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Government Regulation of Corporations: Theory of Concession: Looks at A Corporation As A Creature of The State

The document summarizes the history of Philippine corporate law from sociedades anonimas introduced in 1888 to the modern Corporation Code of 1980. It discusses key concepts like sociedades anonimas being early limited liability companies similar to English joint stock companies. It also defines a corporation as an artificial being created by law that can be formed through theories of concession or as an enterprise entity.

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Andrea Ivanne
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158 views

Government Regulation of Corporations: Theory of Concession: Looks at A Corporation As A Creature of The State

The document summarizes the history of Philippine corporate law from sociedades anonimas introduced in 1888 to the modern Corporation Code of 1980. It discusses key concepts like sociedades anonimas being early limited liability companies similar to English joint stock companies. It also defines a corporation as an artificial being created by law that can be formed through theories of concession or as an enterprise entity.

Uploaded by

Andrea Ivanne
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1980- Corporation Code became effective

Brief History of Philippine Corporate Law

Sociedades Anonimas

A sociedad anonima was considered a commercial partnership where upon the


execution of funds and personal property, become a juridical person- an artificial being,
invisible, intangible, and existing only in contemplation of law- with power to hold, buy,
and sell property, and to sue and be sued- a corporation- not a general co-partnership
nor a limited co- partnership... The inscribing of its articles of agreement in the
commercial register was not necessary to make it a juridical person- a corporation.
Such inscription only operated to show that it partook of the form of a commercial
corporation, (Mead vs. McCullough) 


The sociedades anonimas were introduced in the Philippine jurisdiction on 1 December


1888 with the extension to Philippine territorial application of Articles 151 to 159 of the
Spanish Code of Commerce. Those articles contained the features of limited liability
and centralized management granted to a juridical entity. But they were more similar to
the English joint stock companies than the modern commercial corporations. (Benguet
vs Pineda)

Our corporation law recognizes the difference between sociedades anonimas and
corporations and will not apply legal provisions pertaining to the latter to the former.(Phil
Product vs. Primateria Societe Anonyme)

Cuentas en Participation

A cuentas en particiapacion as a sort of an accidental partnership constituted in such


manner that its existence was only known to those who had an interest in the same,
there being no mutual agreement between the partners, and without a corporate name
indicating to the public in some way that there were other people besides the one who
ostensibly managed and conducted the business, governed under Article 239 of the
Code of Commerce. Those who contract with the person under whose name the
business of such partnership of cuentas en participacion is conducted, shall have only a
right of action against such person and not against the other person interested, and the
latter, on the other hand, shall have not right of action against third person who
contracted with the manager unless such manager formally transfers his rights to them.
(Bourns vs. Carman)

The Corporation Law (1906)


The Corporation Code (1980)

Corporation Law is broader than corporation code.

SECTION 2 – Corporation Defined

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
incident to its existence.

Government Regulation of Corporations


Theories on the formation of a corporation

1. Theory of Concession: Looks at a corporation as a creature of the State


within the control of the latter. This theory is essentially followed in the
Philippines.

A corporation is an artificial being created by operation of law. It owes it life to the state
its birth being purely dependent on its will. Corporate by-laws must yield to judicial
orders. As a matter of fact, a corporation, once it comes into being, comes more often
within the ken of the judiciary than the other two coordinate branches. It institutes the
appropriate court action to enforce its right. Correlatively, it is not immune from judicial
control in those instances, where a duty under the law as ascertained in an appropriate
legal proceeding is cast upon it. (Tayag v. Benguet Consolidation)

Since all corporations, big or small, must abide by the provisions of the Corporation
Code, then even a simple family corporation cannot claim an exemption nor can it have
rules and practices other than those established by law. Torres v. Court of Appeals, 278
SCRA 793 (1997).

Theory of Enterprise Entity

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