Revised Corporation Code
- Doctrine? Principle? Theories
Title I- General Provisions (Definitions and
Classifications
Section 1
* Act 1459 (took effect- April 01, 1906) It started
during the Act of American Regime and it called
Corporation Law
* BP 68 (took effect- May 01, 1980) During the time
of Marcos and it called Corporation Code
* RA 11232- (took effect- February 23, 2019)
Revised Corporation Code
Section 2- Definition of Corporation
 Artificial being- it is a Juridical Person
 2 Kinds of JP
1. Private JP- referring to partnership
and corporation
2. Public JP- referring to provinces,
cities, municipalities, barangay
 Operation of Law- need to file articles of
incorporation, kailangang bigyan ng certificate
of incorporation ng SEC.
 Pag wala netong dalawa, walang
corporation.
 Mandatory to register because if there is
no registration, there is no corporation to
speak of.
 Right of succession
 Powers/ Attributes- express power, implied
power, incidental power or inherent power.
 Partnership Acts of Administration and
Acts of Ownership
Advantages and Disadvantages of Corporation
 BOD decides
 Stockholders are not liable for their separate
property (major advantage)
 Right of succession
Major disadvantage: They can’t choose
Partnership- No need to register. The purpose of
registration is for monitoring only. But in Limited
Partnership, it is mandatory to register.
Major Advantage: They can choose their partners
(delictus personarum)
History
* Yung batas nagsimula sa Act, naging CA, naging
RA, during the time of Marcos naging PD pero BP
yon nung di nya panahon, naging LOI, at naging RA
 Act during the American regime,
Commonwealth Act, Republic Act,
Presidential Decree- Batas Pambansa, Letter
of Instruction, and finally Republic Act.
Important Points/ Topics
- Voting Requirements
- Period
- Percentage/ Limitations
- Requisites/ Requirements
Right of Succession
 Continues to exist
Trust Fund Doctrine
 Liable only up to the extent of their unpaid
subscription (it constitutes a trust fund in the
event that the corporation will not be able to
pay its corporate obligations)
Doctrine of Corporate Fiction
 Corporation has separate and distinct
personality
* Example 1: Suppose ABC is a corporation. He has
stockholder si 1 2 3 4 and 5. The number represents
stockholder. Yung properties b ani ABC property din
ni 1 2 3 4 5? NO because of separate and distinct
personality.
* What if si 1 ang majority stockholder? He controls
60% of the share of the corporation. Does it mean that
the property of corporation ay property na rin ni 1?
NO because of separate and distinct personality.
* Yung utang ba ng corporation utang din ni 1? NO
 The properties of the corporation are not the
properties of the stockholder and vice versa.
* Example 2: ABC corporation and XYZ corporation.
Yung properties b ani ABC properties din b ani XYZ?
NO because of the separate and distinct personality.
Yung utang ba ni ABC corp utang din b ani XYZ
corporation? NO
E- Doctrine of Piercing/ Disregarding/Removing
the Vail of Corporate Fiction
 Separate and distinct personality will be
disregarded. Use for illegal purposes.
 Going to considered that they are 1 and the
same. Because it is use for illegal purposes.
Example 1: ABC is in the brink of insolvency ayaw
nyang magbayad ng utang sa mga corporate creditors.
Nagcreate sila ng panibagong corporation. Everything
is the same from the stockholders and the BOD.
GR- Doctrine of corporate Fiction
E- Can we consider the new corporation as the same
as this corporation? YES because their purpose is to
evade corporate obligations.
Example 2: Suppose itong corporation na ito ay may
mga employees. May unpaind wages, salaries and
benefits tapos ayaw nilang magbayad. Suppose they
dissolve the corporation and created another
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
nagdedecide, nasusunod dummy lang yung ibang
stockholders. Wala silang ginagawa, all decisions are
made by 1. Di pwede kasi ang nagdedecide sa
corporation ay BOD. Hindi pwedeng magdecide ang
isang stockholder because the decision rests on the
BOD. It is illegal because it is a One man
Corporation because everything is done by 1.
Example 4: Suppose it is a nationalize corporation.
Hindi Filipinos ang may-ari. Ang may-ari ay mga
foreigners 100% or more than 60% are owned by
foreigners. It is not allowed
Test Applied to determine kung ipipierce- Alter
Ego Doctrine or Instrumentality Rule
Doctrine of Limited Capacity (Section 35)
 3 Powers of Corporation
 Express
 Implied
 Inherent/Incidental
 Kapag di kasama sa 3 power, then the
corporation cannot exercise that power
because limited lang ang power ng
corporation. Can only exercise the 3 powers.
