no legal personality to bring an action
for or in behalf of its stockholders or members for the
purpose of recovering property.
ESTRELLA, TOM LUI M.
identity by changes in its individual membership.
 The corporation may be allowed to exist solely for lawful
purposes but where the fiction of corporate entity is being
used as a cloak or cover for fraud or illegality, this fiction
will be disregarded and the individuals composing it will
be treated as identical. This is referred as the doctrine of
piercing the veil of corporate entity. Some of the
instances are:
- Corporation functions for the benefit of a single
person, using such as an alter ego
- Corporation is a mere instrumentality of the
individual stockholders, them being answerable for
the corporate obligations
- Domestic corporation is controlled by aliens
- Corporation is organized by an insolvent debtor to
defraud his creditors
- Subsidiary company is created by a parent company
merely as an agency of the latter
- Corporation is formed by a person for the purpose of
evading his individual contract
- Corporation is dissolved and its assets are transferred
to another corporation to avoid a financial liability of
the first corporation
 CORPORATION AS CREATED OR OPERATED BY LAW
- Corporations, in order to be operational, needs grant
or authority by the State. The power is exercised by
the legislative by a special incorporation law, directly
creates the corporation, or a general incorporation
law, where persons desiring to be & act as a
corporation may incorporate (Corporation Code).
MOZZARELLA NOTES – CORPORATION LAW

 CORPORATION HAS A RIGHT OF SUCCESSION. MISMANAGEMENT Partner can sue a Suit against a
- Corporations has a capacity of continuous existence, co-partner who member of the
regardless of the death, withdrawal, insolvency, or mismanages BoD who
incapacity of its individual members or stockholders, mismanages must
and regardless of the transfer of their interest or be in the name of
shares of stock. the corporation
SUCCESSION None Yes
- Corporation’s term is limited to the period stated in
EXTENT OF Partners are liable Stockholders are
the articles of incorporation not exceeding 50 years
LIABILITY TO 3RD personally and liable only to the
from the date of incorporation, unless dissolved or
PERSONS subsidiarily extent of their
extended, or thru a special law governing its creation. investments, as
ASPECT PARTNERSHIP CORPORATION represented by the
MANNER OF Mere agreement of Created by law or shares subscribed
CREATION parties by operation of by them
law TRANSFERABILITY Partner cannot Stockholder has
NUMBER OF May be organized Requires at least 5 OF INTEREST transfer his the right to
INCORPORATORS by 2 persons incorporators interest in the transfer his shares
partnership so as without
COMMENCEMENT From the moment From the date of
to make the permission to
OF JURIDICAL of execution of the issuance of the
transferee a other stockholders
PERSONALITY contract certificate of
partner without
incorporation by
consent of all other
SEC
existing partners
POWERS May exercise any Only exercise
(delectus
power authorized powers expressly
personarum)
by partners not granted by law of
TERM OF Any period of time Not be formed in
contrary to law implied from those
EXISTENCE stipulated by excess of 50 years,
granted or
partners extendible for not
incidental to its
more than 50
existence
years
MANAGEMENT When Power to do
FIRM NAME Ltd. for limited Any name for as
management is business and
partnership long as it is not
not agreed, every manage its affairs
identical or
partner is an agent rests on the BoD
deceptively
similar to any
registered frim

ESTRELLA, TOM LUI M.

MOZZARELLA NOTES – CORPORATION LAW

name, or contrary consent of other

to existing laws stockholders
DISSOLUTION Dissolved at any Dissolved with
time by the will of consent of the
any or all the State SECTION 3 – CLASSES OF CORPORATIONS
partners
 STOCK – purpose of making profit that can be distributed
LAWS GOVERNING Civil Code Corporation Code
as dividends
 NON-STOCK – don’t issue stock and are created not for
ADVANTAGES DISADVANTAGES profit, but for public good and welfare
 legal capacity to act as a  complicated in form and  CORPORATION SOLE – consists of one member or
legal unit management corporator only
 continuity of existence  entails high cost on  CORPORATION AGGREGATE – consisting of more than
because of non- formation and operation one corporator
independence of the lives  credit is weakened by the  ECCLESIASTICAL – for religious purposes
who compose it limited liability of
 LAY – organized for purpose other than religion
 credit is strengthened by stockholders
such continuity  lack of personal element  ELEEMOSYNARY – established for charitable purposes
 management centralized on transferability of  CIVIL – for business and profit
on the BoD shares  DOMESTIC – incorporated under the law of the PH
 creation, organization,  greater degree of  FOREIGN – formed, organized, or existing under any laws
management, and governmental control and outside PH
dissolution is governed by supervision  DE JURE – existing in fact and in law
one general incorporation  stockholder’s voting rights  DE FACTO – existing in fact, but not in law
law become theoretical
 CLOSE – limited to selected persons
 makes feasible gigantic because of the use of
enterprises, for many proxies  OPEN – open to any person who wish to be a stockholder
individuals can invest  stockholders have little or member
their separate funds in the voice in the conduct of the  PARENT/HOLDING – related to another corporation that
enterprise business it has power to elect the majority of the directors of such
 shareholders have limited  management and control other corporation
liability are separate from  SUBSIDIARY – majority of its directors can be elected by
 not general agents of the ownership in large such other corporation
business corporations  TRUE – exists by statutory authority
 shares of stock can be
transferred without

ESTRELLA, TOM LUI M.

MOZZARELLA NOTES – CORPORATION LAW
 QUASI-CORPORATION – exists without formal legislative
grant
 PRESCRIPTION – exercised corporate powers for an
indefinite period without interference on the part of the
sovereign power
 ESTOPPEL – in reality not a corporation for it is
defectively formed but considered one by reason of their
acts or admissions are precluded from asserting that
they’re not a corporation
 PUBLIC – formed or organized by the Government
 PRIVATE – formed for a private purpose, benefit, or end
SECTION 4 – CORPORATIONS CREATED BY SPECIAL LAWS OR
CHARTERS
 Enactment of a special act creating a private corporation
is subject to the constitutional limitation that such
corporation shall be owned by the government or any
subdivision or instrumentality thereof.
SECTION 5 – CORPORATORS AND INCORPORATORS,
STOCKHOLDERS AND MEMBERS
 CORPORATORS – those who compose the corporation
 INCORPORATORS – corporators mentioned in the
articles of incorporation as originally forming and
composing the corporation, and who executed and signed
the articles of incorporation as such
 STOCKHOLDERS – owners of shares of stock in a stock
corporation; also known as the owners or shareholders of
the corporation
ESTRELLA, TOM LUI M.
 MEMBERS – corporators that doesn’t have capital stock;
must at least be a subscriber to at least one share of the
capital stock of such corporation
 PROMOTERS – bring about or cause to bring about the
formation and organization of a corporation by bringing
together the incorporators or persons interested in the
enterprise, procuring subscriptions or capital for the
corporation and setting in motion the machinery to make
the corporation operational
 SUBSCRIBERS – agreed to take and pay for original,
unissued shares of a corporation formed or to be formed
 UNDERWRITER – investment banker, who:
 Agreed to buy at stated terms an entire issues of
securities or a substantial part thereof
 Guaranteed the sale of an issue by agreement to buy
from the issuing party any unsold portion at a stated
price
 Agreed to use his “best efforts” to market all or part of
an issue
 Offered for sale stock he has purchased from a
controlling stockholder
SECTION 6 – CLASSIFICATION OF SHARES
 COMMON -