Revised Corporation Code Important Points/ Topics

- Doctrine? Principle? Theories

Title I- General Provisions (Definitions and - Voting Requirements
Classifications - Period
Section 1 - Percentage/ Limitations
* Act 1459 (took effect- April 01, 1906) It started - Requisites/ Requirements
during the Act of American Regime and it called
Corporation Law Right of Succession
* BP 68 (took effect- May 01, 1980) During the time  Continues to exist
of Marcos and it called Corporation Code Trust Fund Doctrine
* RA 11232- (took effect- February 23, 2019)  Liable only up to the extent of their unpaid
Revised Corporation Code subscription (it constitutes a trust fund in the
event that the corporation will not be able to
Section 2- Definition of Corporation pay its corporate obligations)
 Artificial being- it is a Juridical Person Doctrine of Corporate Fiction
 2 Kinds of JP  Corporation has separate and distinct
1. Private JP- referring to partnership personality
and corporation * Example 1: Suppose ABC is a corporation. He has
2. Public JP- referring to provinces, stockholder si 1 2 3 4 and 5. The number represents
cities, municipalities, barangay stockholder. Yung properties b ani ABC property din
 Operation of Law- need to file articles of ni 1 2 3 4 5? NO because of separate and distinct
incorporation, kailangang bigyan ng certificate personality.
of incorporation ng SEC. * What if si 1 ang majority stockholder? He controls
 Pag wala netong dalawa, walang 60% of the share of the corporation. Does it mean that
corporation. the property of corporation ay property na rin ni 1?
 Mandatory to register because if there is NO because of separate and distinct personality.
no registration, there is no corporation to * Yung utang ba ng corporation utang din ni 1? NO
speak of.  The properties of the corporation are not the
 Right of succession properties of the stockholder and vice versa.
 Powers/ Attributes- express power, implied * Example 2: ABC corporation and XYZ corporation.
power, incidental power or inherent power. Yung properties b ani ABC properties din b ani XYZ?
 Partnership Acts of Administration and NO because of the separate and distinct personality.
Acts of Ownership Yung utang ba ni ABC corp utang din b ani XYZ
corporation? NO
Advantages and Disadvantages of Corporation
 BOD decides E- Doctrine of Piercing/ Disregarding/Removing
 Stockholders are not liable for their separate the Vail of Corporate Fiction
property (major advantage)  Separate and distinct personality will be
 Right of succession disregarded. Use for illegal purposes.
Major disadvantage: They can’t choose  Going to considered that they are 1 and the
same. Because it is use for illegal purposes.
Partnership- No need to register. The purpose of Example 1: ABC is in the brink of insolvency ayaw
registration is for monitoring only. But in Limited nyang magbayad ng utang sa mga corporate creditors.
Partnership, it is mandatory to register. Nagcreate sila ng panibagong corporation. Everything
Major Advantage: They can choose their partners is the same from the stockholders and the BOD.
(delictus personarum) GR- Doctrine of corporate Fiction
E- Can we consider the new corporation as the same
History as this corporation? YES because their purpose is to
* Yung batas nagsimula sa Act, naging CA, naging evade corporate obligations.
RA, during the time of Marcos naging PD pero BP
yon nung di nya panahon, naging LOI, at naging RA Example 2: Suppose itong corporation na ito ay may
 Act during the American regime, mga employees. May unpaind wages, salaries and
Commonwealth Act, Republic Act, benefits tapos ayaw nilang magbayad. Suppose they
Presidential Decree- Batas Pambansa, Letter dissolve the corporation and created another
of Instruction, and finally Republic Act. corporation. Their purpose is to evade its liabilities to
the laborers or employees. Can we consider the 2
corporation as one in this case? YES
Example 3: 1 technically calls the shots. Sya ang 3. Business Domicile or center of Management Rule
nagdedecide, nasusunod dummy lang yung ibang Example: ABC in Ph but it is operating in the United
stockholders. Wala silang ginagawa, all decisions are States. Based on the place of operation, we will say
made by 1. Di pwede kasi ang nagdedecide sa that this is not a Ph corporation but an American
corporation ay BOD. Hindi pwedeng magdecide ang corporation.
isang stockholder because the decision rests on the
BOD. It is illegal because it is a One man 4. Grandfather Rule- inaapply ng SEC in certain
Corporation because everything is done by 1. instances because it involves securities.