* Bakit tawag sa kanya limited Capacity?
 May tinatawag na theory of general capacity,
theory of special capacity.
Nationality of Corporation
 It is important that your corporation have
nationality/citizenship because sa Philippine
Corporation, you have certain privileges and
certain rights.
 Can acquire properties
 You are under in the jurisdiction of
SEC
 You have duty and also rights.
1. Incorporation Test- place of incorporation
 Incorporation takes place where it was
incorporated
Example: ABC corporation created sa Philippines
under SEC. San sya niregister? SEC Ph.
Nationality of corporation is Domestic/
Philippine Corporation
2. Control Test- reverse (di inaapply sa Philippines
but there was one scenario when it was applied in Ph
setting during World War II.)
 The citizenship is base on the majority of the
stockholders.
 Based on ownership not based on the place
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
3. Business Domicile or center of Management Rule
Example: ABC in Ph but it is operating in the United
States. Based on the place of operation, we will say
that this is not a Ph corporation but an American
corporation.
4. Grandfather Rule- inaapply ng SEC in certain
instances because it involves securities.
Example: ABC corporation has stockholder 1 2 3 4 5.
Stockholder 5 is also a corporation and he have his
stockholders. Para malaman natin yung nationality ni
ABC corporation, titignan din natin yung nationality
nung stockholders ni 5.
 In order to know the nationality of the
corporation, we must also know the
stockholder’s nationality of the investee
corporation
Section 3- Classes of Corporation
Stock v. Non-stock
Stock- may shares at dividends
Non-stock- walang share at dividend
Classification of Corporation
1. Public Corporation- provinces, city, municipality,
barangay
2. Private Corporation- partnership and corporation
 Corporation created under BP 68 the former
law and under the present law RA 11232
 Can refer to Government Own Control
Corporation which happens to have its
majority stockholder na government.
 Quasi-Public
Other Classification/ Kinds of Corporation
I. As to number of persons who compose them
Corporation Aggregate- more than 2 yung
corporator/member
 Opposite: Corporation Sole/Religious
Corporation- isa lang yung corporator
One Person Corporation- isa lang din yung corporator
II. As to whether they are for religious purpose or
not
Ecclesiastical Corporation - created/organized for
religious purposes.
Lay Corporation – created for a purpose other than for
religion. Not for religious purposes (eleemosynary or
civil)
III. As to whether they are for charitable purposes
or not
Eleemosynary Corporation – established for charitable
purposes
Civil Corporation- established for business or profit
IV. As to state or country under or by whose laws
they have been created
Domestic Corporation- created under Philippines by
virtue of incorporation test. (certificate of
Incorporation is needed)
Foreign Corporation- formed, organized or existing
under any laws other than those of the Philippines.
(license to operate is needed)
 Need pag-aralan yung distinction between the
two because iba yung power, rights and duties.
V. As to their legal right to corporate existence
De Jure Corporation- (in law)- all requirements are
complied both in fact and in law
De Facto Corporation- (in fact)- di nacomply ang
requirements (exist in fact but not in law)
 Under Section 19 it can be subjected to a quo
warranto proceeding to be initiated by the
solicitor
VI. As to whether they are open to the public or not
Close Corporation- limited to selected person or
members of a family
3 Basic Characteristics
 Stockholder should not exceed 20
 There is a restriction in transfer of shares- di
pwedeng ibenta yung share sa public
 The shares cannot also be sold at the stock
exchange
Open Corporation- open to the public (the public can
buy the shares)
VII. As to their relation to another corporation
Parent or holding corporation- majority of directors
controlling the subsidiary corporation.
Subsidiary Corporation- related to another corporation
that the majority of its directors can be elected either,
directly or indirectly, by such other corporation.
VIII. As to whether they are corporations in a true
sense or only in a limited sense
True Corporation- exists by statutory authority or
grant
Quasi-Corporation- no legislative grant
Quasi-Public Corporation
 Franchise/ contract- given by congress (there
is a contract between the government and the
corporation)
 Public duties for profit
Quasi-Corporation
 No legislative grant (no franchise)
 Not a corporation in its full sense
Section 4- Corporations created by special laws or
charters
General Incorporation Law- RA 11232 (batas mismo,
lahat ng corporation dito created)
Special Incorporation Law- Congress (ginawa ng
Congress pars maging isang corporation)
 Law creating SSS, Medicare. PCSO, GSIS
What law governs it?
