What is a corporation? What are its attributes? (Section 1 & 2, Revised Corporation Code)

Summary

Attorney Marie Chris Bataan introduces her virtual classroom on YouTube, aiming to simplify legal concepts. In this segment, she discusses the Revised Corporation Code of the Philippines, effective since February 23, 2019, designed to ease business creation. She explains the concept of a corporation as an artificial legal entity with distinct rights and liabilities, including the ability to own property and enter contracts independently of its members. The video also touches on the corporation's perpetual succession and its powers as defined by law, setting the stage for further exploration of corporate law in subsequent videos.

Takeaways

• 📚 The video is an educational resource by Attorney Marie Chris Bataan, focusing on simplifying legal concepts, particularly the law governing corporations.
• 📖 The Revised Corporation Code of the Philippines is the topic, which came into effect on February 23, 2019, aiming to modernize business regulations and facilitate ease of doing business.
• 🏢 A corporation is defined as an artificial being created by law, possessing rights of succession and powers, attributes, and properties as authorized by law.
• 🤖 Corporations are treated as separate legal entities, distinct from their investors or incorporators, a principle known as the doctrine of corporate entity.
• 💼 The corporate entity doctrine implies that a corporation can enter into contracts, sue, and be sued in its own name, separate from its members.
• 🏦 A corporation has the right of succession, allowing it to continue existing despite changes in its membership or stockholder composition, unlike partnerships.
• 🏬 The attributes of a corporation include being an artificial being, created by law, having the right of succession, and possessing powers and properties as per the law.
• 🛡️ The corporation's powers are generally outlined in the Revised Corporation Code, with specific limits often defined in the corporation's articles of incorporation.
• 🔑 The corporation's ability to own property is a reflection of its status as a separate juridical entity, distinct from its stockholders or directors.
• 🔍 The video series aims to explore further aspects of corporations, including the differences between partnerships and corporations, and the role of stockholders.

Q & A

What is the purpose of the Revised Corporation Code of the Philippines?

The Revised Corporation Code of the Philippines aims to modernize the legal framework governing corporations, introduce new business vehicles, and ensure ease of doing business, addressing previous complaints about the difficulty of establishing a business organization.

When did the Revised Corporation Code become effective?

The Revised Corporation Code became effective on February 23, 2019.

What is the definition of a corporation according to the Revised Corporation Code?

A corporation is defined as 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.

What is the doctrine of corporate entity?

The doctrine of corporate entity refers to the concept that a corporation is treated by law as a separate person, distinct from the investors or incorporators, allowing it to be liable for its own acts or contracts.

Can a corporation own properties?

Yes, a corporation, being a separate juridical entity, can own properties. It can buy and sell properties under its name, separate from the personal properties of its stockholders or directors.

What is the right of succession in the context of a corporation?

The right of succession means that a corporation can continue to exist even with changes in its membership or stockholder composition, unlike partnerships which dissolve upon such changes.

How does the Revised Corporation Code define the powers of a corporation?

The Revised Corporation Code outlines the general powers of a corporation, which are those expressly authorized by law or incidental to its existence. The specific limits and purposes are detailed in the corporation's articles of incorporation.

Why was the old Corporation Code amended?

The old Corporation Code was amended to adapt to the times, introduce new business vehicles, and address complaints about the lack of ease in doing business, thus leading to the Revised Corporation Code.

What is the difference between a natural being and an artificial being in legal terms?

A natural being refers to a human being, while an artificial being, like a corporation, is a creation of law. An artificial being is treated by law as a separate person with rights and responsibilities, despite not being a human.

Can a stockholder be held personally liable for the contracts entered into by the corporation?

No, a stockholder cannot be held personally liable for the contracts entered into by the corporation, as the corporation is considered a separate juridical person. This is due to the doctrine of corporate entity.

What is the significance of the Revised Corporation Code stating that a corporation has powers 'incidental to its existence'?

This statement implies that a corporation possesses inherent powers that are necessary for its operation and are not explicitly granted by the law, as long as they are not prohibited and are relevant to its purpose.