Example: ABC corporation has stockholder 1 2 3 4 5.
Example 4: Suppose it is a nationalize corporation. Stockholder 5 is also a corporation and he have his
Hindi Filipinos ang may-ari. Ang may-ari ay mga stockholders. Para malaman natin yung nationality ni
foreigners 100% or more than 60% are owned by ABC corporation, titignan din natin yung nationality
foreigners. It is not allowed nung stockholders ni 5.
 In order to know the nationality of the
Test Applied to determine kung ipipierce- Alter corporation, we must also know the
Ego Doctrine or Instrumentality Rule stockholder’s nationality of the investee
corporation
Doctrine of Limited Capacity (Section 35)
 3 Powers of Corporation Section 3- Classes of Corporation
 Express Stock v. Non-stock
 Implied Stock- may shares at dividends
 Inherent/Incidental Non-stock- walang share at dividend
 Kapag di kasama sa 3 power, then the
corporation cannot exercise that power Classification of Corporation
because limited lang ang power ng 1. Public Corporation- provinces, city, municipality,
corporation. Can only exercise the 3 powers. barangay
* Bakit tawag sa kanya limited Capacity? 2. Private Corporation- partnership and corporation
 May tinatawag na theory of general capacity,  Corporation created under BP 68 the former
theory of special capacity. law and under the present law RA 11232
 Can refer to Government Own Control
Nationality of Corporation Corporation which happens to have its
 It is important that your corporation have majority stockholder na government.
nationality/citizenship because sa Philippine  Quasi-Public
Corporation, you have certain privileges and Other Classification/ Kinds of Corporation
certain rights. I. As to number of persons who compose them
 Can acquire properties Corporation Aggregate- more than 2 yung
corporator/member
 You are under in the jurisdiction of
 Opposite: Corporation Sole/Religious
SEC
Corporation- isa lang yung corporator
 You have duty and also rights.
One Person Corporation- isa lang din yung corporator
1. Incorporation Test- place of incorporation
 Incorporation takes place where it was
II. As to whether they are for religious purpose or
incorporated
not
Example: ABC corporation created sa Philippines
Ecclesiastical Corporation - created/organized for
under SEC. San sya niregister? SEC Ph.
religious purposes.
Nationality of corporation is Domestic/
Lay Corporation – created for a purpose other than for
Philippine Corporation
religion. Not for religious purposes (eleemosynary or
civil)
2. Control Test- reverse (di inaapply sa Philippines
but there was one scenario when it was applied in Ph
III. As to whether they are for charitable purposes
setting during World War II.)
or not
 The citizenship is base on the majority of the Eleemosynary Corporation – established for charitable
stockholders. purposes
 Based on ownership not based on the place Civil Corporation- established for business or profit
where it was incorporated
Example: ABC corporation majority ng stockholder
nya ay Japanese. Lahat ng Japanese corporation
sinarado sa Ph based on the control test
IV. As to state or country under or by whose laws Special Incorporation Law- Congress (ginawa ng
they have been created Congress pars maging isang corporation)
Domestic Corporation- created under Philippines by  Law creating SSS, Medicare. PCSO, GSIS
virtue of incorporation test. (certificate of What law governs it?
Incorporation is needed) Primarily (at first)- Law creating it
Foreign Corporation- formed, organized or existing Suppletorily (secondly)- RA 11232
under any laws other than those of the Philippines.
(license to operate is needed) Section 5- Corporators and Incorporators
 Need pag-aralan yung distinction between the Corporators- all and encompassing. (Kasama nya
two because iba yung power, rights and duties. lahat) The corporation compose whether it is a
stockholder, incorporators or members.
V. As to their legal right to corporate existence Incorporators- Persons originally creating the
De Jure Corporation- (in law)- all requirements are corporation (privilege because you were the founder of
complied both in fact and in law the corporation)
De Facto Corporation- (in fact)- di nacomply ang Stockholder- persons constituting a stock corporation.
requirements (exist in fact but not in law) (owner of shares of stock in a stock corporation)
 Under Section 19 it can be subjected to a quo Member- persons constituting a non-stock corporation
warranto proceeding to be initiated by the Promoter- the person convincing this person to join
solicitor the corporation