Primarily (at first)- Law creating it
Suppletorily (secondly)- RA 11232
Section 5- Corporators and Incorporators
Corporators- all and encompassing. (Kasama nya
lahat) The corporation compose whether it is a
stockholder, incorporators or members.
Incorporators- Persons originally creating the
corporation (privilege because you were the founder of
the corporation)
Stockholder- persons constituting a stock corporation.
(owner of shares of stock in a stock corporation)
Member- persons constituting a non-stock corporation
Promoter- the person convincing this person to join
the corporation
* Pwede bang incorporator ka at stockholder at the
same time? YES
* Lahat ba ng stockholder incorporator? NO
All incorporators are stockholders
Not all stockholders are incorporators
Section 6- Classification of Shares
Doctrine of Equality of Shares
 All shares are presumed to be equal.
Partnership the presumption of the contribution is
equal
Section 13 wala na tinanggal na. For purposes of
increase in capital stock kaya ididiscuss. In
consonance in the increase of capital stock not because
of incompliance with Section 13
Capital Stock- total number of shares of the
corporation
 Authorized Capital Stock- pag inapproved ng
SEC
 Subscribed Capital Stock- 25% of the
Authorized Capital Stock
 Paid-up Capital Stock- 25% of the SCS
 Unissued Capital Stock- portion not yet issued
to the public
 Outstanding Capital Stock- defined under 137
in the former law and in present under 173.
Example: ACS is 100,000
SCS- 25,000- minimum di pwedeng
bumaba otherwise it is a de facto corporation.
PCS- 6,250- minimum pweden tumaas pero
bawal bumaba
UCS- 75,000
Minimum Capital of Corporation- 5,000
Cooperative Capital- 15,000
 These are under the old law
  This is only for purposes of power. Kasi sa
power may increase of Capital Stock.
* Wala ng minimum Paid-up Capital Stock at
Subscribed Capital Stock ngayon. (wala ng
requirement)
Capital
 Actual property of the corporation- could be
building, land
 Fluctuate yung value (nagdedepreciate)
 Belongs to the corporation
 Can be Real or Personal Property
Capital Stock
 Something which is abstract
 Amount fixed
 When issued it belongs to the Stockholders
 Always Personal Property (kaya nga share)
Shares of Stock- management/ profit/ asset (MPA)
 Pag ikaw ay isang stockholder may part ka sa
management you can vote. may share sa profit
– dividend and may share sa left over ng
assets of the corporation. The mere fact that
you are a stockholder.
Characteristics of the Shares of Stock
1. Personal/Movable Property
2. Intangible Property
3. Does not constitute an indebtedness on the part of
the corporation
Shares of Stock
 Constitutes the interest (may share ka at
ownership sa corporation)
 Intangible
 Can be issued even if it is not yet fully paid
Certificate of Stock
 Written evidence
 Tangible
 Must be fully paid before iissue
* Kailangan pa ba ang CoS para tawagin akong
stockholder? NO because the mere fact na
nagsubscribed ka, you are considered as a stockholder
even though you did not pay.
* Can you issue a share of stock even though it is not
yet fully paid? YES
* Can you issue a certificate of stock even though it is
not yet fully paid? NO because of the Doctrine of
Individuality of Subscription (Di pwedeng iissue
yung CoS unless it is fully paid)
 Sabi ng SEC, it is considered on1, whole,
indivisible contract
Classes of Shares
1. Par Value- nakalagay yung amount sa face ng
certificate of stock
No Par Value- di nakalagay yung stated value pero
merong issued price ( no less than 5 peso)
* Can par value and no par value exist? YES
* Pwede bang yung shares lahat ay no par value? NO
walang bibili ng share mop ag ganon
2. Voting- bumoboto for election of BOD (shares na
pwedeng bumoto)
Non-Voting- GR di sila bumoboto (shares na di
pwedeng bumoto)
E- under ASIMID Instances- they can vote under these
instances
 Amendment of the Articles
 Amendment of the by laws
 Sale, lease, exchange, mortgage
 Incurring creating, increasing bonded
indebtedness
 Merger or consolidation
 Investment of Corporate funds
 Dissolution of the corporation
* Ang shares pwede lahat voting pero di pwede yung
lahat non-voting kasi walang mag-eelect ng BOD
* Pwede bang voting and non-voting? YES they can
co-exist
3. Common- all shares are presumed to be equal
Preferred- there are certain privileges (rights to
dividend, preference sa voting rights and sa assets at
the time of dissolution)
4. Promotion- Binibigay sa promoter (the person
convincing his incorporators to incorporate)
Founders- Incorporators (privilege the right to vote
and to be elected for the period of 5 years)
5. Share in Escrow (in trust)/ Escrow Stock
Example: ABC corporation nag-issue kay Pedro ng
share. Problema si Pedro di pa nya bayad yung share.