Outlines

00:00

📚 Introduction to the Revised Corporation Code

Attorney Marie Chris Bataan introduces her virtual classroom and YouTube channel, which aims to simplify law concepts. She begins the video by discussing the Revised Corporation Code of the Philippines, emphasizing its significance as a legal framework governing corporations. The code, which came into effect on February 23, 2019, has been updated to reflect modern business practices and to ease the process of establishing a corporation. The attorney explains that Section 1 of the code provides the title of the law, while Section 2 defines a corporation as an artificial being created by law, with the right of succession and certain powers and properties as authorized by law.

05:00

🏢 The Concept of Corporate Entity

In the second paragraph, the attorney delves into the concept of corporate entity, explaining that a corporation is treated as a separate legal person, distinct from its investors or incorporators. This doctrine allows the corporation to enter into contracts, sue, and be sued in its own name. The attorney clarifies that a corporation's separate identity means that its members are not personally liable for its debts or obligations, and vice versa. She also touches on the corporation's ability to own property, emphasizing that while shareholders have a proportionate share in the corporation, they do not become co-owners of specific properties owned by the corporation.

10:03

🔄 The Right of Succession and Legal Powers

The final paragraph of the script discusses the right of succession, a key attribute of corporations that allows them to continue operating despite changes in membership or stockholder composition. This is in contrast to partnerships, which dissolve upon any change in membership. The attorney also addresses the corporation's powers, which are defined by the Revised Corporation Code and may be exercised without the need for an express grant, as the code outlines the general powers of a corporation. She notes that these powers are subject to the corporation's stated purpose in its articles of incorporation and that these articles must be approved by the Securities and Exchange Commission. The attorney wraps up the video by encouraging viewers to watch more of her videos for further insights into corporations.

Keywords

💡Revised Corporation Code

The 'Revised Corporation Code' refers to the updated legal framework governing corporations in the Philippines. It came into effect on February 23, 2019, and was introduced to adapt to contemporary business needs and to address the ease of doing business. The video emphasizes that this revision was a response to complaints about the complexity of creating business organizations under the old corporation code. It introduced new business vehicles and provisions to streamline the process.

💡Corporations

A 'corporation' is defined in the script as an artificial being created by operation of law, possessing certain rights and properties. The video focuses on the attributes of a corporation, such as the right of succession and the ability to own properties. The concept is central to the video's theme as it sets the stage for discussing the legal and operational framework of business entities.

💡Artificial Being

The term 'artificial being' is used to describe a corporation, indicating that it is a creation of law rather than a natural entity. This concept is crucial for understanding the legal personality of a corporation, which allows it to enter into contracts, own property, and be liable for its actions separately from its members, as explained in the video.

💡Right of Succession

The 'right of succession' is an attribute of a corporation that allows it to continue existing despite changes in its membership or stockholder composition. This is contrasted with partnerships, which do not have this right and dissolve upon changes in membership. The video uses this concept to highlight a key difference between corporations and other forms of business organizations.

💡Juridical Person

A 'juridical person' is a legal term used to describe an entity, like a corporation, that is treated by law as if it were a person. The video explains that corporations, despite being artificial beings, are treated as separate persons with the ability to enter into contracts, sue, and be sued, which is a fundamental concept in corporate law.

💡Doctrine of Corporate Entity

The 'doctrine of corporate entity' is a principle that recognizes a corporation as a separate legal entity distinct from its shareholders or members. The video discusses how this doctrine allows a corporation to be liable for its actions and contracts independently of its members, which is a cornerstone of corporate law.

💡Ease of Doing Business

The 'ease of doing business' is a concept mentioned in the context of why the corporation code was revised. It refers to the simplicity and efficiency of commercial and legal procedures. The video suggests that the revised code was designed to address complaints about the difficulty of establishing and operating businesses under the old code.

💡Amendments

The term 'amendments' refers to the changes made to the old corporation code to create the revised version. The video indicates that these amendments were necessary to update the legal framework for corporations, introducing new provisions and deleting outdated ones to better suit current business practices.

💡Stockholders

In the video, 'stockholders' are mentioned as the owners of shares in a corporation. They are distinct from the corporation itself, which is a separate juridical entity. The video explains that stockholders do not become co-owners of specific corporation properties but are entitled to a proportionate share in the corporation's assets.

