Definition of corporation:
A corporation is an artificial being created
by operation of law, having the right of
succession and powers, attributes and
properties expressly authorized by law or
incident to its existence.
What does it mean by an artificial being?
Because it is treated as if it’s a person
Having the right of succession, means
continuous existence.
Submit to SEC
 Articles of incorporation
 Certificate of corporation
Why choose one-person corporation instead
of sole proprietorship?
Limited liability, and sole proprietorship has
no separate juridical personality
Corporation:
 Created by law
 At least 1 person/incorporator (OPC)
Before: at least 5 persons
 Terms of existence-in perpetuity
Before: limited to 50 years
 Consent of the state-dissolution
Classes of corporations:
1. Stock
- operated for the purpose of profit
Requisites of stock corporation
 Capital stock divided into shares
 Authorized to distribute dividends
2. Non-stock corporation
- No part of their income is
distributable as dividends
- For public good and welfare
Roman Catholic Church is a corporation by
prescription, meaning they exist for an
indefinite period of time with no
interference by sovereign power.
Other classes of corporations:
Ecclesiastical corporation
- Religious purposes
- For spiritual purposes or for
administering properties held for
religious ones.
Lay corporation
 Eleemosynary corporations
o Created for charitable
purposes
 Civil corporations
o For the benefit, pecuniary or
otherwise, of its members
Close Corporation
- Stocks held by limited number of
persons
Open Corporation
- Formed to openly to accept outsiders
as stockholders
De Jure Corporation
- Existing in fact and in law
De Facto Corporation
- Existing in fact but not in law
Components of a Corporation
Corporators
- Compose the corporation, whether
stockholders or members
Incorporators
- Originally formed the corporation
Who can be an incorporator?
People/Person, Partnership, Association and
Corporation
A corporation cannot use a name identical to
that of any existing corporation, it must be
DISTINGUISHABLE.
Common and Preferred Stocks
Common stock
 Stock which entitles its owner to an
equal pro rata division of profits.
 Complete voting rights
 Absentia
Corporate Officers
 President, who must be a director
 Treasurer, who must be a resident
 Secretary, must be citizen and
resident of the Philippines
o Certifies the actions of the
president

Preferred stock Board of Directors-Corporate officers

 Stock that gives the holder a
preference over the holder of
common stocks
 Redeemable shares-shares previously
issued by the corporation
2/3 majority of the capital stock
Powers of Corporations
Preemptive rights- first dibs

Preferred stock and Redeemable stock are

deprived of voting rights.

Par and no par value shares

Par value shares
 Values are fixed in the articles of
incorporation and certificate.
 Cannot be issued nor sold by
corporation less than par. (watered
stocks)

No par value shares

 Price are not stated in the certificate
of stock but maybe fixed in the
articles of incorporation. (trust fund
doctrine)

URE (Unrestricted Retained Earnings)

Treasury Shares
 Shares which have been issued and
fully paid, but subsequently
reacquired by the corporation.
 No voting rights
 No dividend rights