Habang di nya bayad, hawag ni Juan yung share ni
Pedro for in trust. For the benefit of Pedro in the event
that Pedro will be able to pay, then that is the time that
Juan will give the share to Pedro.
6. Convertible- pwedeng common or preferred and
vice versa
7. Redeemable v. Treasury- both are acquired by the
corporation
8. Watered Stock- VOID
Law 1- Absolutely Simulated Contract
Characteristics
 Walang bayad, kulang ang bayad ibinigay ang
share. Ibinigay ang certificate of stock. VOID
 Anong tawag sa stock na ibinigay pero walang
bayad o kulang ang bayad? Watered Stock
9. Over-issued/ Spurious stock (fake)
 100,000 is the ACS. Nag-issue ng 100,000
10. Original/ Formative- number of shares from the
beginning
11. Increased- pag itinaas ang share
Statutory restrictions regarding the issuance of no
par shares (5)
 Batas mismo ang nagsasabi na bawal o kaya
may restriction
1. Entities not allowed to issue no par shares (7)
 Bank
 Trust Companies
 Insurance Companies
 Building and Loan Association
 Preened Companies
 Public Utilities
 Other corporations authorized to obtain or
access funds from the public
Educational corporation are allowed
2. All preferred shares has stated par value- Why?
How can you compute the preference as to dividends,
voting rights if there is no stated par value.
3. No par- fully paid, non-assessable, not liable for
corporate creditors (basic characteristics of no par)
* Saan applicable ang Trust Fund Doctrine? Par
Value
4. No par- P5 is the minimum amount
5. Entire consideration for no par shares shall be
treated as capital and they shall not be distributable as
dividends
Advantages v. Disadvantages
Par Value- nakalagay yung amount
A: Madaling maibenta kasi protected yung creditor
nakalagay kung magkano yung amount (easily sold)
DA: Liable to corporate creditors
No par value- Di nakalagay yung amount pero may
issued price
A: Fully paid, non-assessable, not liable for corporate
creditors
DA: Promote the issuance of the Watered Stock kasi
nga di moa lam yung tunay na amount nung value.
Limitations Regarding the Issuance of preferred
shares
1. They can vote under ASIMID
2. Always issued with the stated par value
3. The BOD fixes the consideration thereof
Shares na walang Voting Rights
 Redeemable
 Preferred
 Treasury
 Delinquent
Section 7- Founders’ Shares
 Exclusive right to vote and be voted for
 5 years limitation (duration of the founders’
shares)
 Approval of SEC is required\
Redeemable
 The stipulation is needed para maging
redeemable
 Di kailangan ang Unrestricted Retained
Earning (URE)
* Ano yung stock na pwedeng bilhin ng corporation
kahit walang URE? Redeemable
Treasury
 Di kailangang yung stipulation
 Kailangan ang Unresricted Retain Earnings
* Similarity parehas nirereacquire ng corporation
Section 8- Redeemable shares
 No voting rights and no need for Unrestricted
Retained Earnings
 These are the shares reacquired by the
corporation with a stipulation that it can be
reacquired notwithstanding with the absence
of URE
Section 9- Treasury Shares
 No voting rights/ not entitled to dividends
 Not part of outstanding/ do not revert to
unissued shares (kasi nireacquire ng
corporation either by purchase, by redemption,
donation or through some other means)
 It may be resold at a lesser price (this is an
exception to watered stock)
GR- Not distributable as dividend (E- Property
Dividend, opinion of SEC)
* Paano pag ibinenta ang treasury shares?