VI. As to whether they are open to the public or not * Pwede bang incorporator ka at stockholder at the
Close Corporation- limited to selected person or same time? YES
members of a family * Lahat ba ng stockholder incorporator? NO
3 Basic Characteristics
 Stockholder should not exceed 20 All incorporators are stockholders
 There is a restriction in transfer of shares- di Not all stockholders are incorporators
pwedeng ibenta yung share sa public
 The shares cannot also be sold at the stock Section 6- Classification of Shares
exchange Doctrine of Equality of Shares
Open Corporation- open to the public (the public can  All shares are presumed to be equal.
buy the shares)
Partnership the presumption of the contribution is
VII. As to their relation to another corporation equal
Parent or holding corporation- majority of directors
controlling the subsidiary corporation. Section 13 wala na tinanggal na. For purposes of
Subsidiary Corporation- related to another corporation increase in capital stock kaya ididiscuss. In
that the majority of its directors can be elected either, consonance in the increase of capital stock not because
directly or indirectly, by such other corporation. of incompliance with Section 13

VIII. As to whether they are corporations in a true Capital Stock- total number of shares of the
sense or only in a limited sense corporation
True Corporation- exists by statutory authority or  Authorized Capital Stock- pag inapproved ng
grant SEC
Quasi-Corporation- no legislative grant  Subscribed Capital Stock- 25% of the
Authorized Capital Stock
Quasi-Public Corporation  Paid-up Capital Stock- 25% of the SCS
 Franchise/ contract- given by congress (there  Unissued Capital Stock- portion not yet issued
is a contract between the government and the to the public
corporation)  Outstanding Capital Stock- defined under 137
 Public duties for profit in the former law and in present under 173.
Quasi-Corporation Example: ACS is 100,000
 No legislative grant (no franchise) SCS- 25,000- minimum di pwedeng
 Not a corporation in its full sense bumaba otherwise it is a de facto corporation.
PCS- 6,250- minimum pweden tumaas pero
Section 4- Corporations created by special laws or bawal bumaba
charters UCS- 75,000
General Incorporation Law- RA 11232 (batas mismo, Minimum Capital of Corporation- 5,000
lahat ng corporation dito created) Cooperative Capital- 15,000
 These are under the old law
  This is only for purposes of power. Kasi sa * Can par value and no par value exist? YES
power may increase of Capital Stock. * Pwede bang yung shares lahat ay no par value? NO
walang bibili ng share mop ag ganon
* Wala ng minimum Paid-up Capital Stock at
Subscribed Capital Stock ngayon. (wala ng 2. Voting- bumoboto for election of BOD (shares na
requirement) pwedeng bumoto)
Non-Voting- GR di sila bumoboto (shares na di
Capital pwedeng bumoto)
 Actual property of the corporation- could be E- under ASIMID Instances- they can vote under these
building, land instances
 Fluctuate yung value (nagdedepreciate)  Amendment of the Articles
 Belongs to the corporation  Amendment of the by laws
 Can be Real or Personal Property  Sale, lease, exchange, mortgage
 Incurring creating, increasing bonded
Capital Stock indebtedness
 Something which is abstract  Merger or consolidation
 Amount fixed  Investment of Corporate funds
 When issued it belongs to the Stockholders  Dissolution of the corporation
 Always Personal Property (kaya nga share)
* Ang shares pwede lahat voting pero di pwede yung
Shares of Stock- management/ profit/ asset (MPA) lahat non-voting kasi walang mag-eelect ng BOD
 Pag ikaw ay isang stockholder may part ka sa * Pwede bang voting and non-voting? YES they can
management you can vote. may share sa profit co-exist
– dividend and may share sa left over ng
assets of the corporation. The mere fact that 3. Common- all shares are presumed to be equal
you are a stockholder. Preferred- there are certain privileges (rights to
Characteristics of the Shares of Stock dividend, preference sa voting rights and sa assets at
1. Personal/Movable Property the time of dissolution)
2. Intangible Property
3. Does not constitute an indebtedness on the part of 4. Promotion- Binibigay sa promoter (the person
the corporation convincing his incorporators to incorporate)
Founders- Incorporators (privilege the right to vote
Shares of Stock and to be elected for the period of 5 years)
 Constitutes the interest (may share ka at
ownership sa corporation) 5. Share in Escrow (in trust)/ Escrow Stock
 Intangible Example: ABC corporation nag-issue kay Pedro ng
 Can be issued even if it is not yet fully paid share. Problema si Pedro di pa nya bayad yung share.
Certificate of Stock Habang di nya bayad, hawag ni Juan yung share ni
 Written evidence Pedro for in trust. For the benefit of Pedro in the event
 Tangible that Pedro will be able to pay, then that is the time that
 Must be fully paid before iissue Juan will give the share to Pedro.
* Kailangan pa ba ang CoS para tawagin akong
stockholder? NO because the mere fact na 6. Convertible- pwedeng common or preferred and
nagsubscribed ka, you are considered as a stockholder vice versa
even though you did not pay.
* Can you issue a share of stock even though it is not 7. Redeemable v. Treasury- both are acquired by the
yet fully paid? YES corporation
* Can you issue a certificate of stock even though it is
not yet fully paid? NO because of the Doctrine of 8. Watered Stock- VOID
Individuality of Subscription (Di pwedeng iissue Law 1- Absolutely Simulated Contract
yung CoS unless it is fully paid) Characteristics
 Sabi ng SEC, it is considered on1, whole,  Walang bayad, kulang ang bayad ibinigay ang
indivisible contract share. Ibinigay ang certificate of stock. VOID
 Anong tawag sa stock na ibinigay pero walang
Classes of Shares bayad o kulang ang bayad? Watered Stock
1. Par Value- nakalagay yung amount sa face ng
certificate of stock 9. Over-issued/ Spurious stock (fake)
No Par Value- di nakalagay yung stated value pero  100,000 is the ACS. Nag-issue ng 100,000
merong issued price ( no less than 5 peso)
10. Original/ Formative- number of shares from the  Delinquent
beginning
Section 7- Founders’ Shares
11. Increased- pag itinaas ang share  Exclusive right to vote and be voted for
 5 years limitation (duration of the founders’
Statutory restrictions regarding the issuance of no shares)
par shares (5)  Approval of SEC is required\
 Batas mismo ang nagsasabi na bawal o kaya
may restriction Redeemable
1. Entities not allowed to issue no par shares (7)  The stipulation is needed para maging
 Bank redeemable
 Trust Companies  Di kailangan ang Unrestricted Retained
 Insurance Companies Earning (URE)
 Building and Loan Association * Ano yung stock na pwedeng bilhin ng corporation
 Preened Companies kahit walang URE? Redeemable
 Public Utilities
 Other corporations authorized to obtain or Treasury
access funds from the public  Di kailangang yung stipulation
Educational corporation are allowed  Kailangan ang Unresricted Retain Earnings

