Published — August 15, 2022
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
After reading “What is a professional corporation?”, read also “Are there instances when corporate officers may be held liable for obligations incurred by the corporation?”
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Any person, partnership, association or corporation, singly or jointly with others but not more than fifteen (15) in number, may organize a corporation for any lawful purpose or purposes.
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Natural persons who are licensed to practice a profession shall not be allowed to organize a stock corporation unless otherwise provided under special laws.
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Nonstock corporations may be formed or organized for charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civic service, or similar purposes.
The Revised Corporation Code of the Philippines (RCCP) provides that “any person, partnership, association or corporation, singly or jointly with others but not more than fifteen (15) in number, may organize a corporation for any lawful purpose or purposes. (Section 10, RCCP.)
However, the RCCP expressly provides that natural persons who are licensed to practice a profession, partnerships or associations organized for the purpose of practicing a profession, shall not be allowed to organize a stock corporation unless otherwise provided under special laws.
The law says:
Section 10 of the Revised Corporation Code of the Philippines (RCCP) provides that:
“Any person, partnership, association or corporation, singly or jointly with others but not more than fifteen (15) in number, may organize a corporation for any lawful purpose or purposes: Provided, That natural persons who are licensed to practice a profession, and partnerships or associations organized for the purpose of practicing a profession, shall not be allowed to organize as a corporation unless otherwise provided under special laws. Incorporators who are natural persons must be of legal age.” (Emphasis supplied.)
On the other hand, Section 87 of the RCCP provides that a nonstock corporation may be organized for a professional purpose, among others.
The law says:
“Nonstock corporations may be formed or organized for charitable, religious, educational, professional, cultural, fraternal, literary, scientific, social, civic service, or similar purposes, like trade, industry, agricultural and like chambers, or any combination thereof, subject to the special provisions of this Title governing particular classes of nonstock corporations.” (Emphasis supplied.)
Are general professional partnerships treated as individual taxpayers or as a corporation subject to corporate income tax?
Jurisprudence says:
In the case of Rufino Tan v. Secretary of Finance (G.R. No. 109289, October 03, 1994), the Supreme Court ruled that a general professional partnership is considered as a corporation for income tax purposes, to wit:
“The Court, first of all, should like to correct the apparent misconception that general professional partnerships are subject to the payment of income tax or that there is a difference in the tax treatment between individuals engaged in business or in the practice of their respective professions and partners in general professional partnerships. The fact of the matter is that a general professional partnership, unlike an ordinary business partnership (which is treated as a corporation for income tax purposes and so subject to the corporate income tax), is not itself an income taxpayer. The income tax is imposed not on the professional partnership, which is tax exempt, but on the partners themselves in their individual capacity computed on their distributive shares of partnership profits.” (Emphasis supplied.)
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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