Ways of voting
 Personal
Dissolution
 Proxy

Methods of dissolution
 Voluntarily
 Involuntarily
20 days before meeting, notice shall be
given to each shareholder.
Notice of the time, place and object shall be
published in a newspaper published in the
place where the principal office is located
If no newspaper is published, publish in
newspaper of GENERAL CIRCULATION
in the Philippines.
Valid request for dissolution:
1. Reason for dissolution
2. Form, manner and time notice were
given
3. Names of the stockholders and
directors who approved the
dissolution
4. Date, place, and time of the meeting
5. Details of publication
Corporation shall submit:
1. Copy of resolution authorizing the
dissolution
2. Proof of publication
3. Favorable recommendation
Voluntary Dissolution Where Creditors
are Affected
Petition shall be filed with the Commission:
1. Signed by majority of BOD
2. Verified by its president or secretary
3. Set forth all claims and demands
against it
4. Vote at least 2/3 of the outstanding
capital stock or 2/3 of the members
at a meeting
Filing objections to the petition
 Not be less than 30 days nor more
than 60 days after the entry of the
order
Dissolution by Shortening Corporate
Term
 Effected by amending the articles of
incorporation
 A copy of the amended articles shall
be submitted to SEC
 Upon the expiration of the term,
corporation shall be deemed
dissolved
 No need issuance of certificate of
dissolution
Withdrawal of Request and Petition for
Dissolution
 Made in writing
 Verified by any incorporator,
director, trustee, shareholder or
member
 Signed by the same number of the
said positions necessary to request
for dissolution
Withdrawal shall be submitted:
 No later than 15 days from receipt of
Commission of request for
dissolution
Upon receipt of withdrawal, Commission
shall withhold action on the request for
dissolution and shall, after investigation:
1. Make a pronouncement that the
request for dissolution is deemed
withdrawn
2. Direct a joint meeting of the BOD
and the stockholders whether to
proceed with dissolution
3. Issue such other orders as it may
deem appropriate
Corporate Liquidation
Every corporation whose charter expires, is
annulled by forfeiture
Whose corporate existence is terminated in
any other manner, shall nevertheless remain
as body corporate for 3 years after the
effective date of dissolution
Foreign Corporation
Definition and Rights:
One formed, organized or existing under
laws other than those of the Philippines and
whose laws allow Filipino citizens and
corporations to do business in its own
country or State.
Right to transact business in the PH
 License for that purpose
 Certificate of authority
Application for License:
 Submit to SEC a copy of its articles
of incorporation and bylaws
Test to Identify:
a) Incorporation test
 Corporation organized under PH
law-Domestic
 Corporation organized under other
state-Foreign
b) Control Test
 Nationality of Control Group
c) Grandfather Rule
 Indirect possession of shares
The application shall be under oath and,
unless already stated in its articles of
incorporation, shall specifically set forth the
ff:
a) Date and term
b) Address of principal office
c) Name and address of resident agent
d) Place in the Philippines
e) Specific purposes
f) Name and address of directors and
officers
g) Statement of authorized capital stock
h) Statement of outstanding capital
stock
i) Amount actually paid in
Resident Agent
 An individual residing in the PH or
domestic corporation lawfully
transacting business in the PH
 Purpose: receiving summons and
other legal processes in any legal
actions
 Must be of good moral character and
of sound financial standing
Corporation will file with the commission a
written power of attorney.
In case resident agent is not found, the
service of any summons may be made upon
the Commission.
The Commission shall, within 10 days
thereafter, transmit by mails copy of such
summons to the principal office.
Merger or Consolidation Involving a
Foreign Corporation Licensed in the PH
A foreign corporation authorized to transact
business in the PH shall be a party to a
merger or consolidation in its home country
or state as permitted by law authorizing its
incorporation, such foreign corporation
shall:
 Within 60 days after the effectivity
of merger or consolidation, a copy of
the articles of merger or
consolidation duly authenticated by
the proper officials of the country or
State.
Doing Business without a License
The corporation cannot sue but can be sued.
Revocation of License
The license of a foreign corporation to  2 or more corporations may merge
transact business in the PH may be revoked into a single corporation or may be
upon any of the ff grounds: consolidate into a new single
a) Failure to file annual report corporation
b) Failure to appoint and maintain a
resident agent Procedures:
c) Failure to submit a statement of such 1. Board of Directors – plan
change 2. Present plan to stockholders – both
d) Failure to submit an authenticated corporation will have meeting
copy of the amended articles of 3. Articles of Merger or Consolidation
incorporation or bylaws or articles of 4. Submit to SEC
merger or consolidation - Can backout after vote
e) Misrepresentation of any material
f) Failure to pay taxes, imposts,
assessments or penalties
g) Transacting business outside the
purpose
h) Transacting business as an agent or
on behalf of any foreign corporation
i) Any other ground as would render it
unfit to transact business in the PH

Issuance of Certificate of Revocation

The Commission shall issue a corresponding
certificate of revocation.

Withdrawal of Foreign Corporations

A foreign corporation licensed to transact
business in the Philippines by filing a
petition for withdrawal of license.

No certificate of withdrawal shall be issued

by the Commission unless all the ff
requirements are met:
a) All claims which have accrued in the
PH have been paid or settled
b) All taxes, imposts, assessments, and
penalties, if any, lawfully due to the
PH Government
c) The petition for withdrawal of
license has been published once a
week for 3 consecutive weeks in a
newspaper of general circulation

Merger and Consolidation