8/9/2019 Study Guide 1 Questions and Answers

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1. What is a corporation?

Sec. 2, BP 68 to wit: "A corporation is an artificial being create b! operation oflaw, haing the right of s#ccession an the powers, attrib#tes an propertiese$pressl! a#thori%e b! law or incient to its e$istence."

2. What are the attrib#tes of a corporation? Briefl! e$plain each.

&he attrib#tes are:1. 't is an artificial being.2. 't is create b! operation of law.(. 't has the right of s#ccession.). 't has onl! the powers, attrib#tes an properties e$pressl! a#thori%e b!

law or incient to its e$istence.

(. What is *eant b! the "octrine of legal entit!"? +p. 1, e leon-

&he co*pan! an its *e*bers are two separateistinct entities. /octrinall!, acorporation is a legal or 0#riical person with a personalit! separate an apartfro* its inii#al stocholers or *e*bers an fro* an! legal entit! to which it*a! be connecte or relate. The stockholders or members who, as natural

persons, are merged in the corporate body, compose the corporation but theyare not the corporation."

). $plain: "piercing the eil of corporate entit!." +p 26, e leon-

&he octrine that a corporation is a legal entit! or a person in law, istinct fro*

the persons co*posing it or an! other corporation to which it *a! be relate, is*erel! a legal fiction for p#rposes of conenience an to s#bsere the ens of0#stice. &his fiction, therefore, cannot be e$tene to a point be!on its reasonan polic!. Pec#liar sit#ations or ali gro#ns *a! e$ist to warrant the isregarof its inepenent being an the piercing of the corporate eil.

&he aboe octrine is applie onl! in three basic areas:

1. efeat of p#blic conenience as when the corporate fiction is #se as aehicle for the easion of an e$isting obligation3

2. fra# cases or when the corporate entit! is #se to 0#stif! a wrong,protect fra#, or efen a cri*e3

(. alter ego cases, where a corporation is *erel! a farce since it is a *erealter ego or b#siness con#it of a person, or where the corporation is soorgani%e an controlle an its affairs are so con#cte as to *ae it *erel! aninstr#*entalit!, agenc!, con#it or a0#nct of another corporation.

8/9/2019 Study Guide 1 Questions and Answers

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. /isting#ish between corporation an partnership?

PA4&54S'P 74P4A&'5

1. *anner of creation 7reate b! *ere agree*ent of

the parties +Art. 1989-

7reate b! law or b! operation

of law +Sec. 2, BP 68-2. n#*ber of incorporators a! be organi%e b! onl! two

persons +Art. 1969-4e;#ires at least fie persons+e$cept sole proprietorship-+Sec. 1, BP 68-

). powers $ercise an! powera#thori%e b! the partnersproie it is not contrar! tolaw, *orals, goo c#sto*s,p#blic orer or p#blic polic!+Art. 1(

8/9/2019 Study Guide 1 Questions and Answers

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1. Stock corporation@ is the orinar! b#siness corporation create an operatefor the p#rpose of *aing a profit which *a! be istrib#te in the for* ofiiens to stocholers on the basis of their ineste capital.

2. Non-stock corporation@ o not iss#e stocs an istrib#te iiens to their

*e*bers3 the! are create not for profit b#t for the p#blic goo an welfare.

&4 7ASS'='7A&'5S = 74P4A&'5S:

+1- as to the 5DB4 = P4S5S W 7PS &:

+a- Corporation aggregateor a corporation consisting of *ore than one*e*ber or corporator3 or

+b- Corporation soleor a special for* of corporation #s#all! associatewith the clerg! +Sec. 11

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+9- as to their 4A&'5 & A5&4 74P4A&'5.

+a- &arent or holding corporationor one which is so relate to anothercorporation that it has the power, either irectl! or inirectl!, thro#gh one or *ore

inter*eiaries, to control or to elect the *a0orit! of the irectors of s#ch othercorporation3

+b- Subsidiary corporation or one which is so relate to anothercorporation that the *a0orit! of its irectors can be electe, either irectl! orinirectl!, b! s#ch other corporation which thereb! beco*e its parent corporation.'t is one in which another corporation owns at least a *a0orit! +i.e., *ore than

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soereign power an which b! fiction of law is gien the stat#s of a corporationor3

+b2- Corporation by estoppel or one which in realit! is not acorporation, either de #ureor de $acto, beca#se it ' so efectiel! for*e, b#t is

consiere a corporation in relation to those onl! who, b! reason of their acts ora*issions, are precl#e fro* asserting that it is not a corporation. &his legalass#*ption is not goo, howeer, as against the State b#t *a! arise onl! forp#rposes of priate litigation