General Provisions
1. What law created the Revised Corporation Code of the Philippines (RCCP)?
- The law that created the Revised Corporation Code of the Philippines (RCCP) was enacted through
Republic Act No. 11232 and was established on February 23, 2019.
2. Explain the doctrine of piercing the veil of a corporate entity and give examples/instances where
piercing the veil is allowed.
- Doctrine of piercing the veil of corporate entity, which applies when the corporate entity is being used
to commit fraud, evade obligations, or justify wrongful conduct. When this doctrine is applied, the
courts disregard the separate legal personality of the corporation and hold its shareholders or
officers personally liable. For example, a group of businessmen creates a corporation solely to
defraud creditors by transferring assets to another company under their control, leaving the original
corporation unable to pay its debts.
3. Define corporation by prescription and corporation by estoppel.
- Corporation by prescription is the one which has exercised corporate powers for an indefinite period
without interference on the part of the government. On the other hand, corporation by estoppel is
that all persons who assume to act as a corporation knowing it to be without authority to do so shall
be liable as general partners for all debts, liabilities and damages incurred or arising as a result
thereof.
4. What is the distinction between corporations created by special laws or charters versus
corporations created under the RCCP?
- Corporations created by special laws or charters are these corporations that are formed through
specific legislative acts (e.g., a Republic Act or a Presidential Decree). They are usually
government-owned or controlled corporations (GOCCs) or entities created for specific public
purposes. Example of this is Bangko Sentral ng Pilipinas (BSP) – created by Republic Act No. 7653
(New Central Bank Act). On the other hand, corporations created under the RCCP are formed by
private individuals or entities through registration with the Securities and Exchange Commission
(SEC). They must comply with the general provisions of the RCCP, including requirements on
incorporation, corporate governance, and dissolution. They can be stock or non-stock corporations,
operating for profit or nonprofit purposes.
5. Explain the Doctrine on Equality of shares.
- In RCCP, Title 1 Section 6, states that each share shall be equal in all respects (rights and liabilities)
to every other share except as otherwise provided in the articles of incorporation and stated in the
certificate of stock.
Incorporation and Organization
1. Who may incorporate and what are their qualifications?
- Title 2 Section 10 states that any person, partnership, association or corporation, singly or jointly with
others but no more than fifteen may organize a corporation. The qualifications are:
a. Each incorporator of a stock corporation must own, or be a subscriber to, at least one share
of the capital stock.
b. Each incorporator of a nonstock corporation must be a member of the corporation.
c. Incorporators who are natural persons must be of legal age, resident of the Philippines, must
sign the Articles of Incorporation/Bylaws.
2. What is the general rule and the exception to the rule with respect to a corporation’s existence?
- The general rule with respect to a corporation’s existence is that the corporation shall have perpetual
existence. On the other hand, the exception is if the articles of incorporation provide otherwise or if it
provides for a specific period.
3. In case a corporate term has expired, state the rule on the revival of corporate existence.
- Upon SEC approval, the corporation automatically has a perpetual existence, unless it chooses to
specify a fixed corporate term. The corporation regains its legal personality, rights, and privileges.
And also all assets, liabilities, and obligations are reinstated.
4. What is the importance of having a corporate name and what are the limitations on the use of a
corporate name?
- Corporate name is important because it's the one who gives the existence of the corporation and
identity. And also in general rule, a corporation must have a name by which it is to sue and be sued
and do all legal acts. However, creating a corporate name has limitations which is that a name must
not be identical, deceptively or confusingly similar to any existing corporation or other name that is
already protected by law. For addition, the corporate name must include the word “Inc., Corporation,
or OPC.”
5. Can a corporate name be changed? If so, how?
- Yes, a corporation can change its name by amending its articles of incorporation through the majority
vote of the board of directors and at least two-thirds of the stockholders. In order to easily identify the
changes in the articles of incorporation by underscoring it. The amendment shall take effect upon the
approval of SEC or from the date of filing with the said Commission if not acted upon within six
months.
6. What are the effects of Non-use of corporate charter and continuous inoperation?
- In Title 2 Section 21 states two cases. First is failure to formally organize and commence its
business within 5 years from the date of its incorporation which the certificate of incorporation shall
be deemed revoked as of the day following the end of the five year period. The second case is the
continuous inoperation for at least five consecutive years in which the SEC may, after due notice and
hearing, place the corporation under delinquent status.