 The moment it is resold- it is entitled to all
rights and dividends
Title II- Incorporation and Organization of Private
Corporations
Section 10- Number and Qualifications of
Incorporators
Corporators
 Generic it refers to the stockholders, members
or even incorporators
 The moment you loss your status as a
stockholder or a member then you’re no
longer a corporator
 There is no limit as the number of
incorporators (except for OPC there is only
one stockholder)
Incorporators
 Person who signed in Article of Incorporation
 Does not cease because once an incorporator,
you are forever an incorporator you are the
founder of the corporation.
 Minimum- 1, Maximum- 15
Who can be an Incorporator?
 ANY person (natural or juridical), partnership,
corporation or association, singly or jointly
Requirements/ Qualifications (2 for natural, 1 for
juridical)
Natural person- legal capacity (can enter into a
contract) and must own 1 share
Juridical person- own 1 share
* Can a corporation exist even if there is only one
incorporator? YES
Old Law- Only a natural person (5 Qualifications)
Basic qualification removed- majority are residents of
the Philippines
One Person Corporation- there is only one
incorporator or stockholder
Ordinary Corporation- more than one
Section 11- Corporate Term
Prospective- all corporations which will be created
after February 23, 2019
 GR- perpetual (the law has no maximum
period)
 E- If they have chosen Fixed (opinion: the
maximum is 50 years. The law did not provide
a maximum period)
 Extend the period- 3 years prior to the
expiration of the period (before its 5 years)
* Can it be extended earlier than 3 years?
 E- it can be extended if there is a justifiable
reason which will be approved by the
Securities and Exchange commission.
Retroactive- corporations existing prior to February
23, 2019
 GR- perpetual (the law has no maximum
period)
 E- They have chosen Fixed
 Vote- Majority of the Outstanding Capital
Stock
 Period to decide- 2 years (from February 23,
2019, they have 2 years to decide what have
they chosen for those corporation which are
existing. They can choose perpetual or a
corporation with a fixed term.)
Revival of Corporations- those corporations which
are already dissolved
 GR- perpetual (the law has no maximum
period)
 E- They have chosen Fixed
 Must obtain from SEC- Certificate of Revival
of Corporate Existence
 Favorable government recommendation (8
entities)- need the favorable endorsement or
favorable recommendation of the appropriate
agency
* No application for revival of certificate of
incorporation of banks, banking and quasi-banking
institutions, preneed, insurance and trust companies,
non-stock savings and loan associations (NSSLAs),
pawnshops, corporations engaged in money service
business, and other financial intermediaries shall be
approved by the Commission unless accompanied by a
favorable recommendation of the appropriate
government agency.
Old Law- maximum period is 50, no minimum
Section 12- Minimum Capital Stock Requirement
 GR- no minimum Capital Stock (the
corporation can exist even if there is only
P50,000)
 E- required by special law
 Example: You are a school, there are
certain requirements for colleges or
high schools set by DepEd or CHED
for minimum paid up capital
requirements.
 Percentage requirement: 100% (Example:
Mass Media, ABS-CBN, DZMM, Philippine
Daily Inquirer, Rappler) It must have 100%
Filipino ownership.
 70/30% - Advertising Industry (70%
must be iwned by Filipino, 30% must
be owned by any other nationality)
 60/40%- Requirement under the
constitution (popular): Public Utilities,
Educational Institutions, Exploration
of Natural Resources.
 Whether you are an OPC or an Ordinary
Corporation there is no minimum CS
 Is there a minimum capital stock requirement?
NONE
 Is there a minimum paid up capital stock
requirement? NONE
 Is there is a percentage requirement? YES
* Before there was a minimum paid up under Section
13- 5,000
Cooperative- there is a minimum paid up capital
stock.
Old Section 13- Repealed
 But the requirement of 25% is still existing in
Section 37

Section 13- Contents of Article of Incorporation
 Mandatory can add other requirements but
can’t remove
Mandatory Requirements
A. Name of Corporation- should have INC Corp or
OPC
B. Primary purpose- only one primary purpose
(Example: banking)
Secondary Purpose- it should be germane and
related to the primary purpose. If it is not consistent, it
can be declared as ultra vires
 Prohibition: Banking Institutions cannot
engage in insurance neither any insurance can
engage in banking
 It is important because these two is the
express power of the corporation. (written in
the articles)
 Where can you find the power of the
corporation? Article of Incorporation
primarily in the purposes
 If within the power- Intra Vires Act
 Outside of the power- Ultra Vires Act
 Remedy: 2/3 votes of the Outstanding
Capital Stock (Ratify going to make it
valid)
* Cooperative: primary objective, secondary
objective
C. Principal Office is located- this is where you hold
the meeting of the stockholder and where you keep
the book of the corporation.