2. All preferred shares has stated par value- Why? * Similarity parehas nirereacquire ng corporation
How can you compute the preference as to dividends,
voting rights if there is no stated par value. Section 8- Redeemable shares
 No voting rights and no need for Unrestricted
3. No par- fully paid, non-assessable, not liable for Retained Earnings
corporate creditors (basic characteristics of no par)  These are the shares reacquired by the
corporation with a stipulation that it can be
* Saan applicable ang Trust Fund Doctrine? Par reacquired notwithstanding with the absence
Value of URE

4. No par- P5 is the minimum amount Section 9- Treasury Shares

 No voting rights/ not entitled to dividends
5. Entire consideration for no par shares shall be  Not part of outstanding/ do not revert to
treated as capital and they shall not be distributable as unissued shares (kasi nireacquire ng
dividends corporation either by purchase, by redemption,
donation or through some other means)
Advantages v. Disadvantages  It may be resold at a lesser price (this is an
Par Value- nakalagay yung amount exception to watered stock)
A: Madaling maibenta kasi protected yung creditor GR- Not distributable as dividend (E- Property
nakalagay kung magkano yung amount (easily sold) Dividend, opinion of SEC)
DA: Liable to corporate creditors * Paano pag ibinenta ang treasury shares?
 The moment it is resold- it is entitled to all
No par value- Di nakalagay yung amount pero may rights and dividends
issued price
A: Fully paid, non-assessable, not liable for corporate Title II- Incorporation and Organization of Private
creditors Corporations
DA: Promote the issuance of the Watered Stock kasi
nga di moa lam yung tunay na amount nung value. Section 10- Number and Qualifications of
Incorporators
Limitations Regarding the Issuance of preferred Corporators
shares  Generic it refers to the stockholders, members
1. They can vote under ASIMID or even incorporators
2. Always issued with the stated par value  The moment you loss your status as a
3. The BOD fixes the consideration thereof stockholder or a member then you’re no
longer a corporator
Shares na walang Voting Rights  There is no limit as the number of
 Redeemable incorporators (except for OPC there is only
 Preferred one stockholder)
 Treasury
Incorporators  E- They have chosen Fixed
 Person who signed in Article of Incorporation  Must obtain from SEC- Certificate of Revival
 Does not cease because once an incorporator, of Corporate Existence
you are forever an incorporator you are the  Favorable government recommendation (8
founder of the corporation. entities)- need the favorable endorsement or
 Minimum- 1, Maximum- 15 favorable recommendation of the appropriate
agency
Who can be an Incorporator?
 ANY person (natural or juridical), partnership, * No application for revival of certificate of
corporation or association, singly or jointly incorporation of banks, banking and quasi-banking
institutions, preneed, insurance and trust companies,
Requirements/ Qualifications (2 for natural, 1 for non-stock savings and loan associations (NSSLAs),
juridical) pawnshops, corporations engaged in money service
Natural person- legal capacity (can enter into a business, and other financial intermediaries shall be
contract) and must own 1 share approved by the Commission unless accompanied by a
Juridical person- own 1 share favorable recommendation of the appropriate
* Can a corporation exist even if there is only one government agency.
incorporator? YES
Old Law- maximum period is 50, no minimum
Old Law- Only a natural person (5 Qualifications)
Basic qualification removed- majority are residents of Section 12- Minimum Capital Stock Requirement
the Philippines  GR- no minimum Capital Stock (the
corporation can exist even if there is only
One Person Corporation- there is only one P50,000)
incorporator or stockholder  E- required by special law
Ordinary Corporation- more than one  Example: You are a school, there are
certain requirements for colleges or
