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RCC Topic 1

Revised Corporation Code of the Philippines

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7 views

RCC Topic 1

Revised Corporation Code of the Philippines

Uploaded by

j38166212
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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REVISED CORPORATION

CODE OF THE PHILIPPINES


General Provisions, Definitions and Classifications
Revised Corporation Code (R.A. No. 11232)

• Approved by Congress on February 20, 2019


• Signed into law on February 21, 2019
• Took effect on February 23, 2019
• Repealed BP Blg 68 (Corporation Code of the Philippines- 1980)
Highlights of the Revised Corporation Code

• Now contains 188 sections vs. 149 sections of the Old Corporation
Code
• Promotes Ease of Doing Business
• Adopts best practices in good corporate governance
• Strengthened the powers of the SEC
• Process improvements in corporate activities
Unchanged Principles and Concepts

• Definition and classes of corporations


• Classification of shares
• Management structure
• Corporate powers and capacity
• Dissolution process
• Mergers and consolidation
• Licensing of foreign corporations
Section 2, RCC

“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 incidental to its
existence.”
Theories on the
Formation of Corporation
Concession Theory

Also known as:


• Fiat Theory
• Government Paternity Theory
• Franchise Theory

Ø A corporation is not in fact and in reality a person


Ø The law treats it as though it were a person by process of legal
fiction or by regarding it as an artificial person distinct and
separate from its individual shareholders.
Concession Theory

Ø A corporation is an artificial creature without any existence until


it has received the imprimatur of the state acting in accordance
with the law, through the SEC (Tayag vs. Benguet Corporation, 26
SCRA 242).
Ø Although the fiction cannot be created unless there is an
enterprise or group of individuals upon whom it may be
conferred… the grant is only by virtue of a primary franchise given
by the State.
Franchise of Corporations

Primary Franchise Secondary Franchise

The franchise or authority to Special authority given to a


exist as a corporation corporation to engage in a
ü Granted by the RCC specialized business
ü Except those with special
charters
Theory of Enterprise Entity/ Corporate
Enterprise

Ø The corporation is not merely an artificial being, but more of an


aggregation of persons doing business, or underlying business unit
Ø It is not a legal fiction alone that creates a corporate entity but
also the consent of those who will form the corporation to engage
in a common venture or business for profit
Genossenchaft Theory

• Treats a corporation as the reality of the group as a social and


legal entity, independent of the state recognition and concession
Formation of a Corporation

Private Corporation
Ø By general corporation law particularly the RCC

Public Corporations
Ø Corporations created for political purposes
Ø By general law or special law
Government-Owned or Controlled
Corporation

• Any agency organized as a stock or non-stock corporation, vested


with functions relating to public needs whether governmental or
proprietary in nature, and owned by the Government directly or
through its instrumentalities either wholly, or, where applicable as
in the case of stock corporations, to the extent of at least 51% of
its capital stock.
Funa vs. MECO and COA
(G.R. No. 193462, February 4, 2014)

Ruling:

MECO is a sui generis entity. Though it has a special duty and


authority to exercise certain consular functions, it maintains its
legal status as a non-governmental entity. Thus, only accounts
pertaining to the verification and consular fees may be audited by
the COA.
Funa vs. MECO and COA
(G.R. No. 193462, February 4, 2014)

GOCCs are stock or non-stock corporations vested with functions relating to public
needs that are owned by the government directly or through instrumentalities:

First, its organization as stock or non-stock corporation;

Second, the public character of its function; and

Third, government ownership over the same.

The last element was not met here.


Funa vs. MECO and COA
(G.R. No. 193462, February 4, 2014)

Stock Corporation:
Ø The controlling interest of the government is assured by its
ownership of at least 51% of the corporate capital stock.

Non-Stock Corporation
Ø The controlling interest of the government is affirmed when at
least a majority of the members government officials holding such
membership by appointment or designation of there is otherwise
substantial participation of the government in the selection of the
corporation’s governing board.
Principal Attributes of a Corporation

ü It is an artificial being
ü Created by operation of law
ü Has the right of succession
ü Has the powers, attributes and properties expressly authorized by
law or incident to its existence (limited capacity).
Other Attributes of a Corporation

ü Acquires juridical personality upon issuance of COR by the SEC


ü Management of its business and affairs is vested in the BOD or
BOT
ü Owners are generally allowed to transfer their interests even
without the consent of the other owners
ü May exist in perpetuity unless a fixed term is stated in the
articles of incorporation
Quasi-Public Corporations (Public Utilities)

• Created by operation of general corporation law but performs


governmental functions
• Engaged in private business involving public interest
De Facto Corporation

• One which actually exists for all practical purposes as a


corporation but which has no legal right to corporate existence as
against the State.
De Facto Corporation

Requisites:
• Organized under a valid law
• Attempt in good faith to form a corporation according to the
requirements of the law (colorable compliance)
• Use of corporate powers
Corporation by Estoppel

• No real existence in law


• Neither de jure or de facto
• A mere fiction existing for the particular case, and vanishing
where the element of estoppel is absent
ü Stockholders limited liability on the X High cost of formation and
obligation of the corporation operations
ü Strong juridical personality through X Subject to high degree of
continuity of existence governmental regulation and
ü Legal capacity to act and contract as supervision
a distinct unit in its own name X Subject to higher taxes or indirect
double taxation
ü Centralized management
X Stockholders have limited
ü Ease of transferability of shares of participation in the conduct of the
stock corporation’s business
ü Feasibility of considerable financial X Credit is weakened by limited
undertakings because of numerous liability feature
investors

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