D. Term of Corporation- Section 11
E. Stock Requirements- the amount of its authorized
capital stock, number of shares into which it is divided
F. Arbitration Requirement- arbitration: A TP will
be the one to decide for the parties
G. Non-stock Corporation Requirements-
Arbitration agreement it is not mandatory but only
optional (one of the remedies provided by law), can
file electronically the Article of Incorporation (can
file, vote and attend electronically)
Section 14- Form of the Articles of Incorporation
Provisions
First- the name of the corporation should contain Inc,
Corporation, OPC
 Tell the public that it is a corporation because
in a partnership, you can see the word
company, associate or limited.
Fifth- Incorporators
 Name, nationality, residence must also be
provided
Sixth- Incorporating Directors- temporary directors
 Already have directors where in fact after the
issuance, that is the time they are going to
elect.
 Whoever will be the incorporators will be the
directors and called as incorporating
directors
Seventh- ACS Requirements
 Authorized capital stock of the corporation is
________ divided into number of shares per
share and the par value of each. It must be
specified.
Eight: Number of shares of the Authorize Capital
Stock
 Has been subscribed as follows: name of
subscriber, nationality, no. of shares
subscribed, amount subscribed, and the
amount paid.
Ninth- Certification of treasurer (before it is called as
treasurer’s affidavit)
 The seventh and eight provision must be
specified in the certification of treasurer
because if it is not, were having a problem in
Section 16. Grounds when the amendment
may be rejected or disapprove
Tenth- Undertaking to change the name
 Revise Corporation code and SEC are strict
insofar as the name is concerned. In fact,
before you can incorporate the first thing that
you’re supposed to do is to file the name
verification or undergo the name verification
process.
 If your name is similar to another corporation,
then you will not be allowed to file the
Articles of Incorporation
Voting Requirements
Stockholders
 Majority of OCS
 2/3 of OCS
 Which is bigger in terms of vote? 2/3
* Cooperative you have ¾ of votes
Instances when they are combined
 Majority + 2/3
 Majority + Majority
 They combined the vote of the BOD
and afterwards it will be ratified by
the stockholders
Board of Directors
 Majority of the BOD- bigger than the majority
of the quorum
 Majority of the quorum of the BOD (50% +
1%)
 If the BOD is 15, the majority is 8
 Suppose 8 attended, the majority of
the quorum is 5
 10 attended, the majority of the
quorum is 6
* 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
attended only 5 votes are required to
approve the act.
* If they are going to decide what is the vote.
Majority of the quorum unless the law specifies that
what is required is majority of the BOD
Instances of 2 voting requirements
 Unanimous consent of the remaining BOD in
case of the emergency board
 Self-dealing director
* Who runs the corporation? Who is the governing
body? BOD
* Initially is the BOD who will decide but there are
instances where the stockholders will decide and there
are instances that the BOD will decide. But there also
instances that both of them will decide.
Section 11- only the stockholders will decide (ratify
and extend)
Section 15- Amendment of Article if Incorporation
(comparative analysis of the voting requirement)
Amendment- only a portion will be changed (name,
term, principal office and purposes of the corporation)
Revised- the whole will be changed (more drastic and
has a bigger scope)
Amendment of AOI- Majority + 2/3
Amendment of By-Laws- Majority + Majority
Amendment of Close Corporation- 2/3 of OCS
Amendment in Cooperative- 2/3 of the Members
Amendment of Plan/Merger/Consolidation- Majority
+ 2/3, Majority + 2/3
Amendment in Foreign Corporations- no such vote but
you have to file it within 60 days
Provisions which are non-amendable (reason: the
law fixes them because there is a degree of
permanency unless the law allows it)
1. Name of the incorporators (once you are an
incorporator, you are forever an incorporator)
2. Date when they filed or signed the AOI
3. Original number of the incorporators
Vote Required- Majority + 2/3
Date of the Effectivity
 ABC is a corporation and they will file in SEC
the amended AOI and the SEC will issue the
amended COI or corporate charter
 GR- upon approval of SEC, issuance of
Amended COI
 E- from the date of filing, if not acted upon
within 6 months
 Example: Suppose ABC files on
October 1, 2019. Normally within the
span of 2 weeks, the SEC will issue
the COI. October 16, 2019 SEC
issued. October 16 is the date of
effectivity because it is the date of the
issuance of the amended COI
 The problem is it has already reached
6 months and the SEC has not yet
approve or disapprove the
amendment. October 1 is the date of
effectivity
* Cooperative- 30 days
Appraisal Right
 Concurring- votes yes
 Dissenting- votes no (will be the one to
withdraw because he does not agree with the
amendment
GR- a meeting is required
E- Section 100 (Close Corporation)
Section 15- written assent of stockholders
Favorable recommendation of the appropriate
government agency (7)
 No articles of incorporation or amendment to
articles of incorporation of banks, banking and
quasi-banking institutions, preneed, insurance
and trust companies, NSSLAs, pawnshops and
other financial intermediaries shall be
approved by the Commission unless
accompanied by a favorable recommendation
of the appropriate government agency to the
effect that such articles or amendment is in
accordance with law.
