Flashcards
Describe the process by which a corporation is created.
A corporation is not created by mere agreement of the incorporators or by their execution of the articles of incorporation. It is created by a law from which the corporation derives its legal existence.
Define the right of succession in relation to a corporation.
The right of succession of a corporation means that it has the power to exist continuously, either by opting to have perpetual succession.
How is the legal existence of a corporation established?
The legal existence of a corporation is established through a law, which can be a general law governing private corporations or a special law passed by Congress for government-owned corporations.
Describe the consequences of besmirching or tarnishing the goodwill of a corporation.
Besmirching or tarnishing the goodwill of a corporation can entitle the corporation to moral damages.
What is the implication of a corporation having the right of succession?
Having the right of succession does not mean a corporation is immortal; it simply means it has the power to exist continuously.
Explain why a law enacted by the legislature to create a private corporation is considered unconstitutional.
It is unconstitutional because the Constitution precludes the passage of such statutes, particularly under Section 16, Article XII of the 1987 Constitution.
Describe the concept of ultra vires in relation to corporations.
Ultra vires refers to actions by a corporation that are beyond the powers authorized by law, its articles of incorporation, or incidental to its existence.
Define sole proprietorship and explain how it differs from a corporation.
A sole proprietorship is a business owned by an individual without a separate legal entity, unlike a corporation which has a distinct legal personality separate from its owners.
How does a corporation’s legal personality differ from that of its owners in terms of liability?
A corporation’s legal personality shields its owners from personal liability for the corporation’s obligations, while in a sole proprietorship, the owner’s personal assets can be used to settle business debts.
Explain the principle that governs a corporation’s ability to act within its powers.
A corporation can only act within the powers conferred upon it by law, its articles of incorporation, or those implied from the conferred powers, and any act outside these powers is considered ultra vires.
Differentiate between a corporation and other forms of business organizations like partnerships or sole proprietorships.
Unlike partnerships or sole proprietorships, a corporation has a separate legal personality from its owners, providing limited liability and perpetual existence.
Describe the restrictions placed on corporations regarding their activities and the acquisition of assets.
Corporations are limited to activities and acquisitions that are related to or in furtherance of their stated purposes, ensuring that their actions are within the scope of their authorized powers.
How does the concept of ultra vires impact the decision-making process of a corporation?
The concept of ultra vires influences corporate decision-making by requiring actions to align with the corporation’s authorized powers and purposes, preventing activities that are beyond its legal scope.
Explain the legal requirements for establishing a sole proprietorship compared to incorporating a business.
Establishing a sole proprietorship involves fewer formalities such as securing licenses and permits, while incorporating a business requires compliance with specific legal procedures to create a separate legal entity.
Describe the significance of a corporation having a separate legal personality.
Having a separate legal personality allows a corporation to enter contracts, own assets, and incur liabilities in its own name, distinct from its shareholders or owners.
Describe the difference in composition between a partnership and a corporation.
A partnership requires at least two partners, while a corporation can be composed of one person.
Define the liability difference between stockholders in a corporation and general partners in a partnership.
Stockholders’ liability in a corporation is limited to their subscription to the capital stock, while general partners in a partnership may be held liable beyond their contribution.
How is a partnership created compared to a corporation?
A partnership is created by agreement, while a corporation is created by the operation of law.
Define a partnership according to the Civil Code of the Philippines.
A partnership is an agreement where two or more persons contribute money, property, or industry to a common fund with the intention of dividing profits among themselves.
Describe a corporation according to the Civil Code of the Philippines.
A corporation is an artificial being created by operation of law, with the right of succession and powers authorized by law.
How does a partnership acquire juridical personality compared to a corporation?
A partnership acquires juridical personality when two or more persons agree to form it, while a corporation gains juridical personality upon issuance of a Certificate of Incorporation by the SEC.
Describe the management structure differences between a corporation and a partnership.
A corporation is generally managed by the Board of Directors, while a partnership is managed by the Managing Partner designated in the Articles of Partnership or by any general partner in the absence of designation.
How do corporations and partnerships differ in the exercise of powers?
A corporation can only exercise powers conferred by law, articles of incorporation, or implied from expressly-conferred powers, while a partnership can perform any act unless it goes against laws, morals, custom, public order, or public policy.
Define the transfer of shares or rights in corporations and partnerships.
In a corporation, a stockholder can sell fully-paid shares without needing consent, whereas in a partnership, a partner cannot assign interest to a third party without partner consent due to the trust-based nature of partnerships.
What are the classes of corporations based on the existence of shares of stock?
Corporations can be classified as Stock Corporations, which have capital stock divided into shares and can distribute dividends or surplus profits based on the shares held.
Describe the requirements for a valid articles of incorporation in a Stock Corporation.
A valid articles of incorporation for a Stock Corporation must specify the amount of authorized capital stock and the number of shares by which it is divided.
How does the absence of provisions on dividend declaration authority impact the classification of a corporation?
The absence of provisions on dividend declaration authority in the articles of incorporation or bylaws does not automatically make a corporation a nonstock corporation.
Describe the governance of a Government-owned controlled corporation (GOCC)
CCs are governed by the special law creating them and the provisions of the RCC, with the special law prevailing in case of conflict.
What distinguishes a Private corporation in terms of governance?
Private corporations are governed by the RCC, including non-chartered GOCCs.
Define a Nonstock Corporation
A nonstock corporation has no capital stock and is not authorized to distribute dividends to its members.
How are Public and Private corporations organized in terms of organizers?
Public corporations are organized by the State only, while Private corporations are organized by private persons alone or with the State.
Describe the purposes of a Nonstock Corporation
A nonstock corporation may be organized for any purposes except for profit and political ends.
Explain the difference in function between Public and Private corporations
Public corporations are organized for the government of a portion of the State, while Private corporations are usually organized for profit.
Describe the concept of a holding corporation in business organizations.
A corporation that holds stocks in other companies for the purpose of control rather than mere investment, often part of a conglomerate or umbrella structure with other subsidiaries.
Define De Jure in the context of legal status of a corporation.
De Jure refers to a corporation that has fulfilled all legal requirements and can resist a state’s challenge to its existence.
How is De Facto status of a corporation characterized?
De Facto status means the corporation is organized with colorable compliance with valid laws, and its existence cannot be questioned collaterally.
Describe the concept of corporate existence by Estoppel.
Corporate existence by Estoppel occurs when individuals act as a corporation without authority, making them liable as general partners for debts and damages.
Explain the concept of corporate existence by Prescription.
Corporate existence by Prescription refers to a corporation that has exercised corporate powers for an indefinite period without interference from the sovereign power.
What is the significance of the Roman Catholic Church in the context of corporate existence by Prescription?
The Roman Catholic Church is an example of a corporation that has exercised corporate powers for an indefinite period without interference, illustrating corporate existence by Prescription.
