CORPORATION LAW 3.

Right of Succession
CHAPTER 1 INTRODUCTION 4. Powers, Attributes, and Properties
expressly authorized by law and
Kinds of Business Organization (4) incident to its existence.
a. Sole Proprietorship
One-man form of business entity, and defined Advantages of Corporate Form of Business
as one conducted for profit by a lone or single 1. Capacity to act as single unit
individual who owns all the assets, personally 2. Limited shareholder’s liability
owns and answers all the liabilities or suffers 3. Continuity of Existence
all the losses and enjoys all the profits to the 4. Feasibility of greater undertaking
exclusion of others. 5. Transferability of shares
6. Centralized management
b. Partnership 7. Standardized method of organization,
A contract of partnership two or more management and finance
persons bind themselves to contribute
money, property, or industry to a common Disadvantages of the Corporate Form of
fund with the intention of dividing the profits Business
among themselves. (Art 1767 NCC) 1. Valid and binding corporate act
2. Business transaction is limited to the
c. Joint Venture AOI
Partnership contract in nature and created 3. Shareholder’s limited liability limit the
for a particular business transaction. credit available to the corporation as a
Partnership Joint Venture legal entity
Personality distinct Does not have 4. Transfer of shares may result to
from persons uniting incompatible and conflicting
composing it interests
Particular or single General business 5. Minority shareholders have no say in
transaction of particular kind the conduct of business affairs
6. Double taxation may be imposed
d. Corporation 7. Subj to govt regulations and control
Artificial being, created by operation of law, (reportorial reqts)
having the right of succession, and the
powers, attributes and properties expressly Distinctions bet. Corporation and
authorized by law and incident to its Partnership
existence. (Sec 2, RA 11232) Corporation Partnership
By law or operation Created by
CHAPTER 2 DEFINITION AND ATTRIBUTES of law agreement
At least 2 but not Two or more natural
Definition more than 15 persons
Artificial being, created by operation of law, incorporators
having the right of succession, and the Powers and By agreement of the
powers, attributes and properties expressly functions granted by parties not contrary
authorized by law and incident to its law and necessary to to L-M-GC-PO
existence. (Sec 2, RA 11232) existence
Transact thru the Any one of the
Attributes BOD unless parties
delegated
1. Artificial Being Right of succession Based on mutual
2. Created by operation of Law except for OPC trust; death,

RMNRPascual – Corporation Law Notes

 incapacity, To be governed by the provisions of the
insolvency or special law or charter creating them or
withdrawal would applicable to them, supplemented by the
result to dissolution provisions of the Corp Code.
Any stockholder can Cannot transfer
transfer even without consent Other Classes of Corporations
without consent 1. Public and Private Corporations
Liability is limited to Liable pro rata with
the extent of all their property Public – created by the State as its own device
subscription and agency for the accomplishment of its own
Perpetual existence; Indefinite period public purpose.
for with specific subj to causes of
term, amendment dissolution GOCCs
Cannot be dissolved Anytime may be - With original charter or created by
by mere agreement dissolve at will of special law
of stockholders partners - Incorporated under general law

Govt Powers in Relation to Corporations Corp Code may still be applied suppletorily
- Due process even if governed by their charters.
- Equal Protection Clause
Private – those formed for some private
Under the control and supervision of the SEC purpose, benefit, aim or end.

CHAPTER 3 CLASSIFICATION OF True distinction:

CORPORATIONS Public – organized for govt purposes
Private – Not for govt purposes
Classes of Corp under the Corp Code
2. Ecclesiastical or Religious Corp
Stock Corporations are those which have
capital stock divided into shares and are For spiritual purposes; for administering
authorized to distribute to the holders of such properties held for religious one. Under Corp
shares, dividends, or allotments of the surplus Code, they are further classified either as
profits on the basis of the shares held. All religious societies or corporation sole.
other corporations are non-stock, (Sec 3 RA
11232) Lay Corporations – purposes other than
religion; for secular or business purpose.
Requisites to be stock corporation Either as Eleemosynary or civil
1. Capital Stock divided into shares
2. Authorized to distribute dividends to Eleemosynary Corp – charitable and
its stockholders based on shares benevolent purposes
owned.
Civil Corp – Purpose is for benefit, pecuniary
Non-stock – no part of their income is of its members
distributable as dividends to its members,
merely used for the furtherance of their 3. Aggregate, Sole or One Person Corp
purpose.
Aggregate – composed of a number of
Corporations created by Special Law or individuals with corporate power. Not less
charter than 2 but not more than 15

RMNRPascual – Corporation Law Notes

Corporations Sole – one-person only and general public; otherwise known as public
made as bodies corporate to give them some service corpo
legal capacity and advantage, which as
natural persons, they cannot have. 8. Quasi Corporation

One-Person Corp – single stockholder Term applies to pubic bodies not vested with
the general powers but organized by statutes
4. Close and Open Corporation with precise duty which may be enforced;
primarily political subdivisions
Close Corp – held by limited number of
persons like family or close-knit group; no 9. De Jure Corporation
public investors.
Juridical entities created with the statutory
Open Corp – openly accepts outsiders as requirement of incorporation and cannot be
stockholders and investors; authorized to list attacked even by quo warranto.
in the stock exchange
10. De Facto Corporation
5. Domestic and Foreign Corporation
Exists by virtue of an irregularity but with
Domestic – organized under Ph Laws, either colorable compliance with the requirements
by legislative act or under the Gen. Corpo of the law; existence can be attacked by quo
Law. warranto.