Section 16- Grounds when AOI or Amendment
may be Disapproved
1. Not in prescribed form- they did not comply with
Section 13 and 14.
2. Illegal Purpose- engage in prostitution, white slave
trade, prohibited drugs
3. Certification is false- Section 14 (7th and 8th
provision)
4. Percentage requirement not complied (Section 12)
5. No favorable recommendation of the appropriate
government agency
 Under these 5 instances the SEC can reject the
Article or the amendment to the article
PD 902-A- Suspension or Revocation of Certificate of
Incorporation
 Law creating the SEC and under the law, the
SEC can revoke or revoke the certificate of
incorporation under 6 instances
6 Instances where the SEC can suspend or revoke
 FraSeReCoFaFa
Fraud in procuring the certificate of incorporation
(dissolution of the corporation adapted in here)
Series misrepresentation (that is what the corporation
can do or doing)
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
Section 17- Corporate Name
Vote required to change- Majority + 2/3
* Can you change the corporate name? YES but the
law did not specify the vote (Section 15- Amendment
of the Articles)
Effect of change of name- same corporation under a
different name
 The corporation cannot use the defense that it
is a new corporation. It is the same
corporation under a different name.
* If you are going to change the name of corporation
does it mean that it is a new corporation? NO
Provisions of the Law (the SEC will not allow the
registration of the corporate name)
 Name shall not be allowed if- not
distinguishable (the corporate existence will
not start) Why is it not distinguishable
 1. Already reserved or registered
 2. Already protected by law
 3. Where it is contrary to exiting laws,
rules or regulations
 A name is not distinguishable even if it
contains one or more of the following: (When
it is distinguishable)
 (a) The word "corporation",
"company", incorporated", "limited",
"limited liability", or an abbreviation
of one if such words; and
 (b) Punctuations, articles,
conjunctions, contractions,
prepositions, abbreviations, different
tenses, spacing, or number of the same
word or phrase.
Example: ABC has the word Corp, Company,
Incorporated. It is the same corporation even though it
is using the abbreviated word.
Effect of violation (not distinguishable) Effects if
your name is found not to be distinguishable
 SEC will summarily order- without an
opponent, the SEC with its own initiative can
issue:
 1. Cease and desist order (SEC is
telling you not to use the corporate
name)
 2. Removal of all visible signages
 3. Fails to comply- cited for contempt
(damages amounting to P30,000)
 4. Administratively/Criminally liable
 5. Revoke the COI
If it is distinguishable
 The SEC will allow you to file the AOI
*Old law- if the name is similar to another name, it
will not be allowed.
 Name should be distinguishable
Section 18- Registration, Incorporation and
Commencement of Corporate Existence
New Law- Name verification is required (first
document to be file)
 Name will be verified under Section 17 if it is
distinguishable because if it is not
distinguishable, the SEC will not allow it.
 If distinguishable, SEC requires the
submission of AOI
 If compliant- SEC will issues COI (there is
no illegality and all the requirements have
been complied)
Effect if Issuance
 Right to exist- YES
 If the SEC issues the COI is it legally
existing? YES
 Right to operate- NO because there are 3
things that the corporation must do.
 Elect the BOD
 Elect the officers
 File the by-laws
Issuance of COI
 Start of the corporation
*Old law- Before, the corporation will file the AOI in
SEC and SEC will issue the COI
Effect of non-issuance of COI
 Can a file MANDAMUS- compel the
issuance of the performance of an act.