💡Board of Directors

The 'board of directors' is the governing body of a corporation, responsible for making major decisions and overseeing the management. The video touches on the role of the board in authorizing contracts on behalf of the corporation, highlighting the separation of legal responsibilities between the corporation and its directors.

💡Articles of Incorporation

The 'articles of incorporation' are legal documents that set out the purpose, name, and other essential details of a corporation. The video mentions that these documents, approved by the Securities and Exchange Commission, define the limits of a corporation's powers and are integral to understanding the corporation's legal framework.

Highlights

Introduction to the revised Corporation Code of the Philippines, effective since February 23, 2019.

The revised code aims to adapt to modern business needs and ease of doing business.

Section 1 of the Corporation Code provides the title of the law governing corporations.

Section 2 defines a corporation as an artificial being created by law with specific rights and attributes.

Corporations are treated as separate juridical persons, distinct from their members.

The doctrine of corporate entity allows a corporation to be liable for its acts and contracts.

A corporation can enter into contracts, sue, and be sued in its own name.

The corporation's separate entity prevents stockholders from being personally liable for corporate actions.

Corporations can own properties distinct from the properties of their stockholders or directors.

The right of succession allows a corporation to continue existing despite changes in membership.

Corporations have general powers as stated in the revised Corporation Code.

The corporation's powers are limited by its articles of incorporation and the Securities and Exchange Commission's approval.

The video discusses the attributes of a corporation, including its artificial nature and legal creation.

The video differentiates between a corporation and other business forms like partnerships.

The video provides a brief overview of the corporation's attributes and the doctrine of corporate entity.

The video encourages viewers to watch more videos for a deeper understanding of corporations.

The video concludes with a call to action for viewers to like, subscribe, and enable notifications for future content.

Transcripts

foreign

[Music]

hi i am attorney marie chris bataan

lasko this is my virtual classroom

welcome to my youtube channel in this

channel i shall aim to simplify the law

i shall discuss concepts and principles

of law in under 10 minutes

hi everyone for this video

i will talk about corporations

and for this particular video let us

zoom in

and focus on the corporation code more

specifically

your section one and two

of your corporation code

your section one is just basically

telling you the title

of the law governing corporations and it

says that the title of the code is the

revised corporation code of the

philippines

now why revised because clearly the old

corporation code had several amendments

and in it it actually introduced several

amendments and deleted also some

provisions

this revised corporation code became

effective february 23 2019.

this is a very welcome development

because

your new corporation code revised

corporation code has now adapted to the

times as you will later on learn once

you go over the revised corporation code

your revised corporation code came into

being

so that

there is the

introduction of new business vehicles

there is the

always the observance of the ease of

doing business because of the complaints

before that it was

very difficult for for

persons to create

a

a business organization and so

the revised corporation code

was

made or rather the old corporation code

was amended to answer

these um complaints that there was no

ease in doing business and so

we have this now where there are certain

provisions

that answer to the deficiencies perhaps

of the old corporation code so that's

just basically your

section one

what is section two

section 2 merely defines what a

corporation is

so let's read section 2.