Section 11- Corporate Term high schools set by DepEd or CHED
Prospective- all corporations which will be created for minimum paid up capital
after February 23, 2019 requirements.
 GR- perpetual (the law has no maximum  Percentage requirement: 100% (Example:
period) Mass Media, ABS-CBN, DZMM, Philippine
 E- If they have chosen Fixed (opinion: the Daily Inquirer, Rappler) It must have 100%
maximum is 50 years. The law did not provide Filipino ownership.
a maximum period)  70/30% - Advertising Industry (70%
 Extend the period- 3 years prior to the must be iwned by Filipino, 30% must
expiration of the period (before its 5 years) be owned by any other nationality)
* Can it be extended earlier than 3 years?  60/40%- Requirement under the
 E- it can be extended if there is a justifiable constitution (popular): Public Utilities,
reason which will be approved by the Educational Institutions, Exploration
Securities and Exchange commission. of Natural Resources.

Retroactive- corporations existing prior to February  Whether you are an OPC or an Ordinary
23, 2019 Corporation there is no minimum CS
 GR- perpetual (the law has no maximum  Is there a minimum capital stock requirement?
period) NONE
 E- They have chosen Fixed  Is there a minimum paid up capital stock
 Vote- Majority of the Outstanding Capital requirement? NONE
Stock  Is there is a percentage requirement? YES
 Period to decide- 2 years (from February 23, * Before there was a minimum paid up under Section
2019, they have 2 years to decide what have 13- 5,000
they chosen for those corporation which are
existing. They can choose perpetual or a Cooperative- there is a minimum paid up capital
corporation with a fixed term.) stock.

Revival of Corporations- those corporations which Old Section 13- Repealed

are already dissolved  But the requirement of 25% is still existing in
 GR- perpetual (the law has no maximum Section 37
period)
  Whoever will be the incorporators will be the
Section 13- Contents of Article of Incorporation directors and called as incorporating
 Mandatory can add other requirements but directors
can’t remove Seventh- ACS Requirements
Mandatory Requirements  Authorized capital stock of the corporation is
A. Name of Corporation- should have INC Corp or ________ divided into number of shares per
OPC share and the par value of each. It must be
B. Primary purpose- only one primary purpose specified.
(Example: banking) Eight: Number of shares of the Authorize Capital
Secondary Purpose- it should be germane and Stock
related to the primary purpose. If it is not consistent, it  Has been subscribed as follows: name of
can be declared as ultra vires subscriber, nationality, no. of shares
 Prohibition: Banking Institutions cannot subscribed, amount subscribed, and the
engage in insurance neither any insurance can amount paid.
engage in banking Ninth- Certification of treasurer (before it is called as
 It is important because these two is the treasurer’s affidavit)
express power of the corporation. (written in  The seventh and eight provision must be
the articles) specified in the certification of treasurer
 Where can you find the power of the because if it is not, were having a problem in
corporation? Article of Incorporation Section 16. Grounds when the amendment
primarily in the purposes may be rejected or disapprove
 If within the power- Intra Vires Act Tenth- Undertaking to change the name
 Outside of the power- Ultra Vires Act  Revise Corporation code and SEC are strict
 Remedy: 2/3 votes of the Outstanding insofar as the name is concerned. In fact,
Capital Stock (Ratify going to make it before you can incorporate the first thing that
valid) you’re supposed to do is to file the name
* Cooperative: primary objective, secondary verification or undergo the name verification
objective process.
C. Principal Office is located- this is where you hold  If your name is similar to another corporation,
the meeting of the stockholder and where you keep then you will not be allowed to file the
the book of the corporation. Articles of Incorporation

