TORREMOLINOS ATENCIÓN ESPECIALIZADA
CIRUGÍA PLÁSTICA Y REPARADORA Centro L.O.V
conducted In the name of the ostensible partner.
Has a firm name.
Has no juridical personality and can sue or be sued only in the name of the ostensible partner.
Has juridical personality and may sue or be sued under its firm name
Has no common fund. Has a common fund.
The ostensible partner manages its business operations.
All general partners have
the right of
management.
Liquidation thereof can only be done by the ostensible partner.
Liquidation may, by agreement, be entrusted to a partner or partners.
Corporation v. Partnership
BASIS PARTNERSHIP CORPORATION
As to creation and governing law
Created by mere agreement of the parties and governed by the Civil Code
Created by operation of law and governed by the Corporation Code
Commencement of juridical
personality and term of existence
From the moment of meeting of /minds of the partners
The term of a partnership may be
established for any period of time stipulated by the partners
Existence of the corporation commences from the date of issuance of the Certificate of
Incorporation by the Securities and Exchange Commission (SEC).
Existence can NOT be for a term in excess of 50 years. The term of a corporation may be extended to not more than 50 years at any single instance.
Number of
incorporators
May be organized by at least 2 persons GR: Requires at least 5 incorporators but not more than 15.
XPN: Corporation sole
Powers
GR: May exercise any power authorized by the partners.
XPN: Acts which are contrary to law, morals, good customs, public order, public policy
May exercise only such powers as may be granted by law and its articles of incorporation, implied therefrom or incidental thereto.
Management
When management is not agreed upon, every partner is an agent of the partnership
GR: Power to do business and manage its affairs is vested in the Board of Directors (BOD) / Board of Trustees (BOT).
XPNs:
1) Executive Committee (Sec. 35, CC) 2) Management Contract (Sec. 44, CC) 3) The AOI of a close corporation may provide that the business of the corporation shall be managed by the stockholders of the corporation rather than by a board of directors (Sec. 97, CC).
Effect of
mismanagement
A partner as such can sue a co-partner who mismanages.
The suit against a member of the BOD or BOT who mismanages must be brought in the name of the corporation (Derivative suit).
Extent of liability to third persons
GR: Partners are liable personally and subsidiarily(sometimes solidarily) for partnership debts to third persons XPN: Limited partner
Stockholders are liable only to the extent of the shares subscribed by them whether paid or not.
Right of Succession No right of succession Has right of succession Transferability of
Share Holder’s interest
Partner cannot transfer his interest in the partnership without the consent of all the other existing partners.
Stockholder has the right to transfer his shares without prior consent of the other stockholders unless the right of first refusal is embodied in the articles of incorporation.
Dissolution
May be dissolved any time by the will of any or all of the partners.
Death, civil interdiction and insolvency of a partner dissolve the partnership.
Can only be dissolved with the consent of the State.
Death or insolvency of shareholders can’t dissolve the corporation.
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U N I V E R S I T Y O F S A N T O T O M A S CLASSES OF CORPORATIONClasses of corporation
The following are the classes of corporation:
1. As to whether their membership is represented by shares of stock or not:
a. Stock‐ one which have capital stock divided into shares and are authorized to distribute to the holders of such shares dividends or allotments or the surplus profits on the basis of the shares held (Sec. 3, CC).
b. Non-Stock‐ is one which do not issue shares and are created not for profit but for public good and welfare and where no part of its income is distributable as dividends to its members, trustees, or officers (Sec. 87, CC).
2. As to the number of persons who compose them:
a. Corporation aggregate ‐ corporation consisting of more than one member or corporator. The CC requires that these corporations must be formed by “not less than 5 persons” (Sec. 10, CC).
b. Corporation Sole‐ religious corporation which consists of one member or corporator only and his successor.
3. As to whether they are for religious purpose or not:
a. Ecclesiastical corporation‐ one organized for religious purpose.
b. Lay corporation‐ one organized for a purpose other than for religion.
4. As to whether they are for charitable purpose or not:
a. Eleemosynary‐ one established for religious purposes.
b. Civil‐ one established for business or profit.
5. As to state or country under or by whose laws they have been created:
a. Domestic‐ one incorporated under the laws of the Philippines
b. Foreign‐ one formed, organized, or existing under any laws other than those of the Philippines and whose laws allow Filipino citizens and corporations to do business in its own country or state (Sec. 123, CC).
6. As to their legal right to corporate existence:
a. De jure‐ one existing both in fact and in law b. De facto‐ one existing in fact but not in law 7. As to whether they are open to the public or not:
a. Close‐ one which is limited to selected persons or members of the family (Sec. 96‐
105, CC).
b. Open‐ one which is open to any person who may wish to become a stockholder or member thereto.