it says

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

are incidental to its existence

in section 2 you already know

that a corporation is an artificial

being

it is merely a creation of law

as opposed to a natural being like us we

are natural beings

you have your corporation that is an

artificial being

the same as that of a partnership which

is also an artificial being

it is one that is created by law

it is not really a person but by

operation of law it is treated as such

as if it is a person and that's why we

call them your partnership and your

corporation we call them juridical

persons

from the definition given by your

revised corporation code of what a

corporation is you can actually already

tell what are the attributes of a

corporation so what are the attributes

first it is an artificial being

second it is created by operation of law

third it has the right of succession

fourth it has the powers attributes and

properties that are expressly authorized

by law or incident to its existence

as i've mentioned it is an artificial

being

and

what happens if it is an artificial

being what is the consequence

the consequence is that it is treated by

law

as a separate person

a separate person that is

distinct from the investors or the

incorporators that are

making up the

corporation

and this is what we call the doctrine of

corporate entity

because of such doctrine

the corporation then can be liable

for acts or contracts that are entered

into in the name of the corporation

because again it is considered as a

separate juridical person it is separate

and distinct from the stockholders

composing it this means then that if a

stockholder has

uh has a debt with let's say

mr a

mr a cannot sue the corporation for the

death of a stockholder

even if that stockholder be a director

of the corporation or be the president

of a corporation because again as i've

mentioned the corporation is separate

and distinct from the members or from

the stakeholders composing it

it can therefore

enter into contracts in its own name it

can sue and it can also be sued

again

separately and distinctly

from the stockholders or the members

composing the corporation

in the same manner that when a president

enters into a contract in behalf of the

corporation as authorized by the

governing body which is the board of

directors

your president cannot also be made

personally liable for the contracts that

he has entered into

with authority in behalf of the

corporation because again

the corporation is considered as a

separate juridical person

again this is what we call the doctrine

of corporate

entity

we also mentioned that one of the

attributes of a corporation is that it

can

have powers or properties

that are expressly authorized by lore

incident to its existence

that being so your corporation can also

own properties it being considered as a

separate juridical personality so it can

buy properties and it can also sell

properties if the property is under the

name of the corporation then it is owned

by the corporation it cannot be

considered as owned by the stockholders

or the directors rather it is owned by

the corporation

while when you become a stockholder you

are a holder of a stock which i will be

discussing in another video in our

virtual classroom you're entitled to a

proportionate share in the corporation

but that does not amount to you becoming

a co-owner of a specific property under

the name of the corporation so again

your corporation being a separate

juridical entity

it can

buy properties it can convey properties

again just because you're a stockholder

that does not already make you a

co-owner of a specific property in a

corporation or in the property rather of

a corporation now let's discuss about

another attribute of a corporation which

we also mentioned earlier

and such that it has the right of

succession

what does this mean

this means that the corporation can

continue

to exist even with a change of the

membership or even with the change of

the composition of the stockholders

why is it important to mention this it's

important to mention this because a

corporation is just one form of business

organization

the other two major forms of business

organizations we have the

the sole proprietorship and the

partnership

if you have

visited some of my videos

you would have already learned that when

you talk about

partnerships there is no right of

succession in a partnership

such that if there is a change in the

membership of the partnership if one

withdraws if another is admitted if one

dies then

the partnership is dissolved that means

that partnership

will cease to exist

this is different when we're talking

about a corporation

again because even if there is an

additional stockholder or addition

additional investors or if a stockholder

sells his shares

the

corporation can continue to exist it is

not considered as

dissolved this is just one of the

the distinctions between a partnership

and a corporation i will put uh the link

below on my

on uh video

where i discuss the differences other

differences or distinctions between a

partnership and a corporation but going

back to such attribute

your corporation as i've mentioned will

continue to exist even if there is an

additional stockholder or stockholders

even if some stockholders will

stop becoming such because they sell

their shares they will continue or

rather the corporation will continue to

exist

now let's go to the fourth attribute of

a corporation that i have mentioned

earlier on

and that is that the corporation

has powers attributes or properties that

are expressly authorized by law or

incident to its existence or incidental

rather to its existence now what do we

mean by this this means that because a

corporation is an artificial entity that

is created by operation of law this

means that the corporation should only

act in accordance with law and what law

are we talking about or talking about

the revised corporation code is there a

need for an express grant as to what

powers

they may

they may

exercise no there is no need for an

express grant because the revised

corporation code already tells you of

the general powers of a corporation

of course when you go over the revised

corporation code you will

of course learn

as to the limits of these powers as when

they can only engage in business

that

that they have stated in their articles

of incorporation as to what purpose what

is the purpose rather of their

incorporation

so of course

um while we look into the general law we

will also have to look into the articles

of incorporation which i will be

discussing in another video

as to the

as to it being

being or rather as to it giving the

limits of the powers of the corporation

of course

us would be approved by the securities

and exchange

commission

so that is it for this short video where

we just focused on the general concept

of a corporation where we talked about

what general law governs corporations

what is a corporation how is it defined

what are the attributes of a corporation

and the concept of um the doctrine of

corporate entity yes you will learn more

about corporations

and my other videos so watch out for

them and let's enjoy learning through

this

virtual classroom

i hope you have learned something from

this video if you have please click like

subscribe and that notification bell so

that you will be notified of new video

uploads thank you for watching see you

next time in mbl classroom

[Music]

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