D. Term of Corporation- Section 11 Voting Requirements

E. Stock Requirements- the amount of its authorized Stockholders
capital stock, number of shares into which it is divided  Majority of OCS
F. Arbitration Requirement- arbitration: A TP will  2/3 of OCS
be the one to decide for the parties  Which is bigger in terms of vote? 2/3
G. Non-stock Corporation Requirements- * Cooperative you have ¾ of votes
Arbitration agreement it is not mandatory but only
optional (one of the remedies provided by law), can Instances when they are combined
file electronically the Article of Incorporation (can  Majority + 2/3
file, vote and attend electronically)  Majority + Majority
 They combined the vote of the BOD
Section 14- Form of the Articles of Incorporation and afterwards it will be ratified by
Provisions the stockholders
First- the name of the corporation should contain Inc,
Corporation, OPC Board of Directors
 Tell the public that it is a corporation because  Majority of the BOD- bigger than the majority
in a partnership, you can see the word of the quorum
company, associate or limited.  Majority of the quorum of the BOD (50% +
Fifth- Incorporators 1%)
 Name, nationality, residence must also be  If the BOD is 15, the majority is 8
provided  Suppose 8 attended, the majority of
Sixth- Incorporating Directors- temporary directors the quorum is 5
 Already have directors where in fact after the  10 attended, the majority of the
issuance, that is the time they are going to quorum is 6
elect. * If they are going to hold a meeting, what is required?
Only the majority of the BOD
  If they are 15, the majority is 8. If 8 effectivity because it is the date of the
attended only 5 votes are required to issuance of the amended COI
approve the act.  The problem is it has already reached
* If they are going to decide what is the vote. 6 months and the SEC has not yet
Majority of the quorum unless the law specifies that approve or disapprove the
what is required is majority of the BOD amendment. October 1 is the date of
effectivity
* Cooperative- 30 days
Instances of 2 voting requirements
 Unanimous consent of the remaining BOD in Appraisal Right
case of the emergency board  Concurring- votes yes
 Self-dealing director  Dissenting- votes no (will be the one to
withdraw because he does not agree with the
* Who runs the corporation? Who is the governing amendment
body? BOD
* Initially is the BOD who will decide but there are GR- a meeting is required
instances where the stockholders will decide and there E- Section 100 (Close Corporation)
are instances that the BOD will decide. But there also Section 15- written assent of stockholders
instances that both of them will decide.
Section 11- only the stockholders will decide (ratify Favorable recommendation of the appropriate
and extend) government agency (7)
 No articles of incorporation or amendment to
Section 15- Amendment of Article if Incorporation articles of incorporation of banks, banking and
(comparative analysis of the voting requirement) quasi-banking institutions, preneed, insurance
Amendment- only a portion will be changed (name, and trust companies, NSSLAs, pawnshops and
term, principal office and purposes of the corporation) other financial intermediaries shall be
Revised- the whole will be changed (more drastic and approved by the Commission unless
has a bigger scope) accompanied by a favorable recommendation
of the appropriate government agency to the
Amendment of AOI- Majority + 2/3 effect that such articles or amendment is in
Amendment of By-Laws- Majority + Majority accordance with law.
Amendment of Close Corporation- 2/3 of OCS
Amendment in Cooperative- 2/3 of the Members
Amendment of Plan/Merger/Consolidation- Majority Section 16- Grounds when AOI or Amendment
+ 2/3, Majority + 2/3 may be Disapproved
Amendment in Foreign Corporations- no such vote but 1. Not in prescribed form- they did not comply with
you have to file it within 60 days Section 13 and 14.
Provisions which are non-amendable (reason: the 2. Illegal Purpose- engage in prostitution, white slave