 Mandamus- filed against the SEC if the SEC
refuses to issue the COI
Discretionary Act- optional on the part of SEC
Ministerial Act- Mandatory
* If the corporation has met all the requirements is it a
discretionary or ministerial act on the part of the SEC
to issue? Ministerial that is the reason why you can
fila a case for Mandamus if the corporation still
refuses to issue the COI
Section 19- De Facto Corporation
De Jure- all the legal requirements have been met so it
is a valid corporation
De Facto- one some or maybe or some of the
requirements have not been complied
Requisites of De Facto Corporation
1. Valid law- RA 11232
2. Attempt to incorporate/organize- the corporation
has filed the name verification, file the articles
3. Actual user of the corporate power- the corporation
has elected the BOD, elected the officers and file the
by-laws (operating)
4. Issuance of COI despite of the non-compliance with
the legal requirements
* De Facto does it have articles? YES
* Does it have certificate? YES but the problem was
issued but there is something violated.
Some Reasons why we are going to declare the
corporation as a de facto
 Corporate name resembles, it is not
distinguishable
 Forgery in the articles
 Citizenship
 Percentage Requirement
De Jure and De facto
 Technically they are the same because you
apply all the principle in de facto subject only
to the one exception.
Remedy against De Facto- Quo Warranto
(questioning the legal existence of the corporation)
Example: A case was filed against ABS-CBN
questioning its legal existence (Quo-Warranto).
Solicitor general was questioning the existence of
ABS-CBN
 Quo Warranto- filed against De Facto
corporation and only the solicitor general can
file
Direct Attack
 Directly questioning the legal existence of the
corporation.
 The direct attack is the quo warranto
proceeding to be filed by the solgen
Collateral Attack
 ABC corporation (de facto) and Pedro. ABC
extended a loan to Pedro. Pedro does not want
to pay because it is a de facto corporation.
Indirect because even though ABC is a de
facto corporation, it is only the solicitor
general who can file the case. Anyone
questioning the legal existence, which is not a
quo warranto proceeding, which is not filed by
the solicitor general is a collateral attack.
 Not allowed against a de facto corporation.
* If you are De Jure, you cannot be subjected to a
direct or a collateral attack. But if you are De Facto
corporation, can you be subjected to a collateral
attack? NO. To a direct attack? YES- Quo warranto
De Facto- has COI but there is a violation
Corporation by estoppel- No articles, no certificate
but it is operating as if it is a corporation.
Section 20- Corporation by Estoppel
De Jure- complied all the legal requirements (legal)
De Facto- has the AOI and COI but it failed to satisfy
1 or some of the requirements under the law so it can
be subjected to a Quo Warranto Proceeding
Corporation by Estoppel- No AOI, no COI basically
it is not a corporation
Effect of corporation by estoppel- persons
comprising it are liable as a general partner (up to
the extent of their separate property)
Legitimate Corporation- Stockholders are not liable
up to the extent of their separate property (trust fund
doctrine)
Ostensible corporation/estoppel-
 Can you evade your liability or use it as a
defense that you are a corporation by estoppel
so that you will not become liable? NO
 Provided, however, That when any such
ostensible corporation is sued on any
transaction entered by its as a corporation or
on any tort committed by it as such, it shall
not be allowed to use on any its lack of
corporate personality as a defense. Anyone
who assumes an obligation to an ostensible
corporation as such cannot resist performance
thereof on the ground that there was in fact no
corporation.
 Example 1: I’m a corporation by estoppel can
I use that as a defense? NO
 Example 2: Suppose a TP transacted to me
and I’m a corporation by estoppel. Can the TP
evade the liability? NO
Section 21- Effects of Non-use of Corporate
Charter and Continuous Inoperation
Non-Use- form the start (issuance of certificate by
SEC), it becomes a perpetual corporation
 Did not do anything
 What if in a period of 5 years, it did not elect
the BOD, did not elect the officers and did not
file the by-laws?
 Deemed Revoked- the corporation is dissolve
(COI will be revoked)
Continuous Inoperation- What if during the 5-year
period they were able to elect the BOD and officers
and filed the by-laws. All of a sudden they cease to
operate. It is possible in the first year of operation they
did something and later on, stop doing it.
 Did something but afterwards for a period of 5
years they stopped operation
 Placed under delinquent status for 2 years
(extension for you to operate)
 If compliant- order will be lifted (it is
now again a valid corporation)
 If not compliant- the revocation of
COI will happen
 Old Revised Cooperative
Non- Use 2 years 5 years 2 years
Continuous 5 years 5 years 2 years

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