Foreign – Formed, organized under any laws 11. Corporations by Estoppel

other than Ph Laws.
Defectively formed but which are considered
6. Parent or Holding Companies and as corporation in relation to those who
Subsidiaries and Affiliates cannot deny their corporate existence due to
agreement, admission or conduct.
Parent Corp – One corporation control other
corporations known as subsidiaries
CHAPTER IV FORMATION AND
Holding Companies – owns a controlling ORGANIZATION OF CORPORATIONS
interest (more than 50% of the voting stock)
Three stages in the life of corporation:
Subsidiary corp – under the control of 1. Creation
another; subsidiary has independent and 2. Re-organization or quasi-
separate juridical personality reorganization
3. Dissolution and winding up.
Affiliates – subjected to common control and
operated as part of a system; other term for For purposes of creation, three steps:
sister companies
1. Promotional Stage
7. Quasi-Public Corp
Promotion – act of advancing; act of getting a
Private corpo granted with franchise involving corporation organized including the
performance of public duties; operations procurement of subscription to its capital
contribute to convenience or welfare of the stock
Promoter – one who brings to form a corpo

RMNRPascual – Corporation Law Notes

 2. Process of Incorporation Corp name must be distinguishable from that
already reserved or registered by another
Formal and procedural requisite of drafting corpo or if such name is protected by law or
the AoI, preparation of necessary supporting when uses is contrary to existing law, rules
documents, its filing, and approval of the SEC and regulations (Sec 17, RA 11232)
and issuance of Cert of Incorporation.
SEC Memo Circular No. 13 s. 2019
3. Organization and commencement of 1. Corpo name shall have the word
business Corporation or Incorporated or the
abbrev of Corp. or Inc.
Overt acts after incorporation (adoption of 2. For OPCs, shall contain OPC below or
by-laws, election of corpo officers) at the end of corpo name
3. Corp name of Foundation shall contain
Promotional Stage Foundation
(Skipped this part, mahaba kasi huhu tsaka 4. Non-stock, non-profit copo engaging
feel ko di relevant haha  ) in microfinance shall use Microfinance
or microfinancing in its name
Process of Incorporation 5. Term that describes the corpo’s
business should refer to its primary
Tiresome procedure which includes drafting purpose.
of AoI, prep and submission of additional and 6. Distinguishable from other corpo or
supporting docs, filing with the SEC, and partnership name registered with the
subsequent of the Cert of Incorporation. SEC or DTI (sole prop)
7. If similar, add one or more distinctive
Content of the AoI (under Sec 13 of RA words to remove similarity
11232) 8. No punctuations, signs, symbols are
not acceptable of distinguishable
- Name of corpo words
- Purpose 9. Corpo name consisting of only
- Principal Office symbols shall not be registered.
- Term of Existence 10. Business or trade name different from
- NaNaRes of Incorporators (Name, copo name must be indicated in the
Nationality, Residence) AoI.
- # of Directors 11. Trade name registered with the IPO
- NaNaRes of Directors may be used as part of Corpo name
- Authorized Capital Stock (for stock 12. Full name of a person may be used as
corpo) corpo name as long as s/he is a
- NaNaRes and summary of stockholder and if consented; if
contributors (non-stock) deceased, consent of the estate.
- Other matters deemed necessary by 13. For OPC, he may use own name
the incorporators 14. Internationally known foreign corpo
cannot be used by domestic corpo
Sec 14 of RA 11232 provides the format unless it is a subsidiary and parent
kineme corpo consented. Name written in
another language, as long as it doesn’t
Corporate Name violate good morals, or not offensive,
Essential; through it that it can act and may be used.
perform all legal acts. 15. Name of local geographic unit may be
used but with descriptive words

RMNRPascual – Corporation Law Notes

 16. Enumeration of allowed names
pursuant to other laws. Check niyo
nalang pls apakadami bhie.
17. Practice of profession regulated by
special law shall be governed by it.
Associations may use the profession’s
name.
18. Enumeration of exclusive allowed
names pursuant to other laws. Check
niyo nalang pls apakadami bhie.
19. Dissolved corpo or whose registration
was revoked – name cannot be used
within 5 yrs of dissolution or
revocation unless allowed by the
stockholders representing majority of
the outstanding capital
20. Old name (owned or belonging to
another) changed to new name but
reverting to old name is allowed only
after 3 yrs from approval of new
name.
21. For absorbed corpo, name of absorber
corpo can only be used.

Pabasa nalang cases mga mhie 

Amendment or Change of Corporate Name

- Amendment is pursuant to Sec 15 of
RA 11232
- To take effect upon approval or if not
acted upon within 6 months by the
SEC for a cause not attributable to the
corporation.

Purpose Clause
Defines the scope of authority of the
corporate. This statement confers and also
limits the actual authority of the corporate
representative.

Principal Office
Under Sec 13 [3], must be located in the
Philippines.

RMNRPascual – Corporation Law Notes