law fixes them because there is a degree of trade, prohibited drugs
permanency unless the law allows it) 3. Certification is false- Section 14 (7th and 8th
1. Name of the incorporators (once you are an provision)
incorporator, you are forever an incorporator) 4. Percentage requirement not complied (Section 12)
2. Date when they filed or signed the AOI 5. No favorable recommendation of the appropriate
3. Original number of the incorporators government agency
 Under these 5 instances the SEC can reject the
Vote Required- Majority + 2/3 Article or the amendment to the article
Date of the Effectivity
 ABC is a corporation and they will file in SEC PD 902-A- Suspension or Revocation of Certificate of
the amended AOI and the SEC will issue the Incorporation
amended COI or corporate charter  Law creating the SEC and under the law, the
 GR- upon approval of SEC, issuance of SEC can revoke or revoke the certificate of
Amended COI incorporation under 6 instances
 E- from the date of filing, if not acted upon 6 Instances where the SEC can suspend or revoke
within 6 months  FraSeReCoFaFa
 Example: Suppose ABC files on Fraud in procuring the certificate of incorporation
October 1, 2019. Normally within the (dissolution of the corporation adapted in here)
span of 2 weeks, the SEC will issue Series misrepresentation (that is what the corporation
the COI. October 16, 2019 SEC can do or doing)
issued. October 16 is the date of Refusal to comply with a lawful order of the court
Continues in operation for a period of 5 years
Failure to file by-laws
Failure to file reports *Old law- if the name is similar to another name, it
will not be allowed.
Section 17- Corporate Name  Name should be distinguishable
Vote required to change- Majority + 2/3
* Can you change the corporate name? YES but the Section 18- Registration, Incorporation and
law did not specify the vote (Section 15- Amendment Commencement of Corporate Existence
of the Articles) New Law- Name verification is required (first
document to be file)
Effect of change of name- same corporation under a  Name will be verified under Section 17 if it is
different name distinguishable because if it is not
 The corporation cannot use the defense that it distinguishable, the SEC will not allow it.
is a new corporation. It is the same  If distinguishable, SEC requires the
corporation under a different name. submission of AOI
* If you are going to change the name of corporation  If compliant- SEC will issues COI (there is
does it mean that it is a new corporation? NO no illegality and all the requirements have
been complied)
Provisions of the Law (the SEC will not allow the Effect if Issuance
registration of the corporate name)  Right to exist- YES
 Name shall not be allowed if- not  If the SEC issues the COI is it legally
distinguishable (the corporate existence will existing? YES
not start) Why is it not distinguishable  Right to operate- NO because there are 3
 1. Already reserved or registered things that the corporation must do.
 2. Already protected by law  Elect the BOD
 3. Where it is contrary to exiting laws,  Elect the officers
rules or regulations  File the by-laws
 A name is not distinguishable even if it
contains one or more of the following: (When Issuance of COI
it is distinguishable)  Start of the corporation
 (a) The word "corporation",
"company", incorporated", "limited", *Old law- Before, the corporation will file the AOI in
"limited liability", or an abbreviation SEC and SEC will issue the COI
of one if such words; and
 (b) Punctuations, articles, Effect of non-issuance of COI
conjunctions, contractions,  Can a file MANDAMUS- compel the
prepositions, abbreviations, different issuance of the performance of an act.
tenses, spacing, or number of the same  Mandamus- filed against the SEC if the SEC
word or phrase. refuses to issue the COI
Example: ABC has the word Corp, Company,
Incorporated. It is the same corporation even though it Discretionary Act- optional on the part of SEC
is using the abbreviated word. Ministerial Act- Mandatory

