HANDOUT No.

2-C

A. In general, the procedure for the formation of a Private Corporation –

1. Name Verification
2. Promotional arrangements (looking for incorporators and making
contracts with them with the aid of competent legal and technical advice);
3. Preparation of incorporating papers (articles of incorporation,
treasurer’s affidavit, statement of assets and liabilities, certificates required by the
Securities and Exchange Commission on deposit and on the corporate name,
etc.);
4. Filing of incorporation papers and payment of all fees legally required;
5. Issuance of certificate of incorporation;
6. Organizational meeting of the incorporators to elect the board of
directors and to adopt by-laws;
7. Filing of by-laws with the Securities and Exchange Commission;
8. Organizational meeting of directors to elect corporate officers;
9. Doing corporate business.

B. Requirements as to capital stock under laws covering or related thereto:

I. Nationalized Corporations1

a. 100% Filipino owned

1. Retail trade corporations

2. Rural Banks except that Filipino-controlled domestic banks and
corporations organized primarily to invest in rural banks may
now become rural bank investors (Sec. 4, RA 720, as amended
by B.P. 651)
3. Mass Media ownership and operation (1986 Constitution)
4. Rice and corn industry (P.D. 194)

Under the Security Agency law (R.A. 5487), security

agencies must be 100 % Filipino owned. (American President Lines
vs. Clave, 114 SCRA 826)

b. 75% Filipino Owned

1. Awardees of government supplies purchases (C.A. 138)

2. Contract awardees for repair of public works and national
defense projects (R.A. 76)
3. Coastwise Trade (P.D. 761)
1
Reviewer in Commercial Law, Jorge Miravite, 2011 Edition
 2

c. 70% Filipino Owned

1. Domestic banks except rural banks (R.A. 337)

2. Awardees of Government public work contracts (R.A. 76)
3. Corporations for bay and river license

d. 60% Filipino Owned

1. Public Utility corporations (C.A. 146)

2. Corporations to utilize, develop or exploit natural resources(Art. XII,
Sec. 1, 1987 Constitution); fishing licenses (P.D. 704); Geothermal energy
permits (R.A. 5092)
3. Beneficiaries of Philippine Overseas Shipping Act (R.A. 1407, now
RA 7471); Domestic air commerce (R.A. 776); financing companies (R.A.
5980); awardees of supplies contracts for government owned or controlled
corporations (R.A. 5183)
4. Educational Institutions

Other pertinent laws

(1) Insurance corporations – No domestic insurance company shall, if a

stock corporation, engage in business in the Philippines unless
possessed of a paid-up capital stock equal to at least two million
pesos (Sec. 18, Insurance Code)2

(2) Under the Flag law –

a) In the purchase of materials, articles and supplies, preference
shall be given to those manufactured or produced in the
Philippines and to domestic entities. Domestic entities include
any corporate body or commercial company duly organized and
registered under the laws of the Philippines seventy-five per
centum (75%) of whose capital stock is wholly owned by
citizens of the Philippines.

Sources: Commercial Law Reviewer, 1988 Edition

Aguedo F. Agbayani
Reviewer in Commercial Law, Miravite, 2011 Edition

A. Villegas

2
Different requirements with respect to reinsurance business and if the same is organized as a mutual
company.