8. As to their relation to another corporation:
a. Parent or Holding‐ one which is related to another corporation that it has the power either, directly or indirectly to, elect the majority of the director of such other corporation
b. Subsidiary‐ one which is so related to another corporation that the majority of its directors can be elected either, directly or indirectly, by such other corporation 9. As to whether they are corporations in a true
sense or only in a limited sense:
a. True‐ one which exists by statutory authority b. Quasi‐ one which exist without formal
legislative grant.
i. Corporation by prescription‐ one which has exercised corporate powers for an indefinite period without interference on the part of the sovereign power and which by fiction of law, is given the status of a corporation;
ii. Corporation by estoppel‐ one which in reality is not a corporation, either de jure or de facto, because it is so defectively formed, but is considered a corporation in relation to those only who, by reason of theirs acts or admissions, are precluded from asserting that it is not a corporation (Sec. 21, CC).
10. As to whether they are for public (government) or private purpose:
a. Public‐ one formed or organized for the government of a portion of the State.
b. Private- one formed for some private purpose, benefit or end.
Requisites for the formation of a stock corporation For a stock corporation to exist, two requisites must be complied with, to wit:
1. A capital stock divided into shares and
2. An authority to distribute to the holders of such shares, dividends or allotments of the surplus profits on the basis of the shares held (Sec. 3, CC;
Collector of Internal Revenue vs Club Filipino de Cebu 5 SCRA 321).
Requisites of a de facto corporation (LAP) 1. Organized under a valid Law.
2. Attempt in good faith to form a corporation according to the requirements of the law.
NOTE: Issuance of Certificate of Incorporation by SEC is a minimum requirement for the formation of the Corporation in good faith (Sundiang, 2009).
3. Use of corporate Powers - The corporation must have performed the acts which are peculiar to a corporation like entering into a subscription agreement, adopting by-laws, and electing directors.
Q: University Publishing Company (UPC), through its president, entered into a contract with Albert to publish the commentaries on the Revised Penal Code. UPC published the commentaries but it did not remit the amount due to Albert. This prompted Albert to file a collection suit. The RTC decided against UPC. When the Sheriff were about to implement the writ of execution against the company, he discovered that UPC is not registered corporation. Consequently, the president of UPC was substituted in the writ of execution. The president invoked the separate legal personality of the corporation as his defense. 1) Is UPC a de facto corporation? 2) Can the defense that UPC is a corporation by estoppel be invoked by the president? 3) Who is liable for the debts of the corporation?
A:
1. No. UPC cannot be a considered a de facto corporation because it was not registered with the SEC
2. No. One who has induced another to act upon his willful misrepresentation that a corporation was duly organized and existing under the law, cannot thereafter set up against his victim the principle of corporation by estoppel.
3. The president, who negotiated with Albert is liable.
A person acting or purporting to act on behalf of a corporation which has no valid existence assumes such privileges and obligations and becomes personally liable for contracts entered into or for other acts performed as such agent (Albert v University Publishing Co. G.R. No. L-19118, January 30, 1965).
Liabilities of officers and directors/ trustees of a de facto corporation
The liabilities and penalties attending to officers and directors/ trustees of a de jure corporation shall be the same as those of a de facto corporation. This includes the liability under the criminal law.
Members of a de facto corporation cannot be held liable as partners by third persons
The members of a de facto corporation cannot be held liable as partners by third persons who deal with them in their supposed corporate capacity, merely on
account of a technical defect in the formation of the corporation.
On the other hand, where an attempt to organize a corporation fails by omission of some substantial step or proceeding required by the law, its members or stockholders are liable as partners (De Leon, 2010).
The existence of a de facto corporation cannot be collaterally attacked
GR: The existence of a de facto corporation shall not be inquired into collaterally in any private suit to which such corporation may be a party. Such inquiry may be made by the Solicitor General in a quo warranto proceeding (Sec. 20, CC).
XPN: Collateral attack will be permitted, however, when the lack of right or the wrong doing of the corporation is in issue because it is in violation of public policy or of express or implied statutory requirement, such as denial of its right to enforce contracts entered into without compliance with prohibitions of express or implied statutory or public policy.
Thus, the defendant may question the personality of a foreign corporation transacting business in the Philippines to maintain a suit on the ground that it is not duly licensed to do business in our country (De Leon, 2010, citing 18 Am. Jur. 2d 606 and Sec. 133 of the CC).
De facto corporation v. De jure corporation
DE FACTO DE JURE
One which actually exists for all practical
purposes as a
corporation but which has no legal right to corporate existence as against the State.
One created in strict or substantial conformity with the mandatory statutory requirements for incorporation.
There is a colorable compliance with the requirements of the law creating the corporation.
There is substantial compliance with the requirements of the law creating the corporation.
Can be attacked directly but not collaterally.
Its right to exist as a corporation cannot be successfully attacked or questioned by any party even in direct proceeding for that purpose by the State (De Leon, 2010).
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U N I V E R S I T Y O F S A N T O T O M A S Rules governing a corporation by estoppel1. 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.
2. When any such ostensible corporation is sued on any transaction entered by it as a