Effect of violation (not distinguishable) Effects if * If the corporation has met all the requirements is it a
your name is found not to be distinguishable discretionary or ministerial act on the part of the SEC
 SEC will summarily order- without an to issue? Ministerial that is the reason why you can
opponent, the SEC with its own initiative can fila a case for Mandamus if the corporation still
issue: refuses to issue the COI
 1. Cease and desist order (SEC is
telling you not to use the corporate Section 19- De Facto Corporation
name) De Jure- all the legal requirements have been met so it
 2. Removal of all visible signages is a valid corporation
 3. Fails to comply- cited for contempt De Facto- one some or maybe or some of the
(damages amounting to P30,000) requirements have not been complied
 4. Administratively/Criminally liable
 5. Revoke the COI Requisites of De Facto Corporation
If it is distinguishable 1. Valid law- RA 11232
 The SEC will allow you to file the AOI
2. Attempt to incorporate/organize- the corporation Section 20- Corporation by Estoppel
has filed the name verification, file the articles De Jure- complied all the legal requirements (legal)
3. Actual user of the corporate power- the corporation De Facto- has the AOI and COI but it failed to satisfy
has elected the BOD, elected the officers and file the 1 or some of the requirements under the law so it can
by-laws (operating) be subjected to a Quo Warranto Proceeding
4. Issuance of COI despite of the non-compliance with Corporation by Estoppel- No AOI, no COI basically
the legal requirements it is not a corporation
Effect of corporation by estoppel- persons
* De Facto does it have articles? YES comprising it are liable as a general partner (up to
* Does it have certificate? YES but the problem was the extent of their separate property)
issued but there is something violated.
Some Reasons why we are going to declare the Legitimate Corporation- Stockholders are not liable
corporation as a de facto up to the extent of their separate property (trust fund
 Corporate name resembles, it is not doctrine)
distinguishable
 Forgery in the articles Ostensible corporation/estoppel-
 Citizenship  Can you evade your liability or use it as a
 Percentage Requirement defense that you are a corporation by estoppel
De Jure and De facto so that you will not become liable? NO
 Technically they are the same because you  Provided, however, That when any such
apply all the principle in de facto subject only ostensible corporation is sued on any
to the one exception. transaction entered by its as a corporation or
on any tort committed by it as such, it shall
Remedy against De Facto- Quo Warranto not be allowed to use on any its lack of
(questioning the legal existence of the corporation) corporate personality as a defense. Anyone
Example: A case was filed against ABS-CBN who assumes an obligation to an ostensible
questioning its legal existence (Quo-Warranto). corporation as such cannot resist performance
Solicitor general was questioning the existence of thereof on the ground that there was in fact no
ABS-CBN corporation.
 Quo Warranto- filed against De Facto  Example 1: I’m a corporation by estoppel can
corporation and only the solicitor general can I use that as a defense? NO
file  Example 2: Suppose a TP transacted to me
and I’m a corporation by estoppel. Can the TP
Direct Attack evade the liability? NO
 Directly questioning the legal existence of the
corporation. Section 21- Effects of Non-use of Corporate
 The direct attack is the quo warranto Charter and Continuous Inoperation
proceeding to be filed by the solgen Non-Use- form the start (issuance of certificate by
Collateral Attack SEC), it becomes a perpetual corporation
 ABC corporation (de facto) and Pedro. ABC  Did not do anything
extended a loan to Pedro. Pedro does not want  What if in a period of 5 years, it did not elect
to pay because it is a de facto corporation. the BOD, did not elect the officers and did not
Indirect because even though ABC is a de file the by-laws?
facto corporation, it is only the solicitor  Deemed Revoked- the corporation is dissolve
general who can file the case. Anyone (COI will be revoked)
questioning the legal existence, which is not a Continuous Inoperation- What if during the 5-year
quo warranto proceeding, which is not filed by period they were able to elect the BOD and officers
the solicitor general is a collateral attack. and filed the by-laws. All of a sudden they cease to
 Not allowed against a de facto corporation. operate. It is possible in the first year of operation they
did something and later on, stop doing it.
* If you are De Jure, you cannot be subjected to a  Did something but afterwards for a period of 5
direct or a collateral attack. But if you are De Facto years they stopped operation
corporation, can you be subjected to a collateral  Placed under delinquent status for 2 years
attack? NO. To a direct attack? YES- Quo warranto (extension for you to operate)
 If compliant- order will be lifted (it is
De Facto- has COI but there is a violation now again a valid corporation)
Corporation by estoppel- No articles, no certificate  If not compliant- the revocation of
but it is operating as if it is a corporation. COI will happen
 Old Revised Cooperative
Non- Use 2 years 5 years 2 years
Continuous 5 years 5 years 2 years

Mandamus Quo-Warranto
* Compelling the performance * Questioning the
of an act legal existence of the
Example: The SEC does not corporation. It is a
like to issue the COI, the direct attack filed by
corporation does not allow the the Solicitor
stockholder to examine the General.
books or allow the stockholder
to attend the meeting.
* Non-use (5 years) * Continuous
inoperation (5 years)
Section 16 PD 902- A

General Provisions/ Definitions/ Classifications-

Section 1-9
Incorporation and Organization of Private
Corporations- Section 10-21
BOD/ Trustees and Officers- Section 22-34
Powers of Corporations- Section 35-44 (express,
implied, inherent)
By-laws- Section 45-47